Opinion
Case No.: 5:12-CV-02904-LHK
2013-09-09
CITY OF SAN JOSE, Plaintiff, v. SAN JOSE POLICE OFFICERS' ASSOCIATION; SAN JOSE FIREFIGHTERS; I.A.F.F., LOCAL 230; MUNICIPAL EMPLOYEES' FEDERATION, AFSCME, LOCAL 101; CITY ASSOCIATION OF MANAGEMENT PERSONNEL, IFPTE, LOCAL 21, THE INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL NO. 3; and DOES 1-10, Defendants.
ORDER DENYING MOTION FOR
ATTORNEYS' FEES
The City of San Jose brought this action against five unions representing public sector employees. See ECF No. 1. The City's Complaint sought a declaratory judgment stating that a voter-passed ballot measure that adversely affected public employees' pensions was legal under federal and state law. See ECF No. 33. After the unions filed motions to dismiss, and briefing was completed on these motions, the City voluntarily dismissed the case. See ECF Nos. 80, 90.
Before the Court is a Motion for Attorneys' Fees brought by one of the Defendant unions, the San Jose Police Officers' Association ("SJPOA"). See ECF No. 93. The Court finds that the motion is suitable for decision without oral argument pursuant to Civil Local Rule 7-1(b) and accordingly VACATES the hearing set for September 12, 2013, at 1:30 p.m. Having considered the parties' arguments, the relevant law, and the record in this case, the Court DENIES the motion for the reasons stated below.
I. BACKGROUND
On June 5, 2012, San Jose voters passed Measure B, a ballot initiative that in effect reduced the pension benefits of the City's public employees. On that same day, the City filed this action against five unions representing public sector employees. See ECF No. 1. The City sought a declaratory judgment stating that portions of Measure B were legal under the Contracts Clause of the U.S. Constitution and several other state and federal laws. See ECF No. 33 at ¶ 31.
The day after the Measure passed, public sector unions, along with City employees and retirees, filed five challenges to the Measure on state law grounds in state court. See ECF No. 97-1 at ¶ 4. In August 2012, the City moved in state court to consolidate the five actions and to stay the state court proceedings pending resolution of this federal case. Id. at ¶ 6. The state court consolidated the five actions and denied the City's motion to stay the state court proceedings. Id. at ¶ 7.
Meanwhile, in June through August of 2012, in this federal action, three Defendant unions, including SJPOA, filed motions to dismiss. See ECF Nos. 8, 41, 56. In its Motion to Dismiss, SJPOA contended that the City's federal action should be dismissed because the case was unripe, the matter called for an advisory opinion, and the City lacked standing. See ECF No. 41 at 4-14. In addition, SJPOA sought a stay or dismissal based on three federal abstention doctrines. Id. at 14-21. The City filed a consolidated opposition to all three motions to dismiss, and the unions filed a consolidated reply brief. See ECF Nos. 60, 72.
The motions to dismiss were set for hearing before this Court on October 4, 2012. On September 26, 2012, the City filed a letter to this Court informing the Court of the status of the state court action and stating that the City was seeking to file its federal claims as a cross complaint in the consolidated state court action. See ECF No. 76. The letter further stated that if the City were able to file its federal claims as a cross complaint in the consolidated state court action, the City would be able to dismiss its federal case. Id. As a result, the City suggested that a continuance of the October 4, 2012 hearing might be appropriate. Id. One of the Defendant unions, the Municipal Employees' Federation, AFSCME Local 101 ("AFSCME"), filed a letter opposing any continuance of the hearing. See ECF No. 77.
In response to the two letters, this Court issued an order on September 28, 2012, indicating that the Court would proceed with the October 4, 2012 hearing unless the parties stipulated to a stay of proceedings pending the state court action or the City voluntarily dismissed the case. See ECF No. 79. On October 1, 2012, the City voluntarily dismissed SJPOA and AFSCME without prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i). See ECF No. 80. This notice of dismissal did not address attorneys' fees. Id. A plaintiff may dismiss a case unilaterally under Rule 41(a)(1)(A)(i) before the defendant has answered or filed a motion for summary judgment. SJPOA and AFSCME had not answered, and accordingly, a notice of dismissal was sufficient under Rule 41(a)(1)(A)(i).
