Howell v. State Dept. of State Hospitals

Facts

Three weeks of employment. Howell worked for the Department of State Hospitals as a temporary prelicensed psychiatric technician from January 2 to January 24, 2020. The department houses involuntarily committed patients, and the position carries physical duties “like crisis intervention and restraining patients who pose a risk to themselves or others.” As part of the hiring process she completed a preemployment health screening that asked her to disclose, among other things, “any disorders of the nervous system,” any “lung or respiratory trouble,” and any “shortness of breath.” She disclosed asthma and answered no to everything else. (Howell v. State Dept. of State Hospitals (2024) 107 Cal.App.5th 143, 147.)

What the screening did not capture. Howell had been diagnosed with major depressive disorder and post-traumatic stress disorder following a 2017 sexual assault by a patient inmate at a Department of Corrections and Rehabilitation hospital in Stockton, where she then worked as a certified nursing assistant. After the assault she experienced panic attacks with trouble breathing and shortness of breath, went on medical leave, and filed a workers’ compensation claim. (Howell, supra, 107 Cal.App.5th at p. 147.)

The termination. When Howell started at the department she was still on medical leave from Corrections; on January 3 she submitted a doctor’s note to Corrections saying she could not return before February 23 and could not work with prison inmates. The department learned of the leave status on or about January 22 through a routine interagency exchange about employment transfers, and a records search then turned up an injury to her “nervous system” inconsistent with what she had put on the health questionnaire. She was terminated on January 24. The department says it terminated her “without fault to minimize any negative impact to her state service career.” (Id. at p. 148.)

What went to the jury, and what came back. Howell pleaded FEHA claims for mental and physical disability discrimination, failure to accommodate, failure to engage in the interactive process, and failure to prevent discrimination. The trial court granted summary judgment on the accommodation and interactive-process claims; Howell dismissed the failure-to-prevent claim on the first day of trial. The jury found for her on mental disability discrimination only, awarding $28,941 in lost earnings, $7,810.25 in lost health insurance, and nothing for pain and suffering. (Ibid.)

The insurance evidence, in full. This is the whole record on the $7,810.25. Howell put in “an invoice from her healthcare provider for insurance premiums in the amount of $1,115.75.” In a footnote the court explains what happened next: the invoice covered March 1 to August 1, but in argument Howell “used the unpaid invoice to extrapolate that seven months of unpaid premiums would equal $7,810.25, which the jury awarded,” so “it appears Howell treated the invoice as the bill for a single month of coverage.” Then the two facts that decided the issue: “Howell testified that she never paid the invoice and never obtained any replacement insurance.” (Id. at p. 153 & fn. 10.)

Procedural history

Both sides moved after trial. Howell sought a limited new trial on noneconomic damages, or in the alternative a conditional additur of $70,000; the court denied it. The department moved for judgment notwithstanding the verdict and the court granted it, striking the lost-health-insurance award “because Howell had failed to present evidence of out-of-pocket expenses caused by the loss.” The department’s parallel new trial motion on the same award was treated as moot. (Howell, supra, 107 Cal.App.5th at p. 148.)

As the prevailing party Howell then sought “over $1.75 million in attorney fees, costs, and prejudgment interest.” The court awarded $135,102. (Ibid.) Howell appealed from the judgment and the posttrial orders, raising three errors: denial of the new trial motion, the striking of the insurance award, and the partial grant of the fee motion. (Id. at p. 149.)

Standards, and why they matter here. Because an order denying a new trial is not independently appealable, it is reviewed as part of the underlying judgment, and the reviewing court examines “the entire record, including the evidence, so as to make an independent determination whether the error was prejudicial.” But a new trial “shall not be granted . . . , unless after weighing the evidence the court is convinced from the entire record, including reasonable inferences therefrom, that the court or jury clearly should have reached a different verdict or decision,” and a reviewing court “can reverse the denial of a new trial motion based on insufficiency of the evidence or inadequate damages only if there is no substantial conflict in the evidence and the evidence compels the conclusion that the motion should have been granted.” (Id. at p. 149, quoting Hasson v. Ford Motor Co. (1982) 32 Cal.3d 388, 417, fn. 10, Code of Civil Procedure section 657, and Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th 720, 752.) On the judgment notwithstanding the verdict the court applied de novo review, because it was undisputed that the benefits stopped and that Howell obtained no substitute coverage — a purely legal question — while noting that “applying the more deferential substantial evidence standard would not produce different results.” (Id. at p. 152.) The fee order was reviewed for abuse of discretion. (Id. at p. 157.)

