On August 1, 2019, a court of appeal in Scott v. City of San Diego reversed an award of attorney’s fees in the amount of $51,946.96 to an employer after it prevailed in a jury trial over claims of race discrimination and retaliation under the Fair Employment and Housing Act (FEHA). Early in the litigation, the employer had made a formal offer pursuant to Section 998 of the Code of Civil Procedure in the amount of $7,000, in an attempt to resolve the case. Section 998 essentially bars a plaintiff from recovering post-offer fees and costs and requires him to pay a defendant’s post-offer costs, which may include attorney’s fees, if he rejects the offer and then fails to secure a more favorable judgment at trial. The plaintiff in Scott rejected the defendant’s 998 offer and then lost at trial.
While the appeal in this case was pending, the Legislature amended the FEHA to provide 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.” Since the trial court found the plaintiff’s claims were not frivolous, the Scott court give due consideration to the Legislature’s expressed intent that it was “clarifying not changing existing law,” and concluded that the employer was not entitled to the attorney’s fees it had been awarded.