[00:00:00] Speaker 03:
I'm Karin Stepanian, and I represent the appellant.

[00:00:07] Speaker 03:
This appeal is about one straightforward question.

[00:00:11] Speaker 03:
Does Rule 68, the federal rule that shifts costs after a rejected settlement offer, also include attorney's fees allowed under the Dane Act?

[00:00:21] Speaker 03:
The district court below

[00:00:22] Speaker 03:
answered that question with a no, and awarded the APLE over $340,000 attorney's fees, including post-offer fees, even though my clients had made an offer almost two times the amount the APLE ultimately recovered.

[00:00:44] Speaker 03:
So that result misconstrued two key

[00:00:49] Speaker 03:
legal points.

[00:00:51] Speaker 03:
The first one is it goes against California law that treats attorney's fees authorized by statute as cost.

[00:00:59] Speaker 03:
The second, it undermines Rule 68 purpose, which is to encourage the litigants to settle their cases instead of dragging them out.

[00:01:08] Speaker 03:
Now, Rule 68 itself does not define term cost.

[00:01:14] Speaker 03:
However, the United States Supreme Court has spoken on the issue in the case Mark versus Chesney.

[00:01:20] Speaker 00:
And it takes and it applies a very literal approach.

[00:01:24] Speaker 00:
Even though one could go the other way and see the dissents, it looks at the statute and does it define fees

[00:01:33] Speaker 00:
as cost, not does it award fees, but does it define as cost, right?

[00:01:37] Speaker 00:
And many statutes happen to have that kind of language, so bingo.

[00:01:41] Speaker 00:
Here, the Bain Act or the State Act does not in itself define, it gives awards fees, but doesn't define as cost.

[00:01:50] Speaker 00:
You have to then rely on CCP Section 1033.5, right?

[00:01:55] Speaker 00:
And then the question is that, and to me that's another of the problems.

[00:02:01] Speaker 00:
Does that 1033.5 constitute the kind of statute that defines fees as costs?

[00:02:07] Speaker 00:
Because it's a general statute and there's a good argument.

[00:02:10] Speaker 00:
It's really a procedural question because it talks about how fees and costs are supposed to be treated under 1032.

[00:02:17] Speaker 00:
It's not really a substantive, at least that's the argument.

[00:02:22] Speaker 00:
And so it does seem to hinge on 1033.

[00:02:25] Speaker 00:
If it weren't for 1033.5, you wouldn't even have an argument, correct?

[00:02:30] Speaker 00:
Under merit.

[00:02:31] Speaker 03:
Perhaps, yes.

[00:02:33] Speaker 03:
So to answer your question, Your Honor, the Supreme Court, the United States Supreme Court in Mark, didn't ask only to look at the substantive statute.

[00:02:42] Speaker 03:
It asked to look at the substantive statute and, oh, I'm sorry, or their authority.

[00:02:48] Speaker 03:
And it did not ask to look at the statute that create right to attorney's fees.

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It asked to look generally whether the fee's properly awardable in a given action.

[00:03:00] Speaker 03:
And since the district court was handling a case based on the state law, the state law applies when it comes to attorney's fees.

[00:03:11] Speaker 03:
And when we interpret the state law,

[00:03:14] Speaker 03:
pertaining to attorney's fees, we want to give the full meaning to the statutes that relate to the same general subject, attorney's fees.

[00:03:24] Speaker 03:
So we have to look beyond the language of the Bain Act itself, which is silent about what attorney's fees are.

[00:03:32] Speaker 04:
That silence does not- Did you make the Section 1033.5 argument before the district court?

[00:03:41] Speaker 03:
It was not explicitly made in the district court, Your Honor.

[00:03:44] Speaker 03:
It was generally argued that post-offer attorneys fees after Rule 68 were costly.

[00:03:50] Speaker 04:
So have you waived that argument?

[00:03:52] Speaker 03:
Well, the district courts in its reasoning relied on Murray versus Chesney and its rule saying when the substantive statute defines attorney's visa's cost, then they're subject to Rule 68.

