Legal News and Appellate Tips

CEB has published my article, “What Happens to a Fee Award After the Judgment Is Reversed? Try a Stipulated Reversal.” In the short article, I discuss a common confusing scenario: what happens when a judgment is reversed, but the fee award is still on appeal?

That is what happened in Mid-Wilshire Property, L.P. v. Dr. Leevil, LLC (D4d3 Jul. 20, 2022 no. G059899) 2022 WL 2824967 (nonpub. opn.). Briefing in the fee appeal was still underway when the judgment was reversed. Do the parties still have to go through with the briefing and argument?

Nope. Instead, they filed a joint stipulated request to summarily reverse the attorney fee award. And the appellate court granted it.

Sometimes when a case on appeal settles, the settlement will involve stipulating to reversal of the judgment. That much was no surprise in the stipulated reversal of a citizens group’s challenge to the City of Palo Alto’s utility rate structure in Green v. City of Palo Alto (D6 Mar. 27, 2023 no. H049436) 2023 WL 2644025 (nonpub. opn.).

The surprising part was that the Court also went along with the parties and issued their agreed list of instructions to the trial court on remand. And all this over a class-action settlement clocking in at less than $18,000.

The settlement would allow the city to avoid issue preclusion (about whether the city may continue charging rents for the use of general-fund assets). And, of course, the settlement would allow the plaintiffs’ attorneys to seek their attorneys’ fees.

The surprising thing about the opinion is that it directs the trial court “to consider and implement the parties' settlement in a manner consistent with the parties' settlement agreement.” This includes allowing the parties to amend the complaint (to add new claims consistent with the settlement); direct notice to the settlement class, hold a fairness hearing, and consider approving the settlement and attorneys’ fees; and finally, to enter judgment on the settlement and direct the City to comply with it.

The law imposes a presumption against stipulated reversals, and ordinarily that presumption is very difficult to overcome. (Hardisty v. Hinton & Alfert (2004) 124 Cal.App.4th 999.) Green is surprising because the court seems to give light treatment to the presumption.

The reason stipulated reversals are difficult that we do not want people to get the idea that judgments may be manipulated by private, interested litigants.

As relevant to this class action, it is possible that, as the court noted, the reasons for the settlement are valid given that nearly all the ratepayers in the city are parties, and thus will all share in the proceeds of a little more than $17,000. It is possible that that is the reason for the settlement.

But is it probable? Or it is similarly possible—even probable—that observers may wonder if many of those ratepayers wouldn’t rather let their pennies ride and try to vindicate their position that the city may not continue charging rents to its utilities. And observers might further wonder if the driving force behind plaintiffs’ stipulation was less about the $17,000, and more the forthcoming motion for PAGA attorneys’ fees.

In any event, if you are exploring settlement on appeal, do not expect to receive such light treatment as was illustrated here. Try to avoid structuring a settlement that depends on a stipulated reversal.

Here is a common scenario, with a rather uncommon resolution. You have appealed a judgment, and you have separately appealed the attorney fee award. You reversed the judgment. After reporting the victory to the client, you suddenly remember: what about the fee award?

That is what happened in *[Mid-Wilshire Property, L.P. v. Dr. Leevil, LLC](https://casetext.com/case/mid-wilshire-prop-v-leevil-llc?ssr=false&resultsNav=false&tab=keyword&jxs=)* (D4d3 Juul. 20, 2022 no. G059899) 2022 WL 2824967 (nonpub. opn.). The appellants reversed the judgment, but briefing had not even begun in the separate appeal of the fee award of almost $500,000.

Here is what the parties did: They filed a joint stipulated request to summarily reverse the attorney fee award. And the appellate court granted it.

But the court made a few comments about the parties’ request, noting the burden for a stipulated reversal under section 128(a) ordinarily is very difficult to meet.

Here, that was not really important, because the parties are correct that reversal of the fee order was inevitable after the judgment was reversed.

Tip: If you have appealed a cost award and it is not consolidated with your main appeal, you might draw the court’s attention to it in your briefing. If the court reverses, hopefully the court will also dispose of the cost appeal at the same time.

When settling a case after a judgment, parties sometimes explore the possibility of a stipulated reversal of the judgment. In the Court of Appeal, the burden required is very high. But what about getting a stipulated vacatur of the judgment at the trial court?

The parties in Meridian Financial Services, Inc. v. Phan (D4d3 Aug. 10, 2021) 67 Cal.App.5th 657 [282 Cal.Rptr.3d 457, 67 Cal.App.5th 657], review filed (Sept. 17, 2021) stipulated for vacatur of large portions of the statement of decision and judgment as a condition of their settlement. The trial court went along with it.

But the judgment that was left over still had preclusive effect. So the exercise was largely pointless.

The Upshot: Do not put a lot of stock in a stipulated reversal or vacatur of a judgment. It is very difficult to achieve in the Court of Appeal. And even if you can achieve it in the trial court, the effect may be less than you think.