Felix Huerta v. Kava Holdings, Inc.

Defendant Kava Holdings, Inc., dba Hotel Bel-Air

(defendant) terminated two restaurant servers after they were

involved in an altercation during work. One of the fired

employees, plaintiff Felix Huerta, sued defendant on a variety of

legal theories, most of which were dismissed before or during

trial. The trial court granted defendant’s motion for nonsuit as to

plaintiff’s claim for retaliation under the Fair Employment and

Housing Act (FEHA; Gov. Code, § 12900 et seq.), and allowed the

jury to decide plaintiff’s FEHA causes of action for harassment

based on a hostile work environment, discrimination, and failure

to prevent harassment and/or discrimination. The jury returned

a verdict in defendant’s favor.

Postjudgment, the trial court found plaintiff’s action was

not frivolous and denied defendant’s motion for attorney fees,

expert fees and costs under Government Code section 12965,

subdivision (b) (section 12965(b)). Based on plaintiff’s rejection of

defendant’s pretrial Code of Civil Procedure section 9981

settlement offer, however, the trial court awarded defendant

$50,000 in costs and expert witness fees under that statute.

In the unpublished portion of the opinion, we affirm the

judgment. The trial court properly granted nonsuit on plaintiff’s

FEHA retaliation claim and did not prejudicially limit his

counsel’s closing argument.

1 With the exception of section 12965(b), all undesignated

statutory references will be to the Code of Civil Procedure.

3

In the published portion of the opinion, we note that

effective January 1, 2019, section 998 will have no application to

costs and attorney and expert witness fees in a FEHA action

unless the lawsuit is found to be “frivolous, unreasonable, or

groundless when brought, or the plaintiff continued to litigate

after it clearly became so.”2 For litigation that predates the

application of the amended version of section 12965(b), we hold

section 998 does not apply to nonfrivolous FEHA actions and

reverse the order awarding defendant costs and expert witness

fees pursuant to that statute. (Arave v. Merrill Lynch, Pierce,

Fenner & Smith, Inc. (2018) 19 Cal.App.5th 525 (Arave).)

I. FACTUAL AND PROCEDURAL BACKGROUND3

A. The Altercation and Plaintiff’s Termination

The precipitating event triggering this lawsuit occurred on

December 21, 2013, and was captured by several video

surveillance cameras. Plaintiff and Atanas Kolev were working

the same shift as front servers in one of the hotel’s restaurants.

All the guests had departed, and the restaurant staff was

engaged in “side work,” i.e., putting items away and preparing for

the next shift.

2 Section 12965(b), as amended by Statutes 2018, chapter

955, section 5.

3 The jury trial spanned more than three weeks; but on

appeal, plaintiff raises only two issues related to the conduct of

the trial itself. Accordingly, this portion of the opinion will focus

on evidence relevant to the retaliation claim, with an emphasis

on testimony favorable to plaintiff. We will not address damages

or expert witness testimony or delve with detail into the evidence

that pertained only to the harassment and discrimination causes

of action.

4

As of that date, Kolev had worked for defendant for

approximately two years. He was born in Bulgaria and moved to

the United States in 2003. Plaintiff had been with defendant

longer. He was born in Mexico and came to California in 1988,

when he was 15 years old.

Kolev described the altercation as follows: He felt plaintiff

routinely shirked side work duties. This particular evening,

angry because plaintiff kept “disappearing” during the side work,

Kolev confronted him. Plaintiff responded by calling Kolev “a

[expletive] loser.”

4 In his own words, Kolev became “angry” and

“overreacted.” He and plaintiff walked toward each other,

talking loudly. Kolev said they should take their argument

outside and then he pushed plaintiff.

According to plaintiff, when Kolev swore at him that

evening, he called Kolev a loser, but did not use profanity.

Plaintiff did not think he and Kolev were shouting at each other.

Kolev started across the room and plaintiff walked toward him,

not backing down. Kolev grabbed plaintiff by the throat.

Plaintiff told him, “ ‘You’re done. I’m going to report you right

now.’ ”

At that point, other employees intervened. The two men

walked away from each other.

Plaintiff immediately reported the incident to the manager

on duty, Michael Pekarsky. Plaintiff described the confrontation,

but did not state Kolev previously harassed or belittled him

because of plaintiff’s race or national origin. Plaintiff did not tell

4 It was common knowledge among the restaurant staff that

Kolev’s wife left him. Kolev interpreted the “loser” remark as

referring to that fact.

5

Pekarsky the incident had anything to do with race or national

origin.

At Pekarsky’s request, plaintiff stayed in the office and

prepared a written statement on the computer. Plaintiff’s signed

statement read in full:

I still have tables and doing some closing

paper work, and went to deliver the full

bottles of wine to the main bar and when I

was coming back, then [Kolev] started asking

me what I’ve been doing all night. I told him

I’ve been taking care of my tables, because I

got most of the late tables inside. I told him I

was taking the bottles and doing whatever

side work I can. Then he started cursing me

calling, “you piece of [expletive]”. He was

walking toward the kitchen and cursing at me

loud. Then I say “you’re a loser” then he came

back to me and I asked him “what are you

going to do?”. And he grabbed me by the neck.

Then I told him I was going to report it [to] a

manager and to security as well. But then he

said lets [sic] go and finish this @ the parking

lot, I just walk away and reported to mike the

manager. . . [.] ps this is not the first time

th[at] he threatened me. . [. . I] have more

witnesses from other times using a very

offensive verbage [sic]. . calling me worthless

useless piece of [expletive].

