In Huerta v. Kava Holdings, the Court held that Code of Civil Procedure Sec. 998 does not apply to non-frivolous Fair Employment and Housing Act (“FEHA”) litigation that predates the application of the amended version of Government Code Sec. 12965(b). Defendant terminated two restaurant servers after they were involved in an altercation during work. One of the fired employees sued defendant on a variety of legal theories. The trial court granted defendant’s motion for nonsuit as to plaintiff’s claim for retaliation under the FEHA and allowed the jury to decide plaintiff’s FEHA causes of action for harassment based on a hostile work environment, discrimination, and failure to prevent harassment and/or discrimination. The jury returned a verdict in defendant’s favor. After judgment was entered, the trial court found plaintiff’s action was not frivolous and denied defendant’s motion for attorney fees, expert fees and costs under Government Code section 12965(b). Based on plaintiff’s rejection of defendant’s pretrial section 998 settlement offer, however, the trial court awarded defendant $50,000 in costs and expert witness fees under that statute. The Court of Appeal stated that section 998 no longer has application to costs and attorney and expert witness fees in a FEHA action unless the lawsuit is found to be “frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.” Moreover, it stated for litigation that predated the application of the amended version of section 12965(b), section 998 does not apply to non-frivolous FEHA actions. The Court reversed the order awarding defendant costs and expert witness fees pursuant to that statute.

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