Court of Appeal Sustains Reductions by Trial Court and Suggests That Fees Expended by the Opposition Has Probative Value in Fee Proceedings.
In Horsford v. Board of Trustees of California State University (Horsford I), 132 Cal.App.4th 359, 402 (2005), the Fifth District Court of Appeal determined a trial court had applied the wrong standards in awarding attorney’s fees to prevailing plaintiffs in a California Fair Employment and Housing Act, Government Code section 12900 et seq. (FEHA), action. (FEHA has a mandatory fee-shifting clause benefiting prevailing plaintiffs. See Gov. Code, sec. 12965(b).) It remanded for further proceedings.
Remand proceedings did take place, but before a different trial judge because the original judge recused himself. Although normally fee remands are held before the same judge, a substitute judge in posttrial proceedings exercises the same discretion as the original judge. (See Kershner v. Morgali, 152 Cal.App.2d 884, 885 (1957).)
The new judge, Fresno County Superior Court Judge Donald R. Franson, Jr., held several fee motion hearings and a new trial motion hearing, entering a corrected fee award of $3,229,709.50, substantially less than the $10.4 million fee request by the prevailing plaintiffs. Plaintiffs appealed again. The Fifth District affirmed most aspects of Judge Franson’s determinations in Horsford v. The Board of Trustees of California State University (Horsford II), Case No. F051782 (5th Dist. Sept. 4, 2008) (unpublished).
The Court of Appeal—in a 3-0 decision authored by Acting Presiding Justice Vartabedian—rejected plaintiff’s overarching theme that full fee compensation under FEHA inevitably meant “payment at the top permissible rate for all the hours counsel actually devoted to the case.” Instead, the appellate panel believed that FEHA compensation focused on “a reasonable rate for hours reasonably spent on the case.” (Slip Opn., at p. 3, citing Horsford I, supra, 132 Cal.App.4th at p. 394.) With these broad principles in mind, the Fifth District proceeded to analyze plaintiffs’ specific challenges.
Relying on several federal decisions, plaintiffs contended that the trial court could not drastically reduce hours with providing sufficient details. Wrong, said the Court of Appeal, because California state law is different in not imposing “a similar obligation on the trial court.” (Slip Opn., at p. 5, citing Maria P. v. Riles, 43 Cal.3d 1281, 1294 (1987).) However, the appellate panel did acknowledge that greater specificity does aid appellate review of a lower court fee award. Judge Franson did provide detail for his reductions by enumerating suspect categories and providing reasons for not awarding the requested fees. Here is how the logic behind the reductions broke down:
- Reductions for approximations made in “reconstructed” time records. Plaintiffs’ time records for work before Horsford I were not contemporaneous, but reconstructed after the fact. Although contemporaneous time records are not required as part of the fee substantiation process in a fee petition, the trial court is not required to evaluate “reconstructed” time with the same credibility and presumption of accuracy. (See PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1096 n. 4 (2000).)
- Vague time entries. The trial court can determine that there is no basis to determine whether the time was reasonably spent and, therefore, compensable.
- Incorrect time entries. Where plaintiffs acknowledged incorrect time entries, the trial court could disregard plaintiffs’ counsel’s post facto attempts to explain away the errors.
Although verified time statements are entitled to credence, they are not sacrosanct; “it merely means the trial court must examine the records and use them as the basis for its lodestar determination where the records are found accurate and reliable.” (Slip Opn., at p. 7.)
That brings us to the one area that Justice Vartabedian found might have to be addressed on remand—block billing, a topic we have addressed many times before. (See posts of June 20, June 23, and August 13, 2008.) Boiled down to its essence, the appellate panel was concerned that the trial court might have excluded the entire time that was block billed rather than simply adjusting or reducing the block-billed hours. Although this decision in nonpublished, the Fifth District appears to be saying that it is an abuse of discretion for a trial court to exclude block-billed time, rather than making adjustments downward—a rule which puts it in accord with the Ninth Circuit on this subject. (See our August 2, 2008 post on Moreno v. City of Sacramento.) The Court of Appeal remanded to determine what was done and issued some directives: (1) if all block-billed time was excluded, then remand proceedings were necessary for the trial court to make adjustments and then award some reasonable additional fees; or (2) if the trial court did make adjustments in the first instance, it should reinstate its previous fee order.