In the meantime, Pekarsky informed hotel security about

the situation and located Kolev in the kitchen. Kolev also

6

provided a statement. Security separately escorted the two men

off the property. Pekarsky suspended both men pending further

investigation.

The investigation included obtaining written statements

from other employees still in the restaurant when the

confrontation occurred. None of the statements indicated Kolev

bullied or taunted plaintiff because he was Hispanic or from

Mexico.

According to Denise Flanders, defendant’s general

manager, the Human Resources (HR) department followed up

with plaintiff concerning the “p.s.” in plaintiffs statement to

determine the nature of Kolev’s previous threats. Plaintiff was

not responsive to the efforts.

Flanders, HR director Jason Brown, and restaurant

manager Adam Crocini collectively made the decision to

terminate both men on December 24, 2013, for violating the

“Pledge,” defendant’s code of conduct.5 They agreed plaintiff was

5 The Pledge is a written contract signed by every employee.

Plaintiff received a copy of the Pledge and underwent training as

to its requirements. The Pledge advises that certain

unacceptable conduct, e.g., “[e]ngaging in disorderly conduct,

including fighting, threats of violence, physically or verbally

abusing another team member, . . . or using obscene language or

gestures in the [h]otel” may result in immediate termination

without any intervening discipline.

The Pledge encourages employees “to meet and discuss

suggestions, problems or concerns with management” and

emphasizes its open door policy. Employees are required to

immediately report harassment to management or HR.

Retaliation for such reporting is prohibited.

7

a conscientious and respected employee, but found he engaged in

disorderly conduct that warranted immediate termination.

B. Post-Termination Reports of Harassment

Within days of plaintiff’s termination, three coworkers―all

Hispanic―complained to the HR director that plaintiff had been

the victim of sustained harassment by Kolev because of his race

and national origin. Before the fight, Kolev harassed other

Hispanic employees and made racist comments, but plaintiff bore

the brunt of Kolev’s verbal attacks. The HR director checked the

department’s files and confirmed there had not been any previous

complaints concerning Kolev. The HR director also spoke to the

restaurant’s managers, who said they had not observed any such

behavior before plaintiff’s termination.

C. The Complaint

Plaintiff initiated this action on August 8, 2014. The

original complaint―although considerably narrowed in scope by

the time the jury began deliberations―remained the operative

pleading. Plaintiff sued the hotel and several management

individuals. The complaint included 11 causes of action and

sought general and punitive damages based on various legal

theories. Defendant was named in every cause of action; the

individuals were named only in the cause of action for intentional

infliction of emotional distress.

Plaintiff alleged six FEHA causes of action. Five were

based on race, national origin, and ancestry (collectively, race)6:

discrimination, harassment, failure to present discrimination and

6 “Race” was the collective designation used by the trial court

and counsel for these three factors. For consistency, we adopt

this designation as well.

8

harassment, retaliation for complaining of discrimination or

harassment, and wrongful termination in violation of public

policy. In the sixth FEHA cause of action, plaintiff alleged he

was retaliated against for taking a medical leave under the

California Family Rights Act. Plaintiff alleged three factual

predicates for the FEHA race-based claims: harassment by

Kolev; harassment and discrimination by various supervisors,

unrelated to Kolev’s conduct; and discrimination as a substantial

motivating factor in the decision to terminate plaintiff’s

employment.

Plaintiff also sought damages based on breach of an

implied contract that he could be fired only for cause; defendant’s

negligently hiring and retaining supervisors who harassed and

retaliated against him; and defendant’s negligent supervision of

its employees, permitting them to harass plaintiff.

D. Pretrial Proceedings

All the individuals plaintiff sued were dismissed before

trial, either voluntarily or by summary judgment. The trial court

granted summary adjudication for defendant on plaintiff’s causes

of action for breach of implied contract to terminate only for

cause, negligent hiring, and retaliation for taking CFRA leave.

On April 27, 2016, shortly before the trial began, defendant

served plaintiff with a section 998 settlement offer in the sum of

$375,000, with the litigants bearing their own attorney fees,

costs, and litigation expenses. Plaintiff did not accept the offer,

but countered with his own section 998 demand in the sum of

$1.55 million.

E. Jury Trial

The matter proceeded to a jury trial. Trial evidence

included the following:

9

Before December 21, 2013, several coworkers urged

plaintiff to report Kolev’s ongoing verbal harassment to HR. The

coworkers did not report Kolev’s harassment themselves because

they believed plaintiff should take the responsibility.

Plaintiff testified he did not report the harassment

“because sometimes the managers [were] around, and they didn’t

do anything about it.” He thought Pekarsky, when he was a

restaurant captain, overheard some of Kolev’s comments, but did

not respond and actually might have laughed at them on

occasion. Plaintiff also recalled Kolev’s making a comment about

“ ‘[expletive] Mexicans, can’t speak English’ ” during a staff

meeting that Pekarsky and the restaurant manager attended,

but was “not sure every manager heard that.”

Plaintiff testified Kolev “would just out of the blue come

towards” him, cursing at him and calling him a “ ‘[expletive]

Mexican.’ ” He would say, “ ‘You [expletive] Mexican, get out of

my face. I don’t like you. I hate you. Don’t talk to me,’ just for

no reason.” Kolev also said he had been trained to kill while

serving in the Bulgarian army, so plaintiff should not confront or

fight him.