[00:04:06] Speaker 03:
And because the Bain Act did not define attorney's visa's cost, the district court held that they were not subject to Rule 68.

[00:04:14] Speaker 03:
So we are on appeal now taking it further and analyzing the district court's ruling

[00:04:22] Speaker 03:
And bringing in the Code of Civil Procedure, Section 10.3.5 argument.

[00:04:31] Speaker 04:
So the district court order has a footnote that says, defendants do not dispute that the Bain Act allows plaintiff to recover reasonable attorney's fees and do not argue that the court should decline to award fees in this matter.

[00:04:46] Speaker 04:
That's what the district court says.

[00:04:48] Speaker 03:
Well, the appellants below, they did not generally contest that the attorney's fees were allowed under the Bean Act statute.

[00:04:59] Speaker 03:
What the contention was below that the attorney's fees post Rule 68 offer was cut out by the rejection.

[00:05:13] Speaker 03:
interpret the statutory law and case law in California that involve attorney's fees, we see that the appellate state courts treat attorney's fees under the Bain Act or any statute that authorizes those fees as costs.

[00:05:38] Speaker 01:
But we're in federal court, so shouldn't federal civil procedural rules apply?

[00:05:44] Speaker 01:
and separate from attorney's fees, wouldn't they apply to expert witness fees and other cost determinations?

[00:05:52] Speaker 03:
You're right, Your Honor.

[00:05:53] Speaker 01:
So then why wouldn't that apply to the fees as well as other costs?

[00:05:58] Speaker 03:
It does apply to the fees, but there is no federal rules that provide the definition for the attorney's fees under the provided, authorized by the statute.

[00:06:07] Speaker 03:
So that is why we have to look at the state law to see what that silence, the statute that did not say what attorney's fees are, what does that silence mean?

[00:06:18] Speaker 03:
And looking at the broader California statutory scheme, we see that attorney's fees are being treated as cost.

[00:06:26] Speaker 03:
And to finish my point earlier, for purposes of

[00:06:30] Speaker 03:
State equivalent of Rule 68, Code of Civil Procedure, Section 998, when an offer is made and rejected, the appellate courts treat attorney's fees... What about the cases?

[00:06:43] Speaker 01:
Don't they just look at the substantive law and see how the substantive law treats the attorney's fees?

[00:06:48] Speaker 03:
But that's exactly the language in the MARIC, which is the governing law here where the Supreme Court said, look at the substantive statute or other authority and see if the fees, if the costs are properly awardable in a given action.

[00:07:08] Speaker 03:
So we have to look at the Code of Civil Procedure to see what the... Right.

[00:07:11] Speaker 01:
And in MARIC, they looked at the attorney's fees statute for Section 1983 cases.

[00:07:18] Speaker 01:
And because that says fees are part of cost, it was answered.

[00:07:23] Speaker 01:
They didn't look to anything else, right?

[00:07:25] Speaker 01:
They just looked at the substantive statute.

[00:07:27] Speaker 03:
That's correct because they didn't have to.

[00:07:29] Speaker 03:
It was within the statute.

[00:07:31] Speaker 03:
So now there are statutes.

[00:07:33] Speaker 03:
We know there are cases dealing with statutes that separate attorney's fees from costs.

[00:07:39] Speaker 03:
And the definition of the specific language in those statutes would be attorney's fees prevailing

[00:07:46] Speaker 03:
plaintiff would be entitled to attorney's fees and costs.

[00:07:49] Speaker 03:
So the cases that dealt with those kind of statute denied, they held the, they held that attorney's fees are not subject to Rule 68.

[00:07:58] Speaker 03:
Here the Bain Act is silent.

[00:08:00] Speaker 03:
We cannot interpret, we should not interpret that silence as express meaning that... Well, the Bain Act does not define fees as part of costs.

[00:08:11] Speaker 03:
Correct.

[00:08:13] Speaker 03:
So we can have it.

[00:08:14] Speaker 00:
That's why it seems to me you need to then resort to 1033.5 to bridge that gap and that's the question.

[00:08:21] Speaker 00:
When it defines cost under state law and includes attorney's fees awardable under a statute, does that also carry over into the definition of cost under Rule 68 and I'm not so sure about that.

