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The Prison Industries Enhancement Certification Program: Why Everyone Should be Concerned
From the late 19th century into the depression years, Americans struggled economically. For the man and woman on the street to the businesses, companies and manufacturers vainly trying to keep their enterprises afloat, those were difficult times. States strained to overcome the desperate financial situation which held citizens captive as a result of few jobs and even less income or money available for business capital.
To partially overcome the public’s lack of – and need for – everyday household, agricultural and other necessary items, many states began allowing their prison systems to put prisoners to work producing products for consumers. Some of those goods were distributed outside the state of manufacture and began to compete with private sector companies, which were already having difficultly finding markets for their products in the slow economy.
Legislating Limits on Prison Industry Programs
In 1924, the U.S. Secretary of Commerce, Herbert Hoover, held a conference on the “ruinous and unfair competition between prison-made products and free industry and labor” (70 Cong. Rec. S656 (1928)). As a result of that conference, an advisory committee was formed to study the issue. The need for such a committee was in response to complaints from private sector businesses alleging unfair competition from more and more prison-made goods finding their way to the marketplace. In 1928, the committee issued its report to Congress.
The eventual legislative response to the committee’s report led to some very important federal laws regulating the manufacture, sale and distribution of prison-made products. Congress enacted the Hawes-Cooper Act in 1929, the Ashurst-Sumners Act in 1935 (now known as 18 U.S.C. § 1761(a)), and the Walsh-Healey Act in 1936. Walsh controlled the production of prison-made goods while Ashurst prohibited the distribution of such products in interstate transportation or commerce. Both statutes authorized federal criminal prosecutions for violations of state laws enacted pursuant to the Hawes-Cooper Act.
The pertinent language of these statutes, as amended, now provides:
“Whoever knowingly transports in interstate commerce or from any foreign country into the United States any goods, wares, or merchandise manufactured, produced, or mined, wholly or in part by convicts or prisoners, except convicts or prisoners on parole, supervised release, or probation, or in any penal or reformatory institution, shall be fined under this title or imprisoned not more than two years, or both.”
Thus, for several decades to come, the manufacture of prisoner-made products for public or private sale and distribution was prohibited. Certain prison industry products were exempted by statute from the Ashurst-Sumners Act, including “agricultural commodities or parts for the repair of farm machinery.”
Codified at 18 U.S.C. § 1761, the Prison Industries Enhancement Certification Program (PIECP, or “PIE” as it is commonly called) was implemented in 1979. PIECP relaxed the restrictions imposed under the Ashurst-Sumners and Walsh-Healey Acts, and allowed for the manufacture, sale and distribution of prisoner-made products across state lines. However, PIECP limited participation in the program to 38 jurisdictions (later increased to 50), and required each to apply to the U.S. Department of Justice for certification.
PIECP includes mandatory requirements that must be met prior to receiving certification to participate in such prison industry programs. Eligible jurisdictions that apply to take part in PIECP must meet all nine of the following criteria:
1. Legislative authority to involve the private sector in the production and sale of prison-made goods, and administrative authority to ensure that mandatory program criteria will be met through internal policies and procedures.
2. Legislative authority to pay wages at a rate not less than that paid for similar work in the same locality’s private sector (termed “prevailing wages”).
3. Written assurances that the PIECP program will not result in the displacement of free-world workers already employed before the program is implemented.
4. Authority to provide worker benefits, including workers’ compensation or its equivalent.
5. Legislative or administrative authority to take deductions not to exceed 80 percent of prisoners’ gross wages for room and board; federal, state and local taxes; allocations for family support pursuant to state statute, court order or agreement of the offender; and contributions of not more than 20 percent but not less than 5 percent of gross wages to any fund established by law to compensate victims of crime.
6. Written assurances that participation by prisoner workers will be voluntary.
7. Written proof of consultation with related organized labor groups before startup of the PIECP program.
8. Written proof of consultation with related local private industry before startup of the PIECP program.
9. Compliance with the National Environmental Policy Act and related federal environmental review requirements.
The reasoning behind these stipulations, as mandated by Congress in 18 U.S.C. § 1761, was to allow competition be-tween prison industries and private sector manufacturers. The nine restrictions listed above were intended to “level the playing field.” By making the requirements mandatory, Congress believed they could ensure that prison industries were competitive with free-world businesses without giving either an unfair advantage.
But PIECP goes even further, by allowing private sector businesses to “partner” with prison industries through joint venture programs to manufacture products or provide services to the general public. These partnerships are also required to abide by the mandatory
requirements.
In 1999, the U.S. Department of Justice’s Bureau of Justice Assistance (BJA) issued final guidelines for PIECP pro-grams after allowing all participants to discuss and argue for or against the provisions to be contained within the guide-lines. The mandatory requirements were included in the guidelines and are now the “law of the land” with regard to prison industries and their private-sector business partners.
The Fox Guarding the Prison Industry Henhouse
PIECP programs include safeguards to ensure that Congress’ intent regarding the mandatory requirements are fol-lowed by all participants, with private sector companies and prison industries competing on an equal footing.
However, as with any situation where free enterprise and capitalism flourish, the pursuit of profits often outstrips rules and regulations designed to prevent abuses. There have been many examples of profiteering at the expense of regulatory compliance – such as with the current meltdown on Wall Street, the Enron and WorldCom scandals, and ponzi schemes like that of Bernie Madoff (which brought down the JEHT Foundation, a major funder of criminal justice programs) [See: PLN, June 2009, p.34]. Both individuals and businesses in pursuit of profit either ignore controlling laws or find loopholes.
PIECP is no different. In addition to the usual practice of exploiting free-world workers, corporations now exploit prisoner labor through PIECP programs. In the beginning, small businesses that had trouble hiring or retaining employees due to low wages or fluctuating work schedules solicited partnerships with prison industries. This changed dramatically by the 1990s, when companies such as Wal-Mart, Victoria’s Secret, Boeing, Microsoft, Starbucks and dozens of others joined the ranks of U.S. businesses that benefited from PIECP programs, usually through subcontractors. [See: PLN, April 2009, p.32; March 1997, p.1].
Prisoners are now making more than just license plates and road signs. Oregon’s prison factories are perhaps best known for the “Prison Blues” line of blue jeans and other clothing sold on the open market. Tennessee prisoners have manufactured clothes for Kmart and JC Penney, as well as wooden rocking ponies for Eddie Bauer and, more recently, hardwood flooring. Prisoners in Ohio produced car parts for Honda until the United Auto Workers intervened. Prisoners have been employed in data entry and computer circuit board assembly programs, and have even worked in a TWA call center. Incarcerated workers in Utah make cold-weather clothing for Northern Outfitters, while Arkansas prisoners produce cable assemblies and wire harnesses used in medical equipment.
Once private sector companies were allowed to partner with PIECP prison industries to manufacture products and make them available to the general public, they began seeking ways around the program’s mandatory requirements, which were interfering with the corporate goal of generating more profit.
In 1995, the BJA outsourced oversight and management of PIECP programs to a non-profit group, the National Correctional Industries Association (NCIA). The PIECP guidelines are available on NCIA’s website: www.nationalcia.org.
The government’s decision to use NCIA to fulfill its oversight responsibilities appeared to be a natural choice. The association was experienced and knowledgeable about prison industry operations, and was already established. The DOJ and BJA issued a handsome government grant to the NCIA to oversee PIECP programs. In the end, however, this proved to be a poor choice that has led to significant abuses.
Most of the NCIA’s members are administrators and employees of state prison industry programs and their PIECP private sector partners, vendors and suppliers. The association’s board of directors is almost exclusively composed of prison industry officials. Thus, the NCIA includes the very PIECP participants that it is charged with monitoring; in effect, it is overseeing itself.
The BJA requires PIECP partners to be reviewed for compliance with the mandatory requirements prior to starting any new industry program. Following issuance of a certificate allowing a prison industry to begin operations, the program must be reviewed for continuing compliance. These reviews – initial and annual – are to check the wages being paid to prisoner workers, to ensure deductions from those wages are used for the purposes permitted under 18 U.S.C. § 1761(c), and to verify that benefits are being provided and local unions and competing free-world businesses are being consulted.
Additionally, the NCIA handles complaints related to participating prison industries and their private sector partners. The association is supposed to investigate complaints, determine whether or not the prison industry program is in compliance, and if not, take steps to bring it into compliance.
Those are the responsibilities delegated to the NCIA. However, since the association’s board of directors is largely comprised of individuals deeply involved in prison industries, if an allegation of non-compliance is made against a PIECP program, the chances are high that the industry has an employee or administrator sitting on the NCIA’s board who can influence any investigation.
Over the past several years the NCIA has stopped performing annual reviews. Instead it reviews participating prison industries on a 24-month cycle, and only about 30% of the industries are reviewed during each cycle. Further, the NCIA has adopted the practice of conducting “desk assessments,” which are reviews of previously-filed documents from PIECP programs by NCIA staff. Unless there are problems noted or unresolved issues from previous reviews, a cursory desk assessment is all that is done to check such programs for compliance.
PIECP Prison Industry Violations & Abuses
Virtually all of the mandatory requirements for PIECP programs are being ignored or openly violated nationwide. One example involves the use of training periods to circumvent the requirement that prisoners be paid prevailing wages.
Of the 32 jurisdictions currently operating PIE programs, most have reduced “prevailing wages” for incarcerated workers to the state or federal minimum wage. In Florida, for example, Prison Rehabilitative Industries and Diversified Enterprises (PRIDE) uses a “training program” to limit the wages paid to PIECP workers.
PRIDE requires prisoners to complete a 480-hour training course (Level I), which pays minimum wage. Following this training period, the prisoner advances – with small pay increases – through three more levels until reaching Level IV after two years, where he or she “has the potential of making the prevailing wage.” At any time during the four-tiered training program the prisoner can be moved to another job position to begin training on different equipment, further extending the training period and keeping wages depressed.
This practice allows PRIDE, and other prison industries that follow a similar practice, to use prisoners to manufacture goods at reduced pay for years before they qualify to receive the prevailing wages to which they are entitled.
Consultation with Labor Groups
PIECP participants are required to consult with local organized labor groups prior to starting a prison industry pro-gram, to determine if the program will interfere with free-world employment. PRIDE and other prison industries routinely fail to comply with this requirement; instead, they sometimes advertise their intent to start or operate prison industry pro-grams in classified ads in local newspapers.
The requirement to consult with competing private sector businesses is handled in a similar manner. PRIDE notifies the local Chamber of Commerce instead of contacting local competing businesses to get them to sign off on prison industry programs. This puts the responsibility for such contacts and obtaining authorization on the Chamber of Commerce instead of on the prison industry, where it belongs.
PIECP requires any business that partners with a prison industry to maintain its free-world operations in addition to its prison-based program. This is to ensure that employees of the private sector PIECP partner are not replaced by prison labor. The PIECP partners are also required to maintain benefits and wages for non-prisoner workers at the same level as before their participation in the prison industry program. In several cases, however, companies have violated this provision without being sanctioned.
The requirements for private sector PIECP partners to consult with labor unions and competitors and to maintain their non-prison operations are important issues, as demonstrated by the 2008 closure of Lufkin Industries’ trailer division in Lufkin, Texas and the loss of 150 free-world jobs in Austin, Texas due to prison industry programs, among other exam-ples.
Free-world Job Losses
In the mid-1990s, Lockhart Technologies, Inc. partnered with Wackenhut Corrections (now known as GEO Group) to operate an industry program at a Wackenhut prison in Lockhart, Texas, assembling computer and electronic components. Wackenhut built an industrial workspace at the facility and agreed to lease the 25,000 sq. ft. space to Lockhart for $1.00 a year. Once the program was up and running, Lockhart closed its business operation located in nearby Austin, resulting in the termination of 150 employees. [See: PLN, June 1997, p.1; April 1996, p.1].
Lockhart owner Leonard Hill was candid about his use of prison labor. “Normally when you work in the free world, you have people call in sick, they have car problems, they have family problems. We don’t have that [in prison],” he stated.
“The incentive for companies to go into the prisons is pretty clear in some cases,” said Edward Sills, a spokesman for the Texas chapter of the AFL-CIO. “They don’t have to pay all the benefits, in some cases they pay very few of the benefits, that an outside company has to pay in the regular marketplace.”
In 2006, Texas Correctional Industries partnered with a private company in a prison industry program that manufactured flatbed trailers at the Michael Unit in Tennessee Colony. The private sector PIECP partner was Direct Trailer and Equipment Company (DTEC), owned by a former Texas prison employee. The Texas Private Sector Prison Industries Oversight Authority had failed to contact local organized labor groups prior to authorizing the operation. They also failed to contact Lufkin Industries or Bright Coop – Texas-based companies that manufactured the same type of trailers as DTEC.
Due to those failures, Lufkin and Bright were unaware that they faced a new competitor that was using cut-rate prison labor. With sales falling, Lufkin attributed the loss in business to the bad economy. The company decided to close its trailer division in January 2008; 90 employees were transferred and 60 were let go.
An investigation by Lufkin officials exposed the competition from DTEC’s prison industry program. It was further revealed that the trailers manufactured using prison labor were similar to Lufkin’s trailers but were being sold for as much as $2,000 less, due to DTEC’s reduced operating costs through the PIE program. [See: PLN, April 2009, p.25; Nov. 2008, p.12].
Texas lawmakers, concerned over the loss of jobs in Lufkin’s trailer division, quickly got involved. They discovered that failures by the state’s Private Sector Prison Industries Oversight Authority had led to unfair competition – including prisoners being paid minimum wage with no employee benefits, and DTEC being allowed to lease the industry facility at the Michael Unit for $1.00 a year.
Following the Lufkin debacle, Texas legislators passed a bill to address problems in the state’s PIECP programs (HB1914 / SB1169). Under the new law, the Private Sector Prison Industries Oversight Authority was disbanded and oversight was transferred to the Texas Department of Criminal Justice. The law, which was enacted in 2009, prohibits any PIECP program that would result in the loss of free-world jobs due to prison labor.
The PIE program with DTEC was discontinued after the company’s contract expired on March 1, 2009 and was not renewed. Texas still operates four PIECP programs, including the manufacture of aluminum windows and AC parts and heating valves.
Another PIECP program that resulted in the loss of free-world jobs involved Omega Pacific, a company located in Washington state that produced carabiners and other climbing equipment. In December 1995, Omega Pacific fired 30 employees and moved its operations to the Airway Heights Corrections Center near Spokane. Company owner Bert Atwater lauded the rent-free workspace at the facility and the use of low-cost prison labor, where “the workers are delighted with the pay; [there are] no workers who don’t come in because of rush hour traffic or sick children at home; [and] workers ... don’t take vacations. Where would these guys go on vacation anyway?” [See: PLN, Feb. 2000, p.12; March 1997, p.1].
Also in Washington state, Talon Industries, a company that used water jet technology, was forced out of business in 1999 and had to lay off 23 employees due to competition from MicroJet, a private sector PIECP partner at the Monroe Corrections Center. MicroJet was a contractor for Boeing that produced airplane parts.
Talon and an industry association sued Washington officials over the illegal use of prison labor under the state constitution, which led to a Washington Supreme Court ruling prohibiting the use of prisoners in private sector industries. However, no damages were awarded and the state constitution was amended by referendum in 2007 to allow prisoners to participate in such programs. [See: PLN, Feb. 2009, p.20, 30; Dec. 2004, p.22; Feb. 2000, p.13].
Wanting a Bigger Piece of the PIE
From 2002 to 2005, PRIDE operated a food processing industry program (Union Foods) at the Union Correctional Institution in Raiford, Florida. PRIDE partnered with ATL Industries, an Atlanta company. ATL eventually accused PRIDE of improper accounting during a financial dispute; PRIDE countered that ATL owed them money, seized all of the proprietary technology, equipment and products owned by the company, and forced ATL off prison property.
The son-in-law of PRIDE’s president then formed two separate companies (Century Meats and Circle A Brands), which took the place of ATL in the prison industry program, using ATL’s equipment and customer contacts. PRIDE and ATL have counter-sued each other, and the cases are still pending. See: ATL Industries v. PRIDE, Pinellas County Circuit Court (FL), Case Nos. 05-000696-CI-07 and 05-000797-CI-15.
It was later discovered that PRIDE had performed the same type of takeover of three other private sector businesses through PIECP partnerships prior to taking over ATL. In each case, PRIDE assumed control over joint venture prison in-dustry programs and put the former partners out of business. The other companies that were taken over by PRIDE in-cluded Custom Converter Sales, Value Line Converters and Fresh Nectars, Inc. PRIDE attempted a similar takeover of a fourth PIECP partner, Man-Trans, LLC, but reportedly settled with the company and returned its equipment as part of a settlement agreement.
The Florida Attorney General’s office held that several spin-off companies created by PRIDE, and owned or operated by PRIDE executives or board members, were in violation of state law. One of those companies, Industries Training Corp. (ITC), which ran PRIDES’ office and administrative operations, received millions of dollars in loans from the agency. In 2004, PRIDE CEO Pamela Jo Davis and president John Bruels were asked to resign, and PRIDE was told to sever its ties with the spin-off companies. Davis also served as president of ITC, which among other businesses owned Northern Outfitters, a company that manufactures extreme-weather clothing using prison labor in Utah.
Job Training for Lifers?
Prison industry programs often employ prisoners serving life or other long-term sentences. This disregards the fact that PIECP is intended to be a “vocational training program” for the purpose of training offenders and making them more employable upon their release. Providing job training to prisoners who have little or no opportunity for parole or release denies such training to other prisoners who will be released and can use the job skills they learn.
Another important and serious aspect of using lifers in PIECP or other prison industry programs is the access they have to dangerous tools and materials. Putting offenders with the least to lose in close proximity to saws, knives and other items that could be used as weapons places other prisoners and staff at risk.
This was dramatically demonstrated in Florida on June 25, 2008, when a PRIDE prison industry worker attacked and killed Donna Fitzgerald, 50, a guard at the Tomoka Correctional Institution. The weapon used was a “shank” made from sheet metal by prisoner Enoch Hall, who stabbed Fitzgerald repeatedly. He was charged with first-degree murder. [See: PLN, Nov. 2008, p.50]. Murders, escapes and serious assaults are all to common among the nation’s prison industry programs yet for legislators and prison officials this human toll is simply “the cost of doing business.”