Kolev denied he discriminated against plaintiff or anyone

else based on race. He was “antiracist.” He characterized the

exchanges as workplace camaraderie and insisted there was

“nothing extreme or discriminatory . . . nothing that was meant

to harm anybody. [¶] They were calling me that I’m a terrorist,

and I have seven wives and a goat. I . . . understood the nature of

the jokes. It was . . . joking.” Kolev made fun of the way plaintiff

10

spoke, but said he was not the only employee who did so.7 Kolev

was also rude to coworkers who were not Hispanic.

At the close of evidence, plaintiff dismissed all causes of

action except the FEHA claims for retaliation, harassment,

discrimination, and failure to prevent harassment or

discrimination. Defendant moved for nonsuit. The trial court

granted a nonsuit only as to the retaliation claim, finding nothing

in plaintiff’s written statement or interviews with HR that could

“be construed by a reasonable trier of fact [as] reporting a

protected activity.”8 Although the trial court determined the

evidence to support plaintiff’s remaining FEHA causes of action

(harassment, discrimination, and failure to prevent harassment

or discrimination) was suspect, it was “strong enough . . . to go to

the jury.” The jury’s verdict on all remaining causes of action

was in defendant’s favor.

F. Postjudgment Proceedings

As the prevailing party in a FEHA action, defendant sought

costs, expert witness fees, and attorney fees pursuant to section

12965(b). As the prevailing party that obtained a result more

favorable than the sum it was willing to settle for, defendant

sought the same costs and fees pursuant to section 998.

7 Plaintiff spoke English with an accent, talked rapidly, and

was sometimes difficult to understand.

8 The trial court granted defendant’s nonsuit motion on the

retaliation cause of action on June 9, 2016. The trial court

minutes for June 10, 2016 mistakenly report defendant’s motion

for nonsuit as to retaliation was denied; on that date, the trial

court denied defendant’s motion for nonsuit on the discrimination

cause of action.

11

Defendant’s memorandum of costs was in the total amount of

$111,242.83, which included $47,322.50 in expert witness fees.

Defendant asked for $1,318,955 in attorney fees.

Plaintiff moved to tax and/or strike defendant’s costs,

arguing section 12965(b) precluded an award of costs to

defendant as prevailing party unless the trial court determined

plaintiff’s action was “ ‘ “unreasonable, frivolous, meritless or

vexatious.” ’ ” (Cummings v. Benco Building Services (1992) 11

Cal.App.4th 1383, 1387, quoting Christiansburg Garment Co. v

E. E. O. C. (1978) 434 U.S. 412, 421 (Christiansburg).) Plaintiff

opposed the request for attorney fees on the same basis.

Almost six months of briefing and collateral motions

followed. During this period, defendant submitted a revised

memorandum of costs in the amount of $98,863.59. This

memorandum eliminated costs incurred before service of the

section 998 offer. After a hearing, the trial court took the

motions under submission and issued a detailed written ruling

one month later.

The trial court first analyzed each item of claimed postsettlement

offer ordinary costs (§ 1033.5)9 and determined the

requested amounts were necessary and reasonable. Nonetheless,

finding plaintiff’s action was not frivolous, the trial court

determined section 12965(b) precluded awarding defendant

ordinary costs, expert witness fees, and attorney fees.

The trial court then considered each category of postsettlement

offer costs and analyzed whether they could be

9 These costs included jury fees, deposition costs, service of

process fees, expert witness fees, models/blowups/exhibit

photocopies, and court reporter fees.

12

awarded based on the rejected section 998 settlement offer. The

trial court concluded defendant was not entitled to postoffer

attorney fees because the action was not frivolous. It did,

however, award defendant its postoffer ordinary costs and expert

witness fees pursuant to section 998. Although the trial court

previously found defendant’s incurred costs to be necessary and

reasonable, the trial court reduced the award to $50,000 based on

plaintiff’s economic circumstances.

Plaintiff timely appealed from the judgment and the

postjudgment order awarding defendant costs and expert witness

fees pursuant to section 998. We ordered the appeals

consolidated for all purposes.

II. DISCUSSION

A. Nonsuit Was Properly Granted on the

Retaliation Cause of Action

FEHA prohibits workplace harassment and discrimination

based on a number of factors, including race, national origin, and

ancestry. (Gov. Code, § 12940, subd. (a).) An employee who

reports a FEHA violation engages in “protected activity for which

[he can]not be subjected to retaliation.” (Yanowitz v. L’Oreal

USA, Inc. (2005) 36 Cal.4th 1028, 1042 (Yanowitz); Gov. Code,

§ 12940, subd. (h).)

An employee’s cause of action against his employer for

unlawful retaliation under FEHA includes the following

elements: (1) the employee engaged in a FEHA-protected

activity; (2) the employer subjected plaintiff to an “adverse

employment action;” and (3) the employee’s protected activity

“was a substantial motivating reason for” the employer’s action.

(CACI No. 2505; Yanowitz, supra, 36 Cal.4th at p. 1042.) If a

trial court determines as a matter of law that the plaintiff’s

13

evidence of retaliation is insufficient to permit the cause of action

to go to the jury, nonsuit is appropriate. (Nally v. Grace

Community Church (1988) 47 Cal.3d 278, 291 (Nally).)