Issue

Three questions, all of them about remedy rather than liability: (1) whether a zero award for noneconomic damages, returned by a jury that found discrimination, was inadequate as a matter of law or unsupported by the evidence; (2) whether an award for lost health insurance benefits can stand where the employee never paid a premium and never purchased replacement coverage; and (3) whether the trial court abused its discretion in awarding $135,102 on a request for more than $1.75 million, and in failing to rule on an unopposed request for prejudgment interest. (Howell, supra, 107 Cal.App.5th at pp. 149, 152, 157.)

Holding

Reasoning

1. A zero verdict is not automatically inadequate. Howell’s lead authority was Dodson v. J. Pacific, Inc. (2007) 154 Cal.App.4th 931, where a trip-and-fall plaintiff required surgery and the jury awarded nothing for pain and suffering. The court distinguished it on the facts that make Dodson work: there, a “plaintiff who is subjected to a serious surgical procedure must necessarily have endured at least some pain and suffering in connection with the surgery.” Here, by contrast, “Howell does not allege that the termination caused her physical injury, nor was there undisputed evidence Howell ‘necessarily’ endured pain and suffering in connection with the termination as distinguished from the 2017 assault.” (Howell, supra, 107 Cal.App.5th at p. 151.) Her second case, Smith v. Covell (1980) 100 Cal.App.3d 947, turned on juror misconduct, which Howell had not raised as a statutory ground — and a new trial motion “is governed and limited by the statutory provisions, . . . and can be granted only on a ground specified in the motion.” (Ibid., quoting Malkasian v. Irwin (1964) 61 Cal.2d 738, 745.)

2. The causation evidence the defense built. The second half of the new-trial analysis is a lesson in how a zero verdict gets defended. Howell’s own qualified medical evaluator, Dr. Hahn, testified that her mental health symptoms “were substantially caused by the sexual assault at the CDCR,” that they had worsened in 2018 because of reexposure to the perpetrator, that they had “significantly improved” by July 2019, and that at a February 2020 examination — after the firing — she “presented essentially the best” he had ever seen her, having reached “maximal medical improvement.” The department’s expert, Dr. Berg, added the line that does the work: while the termination “bothered her,” “a lot of things bother a lot of people. Being bothered is not the same as having a mental disorder.” And Howell herself acknowledged that “Dr. Berg testified he did not believe the termination exacerbated any mental disorder.” (Howell, supra, 107 Cal.App.5th at pp. 150–152.) Against a record like that, the evidence did not compel any award.

3. Fringe benefits are compensatory damages, and compensatory damages require a loss. The insurance holding is not a rule that health coverage is non-compensable. It is an application of the ordinary requirement that a compensatory award repair an actual loss. The court anchored it in FEHA’s own remedial premise — the statutory objective is “to make the victim of discrimination whole,” and “courts must take care not to grant the employee a windfall” — and then simply observed that this record showed no loss at all. (Howell, supra, 107 Cal.App.5th at p. 153, quoting McCoy v. Pacific Maritime Assn. (2013) 216 Cal.App.4th 283, 308, and Morgado v. City and County of San Francisco (2020) 53 Cal.App.5th 1216, 1220.)

The trial court’s own explanation, which the Court of Appeal quoted with approval, is the cleanest statement of the point and is worth reading as the defense argument it will become: “There was no evidence at trial that Howell had suffered any out-of-pocket economic loss related to health insurance. Howell did not pay for alternative health insurance, nor did she suffer any economic losses as a result of payment for a non-insured loss. It would be entirely speculative to imagine the compensable value of health care as the cost of the premium.” (Id. at p. 153.)

4. Why Howell’s authorities did not help. Each of her cases failed for a reason worth knowing before you cite it. Potter v. Arizona So. Coach Lines, Inc. (1988) 202 Cal.App.3d 126 did not hold lost health insurance recoverable in a civil action; the Court of Appeal there affirmed dismissal for want of jurisdiction “due to the exclusivity of the workers’ compensation law,” and its discussion of benefits concerned what the Workers’ Compensation Appeals Board could award. Fidler v. Hollywood Park Operating Co. (1990) 223 Cal.App.3d 483 reversed the verdict at issue. Lane v. Hughes Aircraft Co. (1997) 56 Cal.App.4th 1038 was reversed by the Supreme Court and cannot “be cited or relied upon by a court or party.” Lowe v. California Resources Agency (1991) 1 Cal.App.4th 1140 defines backpay as including “fringe benefits (such as medical insurance)” in a footnote but does not discuss awards for them. And Ofsevit v. Trustees of California State University & Colleges (1978) 21 Cal.3d 763 affirmed “lost benefits” as part of a reinstatement remedy “without discussion of what the ‘benefits’ included,” in a First Amendment case. The court’s summary is the citation-discipline warning: because those cases “do not specifically address the issue of substitute benefits, they ‘are not authority for propositions that are not considered.’” (Howell, supra, 107 Cal.App.5th at pp. 153–154.) It also treated an undeveloped argument as waived, noting that a “reviewing court is not required to develop the parties’ arguments.” (Id. at p. 154.)