An investigation revealed that Hall, who worked as a welder in a PRIDE program, was already serving two life sentences. He had received at least four disciplinary reports for problem behavior prior to Fitzgerald’s murder, but PRIDE pressured the institution to keep him on the job because the agency needed welders. A report by the Critical Incident Response Team found that the prison classification panel that placed prisoners in job positions had been “inappropriately influenced by PRIDE and their production priorities” in retaining Hall as a PRIDE worker. Hall was later found guilty of Fitzgerald’s murder; he was sentenced to death on January 15, 2010.
Prison industry programs have a motivation to employ offenders with life sentences or other lengthy prison terms, because keeping such prisoners in the same job for years results in quicker production by experienced workers, and thus more profit. However, as demonstrated by Donna Fitzgerald’s death, this practice is also dangerous. According to Florida law, 40 percent of prisoners who work in PRIDE programs must be serving sentences of ten years or more.
Deductions from Prisoners’ Pay
In terms of prisoner pay, PIECP guidelines allow prison industry programs to take four authorized deductions from the wages of incarcerated workers, up to a maximum of 80% of their total earnings, as follows:
“(A) Deductions from gross wages, if made, may be withheld only for the following authorized purposes:
“(1) taxes (federal, state, local); (2) in the case of a state prisoner, reasonable charges for room and board as deter-mined by regulations issued by the Chief State Correctional Officer; (3) allocations for support of family pursuant to state statute, court order, or agreement by the offender; and (4) contributions of not more than 20 percent, but not less than 5 percent of gross wages to any fund established by law to compensate the victims of crime.”
The BJA says that it maintains jurisdiction and authority over wage deductions to ensure that participating prison industries use the deductions for the purposes stated in the guidelines. In the case of room and board deductions, funds withheld from prisoners’ wages are intended to offset taxpayer expenditures for the cost of incarceration.
In Florida, PRIDE decided to take allowable deductions from the wages of PIECP workers. However, the agency diverted more than $3 million in “room and board” deductions to offset PIECP operations and program costs – not to reimburse the state or the Florida Dept. of Corrections for costs of incarceration.
A similar situation was recently reported in Iowa, involving wages for prisoners in a private sector industry program at the North Central Correctional Facility in Rockwell City. According to a November 7, 2009 news report, “Inmates were paid less than people in similar jobs that are from outside the correctional institution.” The industry program involved work at local grain elevators.
Free-world employees received $10.00 per hour; however, prisoners who performed similar job duties were paid $6.15 an hour. The $3.85 wage difference was due to an “up-front deduction” for transportation, supervision costs and work-related materials such as work clothes. This was permissible according to North Central Correctional Facility Warden Jim McKinney, who said the problem was one of “misinterpretation, or difference of interpretation.” A report by the state auditor found that the wage deductions were not being placed in the state’s general fund as required by law, but were being retained by the prison.
What Is a Prevailing Wage?
Although PIECP workers are supposed to receive prevailing wages for work comparable to that of free-world employees, this is rarely the case. In fact, the BJA determined in 2006 that wages for prisoners in PIECP programs “must be set at or above the 10th percentile as defined by the State Department of Economic Security agency.” The 10th percentile is the point at which 10% of workers earned below that amount and 90% earned more. In other words, starting wages for prisoners in PIE programs begin at an amount earned by the lowest-paid 10% of comparable free-world workers, but not less than minimum wage.
Further, prisoners who participate in PIE programs are only entitled to receive minimum or prevailing wages if they are engaged in production work. In some cases, PIECP programs have classified prison industry jobs as “service” rather than production positions, which means minimum wage is not required. For example, a PIE program at the South Central Correctional Facility in Tennessee produced T-shirts for Taco Bell, among other customers. Prisoners who printed the T-shirts received minimum wage while those who packaged the shirts for shipping – labor classified as service rather than production work – were paid $.50 per hour.
According to an October 2008 NCIA report on PIECP compliance assessments, “wages were the single most difficult requirement for PIECP Certificate Holders to implement.” The report noted that six of the 28 jurisdictions assessed had “wage issues of some kind,” though that was “considerably less than in the previous assessment cycle.” Most of those wage-related issues were considered significant; three were “serious enough to involve the potential payment of back wages.”
The report stated that “PIECP managers tend to try to hold wages at or near the minimum wage, sometimes for very long periods of time. They argue that their ability to attract PIECP partners depends upon keeping wages low. ... The result is that many PIECP inmate workers never achieve wage levels significantly above the minimum wage, despite the 10th percentile requirement.”
Additionally, “two jurisdictions were found to be deducting from the inmates’ gross pay for items other than the four deductions allowed under the PIECP statute.” The report concluded that assessors had discovered “instances of major non-compliance in eight jurisdictions, which is roughly 25% of the jurisdictions assessed.”
These findings are likely optimistic, as the NCIA report frankly acknowledged that “no independent observers were used” in the assessments, “no assessor training was provided,” a majority of the findings relied on “desk assessments” rather than “on-site assessments where an assessor ... observed the operation first-hand,” and much of the information relied upon by NICA assessors was provided by the PIECP program members themselves.
PIECP Private Sector Corporate Abuses
In the 1990s, a Delaware corporation, U.S. Technologies, Inc., decided to capitalize on PIE programs by using prison labor to create products for various businesses and manufacturers nationwide. According to its SEC filings, “Historically, the Company has been engaged, directly and through its wholly owned subsidiary UST Industries, Inc. (“UST’), in the operation of industrial facilities located within both private and state prisons, which are staffed principally with prison labor. UST’s prison-based operations are conducted under the guidelines of the 1979 Prison Industry Enhancement (‘PIE’) pro-gram.”
As described above, U.S. Technologies, through its subsidiary UST – previously known as Lockhart Technologies – partnered with Wackenhut Corrections to operate a prison industry program at a Wackenhut facility in Lockhart, Texas, resulting in the loss of 150 free-world jobs.
In 2004, the SEC charged U.S. Technologies’ chairman, C. Gregory Earls, with securities and wire fraud and misappropriation of investors’ funds totaling $13.8 million. He was convicted and sentenced in 2005 to 125 months in federal prison. U.S. Technologies was de-registered as a publicly traded firm as part of a settlement with the SEC; the company’s subsidiary, UST, went out of business as a result of tax forfeiture.
Once the UST / Lockhart Technologies industry program shut down at the Wackenhut facility in Texas, another opera-tion moved in: OnShore Resources, Inc. OnShore apparently took over where UST left off, even using the same address. The company partnered with Wackenhut to use prison labor to manufacture wiring harnesses and related products – the same type of goods that UST had produced. OnShore advertises itself as a minority-owned company that operates as a “PIECP participant.” See: www.onshore-resources.com.
OnShore uses its PIECP program as a tool to attract other businesses. The company’s “product” is basically prisoner labor, and it provides that labor source to other manufacturers regardless of the goods being produced. This is nothing less than a thinly-veiled prison labor brokerage service that offers the benefits of PIECP programs to other companies that want to reduce costs by using incarcerated workers.
As previously reported in PLN, in 2002 the California Dept. of Corrections and Rehabilitation (CDCR) and CMT Blues, a CDCR joint venture industry partner, were sued for underpaying prisoner workers. Prisoners at the R.J. Donovan Correctional Facility who made T-shirts for CMT filed a class-action suit, claiming they were not paid during a 30-day training period, did not receive overtime pay and were not paid prevailing wages, in violation of state labor laws. They received the California minimum wage of $6.75 per hour, while prevailing free-world wages were $8.37 to $13.55 an hour. CMT Blues was further accused of “directing inmates to remove and replace ‘Made in Honduras’ labels [on T-shirts] with others reading ‘Made in the USA.’” [See: PLN, July 1998, p.17].
The prisoners’ lawsuit was later joined by a private citizen, Cristina Vasquez, vice-president of UNITE, an organized labor group. CMT counter-sued the CDCR, complaining that it had been misled by the department’s promises of cheap prison labor. Two other CDCR joint venture industry partners, Western Manufacturing and Pub Brewing, also were accused of shorting the wages of PIECP workers.
The Superior Court found that CMT Blues had engaged in unlawful and unfair business practices, and awarded $841,188.44 in back pay and damages to 167 prisoners plus $435,000 in attorney fees and $65,000 in costs. [See: PLN, Dec. 2004, p.16; Oct. 2003, p.26; Dec. 2002, p.16]. Vasquez’s claim resulted in a stipulated injunction with the CDCR, and the court awarded her $1.25 million in attorney fees.
The injunction required the state to obtain wage plans and duty statements from each joint venture partner, to comply with all record-keeping requirements, to provide payroll data to Vasquez’s attorneys, to identify comparable private sector wages, to require joint venture employers to notify prisoners of their rights under state labor laws, to establish wage-related grievance procedures for prisoners, to require joint venture partners to post bonds to secure payment of wages, to notify the court and Vasquez’s counsel of defaults in wage payments, and to take reasonable steps to collect overdue wages. However, the CDCR repeatedly failed to comply with the injunction and appealed the fee award. [See: PLN, March 2008, p.18].
On November 20, 2008, the California Supreme Court upheld the award of attorney fees under the state’s private attorney general statute (Code Civ. Proc. § 1021.5), rejecting the state’s argument that plaintiffs must first attempt to settle “before resorting to litigation” under § 1021.5. See: Vasquez v. State of California, 195 P.3d 1049, 45 Cal. 4th 243 (Cal. 2008), modified with no change in judgment, 2008 Cal. LEXIS 13923.
While the California Prison Industry Authority still operates private sector joint venture programs, CMT Blues, Western Manufacturing and Pub Brewing are no longer partners.
Why Everyone Should Be Concerned
There is no question that products manufactured using prison labor cost less to make than comparable products produced by private sector businesses. But at what cost to consumers and to free-world competitors and their employees?
This involves considerations beyond what is fair for incarcerated workers, and weighs the benefits of employing prisoners in PIECP programs, ostensibly as a means of job training, against the impact on free-world businesses and the loss of private sector jobs. Since 1999, PIE programs have expanded considerably; there are now 42 participating state or county agencies. In Florida alone, PRIDE currently operates eleven PIECP industries.
Companies that seek profits at any cost have adopted prison industry programs as a way to fight economic down-turns, staffing problems and competitor pricing. By partnering with PIE programs to use inexpensive prison labor, they can significantly boost their bottom lines. Many prison industries offer the use of prison-based workspace at nominal cost, plus incarcerated workers receive no employee benefits such as vacations or health insurance.
This clearly gives prison industries and their PIECP partners a considerable advantage over free-world competitors. Most private sector businesses have to provide prevailing wages, vacations, insurance and other benefits to their employees. They must pay to lease or buy manufacturing space, and have to deal with employee turnover or transient work-forces.
The evolution of PIECP from 1979 to the present has changed the program entirely, allowing it to be corrupted to a point where it is hardly recognizable as the beneficial program that was originally intended by Congress.
PIECP participants now look not to prisoner job training as a goal, but rather profit. The merger of private sector enterprise with prison labor has resulted in higher profit margins for a select few companies and businesses. Prison-made goods are routinely being sold to the general public on the open market, where such products were previously prohibited.
There have been repeated examples of free-world job losses due to prison industry programs. Although PIECP requires that no private sector jobs be sacrificed as a result of prison labor, that restriction is limited to the immediate locality and in any event is not enforced by the BJA or NCIA.
There are no statistics that clearly show the number of free-world jobs lost to PIECP programs. The BJA does not keep or provide such statistics. The NCIA has no idea, and prison industry operators will only claim that no jobs have been lost in their “locality” due to prison labor. Although only a small number of prisoners are involved in PIECP industry programs – approximately 4,700 nationwide – the impact on free-world businesses in terms of competition, lost or fore-gone private sector jobs, and depressed wages can be significant.
“Prison labor is one thing,” said Phil Neuenfeldt, secretary-treasurer for the Wisconsin State AFL-CIO. “But prison labor that provides unfair labor to the outside world and keeps pressure on wages downward is not a good thing.”
The solution to safeguarding private sector jobs while keeping PIECP programs from unfairly competing with free-world businesses is simple. Start by firmly enforcing the existing mandatory requirements of 18 U.S.C. § 1761 and the PIECP guidelines. The laws are in place and need only be applied. Abiding by these requirements would reduce the possibility of prison industry unfairly competing with private manufacturers or businesses. This includes ensuring that prisoners in PIECP programs are paid true prevailing wages.
The most important part of any solution would be the removal of oversight and review responsibilities from the NCIA. The NCIA has repeatedly shown that its agenda is at odds with the legal requirements and statutory intent of the PIECP. Continuing to allow prison industry administrators and employees, and their private sector partners, vendors and suppliers to be the only regulatory authority over PIE programs is ineffective and insufficient, and reeks of conflict of interest.
The Department of Justice’s BJA needs to resume its responsibility to oversee PIECP programs. Enforcement and regulation at the federal level is not only needed but should be required. Until such solutions are adopted, PIECP industry programs will continue to operate with impunity and to the detriment of everyone involved and affected – except, of course, the companies that are raking in money hand over fist as they exploit cheap prisoner labor.
Bob Sloan is an independent Prison Industries Consultant dedicated to reducing the number of private sector jobs lost to prison industries. He has worked with state and federal authorities for seven years to enforce PIECP requirements regarding prevailing wages and to identify improper sales of prison-made goods. A former prisoner who worked in a PIE program in Florida, he has been instrumental in bringing about investigations into PIECP abuses nationwide. For more information: www.piecp-violations.com.
To partially overcome the public’s lack of – and need for – everyday household, agricultural and other necessary items, many states began allowing their prison systems to put prisoners to work producing products for consumers. Some of those goods were distributed outside the state of manufacture and began to compete with private sector companies, which were already having difficultly finding markets for their products in the slow economy.
Legislating Limits on Prison Industry Programs
In 1924, the U.S. Secretary of Commerce, Herbert Hoover, held a conference on the “ruinous and unfair competition between prison-made products and free industry and labor” (70 Cong. Rec. S656 (1928)). As a result of that conference, an advisory committee was formed to study the issue. The need for such a committee was in response to complaints from private sector businesses alleging unfair competition from more and more prison-made goods finding their way to the marketplace. In 1928, the committee issued its report to Congress.
The eventual legislative response to the committee’s report led to some very important federal laws regulating the manufacture, sale and distribution of prison-made products. Congress enacted the Hawes-Cooper Act in 1929, the Ashurst-Sumners Act in 1935 (now known as 18 U.S.C. § 1761(a)), and the Walsh-Healey Act in 1936. Walsh controlled the production of prison-made goods while Ashurst prohibited the distribution of such products in interstate transportation or commerce. Both statutes authorized federal criminal prosecutions for violations of state laws enacted pursuant to the Hawes-Cooper Act.
The pertinent language of these statutes, as amended, now provides:
“Whoever knowingly transports in interstate commerce or from any foreign country into the United States any goods, wares, or merchandise manufactured, produced, or mined, wholly or in part by convicts or prisoners, except convicts or prisoners on parole, supervised release, or probation, or in any penal or reformatory institution, shall be fined under this title or imprisoned not more than two years, or both.”
Thus, for several decades to come, the manufacture of prisoner-made products for public or private sale and distribution was prohibited. Certain prison industry products were exempted by statute from the Ashurst-Sumners Act, including “agricultural commodities or parts for the repair of farm machinery.”
Codified at 18 U.S.C. § 1761, the Prison Industries Enhancement Certification Program (PIECP, or “PIE” as it is commonly called) was implemented in 1979. PIECP relaxed the restrictions imposed under the Ashurst-Sumners and Walsh-Healey Acts, and allowed for the manufacture, sale and distribution of prisoner-made products across state lines. However, PIECP limited participation in the program to 38 jurisdictions (later increased to 50), and required each to apply to the U.S. Department of Justice for certification.
PIECP includes mandatory requirements that must be met prior to receiving certification to participate in such prison industry programs. Eligible jurisdictions that apply to take part in PIECP must meet all nine of the following criteria:
1. Legislative authority to involve the private sector in the production and sale of prison-made goods, and administrative authority to ensure that mandatory program criteria will be met through internal policies and procedures.
2. Legislative authority to pay wages at a rate not less than that paid for similar work in the same locality’s private sector (termed “prevailing wages”).
3. Written assurances that the PIECP program will not result in the displacement of free-world workers already employed before the program is implemented.
4. Authority to provide worker benefits, including workers’ compensation or its equivalent.
5. Legislative or administrative authority to take deductions not to exceed 80 percent of prisoners’ gross wages for room and board; federal, state and local taxes; allocations for family support pursuant to state statute, court order or agreement of the offender; and contributions of not more than 20 percent but not less than 5 percent of gross wages to any fund established by law to compensate victims of crime.
6. Written assurances that participation by prisoner workers will be voluntary.
7. Written proof of consultation with related organized labor groups before startup of the PIECP program.
8. Written proof of consultation with related local private industry before startup of the PIECP program.
9. Compliance with the National Environmental Policy Act and related federal environmental review requirements.
The reasoning behind these stipulations, as mandated by Congress in 18 U.S.C. § 1761, was to allow competition be-tween prison industries and private sector manufacturers. The nine restrictions listed above were intended to “level the playing field.” By making the requirements mandatory, Congress believed they could ensure that prison industries were competitive with free-world businesses without giving either an unfair advantage.
But PIECP goes even further, by allowing private sector businesses to “partner” with prison industries through joint venture programs to manufacture products or provide services to the general public. These partnerships are also required to abide by the mandatory
requirements.
In 1999, the U.S. Department of Justice’s Bureau of Justice Assistance (BJA) issued final guidelines for PIECP pro-grams after allowing all participants to discuss and argue for or against the provisions to be contained within the guide-lines. The mandatory requirements were included in the guidelines and are now the “law of the land” with regard to prison industries and their private-sector business partners.
The Fox Guarding the Prison Industry Henhouse
PIECP programs include safeguards to ensure that Congress’ intent regarding the mandatory requirements are fol-lowed by all participants, with private sector companies and prison industries competing on an equal footing.