On appeal, we review this issue de novo (Saunders v.

Taylor (1996) 42 Cal.App.4th 1538, 1542). We affirm if our

independent review leads us also to conclude as a matter of law

that no trier of fact could find plaintiff was terminated in

retaliation for reporting workplace harassment or discrimination.

(Nally, supra, 47 Cal.3d at p. 291.) In determining whether a

nonsuit should be affirmed, we accept plaintiff’s evidence as true,

indulge “every legitimate inference” from it, and disregard

conflicting evidence. (Ibid.)

Under these standards, we find as a matter of law

plaintiff’s evidence fell short of satisfying the threshold

requirement that plaintiff engaged in protected activity. Plaintiff

concedes he did not “report the assault explicitly as racially

motivated.” Nevertheless, he argues there was enough evidence

of Kolev’s bigotry and abuse to permit the jury to decide whether

the December 21, 2013 argument “had a racial component and

was related to race discrimination and/or harassment.” Yes,

there was: This was a primary theme in plaintiff’s closing

argument (see, post, fn. 10). Evidence that Kolev was bigoted and

abused plaintiff based on plaintiff’s race was relevant to the

FEHA causes of action presented to the jury (harassment,

discrimination, and the failure to prevent either), as was evidence

that the altercation itself between the two men was racially

motivated.

The issue before us, however, is different. In reviewing

whether defendant was entitled to judgment as a matter of law

on the retaliation claim, the question is whether plaintiff’s report

14

of harassment or discrimination based on race was a “substantial

motivating factor” in the decision to terminate him. (Harris v.

City of Santa Monica (2013) 56 Cal.4th 203, 232.) We begin by

analyzing whether plaintiff engaged in FEHA-protected activity,

i.e., did he protest and report a FEHA violation that occurred in

the workplace?

On the night of the incident, plaintiff did not complain to

Pekarsky that Kolev harassed him based on race, national origin,

or ancestry. Rather, he reported the verbal and physical assault

that occurred minutes earlier, without mentioning it was the

latest in a series of race-based run-ins. Witnesses provided

statements concerning only the evening’s confrontation. No one

stepped forward to complain of ongoing harassment by Kolev. At

trial, plaintiff testified he intentionally never reported Kolev’s

harassment; the record confirmed he never complained of it

before his termination.

Plaintiff was fired for engaging in the confrontation with

Kolev, not for reporting it. The confrontation, as described to

defendant’s decision makers, violated defendant’s code of conduct,

not FEHA.

Although facts concerning Kolev’s poor treatment of

Hispanic coworkers subsequently came to light, neither plaintiff

nor the other employees who submitted statements to Pekarsky

following the altercation―but before plaintiff’s termination―

referred to race. The statements pegged Kolev as a crass,

unpleasant coworker, but did not assert he harassed Hispanic

coworkers based on race.

Plaintiff presented no evidence that Flanders, Brown or

Crocini received reports or were aware of racist conduct by Kolev

before they decided to terminate both employees. All three

15

decision makers testified they terminated plaintiff based solely

on his admitted role in the altercation with Kolev, which

constituted a violation of defendant’s code of conduct.

We accept as true testimony that Pekarsky and plaintiff’s

coworkers heard Kolev use profanity and never escalated the

issue to HR, although they should have. But that testimony was

presented in the context of Kolev’s use of foul language that did

not include racial slurs. Even assuming foul language in the

workplace that does not include ethnic denigration constitutes a

FEHA violation, the evidence was undisputed plaintiff never

reported it. Without evidence that plaintiff reported a FEHA

violation―i.e., that plaintiff engaged in protected activity― as a

matter of law, plaintiff cannot prevail on a FEHA retaliation

claim. (Nally, supra, 47 Cal.3d at p. 291.)

B. Plaintiff Forfeited His Challenge to the Trial

Court’s Ruling Concerning Closing Argument

1. Overview

Plaintiff next argues the trial court prejudicially erred by

limiting his counsel’s closing argument, “preclud[ing] the jury

from holding defendant liable . . . for Kolev’s harassing conduct.”

Plaintiff asserts, “Kolev’s assault on December 21, 2016 was the

strongest evidence supporting the hotel’s liability for its failure to

take corrective action. By not being able to consider this

evidence, the jury was precluded from properly assigning the

hotel liability. Therefore, the [t]rial [c]ourt’s erroneous limitation

of the scope of Huerta’s closing argument was prejudicial and

reversible error.”

The issue arose during the jury instruction discussion

between the trial court and counsel. Counsel agreed CACI No.

2521A was appropriate. That instruction advises jurors plaintiff

16

has the burden to prove, among other elements, he “was

subjected to unwanted harassing conduct because of his race” and

“the harassing conduct was severe or persuasive.”

The trial court and counsel then turned to CACI No. 2523,

which provides a nonexhaustive list of conduct that qualifies as

harassment within the context of a FEHA action. Counsel agreed

the trial court should instruct with option (a) that “verbal

harassment, such as obscene language, demeaning comments,

slurs, or threats” constitutes harassing conduct. Plaintiff also

wanted the trial court to give option (b), which provides that

harassing conduct includes “physical harassment such as

unwanted touching, assault, or physical interference with normal

work or movement.” Defendant disagreed, noting the Kolev was

fired the first time he touched plaintiff.