The next day, the City and the three remaining Defendants filed a stipulation dismissing the case without prejudice under Rule 41(a)(1)(A)(ii). See ECF No.90. Under this stipulation, the parties were responsible for their own attorneys' fees and costs. Id. After an answer or summary judgment motion has been filed, Rule 41(a)(1)(A)(ii), which allows dismissal by stipulation of the parties, applies. Here, because the three unions had filed answers to the Complaint, the three unions and the City stipulated to dismissal pursuant to Rule 41(a)(1)(A)(ii).
Later in October 2012, pursuant to a stipulation with the plaintiffs in the consolidated state court action, the City filed a cross complaint in the consolidated state court action alleging the federal law claims that were dismissed without prejudice in the instant federal case. See ECF No. 97-1 at ¶ 13. In March 2013, the state court denied a motion for preliminary injunction filed by the plaintiffs in the consolidated state court action. Id. at ¶ 14. A bench trial was held in the consolidated state court action in July 2013, and a decision from the state court is pending. Id. at ¶ 15.
Meanwhile, on March 11, 2013, SJPOA filed this Motion for Attorneys' Fees pursuant to California Code of Civil Procedure § 1021.5, which provides attorneys' fees to private entities that vindicate important rights affecting the public interest. See ECF No. 93. The City filed an opposition on May 7, 2013, contending that federal law on attorneys' fees applies, and that under federal law, SJPOA is not entitled to fees. See ECF No. 97 at 4-6. The City further contended that even if California law applied, SJPOA would not be entitled to fees because SJPOA could not satisfy the elements of section 1021.5. Id. at 7-11. SJPOA filed a reply on May 21, 2013, in which it contended that state law applied and that the elements of section 1021.5 were satisfied. See ECF No. 98.
II. DISCUSSION
The ordinary rule with respect to attorneys' fees in federal courts is that each party bears its own fees and costs. See Alyeska Pipeline Service Co. v. Wilderness Soc'y., 421 U.S. 240, 247 (1975). This basic principle, however, does not apply when some statutory or nonstatutory provision explicitly authorizes the court to award attorneys' fees to the prevailing party. Id. at 260-63.
SJPOA contends that California Code of Civil Procedure § 1021.5 is such a provision. See ECF No. 93 at 4. However, state law with respect to attorneys' fees applies in federal court only where state substantive law governs the underlying action. See Champion Produce, Inc., v. Ruby Rboinson Co., 342 F.3d 1016, 1024 (9th Cir. 2003). That is, a federal court usually applies state attorneys' fees statutes only where the federal court is sitting in diversity jurisdiction or is exercising supplemental jurisdiction over state law claims. See Cotton v. Slone, 4 F.3d 176, 180-81 (2d Cir. 1993). In such circumstances, the federal court applies the substantive law of the state to the claim and awards attorneys' fees pursuant to state law. Id.
In this case, the Court has not applied state substantive law for any purpose, nor have the parties thus far called on the Court to do so. Defendants moved to dismiss based on Article III doctrines and asked the Court to stay based on federal abstention doctrines. See ECF No. 9 (arguing that this Court should dismiss on Younger abstention grounds or, in the alternative, should not entertain the Declaratory Judgment Act claim); ECF No. 41 (seeking dismissal or stay on Article III or federal abstention grounds); ECF No. 57 (contending this Court should abstain under federal law, or in the alternative, decline to exercise supplemental jurisdiction over the state law claims). In fact, SJPOA acknowledges in the instant Motion for Attorneys' Fees that it sought to dismiss or stay the instant federal action under federal law. As the Motion for Attorneys' Fees states, "SJPOA filed a motion to dismiss the [Complaint] on Article III justiciability grounds . . . . Alternatively, it asked for a stay of dismissal based on three separate federal abstention principles." ECF No. 93 at 2-3 (footnote omitted). Neither the provisions of Article III nor federal abstention doctrines would have required the Court to apply state law. At no point prior to the attorneys' fees motion now before the Court has any party asked the Court to apply any state substantive law. In sum, even if the Court had granted Defendants' motions to dismiss or to stay, any such order would have been based on federal law — not state law.