[00:08:36] Speaker 03:
Well, we have to apply the California law on attorney's fees to determine what attorney's fees under the Bain Act are.

[00:08:44] Speaker 03:
We can't just rely on the gap in the statutory language.

[00:08:50] Speaker 03:
And when we look at California law dealing with attorney's fees,

[00:08:54] Speaker 03:
We see that there are three main classification of attorney's fees when authorized by the statute.

[00:09:00] Speaker 03:
It could be attorney's fees awarded as damages, attorney's fees awarded as sanctions, and to compensate the prevailing side.

[00:09:08] Speaker 03:
Here the Bain Act Subdivision E expressly states that, I'm sorry, Subdivision I states that in addition to damages,

[00:09:19] Speaker 03:
the district court may award attorney's fees.

[00:09:22] Speaker 03:
So clearly, attorney's fees are not damages.

[00:09:24] Speaker 03:
Attorney's fees are not sanctions.

[00:09:26] Speaker 03:
There's no sanctionable conduct, and the Bain Act does not talk about it.

[00:09:30] Speaker 03:
So that leaves us in the third category, which treats attorney's fees as a measure of compensation to the prevailing site.

[00:09:40] Speaker 03:
And we do have this code of civil procedure 1033.5 that codifies that.

[00:09:47] Speaker 04:
You want to save time for rebuttal?

[00:09:50] Speaker 03:
Yes, Your Honor, five minutes.

[00:09:51] Speaker 04:
Okay.

[00:09:53] Speaker 04:
You've got five minutes.

[00:09:55] Speaker 04:
Now.

[00:09:56] Speaker 03:
Okay.

[00:09:57] Speaker 03:
And just a brief, very brief point on the treble damages denial by the district court.

[00:10:03] Speaker 04:
Wouldn't you want to use that, talk about that on rebuttal?

[00:10:06] Speaker 03:
Yes.

[00:10:07] Speaker 04:
Okay.

[00:10:08] Speaker 04:
So you have five minutes for rebuttal.

[00:10:15] Speaker 02:
Good morning, Your Honor.

[00:10:17] Speaker 02:
May I bring my laptop as my notes and so forth up here at the podium?

[00:10:22] Speaker 04:
You can.

[00:10:23] Speaker 04:
Does anybody have an objection?

[00:10:24] Speaker 04:
No.

[00:10:24] Speaker 04:
OK.

[00:10:31] Speaker 02:
Good morning again.

[00:10:32] Speaker 02:
May it please the court.

[00:10:33] Speaker 02:
Christian Contreras on behalf of the appellee, Mr. Smith.

[00:10:38] Speaker 02:
This case is about harmonizing rule 68

[00:10:42] Speaker 02:
with also the plain meaning of the Bain Act.

[00:10:46] Speaker 02:
The Bain Act here, although it doesn't specifically define cost, we could see from the different types of damages within the Bain Act, such as a penalty, treble damages and attorney's fees,

[00:10:59] Speaker 02:
that the statute was intended to also give additional remedies to individuals who had their rights violated.

[00:11:07] Speaker 01:
And so when you look at the Bain Act, and when you harmonize it... Can I ask you, what do you think the other authority in Merrick is referring to, other than the substantive statute?

[00:11:16] Speaker 02:
The other authority in Merrick, just based upon reading Merrick, right, is looking at the substance of the underlying law to guide the court to determine if the legislature

[00:11:29] Speaker 02:
If the legislature itself wanted to include cost as attorney's fees, we see that in 1988 because it's expressly stated.

[00:11:36] Speaker 01:
Is that different from the state substantive law or the substantive law?

[00:11:41] Speaker 02:
The other authority?

[00:11:42] Speaker 01:
Yeah.

[00:11:45] Speaker 01:
Frankly, it says substantive law and other authority and I wasn't sure whether your other authority is referring back to the substantive statute.

[00:11:55] Speaker 02:
It's unclear, Your Honor, from Merrick what Merrick actually intended with or other authority.