After an exchange with counsel, the trial court agreed to

give the physical harassment language as plaintiff requested, but

did not want jurors misled by an attempt “to bootstrap this in

and make a harassment cause of action based on the December

21st conduct, [for] which the employer did take action.”

Plaintiff’s counsel assured the trial court he was “not saying . . .

[the confrontation] itself is harassment, but [wanted to argue

that] Kolev’s motivation in targeting [plaintiff] that day . . . was

based on his racial animus as evidenced by the prior harassing

conduct.” The trial court responded, “You can argue that. I don’t

have any issue,” and then added, “I’m not going to allow you to

say, ‘Oh, [the confrontation] is physical harassment that

[defendant] didn’t do anything about.’ Because [it] clearly did.

[¶] And if you’re going to argue that, I’m not going to give [the

physical harassment instruction].” Plaintiff’s counsel replied

simply, “Understood, Your Honor.”

17

No more was said on the subject. A recurring theme in

plaintiff’s closing argument was that but for Kolev’s ongoing

racially-motivated verbal harassment, the December 21, 2013

confrontation never would have occurred, and plaintiff would not

have been terminated.

10

2. Analysis

We never presume trial court error. (Keyes v. Bowen (2010)

189 Cal.App.4th 647, 655.) Reversal is warranted only where

there has been a miscarriage of justice. (Cal. Const., art. VI,

§ 13.) To be entitled to a reversal, an appellant must

demonstrate trial court error and prejudice as the result of the

error. (Widson v. International Harvester Co. (1984) 153

10 The following excerpts from plaintiff’s counsel’s closing

argument illustrate the point:

1. “Regardless how you slice the pie of reasons . . . that

[plaintiff] was terminated, if racial harassment and race bias

hadn’t come before December 21st, 2013, if it had not existed in

that workplace, December 21st, 2013 does not ever occur. There

is no incident as defendant calls it, or assault and battery as we

call it.”

2. “But for [plaintiff’s] race, nothing ever occurs on December

21st.”

3. “[T]hat event from December 21st, 2013 never occurs

without [plaintiff] having the previous harassment and the

mistreatment by Mr. Kolev, the[] server [the hotel] kept on the

floor for over a year . . . [¶] . . . But if you look at the . . . buildup

of the acrimony [by plaintiff] as he’s being harassed for a yearplus

as of December 2013, what explodes on December 21st . . .

never happen[s].”

4. “ ‘Mexican trash.’ . . . Not even ten days after [the hotel]

fired [plaintiff] . . . they knew that the person who had caused the

assault and battery had used terms like this . . . .”

18

Cal.App.3d 45, 53.) Additionally, an appellant must support his

challenge with cogent argument, citations to relevant authorities,

and accurate references to the record: “[C]iting cases without any

discussion of their application to the present case results in

forfeiture . . . [and w]e are not required to examine undeveloped

claims or to supply arguments for the litigants.” (Allen v. City of

Sacramento (2015) 234 Cal.App.4th 41, 52 (Allen); Cal. Rules of

Court, rule 8.204.) As a general rule, an appellant who fails to

object in the trial court forfeits the issue on appeal. (Gray1 CPB,

LLC v. SCC Acquisitions, Inc. (2015) 233 Cal.App.4th 882, 897

(Gray1).)

As noted, plaintiff did not object in the trial court to the

exchange or to the court’s decision to give the instruction he

requested, provided plaintiff’s counsel did not argue to the jury

that the one instance of physical contact by Kolev constituted

actionable, i.e., severe or pervasive, harassment under FEHA.

Plaintiff’s counsel did not protest that the ruling unfairly limited

his closing argument or would preclude the jury from finding that

Kolev harassed plaintiff based on race.

On appeal, however, plaintiff cites section 647 and asserts

this issue is preserved because no objection is required when the

trial court gives, refuses to give, or modifies a jury instruction.

But the trial court gave the standard CACI No. 2523 language

just as plaintiff requested; there was no refusal or modification.

A plaintiff is not aggrieved when the trial court gives an

instruction he requested. Section 647 has no application; and

without a timely objection in the trial court, the issue is forfeited

on this ground. (Gray1, supra, 233 Cal.App.4th at p. 897.)

Additionally, plaintiff has not suggested in what manner

his closing arguments were unfairly limited. His contentions on

19

appeal are conclusory and lack citations to the record or to

relevant authority. The issues are forfeited on this basis as well.

(Allen, supra, 234 Cal.App.4th at p. 52.)

C. Section 998 Does Not Apply to This

Nonfrivolous FEHA Action

1. Overview

In awarding defendant its ordinary costs and expert

witness fees pursuant to section 998, but reducing the award

from a sum accepted as necessary and reasonable to an amount

that reflected plaintiff’s limited economic resources, the trial

court relied on Seever v. Copley Press, Inc. (2006) 141 Cal.App.4th

1550 (Seever) and Holman v. Altana Pharma US, Inc. (2010)

186 Cal.App.4th 262 (Holman). (Auto Equity Sales, Inc. v.

Superior Court (1962) 57 Cal.2d 450, 455.)

Both Seever and Holman predate Williams v. Chino Valley

Independent Fire Dist. (2015) 61 Cal.4th 97 (Williams), where the

Supreme Court held section 12965(b), which controls the award

of costs in FEHA actions, is an “express exception” to section

1032, subdivision (b). (Williams, at p. 105.) Additionally, since

the trial court entered its postjudgment order in this case, the

legal landscape has expanded to include Arave, supra, 19

Cal.App.5th 525. In Arave, the Court of Appeal tackled Holman

head-on and held section 998 does not apply in nonfrivolous

FEHA actions.

