Unpublished Court of Appeal Decision Holds Rival Theater Owners Cannot Recover Attorney’s Fees Under Private Attorney General Doctrine

In an unpublished decision, in LandValue 77 v. Board of Trustees of California State University, the Fifth District Court of Appeal upheld a lower court’s denial of attorneys’ fees under Code of Civil Procedure section 1021.5, which codified the “private attorney general” doctrine. The doctrine allows plaintiffs to bring suits in the public interest and recover fees when they are successful, but only where plaintiffs show it was not in their economic interest to bring the suit. The court held that the plaintiffs failed to make that showing here.

In the underlying action, a movie theater company and its manager challenged the CEQA review and approval of a new theater. Although the trial court held in plaintiffs’ favor, plaintiffs contended that the remedies were insufficient. The Court of Appeal rejected the plaintiffs’ arguments, but remanded the case for resolution of certain issues. After remand, plaintiffs filed a motion for attorneys’ fees under section 1021.5.

The private attorney general doctrine is an exception to the usual rule that each party bears its own attorneys’ fees. The purpose of section 1021.5 is to compensate litigation brought in the public interest when there are insufficient financial incentives to otherwise justify the litigation—that is, where the financial burden on the plaintiff is much greater than the plaintiff’s stake in the matter. The claimant has the burden of proof to show legal entitlement to the fees under the multi-factor test laid out in Conservatorship of Whitley (2010) 50 Cal.4th 1206. The disputed factor in this case was whether plaintiffs had established a “financial burden of private enforcement,” i.e., that the costs to plaintiffs far outweighed any benefits of prevailing in the litigation. The trial court found plaintiffs failed to satisfy this burden, making a fee award inappropriate. The Court of Appeal agreed.

The court found that the record clearly showed plaintiffs had a financial incentive to stop or delay the opening of the proposed theater, given that plaintiffs had ownership interest in a competing theater only two miles away. Even without proof of an incentive, plaintiffs’ failure to identify with particularity their financial interests in the existing theater and failure to present sufficient evidence to estimate the monetary value of the delay in the opening of the competing theater meant the court could not conduct the proper cost-benefit analysis. Thus, plaintiffs failed to carry their burden of showing that their litigation expenses in fact transcended the monetary value of the benefits obtained. The court noted that a claimant’s declaration of altruistic motives—here, a desire to protect the environment—is not a substitute for presenting the information necessary for the court to perform a cost-benefit analysis.