However, as with any situation where free enterprise and capitalism flourish, the pursuit of profits often outstrips rules and regulations designed to prevent abuses. There have been many examples of profiteering at the expense of regulatory compliance – such as with the current meltdown on Wall Street, the Enron and WorldCom scandals, and ponzi schemes like that of Bernie Madoff (which brought down the JEHT Foundation, a major funder of criminal justice programs) [See: PLN, June 2009, p.34]. Both individuals and businesses in pursuit of profit either ignore controlling laws or find loopholes.
PIECP is no different. In addition to the usual practice of exploiting free-world workers, corporations now exploit prisoner labor through PIECP programs. In the beginning, small businesses that had trouble hiring or retaining employees due to low wages or fluctuating work schedules solicited partnerships with prison industries. This changed dramatically by the 1990s, when companies such as Wal-Mart, Victoria’s Secret, Boeing, Microsoft, Starbucks and dozens of others joined the ranks of U.S. businesses that benefited from PIECP programs, usually through subcontractors. [See: PLN, April 2009, p.32; March 1997, p.1].
Prisoners are now making more than just license plates and road signs. Oregon’s prison factories are perhaps best known for the “Prison Blues” line of blue jeans and other clothing sold on the open market. Tennessee prisoners have manufactured clothes for Kmart and JC Penney, as well as wooden rocking ponies for Eddie Bauer and, more recently, hardwood flooring. Prisoners in Ohio produced car parts for Honda until the United Auto Workers intervened. Prisoners have been employed in data entry and computer circuit board assembly programs, and have even worked in a TWA call center. Incarcerated workers in Utah make cold-weather clothing for Northern Outfitters, while Arkansas prisoners produce cable assemblies and wire harnesses used in medical equipment.
Once private sector companies were allowed to partner with PIECP prison industries to manufacture products and make them available to the general public, they began seeking ways around the program’s mandatory requirements, which were interfering with the corporate goal of generating more profit.
In 1995, the BJA outsourced oversight and management of PIECP programs to a non-profit group, the National Correctional Industries Association (NCIA). The PIECP guidelines are available on NCIA’s website: www.nationalcia.org.
The government’s decision to use NCIA to fulfill its oversight responsibilities appeared to be a natural choice. The association was experienced and knowledgeable about prison industry operations, and was already established. The DOJ and BJA issued a handsome government grant to the NCIA to oversee PIECP programs. In the end, however, this proved to be a poor choice that has led to significant abuses.
Most of the NCIA’s members are administrators and employees of state prison industry programs and their PIECP private sector partners, vendors and suppliers. The association’s board of directors is almost exclusively composed of prison industry officials. Thus, the NCIA includes the very PIECP participants that it is charged with monitoring; in effect, it is overseeing itself.
The BJA requires PIECP partners to be reviewed for compliance with the mandatory requirements prior to starting any new industry program. Following issuance of a certificate allowing a prison industry to begin operations, the program must be reviewed for continuing compliance. These reviews – initial and annual – are to check the wages being paid to prisoner workers, to ensure deductions from those wages are used for the purposes permitted under 18 U.S.C. § 1761(c), and to verify that benefits are being provided and local unions and competing free-world businesses are being consulted.
Additionally, the NCIA handles complaints related to participating prison industries and their private sector partners. The association is supposed to investigate complaints, determine whether or not the prison industry program is in compliance, and if not, take steps to bring it into compliance.
Those are the responsibilities delegated to the NCIA. However, since the association’s board of directors is largely comprised of individuals deeply involved in prison industries, if an allegation of non-compliance is made against a PIECP program, the chances are high that the industry has an employee or administrator sitting on the NCIA’s board who can influence any investigation.
Over the past several years the NCIA has stopped performing annual reviews. Instead it reviews participating prison industries on a 24-month cycle, and only about 30% of the industries are reviewed during each cycle. Further, the NCIA has adopted the practice of conducting “desk assessments,” which are reviews of previously-filed documents from PIECP programs by NCIA staff. Unless there are problems noted or unresolved issues from previous reviews, a cursory desk assessment is all that is done to check such programs for compliance.
PIECP Prison Industry Violations & Abuses
Virtually all of the mandatory requirements for PIECP programs are being ignored or openly violated nationwide. One example involves the use of training periods to circumvent the requirement that prisoners be paid prevailing wages.
Of the 32 jurisdictions currently operating PIE programs, most have reduced “prevailing wages” for incarcerated workers to the state or federal minimum wage. In Florida, for example, Prison Rehabilitative Industries and Diversified Enterprises (PRIDE) uses a “training program” to limit the wages paid to PIECP workers.
PRIDE requires prisoners to complete a 480-hour training course (Level I), which pays minimum wage. Following this training period, the prisoner advances – with small pay increases – through three more levels until reaching Level IV after two years, where he or she “has the potential of making the prevailing wage.” At any time during the four-tiered training program the prisoner can be moved to another job position to begin training on different equipment, further extending the training period and keeping wages depressed.
This practice allows PRIDE, and other prison industries that follow a similar practice, to use prisoners to manufacture goods at reduced pay for years before they qualify to receive the prevailing wages to which they are entitled.
Consultation with Labor Groups
PIECP participants are required to consult with local organized labor groups prior to starting a prison industry pro-gram, to determine if the program will interfere with free-world employment. PRIDE and other prison industries routinely fail to comply with this requirement; instead, they sometimes advertise their intent to start or operate prison industry pro-grams in classified ads in local newspapers.
The requirement to consult with competing private sector businesses is handled in a similar manner. PRIDE notifies the local Chamber of Commerce instead of contacting local competing businesses to get them to sign off on prison industry programs. This puts the responsibility for such contacts and obtaining authorization on the Chamber of Commerce instead of on the prison industry, where it belongs.
PIECP requires any business that partners with a prison industry to maintain its free-world operations in addition to its prison-based program. This is to ensure that employees of the private sector PIECP partner are not replaced by prison labor. The PIECP partners are also required to maintain benefits and wages for non-prisoner workers at the same level as before their participation in the prison industry program. In several cases, however, companies have violated this provision without being sanctioned.
The requirements for private sector PIECP partners to consult with labor unions and competitors and to maintain their non-prison operations are important issues, as demonstrated by the 2008 closure of Lufkin Industries’ trailer division in Lufkin, Texas and the loss of 150 free-world jobs in Austin, Texas due to prison industry programs, among other exam-ples.
Free-world Job Losses
In the mid-1990s, Lockhart Technologies, Inc. partnered with Wackenhut Corrections (now known as GEO Group) to operate an industry program at a Wackenhut prison in Lockhart, Texas, assembling computer and electronic components. Wackenhut built an industrial workspace at the facility and agreed to lease the 25,000 sq. ft. space to Lockhart for $1.00 a year. Once the program was up and running, Lockhart closed its business operation located in nearby Austin, resulting in the termination of 150 employees. [See: PLN, June 1997, p.1; April 1996, p.1].
Lockhart owner Leonard Hill was candid about his use of prison labor. “Normally when you work in the free world, you have people call in sick, they have car problems, they have family problems. We don’t have that [in prison],” he stated.
“The incentive for companies to go into the prisons is pretty clear in some cases,” said Edward Sills, a spokesman for the Texas chapter of the AFL-CIO. “They don’t have to pay all the benefits, in some cases they pay very few of the benefits, that an outside company has to pay in the regular marketplace.”
In 2006, Texas Correctional Industries partnered with a private company in a prison industry program that manufactured flatbed trailers at the Michael Unit in Tennessee Colony. The private sector PIECP partner was Direct Trailer and Equipment Company (DTEC), owned by a former Texas prison employee. The Texas Private Sector Prison Industries Oversight Authority had failed to contact local organized labor groups prior to authorizing the operation. They also failed to contact Lufkin Industries or Bright Coop – Texas-based companies that manufactured the same type of trailers as DTEC.
Due to those failures, Lufkin and Bright were unaware that they faced a new competitor that was using cut-rate prison labor. With sales falling, Lufkin attributed the loss in business to the bad economy. The company decided to close its trailer division in January 2008; 90 employees were transferred and 60 were let go.
An investigation by Lufkin officials exposed the competition from DTEC’s prison industry program. It was further revealed that the trailers manufactured using prison labor were similar to Lufkin’s trailers but were being sold for as much as $2,000 less, due to DTEC’s reduced operating costs through the PIE program. [See: PLN, April 2009, p.25; Nov. 2008, p.12].
Texas lawmakers, concerned over the loss of jobs in Lufkin’s trailer division, quickly got involved. They discovered that failures by the state’s Private Sector Prison Industries Oversight Authority had led to unfair competition – including prisoners being paid minimum wage with no employee benefits, and DTEC being allowed to lease the industry facility at the Michael Unit for $1.00 a year.
Following the Lufkin debacle, Texas legislators passed a bill to address problems in the state’s PIECP programs (HB1914 / SB1169). Under the new law, the Private Sector Prison Industries Oversight Authority was disbanded and oversight was transferred to the Texas Department of Criminal Justice. The law, which was enacted in 2009, prohibits any PIECP program that would result in the loss of free-world jobs due to prison labor.
The PIE program with DTEC was discontinued after the company’s contract expired on March 1, 2009 and was not renewed. Texas still operates four PIECP programs, including the manufacture of aluminum windows and AC parts and heating valves.
Another PIECP program that resulted in the loss of free-world jobs involved Omega Pacific, a company located in Washington state that produced carabiners and other climbing equipment. In December 1995, Omega Pacific fired 30 employees and moved its operations to the Airway Heights Corrections Center near Spokane. Company owner Bert Atwater lauded the rent-free workspace at the facility and the use of low-cost prison labor, where “the workers are delighted with the pay; [there are] no workers who don’t come in because of rush hour traffic or sick children at home; [and] workers ... don’t take vacations. Where would these guys go on vacation anyway?” [See: PLN, Feb. 2000, p.12; March 1997, p.1].
Also in Washington state, Talon Industries, a company that used water jet technology, was forced out of business in 1999 and had to lay off 23 employees due to competition from MicroJet, a private sector PIECP partner at the Monroe Corrections Center. MicroJet was a contractor for Boeing that produced airplane parts.
Talon and an industry association sued Washington officials over the illegal use of prison labor under the state constitution, which led to a Washington Supreme Court ruling prohibiting the use of prisoners in private sector industries. However, no damages were awarded and the state constitution was amended by referendum in 2007 to allow prisoners to participate in such programs. [See: PLN, Feb. 2009, p.20, 30; Dec. 2004, p.22; Feb. 2000, p.13].
Wanting a Bigger Piece of the PIE
From 2002 to 2005, PRIDE operated a food processing industry program (Union Foods) at the Union Correctional Institution in Raiford, Florida. PRIDE partnered with ATL Industries, an Atlanta company. ATL eventually accused PRIDE of improper accounting during a financial dispute; PRIDE countered that ATL owed them money, seized all of the proprietary technology, equipment and products owned by the company, and forced ATL off prison property.
The son-in-law of PRIDE’s president then formed two separate companies (Century Meats and Circle A Brands), which took the place of ATL in the prison industry program, using ATL’s equipment and customer contacts. PRIDE and ATL have counter-sued each other, and the cases are still pending. See: ATL Industries v. PRIDE, Pinellas County Circuit Court (FL), Case Nos. 05-000696-CI-07 and 05-000797-CI-15.
It was later discovered that PRIDE had performed the same type of takeover of three other private sector businesses through PIECP partnerships prior to taking over ATL. In each case, PRIDE assumed control over joint venture prison in-dustry programs and put the former partners out of business. The other companies that were taken over by PRIDE in-cluded Custom Converter Sales, Value Line Converters and Fresh Nectars, Inc. PRIDE attempted a similar takeover of a fourth PIECP partner, Man-Trans, LLC, but reportedly settled with the company and returned its equipment as part of a settlement agreement.
The Florida Attorney General’s office held that several spin-off companies created by PRIDE, and owned or operated by PRIDE executives or board members, were in violation of state law. One of those companies, Industries Training Corp. (ITC), which ran PRIDES’ office and administrative operations, received millions of dollars in loans from the agency. In 2004, PRIDE CEO Pamela Jo Davis and president John Bruels were asked to resign, and PRIDE was told to sever its ties with the spin-off companies. Davis also served as president of ITC, which among other businesses owned Northern Outfitters, a company that manufactures extreme-weather clothing using prison labor in Utah.
Job Training for Lifers?
Prison industry programs often employ prisoners serving life or other long-term sentences. This disregards the fact that PIECP is intended to be a “vocational training program” for the purpose of training offenders and making them more employable upon their release. Providing job training to prisoners who have little or no opportunity for parole or release denies such training to other prisoners who will be released and can use the job skills they learn.
Another important and serious aspect of using lifers in PIECP or other prison industry programs is the access they have to dangerous tools and materials. Putting offenders with the least to lose in close proximity to saws, knives and other items that could be used as weapons places other prisoners and staff at risk.
This was dramatically demonstrated in Florida on June 25, 2008, when a PRIDE prison industry worker attacked and killed Donna Fitzgerald, 50, a guard at the Tomoka Correctional Institution. The weapon used was a “shank” made from sheet metal by prisoner Enoch Hall, who stabbed Fitzgerald repeatedly. He was charged with first-degree murder. [See: PLN, Nov. 2008, p.50]. Murders, escapes and serious assaults are all to common among the nation’s prison industry programs yet for legislators and prison officials this human toll is simply “the cost of doing business.”
An investigation revealed that Hall, who worked as a welder in a PRIDE program, was already serving two life sentences. He had received at least four disciplinary reports for problem behavior prior to Fitzgerald’s murder, but PRIDE pressured the institution to keep him on the job because the agency needed welders. A report by the Critical Incident Response Team found that the prison classification panel that placed prisoners in job positions had been “inappropriately influenced by PRIDE and their production priorities” in retaining Hall as a PRIDE worker. Hall was later found guilty of Fitzgerald’s murder; he was sentenced to death on January 15, 2010.
Prison industry programs have a motivation to employ offenders with life sentences or other lengthy prison terms, because keeping such prisoners in the same job for years results in quicker production by experienced workers, and thus more profit. However, as demonstrated by Donna Fitzgerald’s death, this practice is also dangerous. According to Florida law, 40 percent of prisoners who work in PRIDE programs must be serving sentences of ten years or more.
Deductions from Prisoners’ Pay
In terms of prisoner pay, PIECP guidelines allow prison industry programs to take four authorized deductions from the wages of incarcerated workers, up to a maximum of 80% of their total earnings, as follows:
“(A) Deductions from gross wages, if made, may be withheld only for the following authorized purposes:
“(1) taxes (federal, state, local); (2) in the case of a state prisoner, reasonable charges for room and board as deter-mined by regulations issued by the Chief State Correctional Officer; (3) allocations for support of family pursuant to state statute, court order, or agreement by the offender; and (4) contributions of not more than 20 percent, but not less than 5 percent of gross wages to any fund established by law to compensate the victims of crime.”
The BJA says that it maintains jurisdiction and authority over wage deductions to ensure that participating prison industries use the deductions for the purposes stated in the guidelines. In the case of room and board deductions, funds withheld from prisoners’ wages are intended to offset taxpayer expenditures for the cost of incarceration.
In Florida, PRIDE decided to take allowable deductions from the wages of PIECP workers. However, the agency diverted more than $3 million in “room and board” deductions to offset PIECP operations and program costs – not to reimburse the state or the Florida Dept. of Corrections for costs of incarceration.
A similar situation was recently reported in Iowa, involving wages for prisoners in a private sector industry program at the North Central Correctional Facility in Rockwell City. According to a November 7, 2009 news report, “Inmates were paid less than people in similar jobs that are from outside the correctional institution.” The industry program involved work at local grain elevators.
Free-world employees received $10.00 per hour; however, prisoners who performed similar job duties were paid $6.15 an hour. The $3.85 wage difference was due to an “up-front deduction” for transportation, supervision costs and work-related materials such as work clothes. This was permissible according to North Central Correctional Facility Warden Jim McKinney, who said the problem was one of “misinterpretation, or difference of interpretation.” A report by the state auditor found that the wage deductions were not being placed in the state’s general fund as required by law, but were being retained by the prison.
What Is a Prevailing Wage?
Although PIECP workers are supposed to receive prevailing wages for work comparable to that of free-world employees, this is rarely the case. In fact, the BJA determined in 2006 that wages for prisoners in PIECP programs “must be set at or above the 10th percentile as defined by the State Department of Economic Security agency.” The 10th percentile is the point at which 10% of workers earned below that amount and 90% earned more. In other words, starting wages for prisoners in PIE programs begin at an amount earned by the lowest-paid 10% of comparable free-world workers, but not less than minimum wage.
Further, prisoners who participate in PIE programs are only entitled to receive minimum or prevailing wages if they are engaged in production work. In some cases, PIECP programs have classified prison industry jobs as “service” rather than production positions, which means minimum wage is not required. For example, a PIE program at the South Central Correctional Facility in Tennessee produced T-shirts for Taco Bell, among other customers. Prisoners who printed the T-shirts received minimum wage while those who packaged the shirts for shipping – labor classified as service rather than production work – were paid $.50 per hour.
According to an October 2008 NCIA report on PIECP compliance assessments, “wages were the single most difficult requirement for PIECP Certificate Holders to implement.” The report noted that six of the 28 jurisdictions assessed had “wage issues of some kind,” though that was “considerably less than in the previous assessment cycle.” Most of those wage-related issues were considered significant; three were “serious enough to involve the potential payment of back wages.”
The report stated that “PIECP managers tend to try to hold wages at or near the minimum wage, sometimes for very long periods of time. They argue that their ability to attract PIECP partners depends upon keeping wages low. ... The result is that many PIECP inmate workers never achieve wage levels significantly above the minimum wage, despite the 10th percentile requirement.”
Additionally, “two jurisdictions were found to be deducting from the inmates’ gross pay for items other than the four deductions allowed under the PIECP statute.” The report concluded that assessors had discovered “instances of major non-compliance in eight jurisdictions, which is roughly 25% of the jurisdictions assessed.”
These findings are likely optimistic, as the NCIA report frankly acknowledged that “no independent observers were used” in the assessments, “no assessor training was provided,” a majority of the findings relied on “desk assessments” rather than “on-site assessments where an assessor ... observed the operation first-hand,” and much of the information relied upon by NICA assessors was provided by the PIECP program members themselves.
