Under section 1032(b) of the California Code of Civil Procedure, “a prevailing party is entitled as a matter of right to recover costs in any action or proceeding” unless some statute expressly says otherwise. It has been California’s rule for over a decade that this provision allowed victorious defendants in cases under the Fair Employment and Housing Act (“FEHA”) to recover their costs of suit as a matter of right. However, on May 4, 2015, the California Supreme Court issued its decision in Williams v. Chino Valley Independent Fire District, holding that the default rule of section 1032(b) is preempted by Government Code section 12965(b), a subsection of the FEHA that places the decision to award costs within the discretion of the trial court.
In applying section 12965(b), the courts have borrowed a standard from the U.S. Supreme Court’s decision in Christiansburg Garment Co. v. EEOC to hold that a prevailing defendant can only recover its fees and costs by showing that the plaintiff’s claim was “frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so.” As a result of this change, California courts will now apply the same standard to the recovery of costs that it previously only applied to attorneys’ fees. This change is meant to ensure that plaintiffs are not discouraged from filing suit by the risk of a costs award should they lose.
One oddity Williams creates is an inconsistency between California and federal law. The Ninth Circuit applies the stricter Christiansburg standard to claims under the Americans with Disabilities Act, but not to those under Title VII. This means that in cases alleging discrimination on any basis other than disability, defendants will be able to recover costs as a matter of right under federal law, but not under state law.
There are a few additional practical implications created by the Williams decision. It is unclear post-Williams what procedure one should follow in order to recover those costs. The traditional method has been a memorandum of costs, which places the burden on the plaintiff to show the costs should not be awarded. However, a FEHA defendant seeking attorneys’ fees has the burden to show the claim was “frivolous, unreasonable, or groundless,” which requires a noticed motion. It is also unclear how courts should handle cost awards in cases involving both FEHA and non-FEHA claims, which remain awardable as a matter of right. The Williams court did not explain how these issues should be resolved.
For employers, the same goal remains: avoid the lawsuit. That said, employers that find themselves in a lawsuit should work with counsel to gain leverage through the use of offers of judgment and other applicable strategies.