August 13, 2018

Foley & Mansfield’s Los Angeles defense team of appellate partner Margaret Johnson and partner Lou Klein, succeeded in obtaining a published reversal of a trial court order which denied the firm’s client, a talcum product manufacturer (“TPM”), all of its prevailing party costs under Code of Civil Procedure sections 1032, 1033.5, and 998.

The Plaintiff filed a personal injury action against TPM, as well as other defendants, claiming that she contracted mesothelioma from her use of cosmetic talcum powder products. TPM maintained throughout the proceedings that Plaintiff lacked reliable, sufficient and material evidence to establish that any of its talcum powder she had actually used had been contaminated with asbestos. The jury agreed and returned a defense verdict.

TPM’s trial team consisted of Gary Sharp and Keith Ameele of Foley & Mansfield, PLLP and Adam Abensohn of Quinn Emanuel Urquhart & Sullivan, LLP. (Judgment for TPM was affirmed in a separate appeal.)

The trial lasted several weeks and both sides called a number of expert witnesses. After entry of judgment, TPM filed a Memorandum of Cost in excess of $311,000,00. Plaintiff filed a Motion to Tax, but later withdrew certain objections. At the initial hearing, the trial court raised, sua sponte, a due process concern about imposing a large cost award against Plaintiff and her ability to pay such an award, despite acknowledging that it did not know the extent of Plaintiff’s assets. After allowing the parties to submit supplemental briefing, the trial court issued an order taxing all of TPM’s costs. In its written order, the trial court concluded that it had the inherent power to remit costs. TPM appealed.

On appeal, TPM argued that the trial court erred in granting Plaintiff’s motion to tax all of its costs. Specifically, TPM maintained that the trial court erred in considering Plaintiff’s financial situation in refusing to award TPM any of the statutory prevailing party costs to which it was entitled under Code of Civil Procedure sections 1032 and 1033.5. TPM also argued that the trial court abused its discretion by failing to determine whether its section 998 offer to compromise was made in good faith, instead denying TPM’s request for expert witness fees based on Plaintiff’s claimed inability to pay. In addition, TPM asserted there was insufficient evidence from which the trial court could have found that Plaintiff was unable to pay any cost award.

The Court of Appeal agreed with all of TPM’s arguments. In its August 8, 2018 published opinion, the appellate court held that trial courts do not have discretion to consider a losing party’s ability to pay when determining whether a prevailing party is entitled to costs under the Code of Civil Procedure sections 1032 and 1033.5. The Court of Appeal also confirmed that TPM “was entitled to seek recovery of its postoffer expert witness fees pursuant to section 998.” Though the trial court could consider Plaintiff’s ability to pay in making a determination under section 998, “to properly exercise its discretion,” “the court was required to consider all relevant factors.” And here, “there was insufficient evidence from which the trial court could have found [Plaintiff] lacked the ability to pay any cost award.” Accordingly, the Court of Appeal reversed the trial court’s order taxing TPM’s costs and remanded the matter for further proceedings. Additionally, TPM was awarded its costs on appeal.

Margaret Johnson and Lou Klein