The Court notes that the sole mention of state law in the proceedings thus far has been in the Complaint, where the City sought declaratory judgment that Measure B was lawful under various state laws. See ECF No. 33 at ¶ 31. The Court had not, however, exercised jurisdiction over these claims, nor was it obvious that it would. The Court has the power to decline to exercise supplemental jurisdiction over state claims even when it has subject-matter jurisdiction over federal claims arising out of the same facts. See 28 U.S.C. § 1367(c). Among the bases for the Court to decline to exercise supplemental jurisdiction are that the "claim raises a novel or complex issue of State law," the state law claim "substantially predominates" over the federal claim, and that there are "compelling reasons for declining jurisdiction." Id. In its Motion to Dismiss, SJPOA itself raised arguments that suggested that some of these factors were present in the instant federal action. For example, SJPOA contended in its Motion to Dismiss that this Court should refuse to hear the City's Declaratory Judgment Act claim in part because this Court should avoid "needlessly deciding . . . issues of state law in the first instance." ECF No. 41 at 15. Moreover, another Defendant, AFSCME, in its Motion to Dismiss, explicitly argued that this Court should decline to exercise supplemental jurisdiction over the state law claims. ECF No. 57 at 11-13.
Accordingly, the Court finds that the case up until this point has been based on federal substantive law — not state law. Furthermore, while there were state law claims raised in the Complaint, the Court had not exercised supplemental jurisdiction over such claims, and Defendants themselves argued that the Court should not exercise such jurisdiction. Therefore, because only federal substantive law has applied in this case, federal attorneys' fees law — and not California Code of Civil Procedure § 1021.5 — applies to this motion.
Under federal law, SJPOA may not recover attorneys' fees, and SJPOA makes no contention to the contrary. SJPOA cites no federal statute or rule that would permit it to recover attorneys' fees, and in the absence of such a provision, the rule that each party bears its own fees and costs applies. See Alyeska Pipeline Service Co., 421 U.S. at 247. The dismissal in this case was pursuant Federal Rule of Civil Procedure 41(a)(1)(A), which does not permit the Court to impose attorneys' fees. See ECF No. 80; Am. Soccer Co. v. Score First Enterprises, a Div. of Kevlar Indus., 187 F.3d 1108 (9th Cir. 1999) (reversing award of attorneys' fees after notice of dismissal was filed under Rule 41(a)(1)(A)). Therefore, SJPOA's Motion for Attorneys' Fees must be denied.
III. CONCLUSION
For the foregoing reasons, the Court DENIES SJPOA's Motion for Attorneys' Fees.
IT IS SO ORDERED.
___________
LUCY H. KOH
United States District Judge
City of Carmel-By-The-Sea v. U.S. Dep't of Transp., 123 F.3d 1142 (9th Cir. 1997), is not to the contrary. That case only stands for the proposition that section 1021.5 applies in federal court where the federal court addresses an issue of state substantive law. In Carmel, the Ninth Circuit held that a plan to realign a highway violated state and federal environmental laws. Id. at 1160-61 (federal); id. at 1165 (state). Accordingly, the Ninth Circuit remanded to the district court to determine whether the plaintiffs who were challenging the plan were entitled to attorneys' fees under state or federal attorneys' fees laws. Id. at 1167-68. Similarly, the Court is not persuaded that Larsen v. King Arthur Flour Co., 2012 WL 2590386 (N.D. Cal. July 3, 2012), is contrary to its holding. In Larsen, the court denied attorneys' fees under section 1021.5 after a voluntary dismissal under Rule 41(a)(2). The court did not address whether awarding attorneys' fees under state law would be proper, because it found that the plaintiff was not entitled to fees. Id. at *1.