PIECP Private Sector Corporate Abuses
In the 1990s, a Delaware corporation, U.S. Technologies, Inc., decided to capitalize on PIE programs by using prison labor to create products for various businesses and manufacturers nationwide. According to its SEC filings, “Historically, the Company has been engaged, directly and through its wholly owned subsidiary UST Industries, Inc. (“UST’), in the operation of industrial facilities located within both private and state prisons, which are staffed principally with prison labor. UST’s prison-based operations are conducted under the guidelines of the 1979 Prison Industry Enhancement (‘PIE’) pro-gram.”
As described above, U.S. Technologies, through its subsidiary UST – previously known as Lockhart Technologies – partnered with Wackenhut Corrections to operate a prison industry program at a Wackenhut facility in Lockhart, Texas, resulting in the loss of 150 free-world jobs.
In 2004, the SEC charged U.S. Technologies’ chairman, C. Gregory Earls, with securities and wire fraud and misappropriation of investors’ funds totaling $13.8 million. He was convicted and sentenced in 2005 to 125 months in federal prison. U.S. Technologies was de-registered as a publicly traded firm as part of a settlement with the SEC; the company’s subsidiary, UST, went out of business as a result of tax forfeiture.
Once the UST / Lockhart Technologies industry program shut down at the Wackenhut facility in Texas, another opera-tion moved in: OnShore Resources, Inc. OnShore apparently took over where UST left off, even using the same address. The company partnered with Wackenhut to use prison labor to manufacture wiring harnesses and related products – the same type of goods that UST had produced. OnShore advertises itself as a minority-owned company that operates as a “PIECP participant.” See: www.onshore-resources.com.
OnShore uses its PIECP program as a tool to attract other businesses. The company’s “product” is basically prisoner labor, and it provides that labor source to other manufacturers regardless of the goods being produced. This is nothing less than a thinly-veiled prison labor brokerage service that offers the benefits of PIECP programs to other companies that want to reduce costs by using incarcerated workers.
As previously reported in PLN, in 2002 the California Dept. of Corrections and Rehabilitation (CDCR) and CMT Blues, a CDCR joint venture industry partner, were sued for underpaying prisoner workers. Prisoners at the R.J. Donovan Correctional Facility who made T-shirts for CMT filed a class-action suit, claiming they were not paid during a 30-day training period, did not receive overtime pay and were not paid prevailing wages, in violation of state labor laws. They received the California minimum wage of $6.75 per hour, while prevailing free-world wages were $8.37 to $13.55 an hour. CMT Blues was further accused of “directing inmates to remove and replace ‘Made in Honduras’ labels [on T-shirts] with others reading ‘Made in the USA.’” [See: PLN, July 1998, p.17].
The prisoners’ lawsuit was later joined by a private citizen, Cristina Vasquez, vice-president of UNITE, an organized labor group. CMT counter-sued the CDCR, complaining that it had been misled by the department’s promises of cheap prison labor. Two other CDCR joint venture industry partners, Western Manufacturing and Pub Brewing, also were accused of shorting the wages of PIECP workers.
The Superior Court found that CMT Blues had engaged in unlawful and unfair business practices, and awarded $841,188.44 in back pay and damages to 167 prisoners plus $435,000 in attorney fees and $65,000 in costs. [See: PLN, Dec. 2004, p.16; Oct. 2003, p.26; Dec. 2002, p.16]. Vasquez’s claim resulted in a stipulated injunction with the CDCR, and the court awarded her $1.25 million in attorney fees.
The injunction required the state to obtain wage plans and duty statements from each joint venture partner, to comply with all record-keeping requirements, to provide payroll data to Vasquez’s attorneys, to identify comparable private sector wages, to require joint venture employers to notify prisoners of their rights under state labor laws, to establish wage-related grievance procedures for prisoners, to require joint venture partners to post bonds to secure payment of wages, to notify the court and Vasquez’s counsel of defaults in wage payments, and to take reasonable steps to collect overdue wages. However, the CDCR repeatedly failed to comply with the injunction and appealed the fee award. [See: PLN, March 2008, p.18].
On November 20, 2008, the California Supreme Court upheld the award of attorney fees under the state’s private attorney general statute (Code Civ. Proc. § 1021.5), rejecting the state’s argument that plaintiffs must first attempt to settle “before resorting to litigation” under § 1021.5. See: Vasquez v. State of California, 195 P.3d 1049, 45 Cal. 4th 243 (Cal. 2008), modified with no change in judgment, 2008 Cal. LEXIS 13923.
While the California Prison Industry Authority still operates private sector joint venture programs, CMT Blues, Western Manufacturing and Pub Brewing are no longer partners.
Why Everyone Should Be Concerned
There is no question that products manufactured using prison labor cost less to make than comparable products produced by private sector businesses. But at what cost to consumers and to free-world competitors and their employees?
This involves considerations beyond what is fair for incarcerated workers, and weighs the benefits of employing prisoners in PIECP programs, ostensibly as a means of job training, against the impact on free-world businesses and the loss of private sector jobs. Since 1999, PIE programs have expanded considerably; there are now 42 participating state or county agencies. In Florida alone, PRIDE currently operates eleven PIECP industries.
Companies that seek profits at any cost have adopted prison industry programs as a way to fight economic down-turns, staffing problems and competitor pricing. By partnering with PIE programs to use inexpensive prison labor, they can significantly boost their bottom lines. Many prison industries offer the use of prison-based workspace at nominal cost, plus incarcerated workers receive no employee benefits such as vacations or health insurance.
This clearly gives prison industries and their PIECP partners a considerable advantage over free-world competitors. Most private sector businesses have to provide prevailing wages, vacations, insurance and other benefits to their employees. They must pay to lease or buy manufacturing space, and have to deal with employee turnover or transient work-forces.
The evolution of PIECP from 1979 to the present has changed the program entirely, allowing it to be corrupted to a point where it is hardly recognizable as the beneficial program that was originally intended by Congress.
PIECP participants now look not to prisoner job training as a goal, but rather profit. The merger of private sector enterprise with prison labor has resulted in higher profit margins for a select few companies and businesses. Prison-made goods are routinely being sold to the general public on the open market, where such products were previously prohibited.
There have been repeated examples of free-world job losses due to prison industry programs. Although PIECP requires that no private sector jobs be sacrificed as a result of prison labor, that restriction is limited to the immediate locality and in any event is not enforced by the BJA or NCIA.
There are no statistics that clearly show the number of free-world jobs lost to PIECP programs. The BJA does not keep or provide such statistics. The NCIA has no idea, and prison industry operators will only claim that no jobs have been lost in their “locality” due to prison labor. Although only a small number of prisoners are involved in PIECP industry programs – approximately 4,700 nationwide – the impact on free-world businesses in terms of competition, lost or fore-gone private sector jobs, and depressed wages can be significant.
“Prison labor is one thing,” said Phil Neuenfeldt, secretary-treasurer for the Wisconsin State AFL-CIO. “But prison labor that provides unfair labor to the outside world and keeps pressure on wages downward is not a good thing.”
The solution to safeguarding private sector jobs while keeping PIECP programs from unfairly competing with free-world businesses is simple. Start by firmly enforcing the existing mandatory requirements of 18 U.S.C. § 1761 and the PIECP guidelines. The laws are in place and need only be applied. Abiding by these requirements would reduce the possibility of prison industry unfairly competing with private manufacturers or businesses. This includes ensuring that prisoners in PIECP programs are paid true prevailing wages.
The most important part of any solution would be the removal of oversight and review responsibilities from the NCIA. The NCIA has repeatedly shown that its agenda is at odds with the legal requirements and statutory intent of the PIECP. Continuing to allow prison industry administrators and employees, and their private sector partners, vendors and suppliers to be the only regulatory authority over PIE programs is ineffective and insufficient, and reeks of conflict of interest.
The Department of Justice’s BJA needs to resume its responsibility to oversee PIECP programs. Enforcement and regulation at the federal level is not only needed but should be required. Until such solutions are adopted, PIECP industry programs will continue to operate with impunity and to the detriment of everyone involved and affected – except, of course, the companies that are raking in money hand over fist as they exploit cheap prisoner labor.
Bob Sloan is an independent Prison Industries Consultant dedicated to reducing the number of private sector jobs lost to prison industries. He has worked with state and federal authorities for seven years to enforce PIECP requirements regarding prevailing wages and to identify improper sales of prison-made goods. A former prisoner who worked in a PIE program in Florida, he has been instrumental in bringing about investigations into PIECP abuses nationwide. For more information: www.piecp-violations.com.
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Related legal case
Vasquez v. State of California
| Year | 2008 |
|---|---|
| Cite | 45 Cal.4th 243, 195 P.3d 1049, 85 Cal.Rptr.3d 466 (2008) |
| Level | State Supreme Court |
Supreme Court of California
Cristina VASQUEZ, Plaintiff and Respondent,
v.
STATE of California, Defendant and Appellant.
No. S143710.
Nov. 20, 2008.
As Modified Dec. 17, 2008.
***468 Archer Norris, Thomas S. Clifton, Colin C. Munro, Sonny T. Lee, Walnut Creek; Niddrie, Fish & Buchanan and Martin N. Buchanan, San Diego, for Defendant and Appellant.
Jarvis, Fay, Doporto & Gibson, Jarvis, Fay & Doporto, Oakland, and Andrea J. Saltzman, for League of California Cities and California State Association of Counties as Amici Curiae on behalf of Defendant and Appellant.
Edmund G. Brown, Jr., Attorney General, Manuel M. Medeiros, State Solicitor General, Tom Greene, Chief Assistant Attorney General, Theodora Berger, Assistant Attorney General, and Edward G. Weil, Deputy Attorney General, as Amici Curiae on behalf of Defendant and Appellant.
Altshuler, Berzon, Nussbaum, Rubin & Demain, Altshuler Berzon, Michael Rubin, San Francisco, Katherine M. Pollock; Law Offices of Robert Berke, Robert Berke, Santa Monica, Joseph A. Pertel; Law Offices of Robert S. Gerstein, Robert S. Gerstein; Law Offices of Janet Herold and Janet Herold, La Crescenta, for Plaintiff and Respondent.
Deborah J. La Fetra, for Pacific Legal Foundation as Amicus Curiae on behalf of Plaintiff and Respondent.
The Impact Fund, Brad Seligman, Berkeley, Julia Campins, Oakland; Litt, Estuar, Harrison & Kitson, Barret S. Litt and Paul J. Estuar, Los Angeles, as Amici Curiae on behalf of Plaintiff and Respondent.
Richard Rothschild, Los Angeles; Law Offices of Richard M. Pearl and Richard M. Pearl for Los Angeles County Bar Association, Berkeley, as Amicus Curiae on behalf of Plaintiff and Respondent.
WERDEGAR, J.
*247 **1051 Under the so-called private attorney general statute (Code Civ. Proc., § 1021.5, sometimes hereafter section 1021.5), a court may award attorney fees to the successful party in an action that has resulted in the enforcement of an important right affecting the public interest. In Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 560, 21 Cal.Rptr.3d 331, 101 P.3d 140 ( Graham ), we held the ?catalyst theory? permits a court to award attorney fees under section 1021.5 ?even when litigation does not result in a judicial resolution if the defendant changes its behavior substantially because of, and in the manner sought by, the litigation.? In so holding, we also adopted ?sensible limitations on the catalyst theory? ( Graham, at p. 575, 21 Cal.Rptr.3d 331, 101 P.3d 140) to discourage meritless suits motivated by the hope of fees, ?without putting a damper on lawsuits that genuinely provide a public benefit? ( ibid.).
Today we revisit one of the ?limitations on the catalyst theory? adopted in Graham, supra, 34 Cal.4th 553, 575, 21 Cal.Rptr.3d 331, 101 P.3d 140-specifically, the rule that the plaintiff in a ?catalyst case,? to recover attorney fees under section 1021.5, ?must have engaged in a reasonable attempt to settle its dispute with the defendant prior to litigation? ( Graham, at p. 561, 21 Cal.Rptr.3d 331, 101 P.3d 140). While this is not a catalyst case (see ***469 post, 85 Cal.Rptr.3d at p. 478, 195 P.3d at p. 1059), defendant argues the rule just mentioned should apply whenever fees are sought under section 1021.5. We hold that no such categorical rule applies in noncatalyst cases. In all cases, however, section 1021.5 requires the court to determine that ?the necessity and financial burden of private enforcement ... are such as to make the award appropriate....? ( Ibid., italics added.) In making this determination, one that implicates the court's equitable discretion concerning attorney fees, the court properly *248 considers all circumstances bearing on the question whether private enforcement was necessary, including whether the party seeking fees attempted to resolve the matter before resorting to litigation.
I. Introduction
Defendant and appellant the State of California petitions for review of a decision affirming an order awarding attorneys' fees under section 1021.5 to plaintiff and respondent Cristina Vasquez.
Proposition 139, known as the Prison Inmate Labor Initiative of 1990 (approved by voters, Gen. Elec. (Nov. 6, 1990), and codified as Pen.Code, § 2717.1 et seq.), instructs the Secretary of the Department of Correction and Rehabilitation to establish joint venture programs with private employers within state prison facilities to employ inmates ( id., § 2717.2; see id., § 5050). The law provides, among other things, that inmates be paid wages ?comparable to wages paid by the joint venture employer to non-inmate employees performing similar work for that employer? or wages ?comparable to wages paid for work of a similar nature in the locality in which the work is to be performed.? (Pen.Code, § 2717.8.) The law also requires the Secretary to deduct up to 80 percent of each inmate employee's gross wages for taxes, room and board, restitution to the victims of **1052 crime, and support for the inmate's family. ( Ibid.)
In August 1999, inmates Charles Ervin and Shearwood Fleming, together with the Union of Needletrades, Industrial & Textile Employees, AFL-CIO (UNITE), filed a complaint stating various causes of arising out a joint venture between the State of California and CMT Blues to manufacture clothing at the Richard J. Donovan Correctional Facility in San Diego. As subsequently amended, the complaint named as defendants CMT Blues, its manager Pierre Sleiman, and several corporations that resold CMT Blues' products under their own names. Plaintiffs alleged defendants had committed unfair business practices by failing to pay comparable wages (Pen.Code, § 2717.8) or minimum wages (Lab.Code, §§ 1197, 3351, subd. (e)), by directing inmates to remove and replace ?Made in Honduras? labels with others reading ?Made in the USA,? and by selling these garments to consumers throughout California.
In July 2000, a second amended complaint added Vasquez, the international vice-president of UNITE, as a plaintiff, and added as defendants the State of California and Noreen Blonien, assistant director of the Department of Corrections and Rehabilitation for joint venture programs (collectively hereafter the State). Vasquez, who asserted standing as a taxpayer to prevent the waste of state property (Code Civ. Proc., § 526a), alleged the State had *249 failed to collect and disburse payments due from joint venture employers, including CMT Blues. This failure had occurred, Vasquez alleged, because the State had permitted employers, in violation of Proposition 139, to require inmates to complete unpaid training periods of 30 to 60 days and to pay less than comparable wages.
***470 The State successfully demurred to Vasquez's taxpayer cause of action. Vasquez appealed, and the Court of Appeal reversed. ( Vasquez v. State of California (2003) 105 Cal.App.4th 849, 129 Cal.Rptr.2d 701.) The court rejected the State's argument that a taxpayer claim for waste lies only to prevent the unlawful expenditure of funds, and held that such a claim may also challenge the State's failure to collect funds. ( Id., at pp. 854-856, 129 Cal.Rptr.2d 701.)
While Vasquez's appeal was pending, the inmates' claims against CMT Blues were certified as a class action and tried without a jury. In August 2002, the court entered judgment for the plaintiff class, ordering CMT Blues to pay $841,188.44 in wages, liquidated damages, waiting time, penalties and interest. The court also awarded, based on the parties' stipulation, attorney fees of $435,000 and costs of $65,000.
The trial of Vasquez's taxpayer claim commenced in January 2004. The trial ended, however, when the parties agreed to a stipulated injunction, which the court approved on February 17, 2004, and later entered as a judgment. The injunction requires the State to submit written progress reports to the court every 90 days, to obtain wage plans and duty statements from each joint venture employer, to comply with all applicable record-keeping requirements, to provide payroll data to plaintiff's counsel, to identify comparable wages as required by Proposition 139, to require joint venture employers to notify inmates of their rights under Proposition 139 and the Labor Code, to establish wage-related grievance procedures for inmates, to require joint venture employers to post bonds to secure the payment of wages, to notify the court and plaintiff's counsel of defaults in wage payments, and to take reasonable steps to collect overdue wages. The court retained jurisdiction to enforce, modify and/or dissolve the injunction for a period of two years, subject to extension or termination for good cause, and also retained jurisdiction to award attorneys' fees.
Vasquez subsequently moved for attorney fees under section 1021.5. On August 11, 2004, the court awarded $1,257,258.60, based on a lodestar amount of $967,122 and a multiplier of 1.3. On October 28, 2004, the court entered judgment on the stipulated injunction and the award of attorney fees.
On December 2, 2004, we filed our decision in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, holding that the plaintiff in a catalyst case, to recover attorney fees under *250 section 1021.5, ?must have engaged in a reasonable attempt to settle its **1053 dispute with the defendant prior to litigation? ( Graham, at p. 561, 21 Cal.Rptr.3d 331, 101 P.3d 140).
On December 17, 2004, the State in this case appealed the award of attorney fees. In its opening brief on appeal, the State argued Vasquez was not entitled to recover fees under section 1021.5 because, among other reasons, she had not engaged in a reasonable attempt to settle before resorting to litigation. The Court of Appeal affirmed the fee award. Concerning the State's argument that Vasquez was required to have attempted to settle her claim, the court observed that Graham applied only to catalyst cases, that the instant case was not a catalyst case because Vasquez had obtained a stipulated injunction that was reduced to judgment, and that the State had in any event waived the argument by failing to raise it in the trial court and by failing sufficiently to develop the argument in its opening brief.
