USA – CALIFORNIA Law and Practice Contributed by: Steven Kaufhold, Jonathan Gaskin and Urvashi Malhotra, Kaufhold Gaskin LLP
3.9 Funding and Costs California follows the “American Rule” in which each side pays for its own costs and attorney fees, regard- less of who prevails – unless there is a contract or statute that provides for cost and fee shifting. It is rare for there to be such an exception for class actions. UCL cases do not provide a statutory basis to recover attorney fees. In contrast, the PAGA statutes do pro- vide that successful plaintiffs who enforce important rights or confer significant benefits are awarded their reasonable attorney fees and costs. As a practical matter, class actions and most repre- sentative actions are typically handled on a contingen- cy fee basis. This means that the lawyers represent- ing plaintiffs agree not to seek payment for their fees or costs unless the case is successful. The recovery amount is structured so that the representative plain- tiffs are not personally responsible for paying attor- ney fees or costs. In successful contingency cases, the amount for attorney fees and costs is determined by a contractual agreement; however, courts gener- ally have the authority to approve or disapprove the amount as a form of oversight. These fee arrange- ments are generally a percentage of the recovery (award after costs), and are most commonly around 33%. Third-party litigation funding is allowed in California, but is the subject of ongoing legislative proposals regarding disclosure and applicability, and is less common than contingency fee arrangements. The State Bar of California has provided formal guidance on litigation funding. 3.10 Disclosure and Privilege Discovery Pre-trial discovery in California class actions typically occurs in two phases, focusing first on evidence for class certification and then on the merits of the case. California courts are generally more permissive than federal courts regarding pre-certification discovery seeking potential class member information, though discovery must still be relevant to substantiating the class allegations. California courts are generally very permissive regarding the discovery of the merits. The scope of discovery includes any nonprivileged matter that is relevant to the subject matter of the case or a
pending motion, and is proportional to the needs of the case, even if the information itself is not admissi- ble in court. Common tools include disclosures, inter- rogatories (written questions), document requests, requests for admission, and oral depositions. Califor- nia law recently changed to provide for initial disclo- sures, requiring parties to exchange information within 60 days of an initial disclosure request, unless modi- fied by court order or stipulation. Disclosures must include information on relevant witnesses, documents (including electronic data) that may support claims or defences, and insurance policies, but do not need to be provided if the sole use would be for impeachment. Discovery responses in California must be verified under oath by the responding party. Unlike the federal court, initial disclosures are not automatic, but must be requested by the opposing party. The court can limit discovery if the burden, expense, or intrusiveness clearly outweighs the likelihood of finding admissible evidence. Privilege In California, the “attorney-client” privilege protects communications made in confidence between a client and an attorney for the purpose of seeking or provid- ing legal advice. The scope includes various commu- nication methods like emails, letters, texts, and phone calls. The scope also applies to communications with experts providing expert advice to the attorney nec- essary for the attorney to provide legal advice to the client. The privilege belongs to the client, persists after the attorney-client relationship concludes, and usually requires the client’s consent to be waived, although exceptions apply in cases of preventing imminent death or serious bodily harm. In California, attorney work product is categorised into absolute and qualified protections. Absolute work product is not discoverable under any circum- stances and includes writings containing an attorney’s “impressions, conclusions, opinions, or legal research or theories.” Qualified work product covers all other materials, which can be discovered only if the court
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