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C.A. Affirms Prevailing Party Award in Case Settled in Secret
Opinion Says Fact That Plaintiff Is Willing to Share, in Camera, Terms of Confidential Agreement Resolving Case, While Defense Is Not, Reveals That Plaintiff ‘Won Something Tangible’
By Kimber Cooley, associate editor
Div. Eight of this district’s Court of Appeal affirmed Wednesday an award of $493,577.10 in attorney fees to a plaintiff—under a statute authorizing costs to be paid to the prevailing party in a civil action brought under the Fair Employment and Housing Act—even though the case was resolved through a confidential settlement agreement, the terms of which were unknown to the court.
In an opinion by Justice John Shepard Wiley Jr., and joined in by Acting Presiding Justice Elizabeth A. Grimes and Justice Victor Viramontes, the court was persuaded by the fact that the plaintiff was willing to share the terms of the agreement in camera and the defendant was not, saying the circumstances “reveal that [the plaintiff] won something tangible.”
The appeal proceeded by an unusual path—the award was issued by Los Angeles Superior Court Judge Lia Martin, before trial, after the plaintiff was successful before the California Supreme Court in defeating a statute of limitations argument. The defendant timely appealed the award and the parties subsequently entered the confidential arrangement.
On appeal, the defendant argued that the plaintiff was not the prevailing party and, alternatively, that the award was too high.
Sexual Harassment Suit
Appealing the order was Michael Kelso, who was sued in April 2018 by Pamela Pollock, an employee he supervised at Tri-Modal Distribution Services Inc., a freight company. Pollock alleges that she was passed over for promotion because she refused to have sex with Kelso, then Tri-Modal’s executive vice president.
She asserted sexual harassment and racial discrimination claims against Kelso and Tri-Modal under the Fair Employment and Housing Act (“FEHA”). The case was initially dismissed as time-barred under a one-year statute of limitations due to her filing an administrative complaint 13 months after she was denied a promotion.
In a 2020 opinion, also authored by Wiley, Div. Eight affirmed the judgment and granted costs to the defendants.
The California Supreme Court reversed in 2021, in a unanimous opinion by Justice Goodwin H. Liu, holding that a FEHA harassment claim based on a failure to promote accrues from the time an employee knows or reasonably should know of the employer’s refusal to promote. The high court also reversed the fee award, holding that an appellate court may not award costs on appeal to a prevailing defendant under FEHA without first determining that the plaintiff’s action was frivolous.
Div. Eight remanded and ordered costs for Pollock, who filed a motion in the trial court seeking $526,475 in attorney fees under Government Code §12965(c)(6), which provides that “the court, in its discretion, may award to the prevailing party…reasonable attorney’s fees and costs” in FEHA actions. In March 2022, Martin granted a motion but reduced the request by $32,898.53.
Kelso timely appealed the fee award.
The case was set for trial in May 2023, but the parties reached a settlement agreement in February. Pollock moved to dismiss her underlying case with prejudice, which Martin granted with the proviso that the court would retain jurisdiction over the appealed fee award.
Prevailing Party
Wiley noted that “[m]aking judgments about who, if anyone, prevailed can be intricate and nuanced” and said:
“Trial courts have an unparalleled perspective on who is a prevailing party. They are uniquely positioned to observe telltale ephemera, such as the parties’ reflexive reactions when the verdict is announced.”
He remarked that “we assume the trial court erred by concluding before trial that Pollock was a prevailing party” but wrote that “[s]ince then, however, the parties have settled and the case is concluded, save for this fee issue.” Under those circumstances, he declared that “[w]e hold any assumed error was harmless.”
Turning to the confidential settlement agreement, the jurist wrote:
“Kelso declines to lodge the settlement agreement with this court in camera, which Pollock’s counsel maintains expressly identifies Pollock as the prevailing party. At oral argument, Pollock’s attorney brought the settlement document to counsel table, but Kelso’s appellate attorney claimed she had never seen it. She declined to view it. Kelso’s reluctance, and Pollock’s willingness, reveal that Pollock won something tangible. Pollock’s gain postdates the trial court’s fee award, but it has significance for this appeal: the case is over and, as a practical matter, the time is ripe to consider a fee award.”
Amount of Award
Kelso also challenges the amount of the fee award as unreasonable, saying that Pollock’s counsel asserted too high a rate. Pollock’s attorneys—Kevin A. Lipeles, Thomas H. Schelly, and Julian B. Bellenghi of the El Segundo-based firm Lipeles Law Group APC—filed declarations detailing their rates and the time spent on the case.
Lipeles and Schelly declared their hourly rate to be $675 and Bellenghi averred that he charged $850 an hour.
Saying that “[t]he lawyers’ declarations were substantial evidence supporting the trial court’s order” and that Martin adjusted the fee request downward “presume[ably]…to account for a reduction in hourly rates, Wiley commented:
“Trial courts certainly are not bound to accept lawyers’ self-interested declarations of their own worth. Judges regularly see fee declarations more accurately described as aspirational than believable. Trial courts are free to adjust downward, to demand corroboration, or entirely to reject fee requests when lawyers’ claims are implausible, poorly supported, or do not match the quality of the work the court has witnessed in the litigation. But this trial court compared these declarations with what it knew of these lawyers’ performances in this case. The court exercised reasonable discretion in accepting this evidence.”
Rejecting Kelso’s contention that Pollock’s lawyers billed too many hours, the justice said:
“Missing from Kelso’s briefing…is any mention of how many hours his lawyers devoted to this years-long litigation. Evidence of how much work one side did is an independent gauge of how much the other side did on the same case. Absent this comparative data, Kelso’s complaint rings hollow.”
The defendant also faults Martin with applying a multiplier of 1.8 to the documented earnings to account for the risk the plaintiff’s attorneys faced in taking the matter on a contingency basis. Unpersuaded, the jurist wrote:
“Kelso’s attorneys presumably billed for their services every month and enjoyed regular paychecks. The situation can be different for attorneys working on a contingency who can labor for years solely in the hope that someday a crop will come in. Some years the harvest is a bounty. Other years there is nothing at all.”
The case is Pollock v. Kelso, 2025 S.O.S. 70.
Lipeles, Schelly, and Bellenghi continued their representation of Pollock on appeal. Lann G. McIntyre, Jack E Jimenez, and Tracy Diana Forbath of the San Diego office of Lewis, Brisbois, Bisgaard & Smith LLP represented Kelso.
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