Satrap v. Pacific Gas & Electric Co.

• Decision Date: 31 January 1996
• Docket Number: No. A067380,A067380
• Citation: 49 Cal.Rptr.2d 348,42 Cal.App.4th 72
• Parties: , 131 Lab.Cas. P 58,111, 96 Cal. Daily Op. Serv. 701, 96 Daily Journal D.A.R. 1062 Eugene SATRAP, Plaintiff and Appellant, v. PACIFIC GAS & ELECTRIC COMPANY et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

Page 348

49 Cal.Rptr.2d 348

42 Cal.App.4th 72, 131 Lab.Cas. P 58,111,

96 Cal. Daily Op. Serv. 701,

96 Daily Journal D.A.R. 1062

Eugene SATRAP, Plaintiff and Appellant, v. PACIFIC GAS & ELECTRIC COMPANY et al., Defendants and Respondents.

No. A067380.

Court of Appeal, First District, Division 1, California.

Jan. 31, 1996.

Rehearing Denied Feb. 26, 1996.

Review Denied May 15, 1996.

Bruce R. Worthington, J. Michael Reidenbach, Deborah S. Shefler, Maureen L. Fries, San Francisco, Timothy J. Murphy, Becherer, Beers, Murphy, Kannett & Schweitzer, Emeryville, for Respondents.

STEIN, Associate Justice.

Eugene Satrap appeals an order denying his motion, pursuant to Code of Civil Procedure section 1021.5, for attorneys' fees incurred in litigating his complaint for, inter alia, breach of contract, invasion of privacy and wrongful termination in violation of public policy against his former employer Pacific Gas and Electric Company (hereinafter PG & E).

FACTS

Appellant was hired by PG & E in 1962, and was ultimately promoted to the position of Manager of Gas Supply. In April of 1989, PG & E's corporate security department received a complaint of conflicts of interest, misuse of time and kickbacks in the PG & E Gas Supply Department. In August of 1989, appellant received a letter informing him that the investigation had given PG & E "reasonable cause to believe that you have engaged in serious misconduct.... The allegations involve misuse of Company resources for personal purposes and conflicts of interest in the course of your duties as Manager." Appellant was placed on administrative leave pending further investigation. One week later an industry newspaper, apparently relying on the statement of a PG & E employee, incorrectly reported that appellant was being investigated for accepting kickbacks in connection with certain contracts. The California Public Utilities Commission (hereinafter Utilities Commission) became interested and asked PG & E to provide it with certain documents concerning the investigation of appellant, and information concerning PG & E's Canadian gas purchases. While still on administrative leave, appellant volunteered to cooperate with the Utilities Commission's investigation of PG & E's gas purchasing. Before appellant met with the investigators, PG & E instructed him not to discuss the contents of an interim report on its internal investigation of appellant. That report discussed, among other things, concerns appellant had expressed over a domestic contract negotiation he had participated in that he believed involved some improper political influences, and his suspicion that PG & E had been overpaying its Canadian gas suppliers. Appellant nevertheless met with the Utilities Commission's representatives and discussed some of these issues. He was allowed to return to work but was demoted. Meanwhile, he was required to continue to cooperate with an internal audit even though he demanded, to no avail, that PG & E have either the Utilities Commission or another independent third party conduct the audit. Eventually, appellant quit under circumstance that were found by a jury to constitute constructive termination.

Appellant's original complaint included causes of action for wrongful termination in violation of public policy and retaliation in violation of Labor Code section 1102.5, commonly known as the "whistleblower" statute, based on allegations that PG & E interfered with and retaliated against appellant for disclosing, or planning to disclose, to the Utilities Commission information concerning what he believed to be violations of the law by PG & E. He also alleged a cause of action for invasion of privacy based on the Shortly before the jury rendered its verdict, the Utilities Commission issued its decision on PG & E's application for an order finding that its Gas and Electric operations for the period of January 1, 1990, through December 31, 1990, were prudent. Their decision disallowed recovery of $90,133,000 from utility ratepayers that it found PG & E "could have saved had it pursued prudent alternative actions in procuring Canadian gas supplies."

                public disclosure that he was being investigated for accepting "kickbacks."   In addition, the complaint alleged causes of action for breach of contract, discrimination in violation of the Fair Employment and Housing Act, and interference with prospective economic advantage, based on PG & E's refusal to do business with appellant's new employer.  Several causes of action were voluntarily dismissed, and the court granted PG & E's motion for nonsuit on several others.  The case ultimately went to trial on the causes of action for breach of contract, wrongful termination in violation of public policy and invasion of privacy.  The jury rendered its verdict in appellant's favor, awarding him economic damages of $48,750, non-economic damages of $225,000, and punitive damages of $250,000.  The jury specifically found that appellant had been terminated without cause, and in retaliation for his disclosures to the Utilities Commission.  The jury also found that the public disclosures that appellant was being investigated for accepting kickbacks were false
                

Appellant filed a motion seeking an award of approximately $1.2 million in attorneys' fees pursuant to California Code of Civil Procedure section 1021.5. The court denied the motion, and appellant appeals.