The State petitioned for review of the judgment to the extent it awarded attorney fees. We granted review and limited the issue to be briefed and argued as ***471 follows: ?Does the rule that, in order to receive attorney fees under Code of Civil Procedure section 1021.5, the plaintiff must first reasonably attempt to settle the matter short of litigation, apply to this case? (See Graham[, supra,] 34 Cal.4th 553, 557[, 21 Cal.Rptr.3d 331, 101 P.3d 140]; Grimsley v. Board of Supervisors (1985) 169 Cal.App.3d 960, 966-967[, 213 Cal.Rptr. 108].)?
II. Discussion
Section 1021.5 authorizes a court to ?award attorneys' fees to a successful party ... in any action which has resulted in the enforcement of an important right affecting the public interest....? The Legislature enacted the provision to codify the private attorney general doctrine previously developed by the courts. ( Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 933, 154 Cal.Rptr. 503, 593 P.2d 200 ( Woodland Hills ); cf. Serrano v. Priest (1977) 20 Cal.3d 25, 42-47, 141 Cal.Rptr. 315, 569 P.2d 1303 [approving the doctrine].) The doctrine rests on the recognition that privately initiated lawsuits, while often essential to effectuate important public policies, will as a practical matter frequently be infeasible without some mechanism authorizing courts to award fees. ( Graham, supra, 34 Cal.4th 553, 565, 21 Cal.Rptr.3d 331, 101 P.3d 140; see also Maria P. v. Riles (1987) 43 Cal.3d 1281, 1289, 240 Cal.Rptr. 872, 743 P.2d 932.) Accordingly, ? ?the fundamental objective of the doctrine is to encourage suits enforcing important public policies by providing substantial attorney fees to successful litigants in such cases.? ? ( Graham, at p. 565, 21 Cal.Rptr.3d 331, 101 P.3d 140, quoting Maria P. v. Riles, supra, at p. 1289, 240 Cal.Rptr. 872, 743 P.2d 932.)
[1] Headnote Citing References[2] Headnote Citing References[3] Headnote Citing References[4] Headnote Citing References A court may award attorney fees under section 1021.5 only if the statute's requirements are satisfied. Thus, a court may award fees only to ?a *251 successful party? and only if the action has ?resulted in the enforcement of an important right affecting the public interest....? ( Ibid.) Three additional conditions must also exist: ?(a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.? Section 1021.5 codifies the courts' ? traditional equitable discretion? concerning attorney fees ( Woodland Hills, supra, 23 Cal.3d 917, 938, 154 Cal.Rptr. 503, 593 P.2d 200), and within the statutory parameters courts retain considerable discretion. ?[T]he Legislature has assigned responsibility for awarding fees under section 1021.5 ?not to automatons ..., but to judges expected and instructed to exercise ?discretion.? ? ? ( Graham, supra, 34 Cal.4th 553, 575, 21 Cal.Rptr.3d 331, 101 P.3d 140, quoting Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources (2001) 532 U.S. 598, 640, 121 S.Ct. 1835, 149 L.Ed.2d 855 (dis. opn. of Ginsburg, J.).) In deciding whether to award fees, the court ?must realistically assess the litigation and determine, from a practical perspective, whether or not the action served to vindicate an important right so as to justify an attorney fee award under a **1054 private attorney general theory.? ( Woodland Hills, at p. 938, 154 Cal.Rptr. 503, 593 P.2d 200.) A reviewing court ?will uphold the trial court's decision to award attorney fees under section 1021.5, unless the court has abused its discretion.? ( Graham, at p. 578, 21 Cal.Rptr.3d 331, 101 P.3d 140.)
***472 A. May a Court Award Attorney Fees Under Section 1021.5 Only If the Plaintiff Attempted to Settle Before Resorting to Litigation?
[5] Headnote Citing References The State argues a court may never award attorney fees under section 1021.5 unless the plaintiff attempted to settle before resorting to litigation. Neither the language of the statute nor the cases interpreting it impose such a categorical requirement. In determining, however, whether ?the necessity and financial burden of private enforcement ... are such as to make the award appropriate? (§ 1021.5), a court properly takes into consideration whether the party seeking fees attempted to resolve the matter without litigation.
[6] Headnote Citing References[7] Headnote Citing References In construing section 1021.5 we begin with its plain language, affording the words their ordinary and usual meaning, as the words the Legislature chose to enact are the most reliable indicator of its intent. (See People v. Watson (2007) 42 Cal.4th 822, 828, 68 Cal.Rptr.3d 769, 171 P.3d 1101.) The statute's relevant language provides the court may award attorney fees if, among other things, ? the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate ....? (§ 1021.5, subd. (b), italics added.) This language does not expressly or by necessary *252 implication require that the plaintiff have attempted to settle the dispute; it requires, instead, only that the court determine that private enforcement was sufficiently necessary to justify the award. To be sure, failed attempts to settle can help to demonstrate that litigation was necessary, but the absence of settlement attempts does not logically or necessarily demonstrate the contrary. Depending on the circumstances of the case, attempts to settle may have been futile, exigent circumstances may have required immediate resort to judicial process, or prior efforts to call the problem to the defendant's attention-perhaps by other parties or in other proceedings-may have been rebuffed. The language of section 1021.5 is sufficiently flexible to permit courts to consider these and all other relevant circumstances in determining whether private enforcement was sufficiently necessary to justify awarding fees.FN1
FN1. In determining whether enforcement was sufficiently necessary to justify fees, the court also considers ?the necessity of private, as compared to public, enforcement....? ( Woodland Hills, supra, 23 Cal.3d 917, 941, 154 Cal.Rptr. 503, 593 P.2d 200, italics added.)
The State points to nothing in the legislative history of section 1021.5 that might support the categorical requirement of a prelitigation settlement demand. Moreover, the Legislature clearly knows how to require prelitigation demands unambiguously when that is what it wishes to do. Many statutes illustrate the point. For example, a plaintiff under the Consumers Legal Remedies Act (Civ.Code, § 1750 et seq.) must notify the defendant of the particular violations alleged and demand correction, repair, replacement, or other remedy at least 30 days before commencing an action for damages. ( Id., § 1782, subd. (a)(1)-(2).) The plaintiff in an action based on a health care provider's professional negligence must give the defendant at least 90 days' prior notice before commencing an action. (Code Civ. Proc., § 364, subd. (a).) A private plaintiff under the Safe Drinking Water and Toxic Enforcement Act of 1986 (Health & Saf.Code, § 25249.5 et seq.) must give notice, more than 60 days before commencing an action, to the alleged violator and to the Attorney General and the district attorney, city attorney, or prosecutor in whose jurisdiction the violation occurred. ( Id., § 25249.7, ***473 subd. (d)(1).) A plaintiff may not sue under the Tort Claims Act (Gov.Code, § 900 et seq.) unless he or she has first presented a written claim to the governing board of the defendant public entity and the board has acted upon the claim or the claim has been deemed rejected. ( Id., § 945.4.) The plaintiff in a derivative action against a corporation must allege with particularity**1055 his or her efforts to secure the desired relief from the board of directors, or the reasons for not making such efforts, and also allege that he or she has either informed the corporation or its board in writing of the facts underlying each cause of action or delivered a copy of the proposed complaint. (Corp.Code, § 800, subd. (b)(2).) Finally, the plaintiff in an action for libel in a newspaper or slander by radio broadcast may recover only special damages unless he or she first demands a correction. (Civ.Code, § 48a, subd. 1.)
[8] Headnote Citing References[9] Headnote Citing References *253 Thus, section 1021.5 as written does not require prelitigation demands, even though the Legislature is familiar with the language that will create such a requirement and has used such language on many occasions. Under these circumstances, our own views concerning the theoretical desirability or value of such a categorical requirement are beside the point. In construing this, or any, statute, our office is simply to ascertain and declare what the statute contains, not to change its scope by reading into it language it does not contain or by reading out of it language it does. We may not rewrite the statute to conform to an assumed intention that does not appear in its language. ( Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 545, 67 Cal.Rptr.3d 330, 169 P.3d 559.)
[10] Headnote Citing References We have not interpreted section 1021.5 as imposing a prelitigation settlement demand requirement in noncatalyst cases. In Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, we did require prelitigation demands, but only in catalyst cases. The question before us was the continuing viability of the catalyst theory, in other words, whether section 1021.5 permitted an award of attorney fees, as some courts had concluded, ?even when litigation does not result in a judicial resolution if the defendant changes its behavior substantially because of, and in the manner sought by, the litigation.? ( Graham, at p. 560, 21 Cal.Rptr.3d 331, 101 P.3d 140.) We held the catalyst theory ?should not be abolished but clarified.? ( Ibid.) To award fees in catalyst cases, we reasoned, posed a greater risk of rewarding opportunistic litigation than to award fees in cases that end with court-ordered changes in the parties' legal relationships, because a defendant's voluntary decision to change its behavior necessarily raises the question whether the plaintiff's legal work in fact caused the change and thus deserves to be rewarded with fees. On the other hand, to have abolished the catalyst theory would have deterred attorneys from taking meritorious public interest litigation by permitting defendants, even after tenacious litigation, to avoid paying fees by providing relief voluntarily just before being ordered to do so by the court. ( Id., at pp. 574-575, 21 Cal.Rptr.3d 331, 101 P.3d 140.) To avoid subjecting public interest litigation to ?this increased risk ... without rewarding a significant number of extortionate lawsuits,? we ?adopt[ed] sensible limitations on the catalyst theory that discourage the latter without putting a damper on lawsuits that genuinely provide a public benefit.? ( Id., at p. 575, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added.) We later summarized those limitations as follows: ?In order to obtain attorney fees without such a judicially recognized change in the legal relationship between the parties, a plaintiff must establish that (1) the ***474 lawsuit was a catalyst motivating the defendants to provide the primary relief sought; (2) that the lawsuit had merit and achieved its catalytic effect by threat of victory, not by dint of nuisance and threat of expense ...; and (3) that the plaintiffs reasonably attempted to settle the litigation prior to filing the lawsuit.? ( Tipton-Whittingham v. City of Los Angeles (2004) 34 Cal.4th 604, 608, 21 Cal.Rptr.3d 371, 101 P.3d 174 ( Tipton-Whittingham ).)
*254 That we intended to impose these limitations, including the prelitigation demand requirement, only in catalyst cases is clear from our discussion of the point in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140. There we wrote: ?In addition to some scrutiny of the merits, we conclude that another limitation on the catalyst rule proposed by the Attorney General, appearing as amicus curiae, should be adopted by this court. The Attorney General proposes that a plaintiff seeking attorney fees under a catalyst theory must first reasonably attempt to settle the matter short of litigation. (See **1056 Grimsley v. Board of Supervisors [, supra,] 169 Cal.App.3d 960, 966-967[, 213 Cal.Rptr. 108].) We believe this requirement is fully consistent with the basic objectives behind section 1021.5 and with one of its explicit requirements-the ?necessity ... of private enforcement? of the public interest. Awarding attorney fees for litigation when those rights could have been vindicated by reasonable efforts short of litigation does not advance that objective and encourages lawsuits that are more opportunistic than authentically for the public good. Lengthy prelitigation negotiations are not required, nor is it necessary that the settlement demand be made by counsel, but a plaintiff must at least notify the defendant of its grievances and proposed remedies and give the defendant the opportunity to meet its demands within a reasonable time. (See, e.g., S.D. v. Faulkner [ (S.D.Ind.1989) ] 705 F.Supp. [1361,] 1363 [letter notifying defendants of plaintiffs' grievances, plus discussions over two-month period]; see also Garrison v. Board of Directors (1995) 36 Cal.App.4th 1670, 1676 [, 43 Cal.Rptr.2d 214] [Pub. Resources Code, § 21177, subd. (b) requires California Environmental Quality Act litigants to inform agency of objections before litigation to give agency opportunity to respond].) What constitutes a ?reasonable? time will depend on the context.? ( Graham, supra, 34 Cal.4th 553, 577, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added.)
This passage from Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, does not hold or, given its context, even suggest that the plaintiff in a noncatalyst case must make a prelitigation settlement demand in order to preserve the right to recover fees under section 1021.5. The question was not before us, and ? ?[i]t is axiomatic that cases are not authority for propositions not considered.? ? ( People v. Avila (2006) 38 Cal.4th 491, 566, 43 Cal.Rptr.3d 1, 133 P.3d 1076, quoting People v. Ault (2004) 33 Cal.4th 1250, 1268, fn. 10, 17 Cal.Rptr.3d 302, 95 P.3d 523.)
If we had in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, described the prelitigation demand requirement in catalyst cases as compelled by the language of section 1021.5, then the case for applying the same requirement to all fee awards under the statute would be stronger. But in Graham we did no such thing. Instead, we described the requirement as ?fully consistent with the basic objectives behind section 1021.5 and with one of its explicit requirements-the ?necessity ... of private enforcement? of the public interest.? ( Graham, at p. 577, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added.) That a rule adopted by this court to guide *255 the exercise of judicial discretion is consistent with a statute does not mean ***475 the rule is compelled by the statute. As explained above, the language of section 1021.5 cannot fairly be read as requiring prelitigation demands.
That we did not in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, derive the catalyst-case demand requirement from the language of section 1021.5 is also clear from Graham's companion case, Tipton-Whittingham, supra, 34 Cal.4th 604, 21 Cal.Rptr.3d 371, 101 P.3d 174. In Tipton-Whittingham, we held that plaintiffs seeking attorney fees under the California Fair Employment and Housing Act (Gov.Code, § 12900 et seq.; hereafter the FEHA) under the catalyst theory must have attempted to settle before resorting to litigation, even though the FEHA's provision concerning attorney fees ( id., § 12965, subd. (b)),FN2 in contrast to section 1021.5, contains no reference to ?the necessity ... of private enforcement? ( Code Civ. Proc., § 1021.5). Rather than deriving the demand requirement from the language of the FEHA ( Gov.Code, § 12965, subd. (b)), which would have been impossible, we simply imposed the requirement ?[f]or the reasons explained in ... Graham ? ( Tipton-Whittingham, at p. 608, 21 Cal.Rptr.3d 371, 101 P.3d 174), namely, that the catalyst theory entailed risks and benefits that, on balance, justified the adoption of ? sensible limitations on the catalyst theory that discourage**1057 [extortionate suits] without putting a damper on lawsuits that genuinely provide a public benefit? ( Graham, at p. 575, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added).
FN2. Government Code section 12965, subdivision (b), provides in relevant part: ?In actions brought under this section, the court, in its discretion, may award to the prevailing party reasonable attorney's fees and costs, including expert witness fees, except where the action is filed by a public agency or a public official, acting in an official capacity.?
In the four years since we decided Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, no California court has applied Graham's demand requirement in a noncatalyst case. In 2005, one federal district court relied on Graham by analogy to impose a prelitigation demand requirement on motions seeking attorney fees under the Americans with Disabilities Act (42 U.S.C. § 12101 et seq. (ADA); see id., § 12205 [attorney fees] ). ( Doran v. Del Taco, Inc. (C.D.Cal.2005) 373 F.Supp.2d 1028, 1031-1034 ( Doran ).) But the district court's decision was reversed for that reason. The plaintiff in Doran, who had encountered barriers to his wheelchair in the defendant's restaurants, sued under the ADA and then settled his claims in an agreement designating him as the prevailing party for purposes of attorney fees. FN3 The district court, without noting that we had described the demand requirement as a ?limitation *256 on the catalyst rule? ( Graham, at p. 577, 21 Cal.Rptr.3d 331, 101 P.3d 140), misread Graham as ?adopt[ing] the view that, to recover attorneys' fees in a private attorney general case, a plaintiff must have engaged in a reasonable attempt to settle his or her dispute with the defendant before litigation.? ( Doran, supra, 373 F.Supp.2d 1028, 1032.) Purporting to adopt a similar rule as a matter of federal law under the ADA, the district ***476 court denied the plaintiff's motion for fees. ( Doran, at pp. 1033-1034.) The Ninth Circuit reversed, holding that the district court had ?denied fees by subjecting [the plaintiff] to a requirement not found in the ADA or the case law.? ( Doran v. Del Taco, Inc. (9th Cir.2007) 237 F.Appx. 148, 149.)
FN3. The federal courts have not awarded attorney fees under the catalyst theory since 2001, when the high court rejected that theory in Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, supra, 532 U.S. 598, 605-606, 121 S.Ct. 1835, 149 L.Ed.2d 855. The court in Doran, supra, 373 F.Supp.2d 1028, relied on a Ninth Circuit decision holding that a settlement agreement, as a legally enforceable instrument, can serve as a proper basis for awarding fees under federal law even after Buckhannon. ( Barrios v. Cal. Interscholastic Federation (9th Cir.2002) 277 F.3d 1128, 1134, fn. 5, cited in Doran, at p. 1029.)
The State argues that a 1985 lower court decision, Grimsley v. Board of Supervisors, supra, 169 Cal.App.3d 960, 213 Cal.Rptr. 108 ( Grimsley ), established the general rule that no plaintiff may ever recover fees under section 1021.5 without having attempted to settle before resorting to litigation, and that 19 years later in Graham we merely ?applied the holding of Grimsley to catalyst cases.? Nothing in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, however, suggests we believed that a generally applicable demand requirement existed or that we were merely applying a generally applicable requirement to catalyst cases. Instead, in announcing the demand requirement we described it as a ?limitation on the catalyst rule.? ( Id., at p. 577, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added; see also id., at p. 575, 21 Cal.Rptr.3d 331, 101 P.3d 140 [?limitation[ ] on the catalyst theory?].) Nor did we discuss Grimsley in our opinion; we cited the case without comment in describing the Attorney General's suggestion that we adopt a demand requirement in catalyst cases. ( Graham, at p. 577, 21 Cal.Rptr.3d 331, 101 P.3d 140.)