For the reasons that follow, we find the Arave analysis and

result persuasive. We hold the general policies behind section

998 must yield to the specific policies concerning costs and

20

attorney and expert witness fee awards in nonfrivolous FEHA

actions.11

We begin our analysis by discussing the law applicable to

prevailing party costs in civil actions generally (§§ 1032, 1033.5)

and in FEHA actions specifically (§ 12965(b)). We then review

the authorities relied upon by the trial court and the interplay

between those authorities and section 998, the statute designed

“to encourage the settlement of lawsuits before trial . . . by

punishing a party who fails to accept a reasonable offer from the

other party.” (Hurlbut v. Sonora Community Hospital (1989) 207

Cal.App.3d 388, 408.)

11 The Legislature agrees. Section 12965(b) has been

amended, effective January 1, 2019, to add the following bold

language in the concluding sentence: “In civil actions brought

under this section, the court, in its discretion, may award to the

prevailing party, including the department, reasonable attorney’s

fees and costs, including expert witness fees, except that,

notwithstanding Section 998 of the Code of Civil

Procedure, a prevailing defendant shall not be awarded

fees and costs unless the court finds the action was

frivolous, unreasonable, or groundless when brought, or

the plaintiff continued to litigate after it clearly became

so.”

We also emphasize nothing in our opinion is intended to

apply to FEHA actions deemed “frivolous, unreasonable, or

groundless when brought, or the plaintiff continued to litigate

after it clearly became so.” In those cases, the trial court retains

discretion to award fees and costs pursuant to section 12965(b).

(Williams, supra, 61 Cal.4th at p. 115; Arave, supra,

19 Cal.App.5th at p. 554.)

21

2. Prevailing party costs: Civil Actions v. FEHA

Actions

Generally, the prevailing party in “any action or

proceeding” is entitled to costs as a matter of right. (§ 1032,

subd. (b).) By statute, a defendant against whom a plaintiff

recovers no relief is a “prevailing party.” (Id., subd. (a)(4).) A

trial court has no discretion to deny prevailing party status to

such a defendant. (Charton v. Harkey (2016) 247 Cal.App.4th

730, 738 (Charton).)

A trial court also has no discretion to deny the prevailing

party its ordinary costs; they are to be awarded “as a matter of

right,” unless a statute expressly dictates otherwise.

(§ 1032, subd. (b).) Section 1033.5 lists the ordinary costs that

must be awarded to a prevailing party. The fees of expert

witnesses, unless ordered by the trial court, are not recoverable

as ordinary costs. (Id., subd. (b)(1).) Nor are attorney fees,

unless authorized by law or the parties’ contract. (Id.,

subd. (a)(10).)

In addition to being automatic, cost awards to the

prevailing party pursuant to section 1032, subdivision (b) are

symmetrical, i.e., the prevailing party, whether a plaintiff or a

defendant, is entitled to them. (Charton, supra, 247 Cal.App.4th

at p. 738.)

On the other hand, an award of costs to the prevailing

party in a FEHA action is never a matter of right, but is always

within a trial court’s discretion. (§ 12965(b); Williams, supra, 61

Cal.4th at p. 108.) Notably, that discretion extends to awarding

22

the prevailing party in a FEHA action not just the ordinary

litigation costs, but also attorney fees and expert witness fees.12

As always, however, a trial court’s discretion has

boundaries. The demarcation here is an asymmetrical one; the

trial court’s discretion to award costs―including attorney fees and

expert witness fees―to a prevailing defendant in a FEHA action

is not coextensive with the discretion it possesses when a plaintiff

is the prevailing party.

The asymmetrical standard was articulated by the United

States Supreme Court 40 years in Christiansburg, supra,

434 U.S. 412. There, the Supreme Court recognized trial courts

have discretion to award attorney fees to the prevailing plaintiff

in an Equal Employment Opportunity Commission action simply

because plaintiff prevailed. The Supreme Court held that

discretion does not extend to an award of attorney fees to a

prevailing defendant unless the trial court also finds the

plaintiff’s “claim was frivolous, unreasonable, or groundless, or

that the plaintiff continued to litigate after it clearly became so.”

(Christiansburg, supra, at p. 422.) California courts, of course,

adhere to Christiansburg’s asymmetrical standard for awards of

attorney fees in FEHA actions. (Chavez v. City of Los Angeles

(2010) 47 Cal.4th 970, 985.)

In Baker v. Mulholland Security & Patrol, Inc. (2012)

204 Cal.App.4th 776, this court applied the Christiansburg

12 Section 12965(b), as originally enacted in 1980, did not give

trial courts the discretion to award expert witness fees to the

prevailing party in a private FEHA action. The Legislature

amended the section in 1999 to add that discretion, abrogating

the holding in Davis v. KGO-T.V., Inc. (1998) 17 Cal.4th 436.

(Williams, supra, 61 Cal.4th at p. 106, fn. 1.)