[00:12:02] Speaker 02:
I believe it's more of substantive law, because if you look at the procedure, the procedure's already there with Rule 68 in terms of what would apply.

[00:12:10] Speaker 02:
And so what Merrick said is the court should be guided as to what the folks who intended

[00:12:18] Speaker 02:
To enact this legislation what they wanted to be part as cost and attorney's fees and so when we look at the bain act You look at the legislature the California legislature wanting to expand the type of damages and not include costs as part of attorney's fees frankly, I think it's more of a

[00:12:37] Speaker 02:
legislative omission because the Bain Act was passed in 1986, right?

[00:12:42] Speaker 02:
But when you look at Civil Code Section 52.4, which is gender violence, and that could be other authority, which is a gender violence, someone who had their rights violated based upon their gender, it does state that someone who prevails under that statute can get attorney's fees and costs.

[00:12:59] Speaker 01:
Would you agree that if you filed in state court your same claim, you couldn't get attorney's fees?

[00:13:07] Speaker 01:
So I'm just a little bit worried about forum shopping.

[00:13:09] Speaker 01:
Is everyone now going to bring these claims here because we have a more favorable attorney's fees interpretation than state court where those two state civil procedure codes would apply?

[00:13:22] Speaker 01:
Why wouldn't that create sort of a weird, and maybe we just accept that, but help me think through that, that the exact same case is going to have fees in federal court, not in state court,

[00:13:36] Speaker 01:
How is that not going to make the federal district courts the place to go for Bayonet claims?

[00:13:43] Speaker 02:
Well, the analysis would start with what's in the 998, because the 998 is the equivalent to the Rule 68 here.

[00:13:52] Speaker 02:
And so when you look at the 998, of course, you would have to analyze whether it includes attorney's fees or not.

[00:13:57] Speaker 01:
And so if this case were to have... You're saying 1032 and 1033.5 wouldn't apply to a Bayonet claim in state court?

[00:14:06] Speaker 01:
Is that what your 998 argument is?

[00:14:09] Speaker 02:
1033.5 is a procedural mechanism and we know that based upon what the court in Hassan said and citing Satini in the Supreme Court case in California.

[00:14:23] Speaker 01:
So you're saying that state civil procedural law would not apply to a state court Bain Act case?

[00:14:32] Speaker 01:
Why is that?

[00:14:33] Speaker 02:
Well, it would apply because it's a procedure.

[00:14:37] Speaker 02:
It's always a procedure and it's how it's defined.

[00:14:41] Speaker 02:
But in terms of whether, I think the court's issue is whether there's forum shopping or whether it would look more favorable.

[00:14:47] Speaker 00:
A different result under 998 than under rule 68.

[00:14:49] Speaker 02:
I think the analysis starts with 998 because

[00:14:53] Speaker 02:
1033.5 is just after it's a procedural mechanism.

[00:14:57] Speaker 02:
So if you look at 998, then you have to figure out, OK, well, if a 998 is issued and we prevail, but we get less than what is in the 998, could we get attorney's fees under the Bain Act?

[00:15:08] Speaker 02:
I think that's the question.

[00:15:10] Speaker 00:
What's the answer?

[00:15:12] Speaker 02:
I'm not sure.

[00:15:13] Speaker 02:
I don't think that question is before us precisely.

[00:15:15] Speaker 04:
I don't have section 998 in front of me right now but does it say anything about attorney's fees or as constituting costs?

[00:15:24] Speaker 04:
I imagine if it did, it would be in front of us.

[00:15:29] Speaker 02:
Right.

[00:15:30] Speaker 02:
998, that's, it's a creature of... It's just a separate procedural mechanism.

[00:15:34] Speaker 02:
Right.

[00:15:34] Speaker 04:
It's equivalent of rule 68.

[00:15:36] Speaker 02:
It's similar, but in state court, the plaintiff could do it as well.

[00:15:40] Speaker 02:
But I think it's all based upon how the 998 of the Rule 68 is phrased in terms of whether it includes attorney's fees or not.

[00:15:47] Speaker 04:
But I think... The Bain Act itself allows for attorney's fees.