The plaintiff in Grimsley, supra, 169 Cal.App.3d 960, 213 Cal.Rptr. 108, sought attorney fees under section 1021.5 after winning a judgment setting aside a county's approval of a general plan and mandating compliance with certain statutory procedural requirements the county had neglected. The trial court denied the motion for fees, reasoning that the plaintiff had won ? ?on the narrowest grounds' ? ( Grimsley, at p. 965, 213 Cal.Rptr. 108), had brought about no substantive change in the general plan, and had not enforced an important right affecting the public interest, as required by section 1021.5 ( ibid.). On appeal, the reviewing court affirmed, emphasizing that trial courts' decisions concerning fees under section 1021.5 are ? discretionary ? ( Grimsley, at p. 965, 213 Cal.Rptr. 108) and ? ? may be guided by equitable principles ? ? ( ibid., italics added). Applying its equitable discretion to the facts of the case, the Court of Appeal concluded that **1058 ? it [ was ] a near certainty that had Grimsley timely pointed out to an appropriate county official or agency, the respects in which [the relevant procedural statutes] had not been followed, appropriate corrective action would have been promptly forthcoming.? ( Id., at p. 966, 213 Cal.Rptr. 108, italics added.) The Grimsley court concluded its analysis by holding that ?attorney fees under ... section 1021.5, will not be awarded unless the plaintiff seeking *257 such fees had reasonably endeavored to enforce the ?important right affecting the public interest,? without litigation and its attendant expense.' ? ( Ibid.)
As we have explained, section 1021.5 does not require prelitigation settlement demands in noncatalyst cases. To the extent Grimsley, supra, 169 Cal.App.3d 960, 213 Cal.Rptr. 108, might be read to interpret the statute differently, the decision would be incorrect. No opinion published in the 19 years between Grimsley and Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, however, cites Grimsley as authority for denying a motion for attorney fees under section 1021.5 on the ground that the plaintiff failed to make a prelitigation settlement demand. Only one decision published before Graham even cites Grimsley on this point, and the court in that case declined to rely on Grimsley as a basis for withholding fees. ***477 ( Phipps v. Saddleback Valley Unified School Dist. (1988) 204 Cal.App.3d 1110, 1123, fn. 9, 251 Cal.Rptr. 720.)
Grimsley, supra, 169 Cal.App.3d 960, 213 Cal.Rptr. 108, does usefully illustrate the narrower principle that a court, in exercising its equitable discretion concerning attorney fees under section 1021.5, properly takes into consideration whether the party seeking fees attempted to resolve its dispute before resorting to litigation. Grimsley thus restates the statutory requirement that the party seeking fees under section 1021.5 must demonstrate that ?the necessity and financial burden of private enforcement ... are such as to make the award appropriate.? (§ 1021.5, subd. (b).) As the Grimsley court correctly observed, ? ?courts may be guided by equitable principles when awarding attorney's fees.? ? ( Grimsley, at p. 965, 213 Cal.Rptr. 108, quoting Harvard Investment Co. v. Gap Stores, Inc. (1984) 156 Cal.App.3d 704, 717, 202 Cal.Rptr. 891; see also Woodland Hills, supra, 23 Cal.3d 917, 938, 154 Cal.Rptr. 503, 593 P.2d 200 [§ 1021.5 codifies courts' traditional equitable discretion]; Graham, supra, 34 Cal.4th 553, 575, 21 Cal.Rptr.3d 331, 101 P.3d 140 [judges are expected to exercise discretion under § 1021.5].) While we did not in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, go so far as to require prelitigation settlement demands in noncatalyst cases, we acknowledged the general principle that prelitigation efforts to resolve a dispute, or their absence, properly inform the court's decision whether to award fees under section 1021.5. As we explained, ?[a]warding attorney fees for litigation when those rights could have been vindicated by reasonable efforts short of litigation does not advance [section 1021.5's] objective and encourages lawsuits that are more opportunistic than authentically for the public good.? ( Graham, at p. 577, 21 Cal.Rptr.3d 331, 101 P.3d 140.)
Other decisions also recognize that prelitigation efforts to resolve a dispute properly inform a court's exercise of discretion under section 1021.5. The court in Baxter v. Salutary Sportsclubs, Inc. (2004) 122 Cal.App.4th 941, 19 Cal.Rptr.3d 317, for example, affirmed an order denying attorney fees to a plaintiff who had successfully sued a health club to require trivial changes in its membership contracts, both because the suit had conferred no benefit on *258 the public ( id., at p. 946, 19 Cal.Rptr.3d 317) and because the litigation did not appear to have been necessary. Concerning the suit's necessity, the court found ?no evidence that [the plaintiff had] notified [the defendant] of the deficiencies in its contracts, or demanded their correction, before filing this action. Since [the defendant] corrected those minor deficiencies shortly after the suit was filed, it appears the litigation and the consequent attorney fees were largely, if not entirely, unnecessary.? ( Id., at pp. 946-947, 19 Cal.Rptr.3d 317, fns. omitted.)
Similarly, the court in Schwartz v. City of Rosemead (1984) 155 Cal.App.3d 547, 202 Cal.Rptr. 400, affirmed an order denying the plaintiff's motion for fees after the plaintiff **1059 successfully sued to require a city to conduct environmental review of a plan to construct a cogeneration plant on property adjacent to his own. The court reached this conclusion both because the financial burden plaintiff undertook in suing was not out of proportion to his personal interest in the case ( id., at p. 559, 202 Cal.Rptr. 400), and also because the plaintiff had neglected his statutory duty to inform the Attorney General of the action within 10 days of its filing ( id., at pp. 560-561, 202 Cal.Rptr. 400; see Code Civ. Proc., § 388, and Gov.Code, § 21167.7). While the relevant statutes did not make ***478 such notification a prerequisite to recovering fees, the plaintiff's failure to give notice tended to show that private enforcement had not been necessary: ?If the Attorney General had been promptly notified of [the plaintiff's] action and had decided to intervene, [the plaintiff] may not have been required to pursue his lawsuit to the extent he ultimately did. The service of pleadings on the Attorney General has the effect of informing that office of the action and permits the Attorney General to lend its power, prestige, and resources to secure compliance with CEQA and other environmental laws, perhaps without the necessity of prolonged litigation. If the Attorney General is properly served and elects not to intervene, then a plaintiff's pursuit of a lawsuit becomes presumptively ?necessary.? ? ( Schwartz v. City of Rosemead, supra, at p. 561, 202 Cal.Rptr. 400.)
[11] Headnote Citing References The State argues that policy considerations weigh against adopting different rules for catalyst and noncatalyst cases. The State suggests that a uniform demand requirement would encourage settlements, which the law generally favors ( Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 677, 186 Cal.Rptr. 589, 652 P.2d 437), and that different rules might create confusion for plaintiffs, who cannot know in advance whether any given case will settle and thus become a catalyst case subject to Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140. Our holding, however, neither discourages settlement nor creates confusion. As we have explained, settlement efforts (or their absence) are relevant in every case to show that ?the necessity and financial burden of private enforcement ... are such as to make the award appropriate ....? (§ 1021.5, italics added.) In assessing such information in a particular case to determine whether private enforcement was sufficiently necessary to justify an award of fees, the trial court exercises its equitable *259 discretion in light of all the relevant circumstances. FN4 That a plaintiff for tactical reasons might choose not to propose, or not to accept, a reasonable settlement offer is thus, in every case, a circumstance that potentially weighs against an award of fees. In Graham, we simply identified a set of cases at one end of the equitable spectrum that appeared to justify a bright-line rule because, in those cases, no court-ordered change in the parties' legal relationship exists to show that the public benefit supposedly meriting fees was caused by the plaintiff's litigation rather than by the defendant's voluntary action.
FN4. We presume the trial court, in exercising its discretion to award fees, was aware of the requirements of section 1021.5 and specifically of the requirement that ?the necessity and financial burden of private enforcement ... [be] such as to make the award appropriate.? ( Id., subd. (b).) The State does not argue to the contrary, except to urge that section 1021.5 requires prelitigation settlement demands in every case.
For all of these reasons, we answer in the negative the question on which we granted review: No rule applicable to this case required plaintiff, in order to recover attorney fees under Code of Civil Procedure section 1021.5, first to attempt to settle the matter short of litigation.FN5
FN5. Because section 1021.5 imposes no categorical settlement demand requirement, we need not consider whether any such requirement would admit an exception for futility. However, the claim that settlement efforts would have been futile is logically relevant to a trial court's determination of the question whether private enforcement was sufficiently necessary to justify an award of fees.
B. This Is Not a Catalyst Case.
The State argues in the alternative that we should treat this case as a catalyst case ***479 and, thus, hold that the prelitigation settlement demand requirement adopted for such cases **1060 in Graham, supra, 34 Cal.4th 553, 577, 21 Cal.Rptr.3d 331, 101 P.3d 140, applies. The argument lacks merit.
[12] Headnote Citing References While we did not in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, expressly define ?catalyst case,? a definition of the term is necessarily implicit both in Graham and in its companion case, Tipton-Whittingham, supra, 34 Cal.4th 604, 21 Cal.Rptr.3d 371, 101 P.3d 174. In Graham, we described ?the catalyst theory? as permitting attorneys fees to be awarded ?even when litigation does not result in a judicial resolution if the defendant changes its behavior substantially because of, and in the manner sought by, the litigation.? ( Graham, at p. 560, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added.) Similarly, in Tipton-Whittingham we held that Graham's ?limitations on the catalyst theory? ( Graham, at p. 575, 21 Cal.Rptr.3d 331, 101 P.3d 140) set out the factual prerequisites that a plaintiff must establish ?[i]n order to obtain attorney fees without ... a judicially recognized change in the legal relationship between the parties ....? *260 ( Tipton-Whittingham, at p. 608, 21 Cal.Rptr.3d 371, 101 P.3d 174, italics added.) FN6 Accordingly, and of necessity, a plaintiff who has not succeeded in obtaining ?a judicial resolution? ( Graham, at p. 560, 21 Cal.Rptr.3d 331, 101 P.3d 140) or ?a judicially recognized change in the legal relationship between the parties? ( Tipton-Whittingham, at p. 608, 21 Cal.Rptr.3d 371, 101 P.3d 174) must obtain attorney fees under the catalyst theory, or not at all.
FN6. The quoted language from Tipton-Whittingham, supra, 34 Cal.4th 604, 608, 21 Cal.Rptr.3d 371, 101 P.3d 174, derives indirectly from the high court's definition of the term ?prevailing party? in Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, supra, 532 U.S. 598, 604, 605, 121 S.Ct. 1835, 149 L.Ed.2d 855. (See Graham, supra, 34 Cal.4th 553, 569-570, 21 Cal.Rptr.3d 331, 101 P.3d 140.)
[13] Headnote Citing References[14] Headnote Citing References This case is not a catalyst case because Vasquez successfully obtained a stipulated injunction that was entered as a judgment and thus brought about a judicially recognized change in the parties' legal relationship. (See Tipton-Whittingham, supra, 34 Cal.4th 604, 608, 21 Cal.Rptr.3d 371, 101 P.3d 174.) As noted, the stipulated injunction imposes substantial continuing obligations on the State with respect to its joint venture programs with private employers. (See ante, 85 Cal.Rptr.3d at p. 470, 195 P.3d at p. 1052.) Cases decided since Tipton-Whittingham and Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, in which the plaintiffs have obtained injunctions or stipulated injunctions have not been treated as catalyst cases. ( County of Colusa v. California Wildlife Conservation Bd. (2006) 145 Cal.App.4th 637, 657-658, 52 Cal.Rptr.3d 1 [preliminary injunction and stay]; Lyons v. Chinese Hospital Assn. (2006) 136 Cal.App.4th 1331, 1341-1342, 1345-1348, 39 Cal.Rptr.3d 550 [stipulated judgment and injunction].) A stipulated injunction approved by a court and entered as a judgment is, in effect, a consent decree. Even the federal courts, which reject the catalyst theory, recognize a consent decree as a sufficient basis for awarding attorney fees. ( Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, supra, 532 U.S. 598, 604, 121 S.Ct. 1835, 149 L.Ed.2d 855; see also Graham, at p. 576, fn. 7, 21 Cal.Rptr.3d 331, 101 P.3d 140.)
[15] Headnote Citing References The State, citing Westside Community for Independent Living, Inc. v. Obledo (1983) 33 Cal.3d 348, 352, 188 Cal.Rptr. 873, 657 P.2d 365, contends that a catalyst case is simply one in which ? ?relief***480 is obtained through a ?voluntary? change in the defendant's conduct, through a settlement, or otherwise.? ? The State points to its voluntary conduct in agreeing to the stipulated injunction and in beginning, however slowly and incompletely, to implement the requirements of Proposition 139 before Vasquez became a party to the instant litigation. We have, however, never adopted the formula the State offers as the definition of a catalyst case. In Westside Community, we held simply that a voluntary change by the defendant can justify an award of attorneys' fees ?where ?plaintiffs' lawsuit was a catalyst motivating defendants to provide the primary relief sought....? ? ( Id., at p. 353, 188 Cal.Rptr. 873, 657 P.2d 365, quoting Robinson v. Kimbrough (5th Cir.1981) 652 F.2d 458, 465.) We quoted the same language in **1061 Graham, supra, 34 Cal.4th 553, 567, 21 Cal.Rptr.3d 331, 101 P.3d 140, to make the same point. In neither case, however, did we hold that a case in *261 which the plaintiff has successfully obtained a judicially recognized change in the parties' legal relationship must be treated as a catalyst case simply because the defendant took some voluntary step towards resolving the litigation.
Accordingly, we agree with the Court of Appeal that this is not a catalyst case and that the ?limitations on the catalyst theory? adopted in Graham, supra, 34 Cal.4th 553, 575-577, 21 Cal.Rptr.3d 331, 101 P.3d 140, do not properly apply here.
III. Disposition
The judgment of the Court of Appeal is affirmed.
WE CONCUR: GEORGE, C.J., KENNARD, BAXTER, CHIN, MORENO and CORRIGAN, JJ.
Cristina VASQUEZ, Plaintiff and Respondent,
v.
STATE of California, Defendant and Appellant.
No. S143710.
Nov. 20, 2008.
As Modified Dec. 17, 2008.
***468 Archer Norris, Thomas S. Clifton, Colin C. Munro, Sonny T. Lee, Walnut Creek; Niddrie, Fish & Buchanan and Martin N. Buchanan, San Diego, for Defendant and Appellant.
Jarvis, Fay, Doporto & Gibson, Jarvis, Fay & Doporto, Oakland, and Andrea J. Saltzman, for League of California Cities and California State Association of Counties as Amici Curiae on behalf of Defendant and Appellant.
Edmund G. Brown, Jr., Attorney General, Manuel M. Medeiros, State Solicitor General, Tom Greene, Chief Assistant Attorney General, Theodora Berger, Assistant Attorney General, and Edward G. Weil, Deputy Attorney General, as Amici Curiae on behalf of Defendant and Appellant.
Altshuler, Berzon, Nussbaum, Rubin & Demain, Altshuler Berzon, Michael Rubin, San Francisco, Katherine M. Pollock; Law Offices of Robert Berke, Robert Berke, Santa Monica, Joseph A. Pertel; Law Offices of Robert S. Gerstein, Robert S. Gerstein; Law Offices of Janet Herold and Janet Herold, La Crescenta, for Plaintiff and Respondent.
Deborah J. La Fetra, for Pacific Legal Foundation as Amicus Curiae on behalf of Plaintiff and Respondent.
The Impact Fund, Brad Seligman, Berkeley, Julia Campins, Oakland; Litt, Estuar, Harrison & Kitson, Barret S. Litt and Paul J. Estuar, Los Angeles, as Amici Curiae on behalf of Plaintiff and Respondent.
Richard Rothschild, Los Angeles; Law Offices of Richard M. Pearl and Richard M. Pearl for Los Angeles County Bar Association, Berkeley, as Amicus Curiae on behalf of Plaintiff and Respondent.
WERDEGAR, J.
*247 **1051 Under the so-called private attorney general statute (Code Civ. Proc., § 1021.5, sometimes hereafter section 1021.5), a court may award attorney fees to the successful party in an action that has resulted in the enforcement of an important right affecting the public interest. In Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 560, 21 Cal.Rptr.3d 331, 101 P.3d 140 ( Graham ), we held the ?catalyst theory? permits a court to award attorney fees under section 1021.5 ?even when litigation does not result in a judicial resolution if the defendant changes its behavior substantially because of, and in the manner sought by, the litigation.? In so holding, we also adopted ?sensible limitations on the catalyst theory? ( Graham, at p. 575, 21 Cal.Rptr.3d 331, 101 P.3d 140) to discourage meritless suits motivated by the hope of fees, ?without putting a damper on lawsuits that genuinely provide a public benefit? ( ibid.).
Today we revisit one of the ?limitations on the catalyst theory? adopted in Graham, supra, 34 Cal.4th 553, 575, 21 Cal.Rptr.3d 331, 101 P.3d 140-specifically, the rule that the plaintiff in a ?catalyst case,? to recover attorney fees under section 1021.5, ?must have engaged in a reasonable attempt to settle its dispute with the defendant prior to litigation? ( Graham, at p. 561, 21 Cal.Rptr.3d 331, 101 P.3d 140). While this is not a catalyst case (see ***469 post, 85 Cal.Rptr.3d at p. 478, 195 P.3d at p. 1059), defendant argues the rule just mentioned should apply whenever fees are sought under section 1021.5. We hold that no such categorical rule applies in noncatalyst cases. In all cases, however, section 1021.5 requires the court to determine that ?the necessity and financial burden of private enforcement ... are such as to make the award appropriate....? ( Ibid., italics added.) In making this determination, one that implicates the court's equitable discretion concerning attorney fees, the court properly *248 considers all circumstances bearing on the question whether private enforcement was necessary, including whether the party seeking fees attempted to resolve the matter before resorting to litigation.
I. Introduction
Defendant and appellant the State of California petitions for review of a decision affirming an order awarding attorneys' fees under section 1021.5 to plaintiff and respondent Cristina Vasquez.
Proposition 139, known as the Prison Inmate Labor Initiative of 1990 (approved by voters, Gen. Elec. (Nov. 6, 1990), and codified as Pen.Code, § 2717.1 et seq.), instructs the Secretary of the Department of Correction and Rehabilitation to establish joint venture programs with private employers within state prison facilities to employ inmates ( id., § 2717.2; see id., § 5050). The law provides, among other things, that inmates be paid wages ?comparable to wages paid by the joint venture employer to non-inmate employees performing similar work for that employer? or wages ?comparable to wages paid for work of a similar nature in the locality in which the work is to be performed.? (Pen.Code, § 2717.8.) The law also requires the Secretary to deduct up to 80 percent of each inmate employee's gross wages for taxes, room and board, restitution to the victims of **1052 crime, and support for the inmate's family. ( Ibid.)