Plaintiffs next argued that any fee reductions were limited to those claimed by the defense in opposition to any fee request. This argument was not persuasive to the Fifth District. Rather, “[w]e find no basis to impose a duty on opposing parties to quantify each objection or to impose on the trial court a limitation on its exercise of discretion based on such quantification.” (Slip Opn., at p. 9.) The trial court has the ability to exercise its own judgment about the reasonable necessity of legal services. (See Ketchum v. Moses, 24 Cal.4th 1122, 1137-1138 (2001).) The appellate panel concluded that the trial court can consider broader issues of inefficiency and duplicative effort in arriving at its own reduction to requested fees.
Plaintiffs then challenged the trial court’s award of lower hourly rates than counsel requested. They argued that there was uncontradicted evidence supporting the higher hourly rate claim, meaning that the lower court could not award a different hourly rate, citing Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4th 140, 156 (2006) and Hadley v. Krepel, 167 Cal.App.3d 677, 682 (1985). The Fifth District, although distinguishing the cited cases, acknowledged that these decisions could support such a “proposed rule” but then went on to disagree with the reasoning in these prior cases. Instead, the trial court has discretion—based on its own experience of rates and findings by the first judge hearing the fee dispute—to decide that different hourly rates are appropriate. (Slip Opn., at pp. 11-12.)
Because the 1.5 multiplier determination was not arbitrary, the appellate panel next addressed plaintiffs’ contention that interest on the fee award should have run as follows: (1) from the original judgment date as far as counsel’s trial-phase fees, and (2) from the date of Horsford I as far as appellate phase fees. Not so, Justice Vartabedian found on behalf of the Fifth District panel. Because the fee award was its own several judgment for appeal purposes, the prior reversal in Horsford I was just that—not a simple modification of judgment—such that interest runs from the date of the new judgment. (See Stockton Theatres, Inc. v. Palermo, 55 Cal.2d 439, 446 (1961).) Plaintiffs’ interest claims were properly rejected by the trial court.
As we explored in our June 8, 2008 post and recent post on the Sixth District’s unpublished Reyes decision, there is a divergence in judicial opinion as to whether an opponent’s fees are relevant in supporting the reasonableness of a claimant’s fee request. The Fifth District appears to suggest that at least one panel believes this type of proof is probative. In footnote 6 of Horsford II, the appellate panel stated:
“Given the magnitude of the present case,
the court might find it useful
to require respondents [the defense] to submit a billing
summary for discovery, trial preparation, trial, and the first
appeal, redacted so the summary would not
disclose privileged information. While the hours
and hourly rates of opposing counsel would not be
dispositive of plaintiffs’ fee claims,
such information could well help place plaintiffs’
claims in some perspective. (See Maughan v. Google
Technology, Inc.(2006) 143 Cal.App.4th 1242, 1251.)
At the hearing in this case, Judge Franson posed
the question whether respondent’s failure
to disclose this information,
in itself, supported an inference that plaintiffs’ original fee
claim was not unduly high. The parties did not answer that question nor
raise it on appeal. We do not decide the matter; we merely point out the
possible usefulness of opposing party’s legal bills in evaluating the
number of hours plaintiffs’ counsel say was reasonably required to
litigate this case. (See generally Pearl, Cal. Attorney Fee Awards
(Cont.Ed.Bar, 2d ed. 2007 Supp.) sec. 14.36, pp. 444.1-444.2.)”
BLOG OBSERVATION #1—Richard M. Pearl, author of the CEB treatise on California Attorney Fees Award, was one of the counsel for plaintiffs in Horsford II.
BLOG OBSERVATION #2—Judge Franson attended the same high school in Fresno as blog contributor Mike Hensley. His father was a former justice on the Fifth District, and was a superb jurist. Judge Franson, while a private practitioner, was adverse to Mike in a matter that resulted in a published decision. (See All-West Design, Inc. v. Boozer, 183 Cal.App.3d 1212 (1986) [among other holdings, trial court could credit contingency arrangement and estimate of attorneys hours spent—rather than detailed time records—in awarding a fee to prevailing plaintiff].) Judge Franson won most aspects of that case, but it was a hard fought battle. Greetings to you and hope you are enjoying your experience on the bench.