[00:15:52] Speaker 02:
Right.

[00:15:53] Speaker 02:
The Bain Act

[00:15:54] Speaker 02:
And then you also have to take a look at Civil Code Section 52, because Civil Code Section 52 is also the damages section, which talks about if you prevail under the Bain Act and also unrun all of these other civil rights statutes, what can you get?

[00:16:08] Speaker 02:
And when you look at subsection A, it says that in addition to all of these other damages that you get, you get attorney's fees, which means that the drafters of the Bain Act

[00:16:19] Speaker 02:
Intended for costs to be separate from attorney's fees.

[00:16:22] Speaker 02:
They just didn't put it in there I think it was just that session they didn't feel like putting it in there because when you look to the gender violence section Which was enacted in 2001 just point two sections lower they talk about attorney's fees and costs and so that allows this court I think respectfully to take a look at the substantive statute and the other authority which is under this whole 42

[00:16:44] Speaker 02:
42.1 to 52 point section under the personal rights civil code section I would suggest that we could take a look at that those sections to figure out what other authority should this court be guided to determine if the substantive law the law that actually matters whether it intended to separate costs from attorney's fees because we know from 1988 that

[00:17:06] Speaker 02:
The legislature clearly wanted costs to be together with the attorney's fees.

[00:17:11] Speaker 02:
And in fact, when you look at all of these other cases that have been cited in the briefs, including, I know, the case from Idaho, the early case rather, and also the... Can I just... You're saying 998 with Trump 1032, which is entitled, prevailing party in any action or proceeding.

[00:17:31] Speaker 01:
Defines complaint, defines defendant, defines plaintiff, defines prevailing party.

[00:17:37] Speaker 01:
And then 1033.5 items allowable as cost under section 1032.

[00:17:42] Speaker 01:
And it goes to the following items are allowable as cost under section 32.

[00:17:46] Speaker 01:
And it has attorney's fees when authorized by contract, statute or law.

[00:17:52] Speaker 01:
So it just seems odd that that would be trumped by a rule 68.

[00:18:01] Speaker 02:
and 1033.5 and even section 1717 which talks about attorney's fees and contract, those are more procedural statutes to figure out what could be recovered under what circumstances and who's a prevailing party.

[00:18:17] Speaker 00:
How do you define the risk of any procedural and a substantive statute?

[00:18:22] Speaker 00:
I mean literally it makes

[00:18:25] Speaker 00:
fees recoverable under a statute like the Bain Act part of costs for at least for purposes of 1032 and 1033.5.

[00:18:33] Speaker 00:
So literally it would be cost but you're saying well you kind of can ignore 1033.5 because it's procedural and not substantive but how do you distinguish?

[00:18:44] Speaker 00:
I mean everything is sort of procedural in some way.

[00:18:47] Speaker 02:
Well because the Bain Act is a,

[00:18:53] Speaker 02:
a substantive statute which allows for a cause of action, whereas 1033.5 talks about what happens if someone is a prevailing party.

[00:19:02] Speaker 00:
It doesn't create any new rights.

[00:19:04] Speaker 00:
It doesn't create, it just tells you how you implement it.

[00:19:07] Speaker 02:
Well, it doesn't create any new rights and it doesn't allow for the enforcement of any rights.

[00:19:11] Speaker 02:
The Bain Act is an enforcement of violation of rights.

[00:19:14] Speaker 02:
And so it's more substantive because it talks about which rights and what happens or how to prevail rather.

[00:19:19] Speaker 02:
Whereas 1033.5 is just a procedure if you prevail.

[00:19:24] Speaker 02:
And so when you look at... You know what?

[00:19:27] Speaker 01:
That I think could be problematic because if we're going to say it's more substantive than procedural, then I think it would apply in your case in federal court.

[00:19:38] Speaker 01:
Well, the only reason why you prevail, I think, is by saying, nope, this is just we apply federal procedural law, not state procedural law.

[00:19:46] Speaker 01:
And these are procedural statutes, 1032 and 1033.5.

[00:19:50] Speaker 01:
Right.

[00:19:51] Speaker 02:
I agree.

