Taylor v. Westly

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHRIS LUSBY TAYLOR; NANCY A. 
PEPPLE-GONSALVES; GARY
KESSELMAN; WILLIAM J. PALMER; No. 07-16902
DAWN E. STRUCK; SUSAN SWINTON,
Plaintiffs-Appellants,  D.C. No.
CV-01-02407-
v. WBS/GGH
STEVE WESTLY; JOHN CHIANG,
Defendants-Appellees.

CHRIS LUSBY TAYLOR; NANCY A. 
PEPPLE-GONSALVES; GARY
No. 07-17223
KESSELMAN; WILLIAM J. PALMER;
DAWN E. STRUCK; SUSAN SWINTON, D.C. No.
Plaintiffs-Appellants,  CV-01-02407-WBS/
GGH
v.
OPINION
STEVE WESTLY; JOHN CHIANG,
Defendants-Appellees.

Appeal from the United States District Court
for the Eastern District of California
William B. Shubb, District Judge, Presiding
Argued and Submitted
April 24, 2008—San Francisco, California
Filed May 12, 2008
Before: Robert R. Beezer, Andrew J. Kleinfeld, and
Michael Daly Hawkins, Circuit Judges.
5309
5310 TAYLOR v. WESTLY
Per Curiam Opinion
TAYLOR v. WESTLY 5311
COUNSEL
William W. Palmer, Law Office of William W. Palmer, Sac-
ramento, California, for the appellants.
Robin Johansen, Remcho, Johansen & Purcell, LLP, San
Leandro, California, for the appellees.
OPINION
PER CURIAM:
This controversy has been the subject of extensive litigation
in the district court and has generated two prior appeals. In
both the prior appeals, plaintiffs prevailed. In the first appeal,
we determined that the State of California did not have the
sovereign immunity that it claimed. See Taylor v. Westly
(Taylor I), 402 F.3d 924, 936 (9th Cir. 2005). In the second
appeal, we concluded that the State’s procedures for protect-
ing the rights of owners of property in its escheat process
were unconstitutional. See Taylor v. Westly (Taylor II), 488
F.3d 1197, 1201-02 (9th Cir. 2007). We required the district
court to enjoin operation of the California escheat process and
suggested that the district court require court approval of
curative regulations. See id. at 1202.
5312 TAYLOR v. WESTLY
After the plaintiff had won these two victories on appeal,
the district court issued a preliminary injunction pursuant to
our mandate. The State then eliminated the statutory and
administrative procedure that we had determined to be uncon-
stitutional. The State promulgated an entirely new statutory
procedure addressing escheat. See Cal. Code Civ. P.
§ 1501.5(c) (West 2008); see also id. at §§ 1531, 1531.5,
1532, 1563, 1565. Concluding that the amendments remedied
the constitutional defects we identified in Taylor II, the dis-
trict court granted the Controller’s motion to dissolve the
injunction.
[1] We review a district court’s decision disposing of a
motion to modify or dissolve a preliminary injunction for
abuse of discretion. Credit Suisee First Boston Corp. v. Grun-
wald, 400 F.3d 1119, 1126 n.7 (9th Cir. 2005). On its face,
the new procedure complies with the due process standard
established by the Supreme Court in Mullane v. Cent. Hano-
ver Bank & Trust Co., 339 U.S. 306 (1950), and Jones v.
Flowers, 547 U.S. 220 (2006). Under the new law, the Con-
troller is required to provide pre-escheat “ ‘notice reasonably
calculated, under all the circumstances, to apprise interested
parties of the pendency of the action and afford them an
opportunity to present their objections,’ ” Flowers, 547 U.S.
at 226 (quoting Mullane, 339 U.S. at 314). Thus, the plain-
tiffs’ challenge, to the extent that it is a facial challenge
against the new law, fails.
[2] The plaintiffs have also suggested that the Controller is
administering or may administer the statute in such a way that
the State still does not give notice reasonably calculated to
reach people whose property is taken by the State of Califor-
nia under its escheat law. In Tayor I, we noted that the Con-
troller’s Office has, in the past, openly violated the escheat
law. See 402 F.3d at 928 (“Thus the Controller is admitting
right in her ad that she is violating the law!”). The Controller
has hardly begun enforcing the new escheat law. We cannot
say, on the record before us, that the district court abused its
TAYLOR v. WESTLY 5313
discretion in dissolving the preliminary injunction. Our
review in this case is confined by our limited standard of
review, and is not a definitive adjudication of the constitution-
ality of the new law and administrative procedure.
[3] The district court also denied any interim attorney’s
fees to the plaintiffs. As the State correctly concedes, an
award of attorney’s fees is not barred by Buckhannon Bd. &
Care Home, Inc. v. W. Va. Dep’t of Health & Human Res.,
532 U.S. 598 (2001). The plaintiffs in this case were not
merely a catalyst for change outside the court, as in Buckhan-
non. See id. at 605. In this case, the plaintiffs won their case
twice in the Court of Appeals, and then pursuant to our man-
date to the district court, they won an injunction in district
court. See Tipton-Whittingham v. City of L.A., 316 F.3d 1058,
1062 (9th Cir. 2003) (“[A] preliminary injunction . . . carr[ies]
all the ‘judicial imprimatur’ necessary to satisfy Buckhan-
non.”). The State of California then completely changed its
escheat law in response to the relief the judiciary imposed.
The plaintiffs won in court. It was quite plain under our previ-
ous decisions that there was no room at all for the State to
keep things as they were.
[4] Though interlocutory or interim attorney’s fees are the
exception rather than the rule, in this case it was an abuse of
discretion to deny them. See Richard S. v. Dep’t of Develop-
mental Servs., 317 F.3d 1080, 1085 (9th Cir. 2003). The dis-
crete stage of this litigation that plaintiffs won is over,
because of the permanent change in the law that plaintiffs
forced upon the State of California through the appeals and
consequent injunction. Because of the magnitude of this case,
and the disparity in litigation resources between parties, fail-
ure to award interim fees would create a considerable risk of
starving out plaintiffs with what we have already determined
to be good claims. The district court is directed to award
interim attorney’s fees for plaintiffs’ work in the district court
and in this Court regarding the challenge to California’s old
escheat statute.
5314 TAYLOR v. WESTLY
With regard to these consolidated appeals, the plaintiff has
lost the appeal addressing the dissolution of the preliminary
injunction, but won the appeal addressing interim attorney’s
fees. The district court is directed to award interim attorney’s
fees for the work in district court and in this Court regarding
the attorney’s fees matter. We do not address calculation of
reasonable attorney’s fees, and leave that to the district court,
to be resolved with such evidence, hearings, and testimony, as
the district court may reasonably deem appropriate.
AFFIRMED in part, REVERSED in part. Each party to
bear its own costs on appeal.