In August 1999, inmates Charles Ervin and Shearwood Fleming, together with the Union of Needletrades, Industrial & Textile Employees, AFL-CIO (UNITE), filed a complaint stating various causes of arising out a joint venture between the State of California and CMT Blues to manufacture clothing at the Richard J. Donovan Correctional Facility in San Diego. As subsequently amended, the complaint named as defendants CMT Blues, its manager Pierre Sleiman, and several corporations that resold CMT Blues' products under their own names. Plaintiffs alleged defendants had committed unfair business practices by failing to pay comparable wages (Pen.Code, § 2717.8) or minimum wages (Lab.Code, §§ 1197, 3351, subd. (e)), by directing inmates to remove and replace ?Made in Honduras? labels with others reading ?Made in the USA,? and by selling these garments to consumers throughout California.
In July 2000, a second amended complaint added Vasquez, the international vice-president of UNITE, as a plaintiff, and added as defendants the State of California and Noreen Blonien, assistant director of the Department of Corrections and Rehabilitation for joint venture programs (collectively hereafter the State). Vasquez, who asserted standing as a taxpayer to prevent the waste of state property (Code Civ. Proc., § 526a), alleged the State had *249 failed to collect and disburse payments due from joint venture employers, including CMT Blues. This failure had occurred, Vasquez alleged, because the State had permitted employers, in violation of Proposition 139, to require inmates to complete unpaid training periods of 30 to 60 days and to pay less than comparable wages.
***470 The State successfully demurred to Vasquez's taxpayer cause of action. Vasquez appealed, and the Court of Appeal reversed. ( Vasquez v. State of California (2003) 105 Cal.App.4th 849, 129 Cal.Rptr.2d 701.) The court rejected the State's argument that a taxpayer claim for waste lies only to prevent the unlawful expenditure of funds, and held that such a claim may also challenge the State's failure to collect funds. ( Id., at pp. 854-856, 129 Cal.Rptr.2d 701.)
While Vasquez's appeal was pending, the inmates' claims against CMT Blues were certified as a class action and tried without a jury. In August 2002, the court entered judgment for the plaintiff class, ordering CMT Blues to pay $841,188.44 in wages, liquidated damages, waiting time, penalties and interest. The court also awarded, based on the parties' stipulation, attorney fees of $435,000 and costs of $65,000.
The trial of Vasquez's taxpayer claim commenced in January 2004. The trial ended, however, when the parties agreed to a stipulated injunction, which the court approved on February 17, 2004, and later entered as a judgment. The injunction requires the State to submit written progress reports to the court every 90 days, to obtain wage plans and duty statements from each joint venture employer, to comply with all applicable record-keeping requirements, to provide payroll data to plaintiff's counsel, to identify comparable wages as required by Proposition 139, to require joint venture employers to notify inmates of their rights under Proposition 139 and the Labor Code, to establish wage-related grievance procedures for inmates, to require joint venture employers to post bonds to secure the payment of wages, to notify the court and plaintiff's counsel of defaults in wage payments, and to take reasonable steps to collect overdue wages. The court retained jurisdiction to enforce, modify and/or dissolve the injunction for a period of two years, subject to extension or termination for good cause, and also retained jurisdiction to award attorneys' fees.
Vasquez subsequently moved for attorney fees under section 1021.5. On August 11, 2004, the court awarded $1,257,258.60, based on a lodestar amount of $967,122 and a multiplier of 1.3. On October 28, 2004, the court entered judgment on the stipulated injunction and the award of attorney fees.
On December 2, 2004, we filed our decision in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, holding that the plaintiff in a catalyst case, to recover attorney fees under *250 section 1021.5, ?must have engaged in a reasonable attempt to settle its **1053 dispute with the defendant prior to litigation? ( Graham, at p. 561, 21 Cal.Rptr.3d 331, 101 P.3d 140).
On December 17, 2004, the State in this case appealed the award of attorney fees. In its opening brief on appeal, the State argued Vasquez was not entitled to recover fees under section 1021.5 because, among other reasons, she had not engaged in a reasonable attempt to settle before resorting to litigation. The Court of Appeal affirmed the fee award. Concerning the State's argument that Vasquez was required to have attempted to settle her claim, the court observed that Graham applied only to catalyst cases, that the instant case was not a catalyst case because Vasquez had obtained a stipulated injunction that was reduced to judgment, and that the State had in any event waived the argument by failing to raise it in the trial court and by failing sufficiently to develop the argument in its opening brief.
The State petitioned for review of the judgment to the extent it awarded attorney fees. We granted review and limited the issue to be briefed and argued as ***471 follows: ?Does the rule that, in order to receive attorney fees under Code of Civil Procedure section 1021.5, the plaintiff must first reasonably attempt to settle the matter short of litigation, apply to this case? (See Graham[, supra,] 34 Cal.4th 553, 557[, 21 Cal.Rptr.3d 331, 101 P.3d 140]; Grimsley v. Board of Supervisors (1985) 169 Cal.App.3d 960, 966-967[, 213 Cal.Rptr. 108].)?
II. Discussion
Section 1021.5 authorizes a court to ?award attorneys' fees to a successful party ... in any action which has resulted in the enforcement of an important right affecting the public interest....? The Legislature enacted the provision to codify the private attorney general doctrine previously developed by the courts. ( Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 933, 154 Cal.Rptr. 503, 593 P.2d 200 ( Woodland Hills ); cf. Serrano v. Priest (1977) 20 Cal.3d 25, 42-47, 141 Cal.Rptr. 315, 569 P.2d 1303 [approving the doctrine].) The doctrine rests on the recognition that privately initiated lawsuits, while often essential to effectuate important public policies, will as a practical matter frequently be infeasible without some mechanism authorizing courts to award fees. ( Graham, supra, 34 Cal.4th 553, 565, 21 Cal.Rptr.3d 331, 101 P.3d 140; see also Maria P. v. Riles (1987) 43 Cal.3d 1281, 1289, 240 Cal.Rptr. 872, 743 P.2d 932.) Accordingly, ? ?the fundamental objective of the doctrine is to encourage suits enforcing important public policies by providing substantial attorney fees to successful litigants in such cases.? ? ( Graham, at p. 565, 21 Cal.Rptr.3d 331, 101 P.3d 140, quoting Maria P. v. Riles, supra, at p. 1289, 240 Cal.Rptr. 872, 743 P.2d 932.)
[1] Headnote Citing References[2] Headnote Citing References[3] Headnote Citing References[4] Headnote Citing References A court may award attorney fees under section 1021.5 only if the statute's requirements are satisfied. Thus, a court may award fees only to ?a *251 successful party? and only if the action has ?resulted in the enforcement of an important right affecting the public interest....? ( Ibid.) Three additional conditions must also exist: ?(a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.? Section 1021.5 codifies the courts' ? traditional equitable discretion? concerning attorney fees ( Woodland Hills, supra, 23 Cal.3d 917, 938, 154 Cal.Rptr. 503, 593 P.2d 200), and within the statutory parameters courts retain considerable discretion. ?[T]he Legislature has assigned responsibility for awarding fees under section 1021.5 ?not to automatons ..., but to judges expected and instructed to exercise ?discretion.? ? ? ( Graham, supra, 34 Cal.4th 553, 575, 21 Cal.Rptr.3d 331, 101 P.3d 140, quoting Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources (2001) 532 U.S. 598, 640, 121 S.Ct. 1835, 149 L.Ed.2d 855 (dis. opn. of Ginsburg, J.).) In deciding whether to award fees, the court ?must realistically assess the litigation and determine, from a practical perspective, whether or not the action served to vindicate an important right so as to justify an attorney fee award under a **1054 private attorney general theory.? ( Woodland Hills, at p. 938, 154 Cal.Rptr. 503, 593 P.2d 200.) A reviewing court ?will uphold the trial court's decision to award attorney fees under section 1021.5, unless the court has abused its discretion.? ( Graham, at p. 578, 21 Cal.Rptr.3d 331, 101 P.3d 140.)
***472 A. May a Court Award Attorney Fees Under Section 1021.5 Only If the Plaintiff Attempted to Settle Before Resorting to Litigation?
[5] Headnote Citing References The State argues a court may never award attorney fees under section 1021.5 unless the plaintiff attempted to settle before resorting to litigation. Neither the language of the statute nor the cases interpreting it impose such a categorical requirement. In determining, however, whether ?the necessity and financial burden of private enforcement ... are such as to make the award appropriate? (§ 1021.5), a court properly takes into consideration whether the party seeking fees attempted to resolve the matter without litigation.
[6] Headnote Citing References[7] Headnote Citing References In construing section 1021.5 we begin with its plain language, affording the words their ordinary and usual meaning, as the words the Legislature chose to enact are the most reliable indicator of its intent. (See People v. Watson (2007) 42 Cal.4th 822, 828, 68 Cal.Rptr.3d 769, 171 P.3d 1101.) The statute's relevant language provides the court may award attorney fees if, among other things, ? the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate ....? (§ 1021.5, subd. (b), italics added.) This language does not expressly or by necessary *252 implication require that the plaintiff have attempted to settle the dispute; it requires, instead, only that the court determine that private enforcement was sufficiently necessary to justify the award. To be sure, failed attempts to settle can help to demonstrate that litigation was necessary, but the absence of settlement attempts does not logically or necessarily demonstrate the contrary. Depending on the circumstances of the case, attempts to settle may have been futile, exigent circumstances may have required immediate resort to judicial process, or prior efforts to call the problem to the defendant's attention-perhaps by other parties or in other proceedings-may have been rebuffed. The language of section 1021.5 is sufficiently flexible to permit courts to consider these and all other relevant circumstances in determining whether private enforcement was sufficiently necessary to justify awarding fees.FN1
FN1. In determining whether enforcement was sufficiently necessary to justify fees, the court also considers ?the necessity of private, as compared to public, enforcement....? ( Woodland Hills, supra, 23 Cal.3d 917, 941, 154 Cal.Rptr. 503, 593 P.2d 200, italics added.)
The State points to nothing in the legislative history of section 1021.5 that might support the categorical requirement of a prelitigation settlement demand. Moreover, the Legislature clearly knows how to require prelitigation demands unambiguously when that is what it wishes to do. Many statutes illustrate the point. For example, a plaintiff under the Consumers Legal Remedies Act (Civ.Code, § 1750 et seq.) must notify the defendant of the particular violations alleged and demand correction, repair, replacement, or other remedy at least 30 days before commencing an action for damages. ( Id., § 1782, subd. (a)(1)-(2).) The plaintiff in an action based on a health care provider's professional negligence must give the defendant at least 90 days' prior notice before commencing an action. (Code Civ. Proc., § 364, subd. (a).) A private plaintiff under the Safe Drinking Water and Toxic Enforcement Act of 1986 (Health & Saf.Code, § 25249.5 et seq.) must give notice, more than 60 days before commencing an action, to the alleged violator and to the Attorney General and the district attorney, city attorney, or prosecutor in whose jurisdiction the violation occurred. ( Id., § 25249.7, ***473 subd. (d)(1).) A plaintiff may not sue under the Tort Claims Act (Gov.Code, § 900 et seq.) unless he or she has first presented a written claim to the governing board of the defendant public entity and the board has acted upon the claim or the claim has been deemed rejected. ( Id., § 945.4.) The plaintiff in a derivative action against a corporation must allege with particularity**1055 his or her efforts to secure the desired relief from the board of directors, or the reasons for not making such efforts, and also allege that he or she has either informed the corporation or its board in writing of the facts underlying each cause of action or delivered a copy of the proposed complaint. (Corp.Code, § 800, subd. (b)(2).) Finally, the plaintiff in an action for libel in a newspaper or slander by radio broadcast may recover only special damages unless he or she first demands a correction. (Civ.Code, § 48a, subd. 1.)
[8] Headnote Citing References[9] Headnote Citing References *253 Thus, section 1021.5 as written does not require prelitigation demands, even though the Legislature is familiar with the language that will create such a requirement and has used such language on many occasions. Under these circumstances, our own views concerning the theoretical desirability or value of such a categorical requirement are beside the point. In construing this, or any, statute, our office is simply to ascertain and declare what the statute contains, not to change its scope by reading into it language it does not contain or by reading out of it language it does. We may not rewrite the statute to conform to an assumed intention that does not appear in its language. ( Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 545, 67 Cal.Rptr.3d 330, 169 P.3d 559.)
[10] Headnote Citing References We have not interpreted section 1021.5 as imposing a prelitigation settlement demand requirement in noncatalyst cases. In Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, we did require prelitigation demands, but only in catalyst cases. The question before us was the continuing viability of the catalyst theory, in other words, whether section 1021.5 permitted an award of attorney fees, as some courts had concluded, ?even when litigation does not result in a judicial resolution if the defendant changes its behavior substantially because of, and in the manner sought by, the litigation.? ( Graham, at p. 560, 21 Cal.Rptr.3d 331, 101 P.3d 140.) We held the catalyst theory ?should not be abolished but clarified.? ( Ibid.) To award fees in catalyst cases, we reasoned, posed a greater risk of rewarding opportunistic litigation than to award fees in cases that end with court-ordered changes in the parties' legal relationships, because a defendant's voluntary decision to change its behavior necessarily raises the question whether the plaintiff's legal work in fact caused the change and thus deserves to be rewarded with fees. On the other hand, to have abolished the catalyst theory would have deterred attorneys from taking meritorious public interest litigation by permitting defendants, even after tenacious litigation, to avoid paying fees by providing relief voluntarily just before being ordered to do so by the court. ( Id., at pp. 574-575, 21 Cal.Rptr.3d 331, 101 P.3d 140.) To avoid subjecting public interest litigation to ?this increased risk ... without rewarding a significant number of extortionate lawsuits,? we ?adopt[ed] sensible limitations on the catalyst theory that discourage the latter without putting a damper on lawsuits that genuinely provide a public benefit.? ( Id., at p. 575, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added.) We later summarized those limitations as follows: ?In order to obtain attorney fees without such a judicially recognized change in the legal relationship between the parties, a plaintiff must establish that (1) the ***474 lawsuit was a catalyst motivating the defendants to provide the primary relief sought; (2) that the lawsuit had merit and achieved its catalytic effect by threat of victory, not by dint of nuisance and threat of expense ...; and (3) that the plaintiffs reasonably attempted to settle the litigation prior to filing the lawsuit.? ( Tipton-Whittingham v. City of Los Angeles (2004) 34 Cal.4th 604, 608, 21 Cal.Rptr.3d 371, 101 P.3d 174 ( Tipton-Whittingham ).)
*254 That we intended to impose these limitations, including the prelitigation demand requirement, only in catalyst cases is clear from our discussion of the point in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140. There we wrote: ?In addition to some scrutiny of the merits, we conclude that another limitation on the catalyst rule proposed by the Attorney General, appearing as amicus curiae, should be adopted by this court. The Attorney General proposes that a plaintiff seeking attorney fees under a catalyst theory must first reasonably attempt to settle the matter short of litigation. (See **1056 Grimsley v. Board of Supervisors [, supra,] 169 Cal.App.3d 960, 966-967[, 213 Cal.Rptr. 108].) We believe this requirement is fully consistent with the basic objectives behind section 1021.5 and with one of its explicit requirements-the ?necessity ... of private enforcement? of the public interest. Awarding attorney fees for litigation when those rights could have been vindicated by reasonable efforts short of litigation does not advance that objective and encourages lawsuits that are more opportunistic than authentically for the public good. Lengthy prelitigation negotiations are not required, nor is it necessary that the settlement demand be made by counsel, but a plaintiff must at least notify the defendant of its grievances and proposed remedies and give the defendant the opportunity to meet its demands within a reasonable time. (See, e.g., S.D. v. Faulkner [ (S.D.Ind.1989) ] 705 F.Supp. [1361,] 1363 [letter notifying defendants of plaintiffs' grievances, plus discussions over two-month period]; see also Garrison v. Board of Directors (1995) 36 Cal.App.4th 1670, 1676 [, 43 Cal.Rptr.2d 214] [Pub. Resources Code, § 21177, subd. (b) requires California Environmental Quality Act litigants to inform agency of objections before litigation to give agency opportunity to respond].) What constitutes a ?reasonable? time will depend on the context.? ( Graham, supra, 34 Cal.4th 553, 577, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added.)
This passage from Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, does not hold or, given its context, even suggest that the plaintiff in a noncatalyst case must make a prelitigation settlement demand in order to preserve the right to recover fees under section 1021.5. The question was not before us, and ? ?[i]t is axiomatic that cases are not authority for propositions not considered.? ? ( People v. Avila (2006) 38 Cal.4th 491, 566, 43 Cal.Rptr.3d 1, 133 P.3d 1076, quoting People v. Ault (2004) 33 Cal.4th 1250, 1268, fn. 10, 17 Cal.Rptr.3d 302, 95 P.3d 523.)
If we had in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, described the prelitigation demand requirement in catalyst cases as compelled by the language of section 1021.5, then the case for applying the same requirement to all fee awards under the statute would be stronger. But in Graham we did no such thing. Instead, we described the requirement as ?fully consistent with the basic objectives behind section 1021.5 and with one of its explicit requirements-the ?necessity ... of private enforcement? of the public interest.? ( Graham, at p. 577, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added.) That a rule adopted by this court to guide *255 the exercise of judicial discretion is consistent with a statute does not mean ***475 the rule is compelled by the statute. As explained above, the language of section 1021.5 cannot fairly be read as requiring prelitigation demands.
That we did not in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, derive the catalyst-case demand requirement from the language of section 1021.5 is also clear from Graham's companion case, Tipton-Whittingham, supra, 34 Cal.4th 604, 21 Cal.Rptr.3d 371, 101 P.3d 174. In Tipton-Whittingham, we held that plaintiffs seeking attorney fees under the California Fair Employment and Housing Act (Gov.Code, § 12900 et seq.; hereafter the FEHA) under the catalyst theory must have attempted to settle before resorting to litigation, even though the FEHA's provision concerning attorney fees ( id., § 12965, subd. (b)),FN2 in contrast to section 1021.5, contains no reference to ?the necessity ... of private enforcement? ( Code Civ. Proc., § 1021.5). Rather than deriving the demand requirement from the language of the FEHA ( Gov.Code, § 12965, subd. (b)), which would have been impossible, we simply imposed the requirement ?[f]or the reasons explained in ... Graham ? ( Tipton-Whittingham, at p. 608, 21 Cal.Rptr.3d 371, 101 P.3d 174), namely, that the catalyst theory entailed risks and benefits that, on balance, justified the adoption of ? sensible limitations on the catalyst theory that discourage**1057 [extortionate suits] without putting a damper on lawsuits that genuinely provide a public benefit? ( Graham, at p. 575, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added).