[00:19:53] Speaker 01:
But if we're going to start saying, no, no, no, these are not procedural statutes, these are really substantive, then I think you lose in federal court.

[00:20:01] Speaker 02:
Well, I think the reason why we're even making the distinction between procedural and substantive is because Merrick says that we look at the substantive law or other authority.

[00:20:11] Speaker 02:
And so when you look at the substantive law in Merrick, they looked at 1988, and there it was clear that attorney fees were part of cost.

[00:20:18] Speaker 02:
But when you look at the Bain Act,

[00:20:19] Speaker 02:
You have to take a look at the statute to figure out, okay, you get attorney's fees, but there's no mention of cost.

[00:20:25] Speaker 02:
But there is mention of all of these other damages that you get, which to me suggests that the framers and the folks who passed the Bain Act wanted to separate cost from attorney's fees.

[00:20:38] Speaker 00:
Well, so the Bain Act is substantive because it creates a right, a right to attorney's fees you otherwise wouldn't have for as 1032, 33.5.

[00:20:44] Speaker 00:
I thought your argument is that's procedural because it just talks about how you then

[00:20:49] Speaker 00:
to collect or enforce it.

[00:20:50] Speaker 00:
It doesn't create a new right.

[00:20:52] Speaker 00:
It just calls it something different.

[00:20:55] Speaker 00:
And if that's the case, I mean, if you look at Rule 68 and the Merrick wording, it says, awardable under the relevant substantive statute or other authority.

[00:21:05] Speaker 00:
Substantive could modify both the words statute and other authority because otherwise, why would you even have the word substantive?

[00:21:13] Speaker 00:
Court must have meant something.

[00:21:15] Speaker 00:
It certainly couldn't mean substantive statute or other procedural non-substantive authority.

[00:21:20] Speaker 00:
That would be inconsistent, it seems to me.

[00:21:22] Speaker 00:
So isn't your argument that it should be whatever that other authority is and the Supreme Court doesn't explain, it's got to be substantive.

[00:21:30] Speaker 00:
And your argument is 1033.5 is not substantive.

[00:21:32] Speaker 00:
It's procedural.

[00:21:33] Speaker 00:
It's how do you deal when you collect it and how do you shift it, that sort of stuff because it deals all sorts of things.

[00:21:39] Speaker 02:
That is my argument.

[00:21:40] Speaker 02:
And if this court were to look at other authorities, I would point the court to Civil Code Section 52.4, 52.45, even Civil Code Section 48.7, all part of those personal rights under the Civil Code, which are substantive, which those statutes actually do expressly state that attorney's fees are separate from cost.

[00:22:00] Speaker 02:
And so if the attorney's fees are separate from cost,

[00:22:04] Speaker 02:
then Rule 68 wouldn't apply to the attorney fee award here in this case.

[00:22:10] Speaker 04:
Do you want to say something about treble damages?

[00:22:14] Speaker 02:
Yes.

[00:22:17] Speaker 02:
Well, the district court refused to award treble damages.

[00:22:23] Speaker 04:
You said it was a question of fact for the jury, and you didn't request a jury instruction.

[00:22:28] Speaker 02:
Right.

[00:22:28] Speaker 02:
That's true.

[00:22:32] Speaker 04:
It's a... Is it a question of fact for the jury or can the court award it?

[00:22:36] Speaker 02:
I believe the statute's unclear and I've searched and I personally didn't find any other authority to determine who makes that determination because when you look at the statute it says a jury or court.

[00:22:50] Speaker 02:
The court didn't make a determination, didn't render a verdict, but the case was before the court, and I think that the court was authorized, despite it being before a jury, to make a post-verdict finding of trouble damages.

[00:23:06] Speaker 02:
Unfortunately, there's just no case law on this issue, but just looking at the

[00:23:13] Speaker 02:
Remedial aspect of the Bain act and the purpose of the Bain act I do believe that It should be applicable by a judge post verdict when there is a favorable plaintiff's verdict that raised Seventh Amendment problems No, I don't believe because there has to be factual basis for the triple damages.