5. The federal rule the court adopted. Looking to federal precedent as FEHA cases routinely do, the court found the department’s position “more compelling,” citing Galindo v. Stoody Co. (9th Cir. 1986) 793 F.2d 1502, 1517, which reversed as “improper” an award based on anticipated insurance premiums absent a showing that the plaintiff “actually incurred expenses for substitute medical . . . coverage,” and Rivera v. Baccarat, Inc. (S.D.N.Y. 1999) 34 F.Supp.2d 870, 875, which measures the recovery by “the costs she incurred in maintaining health insurance coverage equivalent to that she received through” the former employer. (Howell, supra, 107 Cal.App.5th at pp. 154–155.) The operative word in both is incurred.

6. The fee cut, and the arithmetic behind it. The numbers tell the story. Counsel logged 1,444 hours between January 2020 and July 2023, “over two-thirds of which were spent preparing for and trying the case.” In a January 2023 settlement conference statement Howell put her fees and costs at $123,101.95. Seven months later the posttrial motion claimed a lodestar of $997,400 at $750 and $650 hourly rates, sought a 1.75 multiplier, and asked for $1,745,450 in fees plus $33,735.29 in costs; on reply the ask grew to $1,769,425. (Howell, supra, 107 Cal.App.5th at p. 156.) The trial court called the request “striking” and “unsupportable,” found the time “shocking” and “beyond all reason,” and concluded that “awarding the requested fees would effect an injustice” — but also that awarding nothing “would also effect an injustice as Howell did prevail on one of her claims at trial.” Its answer was to adopt Howell’s own pretrial estimate: the “solution that presents the least risk of effecting injustice is reliance on Howell’s January 4, 2023, estimate, which sought $123,102 in fees and costs,” plus “an additional amount to compensate counsel for the need to re-prepare for trial” after an unforeseen continuance — 12 hours for each of two trial counsel, or $12,000. Total: $135,102, with no multiplier. (Id. at pp. 156–157.)

7. Why that survived review. The governing principles were not in dispute: a prevailing FEHA plaintiff “should ordinarily receive his or her costs and attorney fees unless special circumstances would render such an award unjust,” the lodestar is the primary method, and a “fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.” (Howell, supra, 107 Cal.App.5th at p. 155, quoting Williams v. Chino Valley Independent Fire Dist. (2015) 61 Cal.4th 97, 115, and Chavez v. City of Los Angeles (2010) 47 Cal.4th 970, 990.) And where a court “substantially reduces a fee or cost request, we infer the court has determined the request was inflated.” (Id. at pp. 155–156, quoting Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1323.)

Two record problems sank the appeal. First, block billing: the court found the total hours “outside all bounds of reason given the number of issues involved in the matter and their relative lack of complexity,” and had “no systematic way to audit” them because counsel submitted only “block-billed” summaries — while “Howell proposes no alternative means of calculating a reasonable number of hours expended.” (Id. at p. 158.) Second, the multiplier was not presented as a multiplier: the court found Howell’s “surreptitious” addition of it into the hourly rates rendered the rates unreasonable, and separately determined “that $500 per hour is a reasonable hourly rate.” (Ibid.) The Court of Appeal also cleared the trial court of the specific improprieties Howell alleged — that it had penalized her for arithmetic errors, for limited success, or for the department’s $30,000 settlement offer — finding the court had recited those facts as context without using them to reduce the award, and pointing out that it had in fact added $12,000 for work performed after the offer. (Id. at p. 157.) On the taxpayer argument, the court’s only mention of taxpayers explained its refusal to apply a positive multiplier, a consideration expressly permitted. (Id. at p. 158.)

8. The one point Howell won. The department never opposed the prejudgment-interest request, and the parties had apparently stipulated its calculation “for the court to decide.” The fee order awarded “$135,102 in ‘fees and costs’” — which disposed of costs — but said nothing about interest. That silence required a remand. (Howell, supra, 107 Cal.App.5th at p. 159.)

Significance

Read this as a proof checklist, not as a defeat. Nothing in Howell narrows FEHA liability. The jury found discrimination and that finding was never disturbed. What the opinion does is enforce, at the remedy stage, two requirements that plaintiffs’ counsel sometimes treat as formalities: that every element of compensatory damages be tied to an actual out-of-pocket loss, and that a fee request be auditable.