FN2. Government Code section 12965, subdivision (b), provides in relevant part: ?In actions brought under this section, the court, in its discretion, may award to the prevailing party reasonable attorney's fees and costs, including expert witness fees, except where the action is filed by a public agency or a public official, acting in an official capacity.?
In the four years since we decided Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, no California court has applied Graham's demand requirement in a noncatalyst case. In 2005, one federal district court relied on Graham by analogy to impose a prelitigation demand requirement on motions seeking attorney fees under the Americans with Disabilities Act (42 U.S.C. § 12101 et seq. (ADA); see id., § 12205 [attorney fees] ). ( Doran v. Del Taco, Inc. (C.D.Cal.2005) 373 F.Supp.2d 1028, 1031-1034 ( Doran ).) But the district court's decision was reversed for that reason. The plaintiff in Doran, who had encountered barriers to his wheelchair in the defendant's restaurants, sued under the ADA and then settled his claims in an agreement designating him as the prevailing party for purposes of attorney fees. FN3 The district court, without noting that we had described the demand requirement as a ?limitation *256 on the catalyst rule? ( Graham, at p. 577, 21 Cal.Rptr.3d 331, 101 P.3d 140), misread Graham as ?adopt[ing] the view that, to recover attorneys' fees in a private attorney general case, a plaintiff must have engaged in a reasonable attempt to settle his or her dispute with the defendant before litigation.? ( Doran, supra, 373 F.Supp.2d 1028, 1032.) Purporting to adopt a similar rule as a matter of federal law under the ADA, the district ***476 court denied the plaintiff's motion for fees. ( Doran, at pp. 1033-1034.) The Ninth Circuit reversed, holding that the district court had ?denied fees by subjecting [the plaintiff] to a requirement not found in the ADA or the case law.? ( Doran v. Del Taco, Inc. (9th Cir.2007) 237 F.Appx. 148, 149.)
FN3. The federal courts have not awarded attorney fees under the catalyst theory since 2001, when the high court rejected that theory in Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, supra, 532 U.S. 598, 605-606, 121 S.Ct. 1835, 149 L.Ed.2d 855. The court in Doran, supra, 373 F.Supp.2d 1028, relied on a Ninth Circuit decision holding that a settlement agreement, as a legally enforceable instrument, can serve as a proper basis for awarding fees under federal law even after Buckhannon. ( Barrios v. Cal. Interscholastic Federation (9th Cir.2002) 277 F.3d 1128, 1134, fn. 5, cited in Doran, at p. 1029.)
The State argues that a 1985 lower court decision, Grimsley v. Board of Supervisors, supra, 169 Cal.App.3d 960, 213 Cal.Rptr. 108 ( Grimsley ), established the general rule that no plaintiff may ever recover fees under section 1021.5 without having attempted to settle before resorting to litigation, and that 19 years later in Graham we merely ?applied the holding of Grimsley to catalyst cases.? Nothing in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, however, suggests we believed that a generally applicable demand requirement existed or that we were merely applying a generally applicable requirement to catalyst cases. Instead, in announcing the demand requirement we described it as a ?limitation on the catalyst rule.? ( Id., at p. 577, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added; see also id., at p. 575, 21 Cal.Rptr.3d 331, 101 P.3d 140 [?limitation[ ] on the catalyst theory?].) Nor did we discuss Grimsley in our opinion; we cited the case without comment in describing the Attorney General's suggestion that we adopt a demand requirement in catalyst cases. ( Graham, at p. 577, 21 Cal.Rptr.3d 331, 101 P.3d 140.)
The plaintiff in Grimsley, supra, 169 Cal.App.3d 960, 213 Cal.Rptr. 108, sought attorney fees under section 1021.5 after winning a judgment setting aside a county's approval of a general plan and mandating compliance with certain statutory procedural requirements the county had neglected. The trial court denied the motion for fees, reasoning that the plaintiff had won ? ?on the narrowest grounds' ? ( Grimsley, at p. 965, 213 Cal.Rptr. 108), had brought about no substantive change in the general plan, and had not enforced an important right affecting the public interest, as required by section 1021.5 ( ibid.). On appeal, the reviewing court affirmed, emphasizing that trial courts' decisions concerning fees under section 1021.5 are ? discretionary ? ( Grimsley, at p. 965, 213 Cal.Rptr. 108) and ? ? may be guided by equitable principles ? ? ( ibid., italics added). Applying its equitable discretion to the facts of the case, the Court of Appeal concluded that **1058 ? it [ was ] a near certainty that had Grimsley timely pointed out to an appropriate county official or agency, the respects in which [the relevant procedural statutes] had not been followed, appropriate corrective action would have been promptly forthcoming.? ( Id., at p. 966, 213 Cal.Rptr. 108, italics added.) The Grimsley court concluded its analysis by holding that ?attorney fees under ... section 1021.5, will not be awarded unless the plaintiff seeking *257 such fees had reasonably endeavored to enforce the ?important right affecting the public interest,? without litigation and its attendant expense.' ? ( Ibid.)
As we have explained, section 1021.5 does not require prelitigation settlement demands in noncatalyst cases. To the extent Grimsley, supra, 169 Cal.App.3d 960, 213 Cal.Rptr. 108, might be read to interpret the statute differently, the decision would be incorrect. No opinion published in the 19 years between Grimsley and Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, however, cites Grimsley as authority for denying a motion for attorney fees under section 1021.5 on the ground that the plaintiff failed to make a prelitigation settlement demand. Only one decision published before Graham even cites Grimsley on this point, and the court in that case declined to rely on Grimsley as a basis for withholding fees. ***477 ( Phipps v. Saddleback Valley Unified School Dist. (1988) 204 Cal.App.3d 1110, 1123, fn. 9, 251 Cal.Rptr. 720.)
Grimsley, supra, 169 Cal.App.3d 960, 213 Cal.Rptr. 108, does usefully illustrate the narrower principle that a court, in exercising its equitable discretion concerning attorney fees under section 1021.5, properly takes into consideration whether the party seeking fees attempted to resolve its dispute before resorting to litigation. Grimsley thus restates the statutory requirement that the party seeking fees under section 1021.5 must demonstrate that ?the necessity and financial burden of private enforcement ... are such as to make the award appropriate.? (§ 1021.5, subd. (b).) As the Grimsley court correctly observed, ? ?courts may be guided by equitable principles when awarding attorney's fees.? ? ( Grimsley, at p. 965, 213 Cal.Rptr. 108, quoting Harvard Investment Co. v. Gap Stores, Inc. (1984) 156 Cal.App.3d 704, 717, 202 Cal.Rptr. 891; see also Woodland Hills, supra, 23 Cal.3d 917, 938, 154 Cal.Rptr. 503, 593 P.2d 200 [§ 1021.5 codifies courts' traditional equitable discretion]; Graham, supra, 34 Cal.4th 553, 575, 21 Cal.Rptr.3d 331, 101 P.3d 140 [judges are expected to exercise discretion under § 1021.5].) While we did not in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, go so far as to require prelitigation settlement demands in noncatalyst cases, we acknowledged the general principle that prelitigation efforts to resolve a dispute, or their absence, properly inform the court's decision whether to award fees under section 1021.5. As we explained, ?[a]warding attorney fees for litigation when those rights could have been vindicated by reasonable efforts short of litigation does not advance [section 1021.5's] objective and encourages lawsuits that are more opportunistic than authentically for the public good.? ( Graham, at p. 577, 21 Cal.Rptr.3d 331, 101 P.3d 140.)
Other decisions also recognize that prelitigation efforts to resolve a dispute properly inform a court's exercise of discretion under section 1021.5. The court in Baxter v. Salutary Sportsclubs, Inc. (2004) 122 Cal.App.4th 941, 19 Cal.Rptr.3d 317, for example, affirmed an order denying attorney fees to a plaintiff who had successfully sued a health club to require trivial changes in its membership contracts, both because the suit had conferred no benefit on *258 the public ( id., at p. 946, 19 Cal.Rptr.3d 317) and because the litigation did not appear to have been necessary. Concerning the suit's necessity, the court found ?no evidence that [the plaintiff had] notified [the defendant] of the deficiencies in its contracts, or demanded their correction, before filing this action. Since [the defendant] corrected those minor deficiencies shortly after the suit was filed, it appears the litigation and the consequent attorney fees were largely, if not entirely, unnecessary.? ( Id., at pp. 946-947, 19 Cal.Rptr.3d 317, fns. omitted.)
Similarly, the court in Schwartz v. City of Rosemead (1984) 155 Cal.App.3d 547, 202 Cal.Rptr. 400, affirmed an order denying the plaintiff's motion for fees after the plaintiff **1059 successfully sued to require a city to conduct environmental review of a plan to construct a cogeneration plant on property adjacent to his own. The court reached this conclusion both because the financial burden plaintiff undertook in suing was not out of proportion to his personal interest in the case ( id., at p. 559, 202 Cal.Rptr. 400), and also because the plaintiff had neglected his statutory duty to inform the Attorney General of the action within 10 days of its filing ( id., at pp. 560-561, 202 Cal.Rptr. 400; see Code Civ. Proc., § 388, and Gov.Code, § 21167.7). While the relevant statutes did not make ***478 such notification a prerequisite to recovering fees, the plaintiff's failure to give notice tended to show that private enforcement had not been necessary: ?If the Attorney General had been promptly notified of [the plaintiff's] action and had decided to intervene, [the plaintiff] may not have been required to pursue his lawsuit to the extent he ultimately did. The service of pleadings on the Attorney General has the effect of informing that office of the action and permits the Attorney General to lend its power, prestige, and resources to secure compliance with CEQA and other environmental laws, perhaps without the necessity of prolonged litigation. If the Attorney General is properly served and elects not to intervene, then a plaintiff's pursuit of a lawsuit becomes presumptively ?necessary.? ? ( Schwartz v. City of Rosemead, supra, at p. 561, 202 Cal.Rptr. 400.)
[11] Headnote Citing References The State argues that policy considerations weigh against adopting different rules for catalyst and noncatalyst cases. The State suggests that a uniform demand requirement would encourage settlements, which the law generally favors ( Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 677, 186 Cal.Rptr. 589, 652 P.2d 437), and that different rules might create confusion for plaintiffs, who cannot know in advance whether any given case will settle and thus become a catalyst case subject to Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140. Our holding, however, neither discourages settlement nor creates confusion. As we have explained, settlement efforts (or their absence) are relevant in every case to show that ?the necessity and financial burden of private enforcement ... are such as to make the award appropriate ....? (§ 1021.5, italics added.) In assessing such information in a particular case to determine whether private enforcement was sufficiently necessary to justify an award of fees, the trial court exercises its equitable *259 discretion in light of all the relevant circumstances. FN4 That a plaintiff for tactical reasons might choose not to propose, or not to accept, a reasonable settlement offer is thus, in every case, a circumstance that potentially weighs against an award of fees. In Graham, we simply identified a set of cases at one end of the equitable spectrum that appeared to justify a bright-line rule because, in those cases, no court-ordered change in the parties' legal relationship exists to show that the public benefit supposedly meriting fees was caused by the plaintiff's litigation rather than by the defendant's voluntary action.
FN4. We presume the trial court, in exercising its discretion to award fees, was aware of the requirements of section 1021.5 and specifically of the requirement that ?the necessity and financial burden of private enforcement ... [be] such as to make the award appropriate.? ( Id., subd. (b).) The State does not argue to the contrary, except to urge that section 1021.5 requires prelitigation settlement demands in every case.
For all of these reasons, we answer in the negative the question on which we granted review: No rule applicable to this case required plaintiff, in order to recover attorney fees under Code of Civil Procedure section 1021.5, first to attempt to settle the matter short of litigation.FN5
FN5. Because section 1021.5 imposes no categorical settlement demand requirement, we need not consider whether any such requirement would admit an exception for futility. However, the claim that settlement efforts would have been futile is logically relevant to a trial court's determination of the question whether private enforcement was sufficiently necessary to justify an award of fees.
B. This Is Not a Catalyst Case.
The State argues in the alternative that we should treat this case as a catalyst case ***479 and, thus, hold that the prelitigation settlement demand requirement adopted for such cases **1060 in Graham, supra, 34 Cal.4th 553, 577, 21 Cal.Rptr.3d 331, 101 P.3d 140, applies. The argument lacks merit.
[12] Headnote Citing References While we did not in Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, expressly define ?catalyst case,? a definition of the term is necessarily implicit both in Graham and in its companion case, Tipton-Whittingham, supra, 34 Cal.4th 604, 21 Cal.Rptr.3d 371, 101 P.3d 174. In Graham, we described ?the catalyst theory? as permitting attorneys fees to be awarded ?even when litigation does not result in a judicial resolution if the defendant changes its behavior substantially because of, and in the manner sought by, the litigation.? ( Graham, at p. 560, 21 Cal.Rptr.3d 331, 101 P.3d 140, italics added.) Similarly, in Tipton-Whittingham we held that Graham's ?limitations on the catalyst theory? ( Graham, at p. 575, 21 Cal.Rptr.3d 331, 101 P.3d 140) set out the factual prerequisites that a plaintiff must establish ?[i]n order to obtain attorney fees without ... a judicially recognized change in the legal relationship between the parties ....? *260 ( Tipton-Whittingham, at p. 608, 21 Cal.Rptr.3d 371, 101 P.3d 174, italics added.) FN6 Accordingly, and of necessity, a plaintiff who has not succeeded in obtaining ?a judicial resolution? ( Graham, at p. 560, 21 Cal.Rptr.3d 331, 101 P.3d 140) or ?a judicially recognized change in the legal relationship between the parties? ( Tipton-Whittingham, at p. 608, 21 Cal.Rptr.3d 371, 101 P.3d 174) must obtain attorney fees under the catalyst theory, or not at all.
FN6. The quoted language from Tipton-Whittingham, supra, 34 Cal.4th 604, 608, 21 Cal.Rptr.3d 371, 101 P.3d 174, derives indirectly from the high court's definition of the term ?prevailing party? in Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, supra, 532 U.S. 598, 604, 605, 121 S.Ct. 1835, 149 L.Ed.2d 855. (See Graham, supra, 34 Cal.4th 553, 569-570, 21 Cal.Rptr.3d 331, 101 P.3d 140.)
[13] Headnote Citing References[14] Headnote Citing References This case is not a catalyst case because Vasquez successfully obtained a stipulated injunction that was entered as a judgment and thus brought about a judicially recognized change in the parties' legal relationship. (See Tipton-Whittingham, supra, 34 Cal.4th 604, 608, 21 Cal.Rptr.3d 371, 101 P.3d 174.) As noted, the stipulated injunction imposes substantial continuing obligations on the State with respect to its joint venture programs with private employers. (See ante, 85 Cal.Rptr.3d at p. 470, 195 P.3d at p. 1052.) Cases decided since Tipton-Whittingham and Graham, supra, 34 Cal.4th 553, 21 Cal.Rptr.3d 331, 101 P.3d 140, in which the plaintiffs have obtained injunctions or stipulated injunctions have not been treated as catalyst cases. ( County of Colusa v. California Wildlife Conservation Bd. (2006) 145 Cal.App.4th 637, 657-658, 52 Cal.Rptr.3d 1 [preliminary injunction and stay]; Lyons v. Chinese Hospital Assn. (2006) 136 Cal.App.4th 1331, 1341-1342, 1345-1348, 39 Cal.Rptr.3d 550 [stipulated judgment and injunction].) A stipulated injunction approved by a court and entered as a judgment is, in effect, a consent decree. Even the federal courts, which reject the catalyst theory, recognize a consent decree as a sufficient basis for awarding attorney fees. ( Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health and Human Resources, supra, 532 U.S. 598, 604, 121 S.Ct. 1835, 149 L.Ed.2d 855; see also Graham, at p. 576, fn. 7, 21 Cal.Rptr.3d 331, 101 P.3d 140.)
[15] Headnote Citing References The State, citing Westside Community for Independent Living, Inc. v. Obledo (1983) 33 Cal.3d 348, 352, 188 Cal.Rptr. 873, 657 P.2d 365, contends that a catalyst case is simply one in which ? ?relief***480 is obtained through a ?voluntary? change in the defendant's conduct, through a settlement, or otherwise.? ? The State points to its voluntary conduct in agreeing to the stipulated injunction and in beginning, however slowly and incompletely, to implement the requirements of Proposition 139 before Vasquez became a party to the instant litigation. We have, however, never adopted the formula the State offers as the definition of a catalyst case. In Westside Community, we held simply that a voluntary change by the defendant can justify an award of attorneys' fees ?where ?plaintiffs' lawsuit was a catalyst motivating defendants to provide the primary relief sought....? ? ( Id., at p. 353, 188 Cal.Rptr. 873, 657 P.2d 365, quoting Robinson v. Kimbrough (5th Cir.1981) 652 F.2d 458, 465.) We quoted the same language in **1061 Graham, supra, 34 Cal.4th 553, 567, 21 Cal.Rptr.3d 331, 101 P.3d 140, to make the same point. In neither case, however, did we hold that a case in *261 which the plaintiff has successfully obtained a judicially recognized change in the parties' legal relationship must be treated as a catalyst case simply because the defendant took some voluntary step towards resolving the litigation.
Accordingly, we agree with the Court of Appeal that this is not a catalyst case and that the ?limitations on the catalyst theory? adopted in Graham, supra, 34 Cal.4th 553, 575-577, 21 Cal.Rptr.3d 331, 101 P.3d 140, do not properly apply here.
III. Disposition
The judgment of the Court of Appeal is affirmed.
WE CONCUR: GEORGE, C.J., KENNARD, BAXTER, CHIN, MORENO and CORRIGAN, JJ.