[00:23:31] Speaker 00:
I mean I

[00:23:32] Speaker 02:
Well, when you look at the statute of the Bain Act, I mean, there's also penalties that are given, penalties and all of the injunctive relief if possible.

[00:23:42] Speaker 01:
And so the Bain Act is just so comprehensive and designed to be a remedial statute that I believe... But the statute says plaintiff is allowed to recover actual damages in any amount that may be determined by a jury or a court sitting without a jury up to a maximum of three times the amount of actual damage.

[00:23:59] Speaker 01:
So since you had a jury here, how could a court decide it?

[00:24:05] Speaker 02:
Well, the determination could be made.

[00:24:08] Speaker 01:
Here it's discretionary, but still, it seems like by the statute, if you went with the jury trial, you'd need to have the jury make that decision.

[00:24:15] Speaker 02:
Well, I think it says or.

[00:24:17] Speaker 02:
I know it says or without a jury, which could mean a bench trial.

[00:24:21] Speaker 02:
But just given what the statute says, just its plain meaning, we do think that a judge has discretion, post verdict, to make that determination.

[00:24:31] Speaker 04:
So there's no California cases at all on this question?

[00:24:37] Speaker 02:
I didn't see any, Your Honor.

[00:24:39] Speaker 02:
And perhaps my colleague, my friend here could.

[00:24:43] Speaker 02:
shed some light on that, but I didn't see any.

[00:24:46] Speaker 02:
But for all of those reasons, your honors, I ask that this court affirm the district court's order.

[00:24:53] Speaker 02:
Thank you very much.

[00:24:54] Speaker 04:
All right.

[00:24:54] Speaker 04:
Thank you very much, counsel.

[00:24:57] Speaker 04:
Mr. Sipayan.

[00:25:06] Speaker 03:
To address one of the points of my friend here, that the legislature omitted just

[00:25:13] Speaker 03:
the definition of attorney's fees in the Bain Act.

[00:25:18] Speaker 03:
The Bain Act was enacted in 1987.

[00:25:23] Speaker 03:
By that time, the Code of Civil Procedure Section 1032 and 1033.5 were already in existence.

[00:25:31] Speaker 03:
They were enacted in 1986.

[00:25:33] Speaker 03:
So legislature presumably was well aware

[00:25:37] Speaker 03:
of those statutes that define attorney's fees authorized by statute being as cost.

[00:25:44] Speaker 03:
So, that again, a mission in the Bain Act should not be construed as to mean that attorney's fees cannot be cost per se.

[00:25:54] Speaker 00:
Are there any statutes after 1033.5 was enacted in 1986 that draw distinction that talks about fees and cost?

[00:26:06] Speaker 03:
There might be, Your Honor, but even if there are statutes like that that draw distinction, attorneys' fees and costs, again, if we look down Code of Civil Procedure 1033.5, it states that Subdivision C5A states that when the statute refers to attorneys' fees and costs,

[00:26:30] Speaker 03:
They, attorney's fees are costs.

[00:26:33] Speaker 03:
So we can see clearly there's a difference in terms of statutory scheme work in California and federal law that says when the statute separately defines attorney's fees and costs, the attorney's fees are treated separately and not subject to Rule 68's cost shifting provision.

[00:26:55] Speaker 01:
Just the forum shopping question.

[00:26:58] Speaker 01:
What's your answer?

[00:27:00] Speaker 01:
And it could be that that's fine to have that inconsistency, but would they be precluded under 1033.5 and 1032 in state court but not here?

[00:27:10] Speaker 03:
Yes, they would be precluded because section 998 awards the prevailing party its costs.

[00:27:15] Speaker 03:
Then the courts look at the section 1033.5, 1033.5,

[00:27:22] Speaker 03:
32, 10, 33.5 and then they get to the definition of attorney's fees authorized by statute.

[00:27:28] Speaker 04:
This is even when the substantive statute as here the Bain Act expressly provides for an award of attorney's fees?

[00:27:38] Speaker 03:
Correct.

[00:27:38] Speaker 03:
Correct.

