In Department of Water Resources Environmental Impact Cases (2022) 79 Cal.App.5th 556, the Third District Court of Appeal held that the trial court abused its discretion in denying motions for attorney’s fees arising out of the voluntary dismissal of coordinated petitions following project changes and decertification of the challenged EIR under pressure from Governor Newsom.

The Department of Water Resources (DWR) initially proposed two tunnels to convey fresh water from the Sacramento River to pumping stations in the Sacramento San Joaquin Delta (Project). Lawsuits were brought by a number of organizations (Plaintiffs) challenging the Project. The suits were coordinated at the trial court level. While the coordinated proceeding was pending, newly elected Governor Newsom announced that he did not support the dual-tunnel proposal, and directed DWR to pursue a single-tunnel conveyance instead. DWR decertified its EIR and rescinded its Project approvals, and the various lawsuits were voluntarily dismissed.

Following dismissal, Plaintiffs moved for attorney fees, arguing that their suits succeeded in causing DWR to voluntarily provide the relief they sought. The trial court denied the motions, concluding that it was not Plaintiffs’ lawsuits that caused DWR to provide the relief. Plaintiffs appealed that denial, arguing that the trial court applied an incorrect legal standard and that its factual conclusion as to causation was unsupported.

While the Court of Appeal rejected most of Plaintiffs’ contentions, it agreed that the trial court erred in treating the Governor’s policy directive as an external, superseding cause. It faulted the trial court for ending its analysis upon its observation that DWR’s conduct was wholly determined by the Governor’s direction. In the Court’s view, the trial court was required to additionally consider whether the lawsuits caused the Governor to issue that direction, thereby still indirectly causing the result achieved. Plaintiffs had offered evidence indicating that this had been the case, which DWR had not rebutted.

Further, the Court of Appeal noted that DWR’s decertification of the EIR had not been a foregone conclusion. The agency could have instead prepared some form of subsequent review for the revised single-tunnel project, only evaluating changes from the already-certified environmental review. Because the trial court viewed decertification as an expected consequence of the change in project, it had failed to consider its significance or whether Plaintiffs actions had been the catalyst for this result.

Similarly, DWR had initially sought to continue a validation action, arguing that the validity of bond financing was not dependent on whether one or two tunnels was used. DWR ultimately reversed course though. The trial court again failed to consider the significance or causation involved in the decision.

As such, the Court remanded the matter for further consideration by the trial court. It did not mandate that fees be awarded, but instead directed the lower court to consider the catalytic effect of Plaintiffs’ actions on a case-by-case basis, and determine the appropriateness of attorney fees in that light.

Key Points:

  • Attorney’s fees may be available under a catalyst theory if plaintiffs achieve their goals, even if not as relief in the litigation itself