23

asymmetrical standard to expert witness fees as well: “We agree

the standard applicable to attorney’s fees should apply to expert

witness fees for a prevailing FEHA defendant. Expert fees, just

like attorney’s fees, are not ordinary litigation costs which are

routinely shifted under Code of Civil Procedure sections 1032 and

1033.5. Like attorney’s fees, expert fees should be treated

differently than ordinary litigation costs because they can be

expensive and unpredictable, and could chill plaintiffs from

bringing meritorious actions.” (Id. at p. 783.)

Finally, in Williams, supra, 61 Cal.4th 97, the California

Supreme Court held the Christiansburg standard applies to the

award of ordinary costs as well as attorney fees13 when the

defendant prevails in a nonfrivolous FEHA action: “To reiterate,

under that standard a prevailing plaintiff should ordinarily

receive his or her costs and attorney fees unless special

circumstances would render such an award unjust. [Citation.] A

prevailing defendant, however, should not be awarded fees and

costs unless the court finds the action was objectively without

foundation when brought, or the plaintiff continued to litigate

after it clearly became so.” (Id. at p. 115.)

3. Section 998 and FEHA Actions

In addition to the asymmetrical standard, the law is now

well settled that section 12965(b) is an express exception to the

prevailing party cost provisions in section 1032, subdivision (b).

Section 1032, subdivision (b) does not apply in FEHA actions, as

13 Expert witness fees were not an issue in Williams, and the

Supreme Court did not address that category of costs in the

FEHA context.

24

the trial court acknowledged. (Williams, supra, 61 Cal.4th at

p. 109.)

What had not been settled, though, is whether section 998

applies in nonfrivolous FEHA actions when a plaintiff refuses a

defendant’s reasonable statutory settlement offer, but fails to

achieve a better result. Under this scenario, appellate courts

traditionally discussed section 998’s applicability by cost

category, i.e., ordinary costs, attorney fees, and expert witness

fees. The trial court followed that formula and determined

defendant was not entitled to section 998 attorney fees, but did

award ordinary costs and expert witness fees pursuant to section

998, albeit in a reduced sum based on plaintiff’s economic

resources. In so ruling, the trial court relied on a trio of preWilliams

appellate decisions:

The trial court denied defendant its postoffer attorney fees

under section 998, citing Mangano v. Verity, Inc. (2008)

167 Cal.App.4th 944 (Mangano). In Mangano, the trial court

granted the defendant employer’s summary judgment motion in a

FEHA action. Defendant then sought an award of expert witness

fees and attorney fees incurred after it served a section 998

settlement offer. The trial court awarded the defendant expert

witness fees, but denied its request for attorney fees. Both sides

appealed; the Court of Appeal affirmed.

No one contended on appeal the FEHA action was frivolous.

(Mangano, supra, 167 Cal.App.4th at p. 951, fn. 10.) With that

understanding, Mangano held the Christiansburg standard

applied and there was no “persuasive argument for allowing the

application of section 998 to supplant the established standard

that seeks to deter frivolous suits while providing adequate

support and incentive for meritorious actions.” (Id. at p. 951.)

25

Accordingly, it affirmed the trial court’s denial of an award of

attorney fees to the prevailing defendant.14

Citing Seever, supra, 141 Cal.App.4th 1550, the trial court

granted defendant’s request for section 998 postoffer ordinary

costs, but in a reduced amount based on plaintiff’s economic

resources. Seever involved an award of ordinary costs and expert

witness fees to the prevailing defendant whose section 998 offer

was rejected.

Nowhere in Seever does one find the words “frivolous” or

“nonfrivolous.” Seever’s initial citation to Christiansburg was in

the context of “the imbalance inherent in allowing equal costshifting

between unequal parties.” (Seever, supra, 141

Cal.App.4th at p. 1562.) Seever attributed the denial of attorney

fees and discretionary costs to prevailing defendants in a FEHA

action to judicial concerns that “shifting these litigation expenses

to what ordinarily are modest- or low-income individuals would

unduly discourage these plaintiffs from litigating legitimate

claims.” (Ibid.)

Seever did not cite or make reference to section 12965(b).

Instead, the appellate panel appeared to accept that the strong

public policy behind section 998 compelled its application in

14 On the other hand, Mangano also affirmed the grant of

expert witness fees to the prevailing defendant pursuant to

section 998. That portion of the decision is not published

(Mangano, supra, 167 Cal.App.4th at p. 948), however, so we

have no insight into the appellate panel’s reasoning on that score,

other than to observe Christiansburg was an attorney fees case

and did not involve a claim for expert witness fees.

26

FEHA actions,

15 and then focused on the potential inequities of

shifting costs to a plaintiff whose economic circumstances were

typically more modest than those of the defendant. To that end,

Seever fashioned a “means” test to fairly weight economic

incentives and consequences: “Thus, seldom would a court

properly deny a successful defendant its entire section 998 cost

award, even in a FEHA case. But consistent with the rationale of

Christiansburg and like California decisions, it is entirely

appropriate and indeed necessary for trial courts to ‘scale’ those

awards downward to a figure that will not unduly pressure

modest- or low-income plaintiffs into accepting unreasonable

offers. [¶] Because the [trial] court here made no inquiry about

Seever’s financial situation, we do not know whether the cost

award . . . represents an unduly powerful settlement incentive to

a litigant of Seever’s means.” (Seever, supra, 141 Cal.App.4th at

p. 1562.)