ANALYSIS

Section 1021.5 confers discretion on a trial court to award legal fees to a successful party in any action "which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement ... are such as to make the award appropriate, and (c) such fees should not, in the interest of justice be paid out of the recovery, if any." (Cal.Code Civ.Proc., § 1021.5; see also Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 154 Cal.Rptr. 503, 593 P.2d 200.) The purpose of an award of attorneys' fees pursuant to section 1021.5, is to encourage suits that enforce "common interests of significant societal importance, but which do not involve any individual's financial interest to the extent necessary to encourage private litigation to enforce the right. [Citation.] To encourage such suits, attorneys fees are awarded when a significant public benefit is conferred through litigation pursued by one whose personal stake is insufficient to otherwise encourage the action. [Citation.] Section 1021.5 was not designed as a method for rewarding litigants motivated by their own pecuniary interests who only coincidentally protect the public interest." (Beach Colony II v. California Coastal Com. (1985) 166 Cal.App.3d 106, 114, 212 Cal.Rptr. 485, italics added.) The decision whether the above-listed factors warrant a fee-shifting award is directed to the discretion of the trial court, and will not be overturned on appeal absent a showing of abuse of that discretion. (Westside Community for Independent Living, Inc. v. Obledo (1983) 33 Cal.3d 348, 355, 188 Cal.Rptr. 873, 657 P.2d 365; Feminist Women's Health Center v. Blythe (1995) 32 Cal.App.4th 1641, 1666, 39 Cal.Rptr.2d 189.) "The pertinent question is whether the grounds given for its [order] ... are consistent with the substantive law of section 1021.5 and, if so, whether their application to the facts of this case is within the range of discretion conferred upon the trial courts under section 1021.5, read in light of the purposes and policy of the statute." (Feminist Women's Health Center v. Blythe, supra, 32 Cal.App.4th at pp. 1666-1667, 39 Cal.Rptr.2d 189.) The trial court found that appellant had failed to establish that the "necessity and financial burden of private enforcement of an 'important right affecting the public interest' justifies an award of attorneys fees in this case." The court found that appellant's "sole motivation from the Appellant first asserts that the court applied an erroneous legal standard that focused solely upon the subjective motivation of appellant, and that we should therefore review the order de novo. (See, e.g., Bullis v. Security Pac. Nat. Bank (1978) 21 Cal.3d 801-815, 148 Cal.Rptr. 22, 582 P.2d 109.) We agree that appellant's subjective motivation for bringing the lawsuit is not a controlling factor in determining whether a section 1021.5 fee award is appropriate. Read as a whole, however, the trial court's order correctly states the legal standard it is to apply in determining whether to award attorneys' fees pursuant to section 1021.5. We, therefore, construe the reference to appellant's "motivation" as a shorthand reference to the court's conclusion that the objective financial incentives for prosecuting the lawsuit were not disproportionate to the financial burden. (See Code Civ.Proc., § 1021.5.)

beginning of this lawsuit through this motion, was, and is, his personal stake in the lawsuit and his personal financial gain."

It is within the trial court's discretion to deny attorneys' fees pursuant to section 1021.5 on the ground that the plaintiff's personal stake in the outcome was not disproportionate to the burden of private enforcement, even where the litigation enforced an important right and conferred a significant benefit upon the public. For example, in Luck v. Southern Pacific Transportation Co. (1990) 218 Cal.App.3d 1, 30-31, 267 Cal.Rptr. 618, the court upheld an order denying a request for approximately $300,000 in attorneys' fees. The trial court had found that the wrongful termination suit alleging, inter alia, that the plaintiff had a constitutional right to refuse drug testing enforced an important public right and conferred a significant benefit. (Id. at p. 30, 267 Cal.Rptr. 618.) Nevertheless, the court denied her request for attorneys' fees because it found ...