The fringe-benefit rule, stated precisely. The holding is evidentiary, not categorical. The court did not say that lost health insurance is never recoverable; it said that on a record showing an unpaid invoice, no replacement policy, and no uninsured medical expense, there was “no loss to compensate.” (Howell, supra, 107 Cal.App.5th at p. 153.) Both of the federal authorities it adopted measure the award by what the employee incurred. That framing is what leaves the door open: premiums actually paid for substitute coverage, COBRA payments, and medical bills that insurance would have covered are losses; the retail value of coverage the employee simply went without is, on this reasoning, speculation.

A second lesson sits underneath the first. The extrapolation footnote is the quiet disaster in this case. A single invoice covering March 1 to August 1 was treated in argument as a one-month bill and multiplied by seven, and the jury adopted the resulting figure. (Id. at p. 153, fn. 10.) Even had the premium been paid, that method of proof invited the very “speculative” characterization the trial court used. Damages arithmetic that a defense expert can take apart in one question will not survive a posttrial motion.

On fees, the case is a warning about the record, not about the rate. The trial court did not find the hourly rates too high in the abstract — it set $500 as reasonable — and it did not reduce the award for limited success, for the settlement offer, or for counsel’s arithmetic. It reduced the award because it could not audit the hours and because the request had grown from $123,101.95 to more than $1.7 million in seven months without an explanation. (Id. at pp. 156–159.) Both of those are curable at the front end: task-based billing entries and a fee narrative that reconciles any pretrial estimate against the final claim.

And do not let an unopposed request die in silence. Howell’s single appellate win came from a request the employer had not even contested. If a trial court’s order does not mention an item, the answer is a prompt request for a ruling or a motion to correct the omission — not an appeal, which here bought a remand and another round of proceedings for $5,356.04 in claimed interest.

A currency note. The opinion was filed November 7, 2024 and was ordered published on December 5, 2024 — the later date is the publication-certification date, not the decided date, and databases that report it as the filing date are reporting the wrong event. The decision is reported at 107 Cal.App.5th 143 [327 Cal.Rptr.3d 745]; every pinpoint in this piece is to the official reports. Confirm subsequent history with a current citator before relying on it.

Key quotes

“At trial, Howell introduced no evidence of any damages resulting from the loss of health insurance benefits, which is a fundamental prerequisite to a compensatory damages award.” (Howell v. State Dept. of State Hospitals (2024) 107 Cal.App.5th 143, 153.)

“Howell testified that she never paid the invoice and never obtained any replacement insurance. Accordingly, Howell suffered no loss to compensate.” (Ibid.)

“Because Howell failed to introduce any evidence that she suffered a loss, e.g., paid insurance premiums or otherwise incurred out-of-pocket costs related to the loss of insurance, the trial court properly struck the award for health insurance benefits.” (Id. at p. 155.)

“Thus, considering the whole record, the evidence does not compel an award of noneconomic damages.” (Id. at p. 152.)

“In asserting error, Howell makes nine arguments, and we agree with only one—the trial court should have specifically addressed Howell’s unopposed request for prejudgment interest.” (Id. at p. 157.)

Read the full opinion (CourtListener) →

Practice pointer

Open questions

What counts as an incurred loss. The court required evidence of “paid insurance premiums or otherwise incurred out-of-pocket costs related to the loss of insurance.” (Howell, supra, 107 Cal.App.5th at p. 155.) Whether an unpaid medical bill sent to collections, a debt incurred for uninsured care, or coverage obtained through a family member at no direct cost to the plaintiff satisfies that standard is not addressed.

Whether the rule reaches other fringe benefits. The analysis is framed around health insurance, but its premise — that a compensatory award repairs an actual loss — would apply equally to lost retirement contributions, life insurance, or other benefits. The opinion does not say whether benefits that accrue automatically, without a premium the employee would otherwise pay, are analyzed the same way.

The interaction with mitigation. An employee who cannot afford replacement coverage after a discriminatory firing recovers nothing for the lost coverage under this reasoning, while one who could afford it recovers what she paid. Whether that asymmetry can be addressed — through the mitigation doctrine, through nominal damages, or otherwise — was not before the court.

What the trial court must do on remand. The remand directs the court to “consider Howell’s request for prejudgment interest.” (Id. at p. 159.) The Court of Appeal expressed no view on entitlement, rate, accrual date, or whether the parties’ apparent stipulation on calculation binds the court.

Costs and the “fees and costs” lump sum. The court read the $135,102 award as having disposed of costs because the order used the phrase “fees and costs.” (Ibid.) Whether a lump-sum award that does not separate the two is reviewable as to the cost component, and how a memorandum of costs interacts with it, is left open.