The trial court relied on Holman, supra, 186 Cal.App.4th

262 to award defendant its section 998 postoffer expert witness

fees, also in a reduced amount, per Seever. In Holman, the Court

of Appeal held a trial court has discretion to award the prevailing

employer in a FEHA case expert witness fees under section 998

without first establishing the plaintiff’s case was frivolous. (Id.

at p. 280.) Where the FEHA action is not frivolous, however, the

trial court must “scale” an award of expert witness fees to take

15 Seever observed that section 998 “is designed to create

economic incentives on both parties to settle rather than try their

lawsuits. To do so, both sides must face some economic

consequences if it turns out they miscalculate and lose.” (Seever,

supra, 141 Cal.App.4th at p. 1562.)

27

into account the plaintiff’s economic resources. (Id. at pp. 283-

284.)

Although it predated Williams, Holman presciently

“assume[d] for purposes of this appeal that . . . the

Christiansburg standard appl[ies] when not only attorney fees,

but also expert witness fees, are awarded under section 12965 to

a prevailing defendant.” (Holman, supra, 186 Cal.App.4th at

p. 280.) Holman rejected, however, the notion that section

12965(b) was an express exception to section 1032, subdivision (b)

prevailing cost provisions. (Holman, at p. 281.) That conclusion

led to Holman’s reliance on Murillo v. Fleetwood Enterprises, Inc.

(1998) 17 Cal.4th 985 (Murillo) to analyze whether section 998

authorized an award of expert witness fees in FEHA actions.

In Murillo, the Supreme Court held the prevailing party

cost provisions in the Song-Beverly Consumer Warranty Act

(Civ. Code, § 1790 et seq.) are not “ ‘express’ exception[s]” to

section 1032, subdivision (b). (Murillo, supra, 17 Cal.4th at

p. 991.) Having reached that conclusion, the Supreme Court

“likewise conclude[d]” the Song-Beverly Act provided no

impediment to awarding expert witness fees to the prevailing

defendant whose section 998 settlement offer was rejected:

“[T]he requirements for recovery of costs and fees under section

998 must be read in conjunction with section 1032(b), including

the requirement that section 998 costs and fees are available to

the prevailing party ‘[e]xcept as otherwise expressly provided by

statute.’ (§ 1032(b), italics added.) Because the cost-shifting

provisions of the Song-Beverly Act do not ‘expressly’ disable a

prevailing defendant from recovering section 998 costs and fees

in general, or expert witness fees in particular, we find nothing in

the Act prohibiting the trial court’s exercise of discretion to

28

award expert witness fees to seller” pursuant to section 998.

(Murillo, at p. 1000, fn. omitted.)

Holman found no inconsistency with Mangano, supra,

167 Cal.App.4th 944. Holman concluded, again relying on

Murillo, that “attorney fees are subject to different rules than

those applicable to other costs.” (Holman, supra, 186 Cal.App.4th

at p. 283.) But erasing the distinction between the treatment of

attorney fees and costs pursuant to section 12965(b) was the

point in Williams. (Williams, supra, 61 Cal.4th at p. 112 [“The

Legislature’s choice of statutory language indicates it intended

the same rule apply to ordinary litigation costs as to attorney

fees”].)

Williams did not involve section 998, so its Murillo

discussion is limited to the express exception/section 1032,

subdivision (b) issue. In 2018, however, our colleagues in

Division Two of the Fourth Appellate District analyzed both

Murillo and Williams, surveyed the development of the law, and

concluded there is no statutory authority to award section 998

postoffer fees and costs in a nonfrivolous FEHA action. (Arave,

supra, 19 Cal.App.5th at p. 553.)

Arave reasoned as follows: Section 12965(b) is an express

exception to section 1032, subdivision (b). Section 998 “operates

only as an adjustment to cost awards under Section 1032(b), [so]

it follows that Section 12965(b) overrides Section 998(c) . . . . [I]f

a defendant may not obtain an award of costs under Section

1032(b) [because] plaintiff's claim are nonfrivolous, the trial court

may not augment an award of costs by awarding expert witness

fees under Section 998(c).” (Arave, supra, 19 Cal.App.5th at

p. 553.)

29

We find Arave’s logic unassailable. The Legislature

expressly pegs section 998 to section 1032. (§ 998, subd. (a).) In

non-FEHA actions, a “defendant is entitled under section 998 to

those costs incurred after the settlement offer to which a

prevailing party would be entitled under section 1032.” (Scott Co.

v. Blount, Inc. (1999) 20 Cal.4th 1103, 1112-1113.) In non-FEHA

actions, where the special prevailing party cost statute is not an

express exception to section 1032, a defendant is also entitled

under section 998 to its postoffer costs. (Murillo, supra,

17 Cal.4th at p. 1000.) But in nonfrivolous FEHA cases, the

prevailing party cost provisions are express exceptions to section

1032. (Williams supra, 61 Cal.4th at p. 105.) It follows, then,

that section 998 does not apply in nonfrivolous FEHA actions.

(Arave, supra, 19 Cal.App.5th at p. 553.)

Analyzed thusly, for cases that predate the amendment to

section 12965(b), we see no reason to differentiate between the

treatment of ordinary costs, attorney fees, and expert witness

fees in nonfrivolous FEHA actions. The language in section

12965(b) indicates all three categories are subject to the same

rules.

The judgment is affirmed. The postjudgment order awarding respondent costs and expert witness fees pursuant to section 998 is reversed. In the interests of justice, no costs on appeal are awarded.