[00:27:39] Speaker 03:
So Civil Code of Civil Procedure 1033.5, we've meant specifically those statutes that authorize attorney's fees.

[00:27:47] Speaker 03:
And those would be subject to cost-shifting provision of the analog of Rule 68-998 in the state court.

[00:27:54] Speaker 00:
We don't want plaintiff, we don't want defendants stop making all... Is there any difference in wording and the key wording between 998 and Rule 68?

[00:28:01] Speaker 00:
Does 998 refer to fees at all?

[00:28:04] Speaker 00:
It just only talks about costs?

[00:28:06] Speaker 03:
I think it talks about the cost.

[00:28:08] Speaker 03:
I'm not sure about the exact language, but it does refer to cost.

[00:28:14] Speaker 03:
And then when it comes to cost, all the attorney's fees would fall into that category, and expert fees, if authorized by court, also would fall into that category.

[00:28:25] Speaker 03:
So we see the pattern of the items that are being defined as cost for purposes of 998 statute.

[00:28:33] Speaker 03:
So the purpose of Rule 68 is to encourage settlements.

[00:28:37] Speaker 03:
If we allow plaintiffs to forum shop and bring their Bain Act claims in federal courts,

[00:28:44] Speaker 03:
No Bain Act will be filed in state courts because they know that if they file it in the federal court, they'll be able to recover their attorney's fees even despite the Rule 68 settlement offers.

[00:28:56] Speaker 03:
Defenders will not make offers.

[00:28:58] Speaker 00:
So the purpose of... Well, but fees can be reduced as they were here.

[00:29:01] Speaker 00:
I think any judge would look at it and say, hey, you didn't even do better.

[00:29:05] Speaker 00:
You could have done better by taking this offer not using Rule 68 but just using Hensley and all the other

[00:29:12] Speaker 00:
you could say, well, I'm going to chop this down by 90 percent or whatever, you know, or I'm just not going to award fees because it didn't produce any results.

[00:29:21] Speaker 00:
So I wouldn't be so sure if I were a plaintiff, you're going to run into friendly territory.

[00:29:24] Speaker 03:
Yeah, but the reduction of attorney's fees does not necessarily mean that they would be cut off after Rule 68 and it will be depending on the case.

[00:29:32] Speaker 03:
So we want to set a clear precedent for all the cases that attorney's fees based in California statutes that are defined

[00:29:41] Speaker 03:
them as cause when they're brought in the district courts, federal courts, they're subject to Rule 68.

[00:29:46] Speaker 03:
And very briefly, I have 20 seconds on the troubled images.

[00:29:50] Speaker 03:
We don't need to look for any case law.

[00:29:52] Speaker 03:
We'll look at the statutes language itself.

[00:29:54] Speaker 03:
It says, as Judge Kohl pointed out, the jury or the court sitting without jury.

[00:29:59] Speaker 03:
There could be very little doubt that if the jury didn't decide it, it's on plaintiff, it's an appealee, and the court cannot

[00:30:09] Speaker 03:
have a say after the defendant is gone from the case.

[00:30:15] Speaker 04:
And this case was in Feral Court because there was a... I'm sorry?

[00:30:18] Speaker 04:
This case was in Feral Court because there was a claim under Section 1983, isn't that correct?

[00:30:23] Speaker 04:
I'm sorry, Your Honor, I didn't hear you.

[00:30:24] Speaker 04:
This case was in Feral Court, not State Court, because there was a claim under Section 1983.

[00:30:30] Speaker 04:
Correct, which we didn't prevail on.

[00:30:34] Speaker 03:
To sum it up, Your Honors, very briefly, the district court's decision below

[00:30:41] Speaker 03:
should be reversed, so we have a clear precedent on what the attorney's fees authorized by California statutes are, would be a guidance to the subsequent cases, and we'll ask the court to affirm the district court's denial of troubled damages.

[00:30:56] Speaker 04:
All right, thank you very much, counsel.

[00:30:58] Speaker 04:
That was an excellent argument by both attorneys, so thank you.

[00:31:03] Speaker 04:
Justin Smith versus City of La Verne will be submitted, and the session of the court is adjourned for today.