CALIFORNIA ATTORNEY'S FEES

Civil Rights/Section 998: Winning Civil Rights Litigant Being Awarded $416,000 In Fees With A 1.5 Multiplier Was Properly Compensated, With Dueling 998 Costs Awards Also Being Sustained

 

Lower Court Properly Scaled Back Expert Fee Costs Award Against Plaintiff Based on Her Financial Situation.

     Hernandez v. The Regents of the University of California, Case Nos. A129427/A130063 (1st Dist., Div. 4 Dec. 12, 2011) (unpublished) involved some interesting fees and costs issues, especially given the shifting impact of Code of Civil Procedure section 998 when woven into the FEHA pro-plaintiff fee shifting provision.

     In this one, a Native American assistant professor at University of California, Berkeley brought a FEHA claim against the Regents. She rejected a 998 offer of $300,000 plus reasonable attorney’s fees, costs, and expenses. After a jury trial, plaintiff was awarded a total of $266,347, which was less than the defense 998 offer.

     She moved to recover $2,662,645 in fees and $46,312.82 in costs under the FEHA fee-shifting provision. In turn, based on the winning 998 offer, the defense sought a total of $144,560.74 in costs (mainly expert witness fees). After a comprehensive fee/costs hearing, the lower court awarded plaintiff $415,938.75 in fees (with a 1.5 multiplier). awarded plaintiff $26,932.84 in pre-998 offer costs, and awarded the defense $33,414.25 in post-998 offer costs as well as $50,000 in expert witness fees (scaled down from its request for more than $111,000 due to plaintiff’s financial situation).

     Plaintiff appealed the fees and costs awards across the board, all to no avail.

     The hourly rates awarded and multiplier were not incorrect under an abuse of discretion standard. Because plaintiff failed to obtain a more favorable award than the defense 998 offer, the defense was treated as the prevailing party for purposes of postoffer attorney’s fees as costs. The preoffer award of costs was justified. So, too, was the postoffer award of expert witness fees to the defense, because the record did reveal that the trial court “scaled back” the requested $111,000 award to $50,000 based on plaintiff’s financial situation. (Seever v. Copley Press, Inc., 141 Cal.App.4th 1550, 1561-1562 (2006); Holman v. Altana Pharma US, Inc., 186 Cal.App.4th 262, 284 (2010).)

 

The University Library.  Berkeley. c1911.

Multipliers: New Jersey Supreme Court Hears Oral Argument On Impact Of Federal Perdue v. Kenny A. Decision On Fee Enhancements In State Cases

 

October 25, 2011 Oral Argument Heard on Walker and Humphries Cases.

     In our May 30, 2011 post, we discussed Walker v. Giuffre, a New Jersey appellate division decision which disallowed a 45% fee enhancement in a state consumer fraud case based on the perceived more rigorous analysis applied to multipliers by the U.S. Supreme Court in Perdue v. Kenny A, 130 S.Ct. 1662, 1669 (2010).

     Incidentally, the New Jersey Supreme Court on April 14, 2011 certified for review the companion case of Humphries v. Power Mills Shopping Plaza, N.J.App.Div. Docket No. A-6038-08T1 (Nov. 4, 2010 unpublished), which disallowed a 20% fee enhancement in an ADA/New Jersey disability discrimination case based on Perdue.

     We can now report that both Walker and Humphries were argued before the New Jersey Supreme Court on October 25, 2011, so stay tuned for future developments.

Allocation/Multiplier: Winning Overtime/Meal Break Plaintiff Reaps $210,625.75 In Fees

 

1.5 Multiplier Sustained by Appellate Court, Rejecting Application of Federal Perdue Analysis.

     Well, well. This next unpublished decision is interesting on a couple of fronts. First, it illustrates that courts will not hesitate to vindicate wage/hour violations through an award of fees enhanced by a multiplier. Second, it also demonstrates that state courts will not kowtow to federal decisions that are not seen as binding in areas where there is a strong state policy encouraging fee shifting in favors of a certain class of litigants (in this case, employees proving wage/hour violations).

Kowtowing in a court.  Source:  Wikipedia.

     Good Nite Inn Management, Inc. v. Ahmed, Case No. A129488 (1st Dist., Div 2 June 29, 2011) (unpublished) is the case.

     There, a plaintiff seeking regress under California wage/hour violation statutes prevailed (garnering damages of $26,590.66). She then sought substantial fees for both defending against employer claims and litigating her prosecuting her own wage/hour claims. The trial court granted her all but 71.5 hours of her attorney’s time that was allocated to different work, but applied a 1.5 multiplier--resulting in a grand total fee award of $210,625.75.

     Disgrunted employer appealed; disgruntled employer was not any less grumpy after it lost the appeal.

     Employer was swimming upstream on the allocation issue, which is discretionary anyway, because the lower court excised 71.5 hours of work on other tasks. Hard to get over? You bet, and so ruled the appellate court, given that the other work was “inextricably intertwined.” Employer’s citation to unique allocation issues applicable to insurance bad faith cases (Cassim/Brandt) and Cartwright cases (Carver v. Chevron, U.S.A., Inc., 119 Cal.App.4th 498 (2004)) did not strike a receptive chord with the court.

     The 1.5 multiplier issue brought us to an interesting point. Employer relied on the U.S. Supreme Court’s decision in Perdue v. Kenny A., 130 S.Ct. 1662 (2010) for the proposition that the lodestar usually gets it done so multiplier enhancements are taboo. Here is the response: “[Employer’s] reliance on federal authority, however, is misplaced. Our state courts have observed that ‘an upward or downward adjustment from the lodestar figure will be far more common under California law than under federal law.’” (Slip Opn., p. 17.) Yipee, we would guess, would be the response of a lot of state practitioners on this particular topic.

Multipliers: New Jersey Supreme Court Grants Certification Of Fee Enhancement Reversal Based On Perdue v. Kenny A.

 

Walker v. Giuffre Is the Case Under Review.

     In Walker v. Giuffre, 415 N.J. Super. 597 (App. Div. 2010), the Appellate Division reversed a 45% fee enhancement to plaintiffs’ attorneys under the New Jersey Consumer Fraud Act and New Jersey Truth in Consumer Contract, Warranty, and Notice Act. The Appellate Division did so based primarily on Perdue v. Kenny A., 130 S. Ct. 1662 (2010) [reviewed in our prior April 24, 2010 post], where the U.S. Supreme Court majority indicated fee enhancements should be available in only rare and exceptional cases.

     However, the New Jersey Supreme Court fairly recently granted certification to review the fee enhancement issue in the case in light of the Appellate Division’s reversal.

     We would like to thank Bruce D. Greenberg, who has a blog called New Jersey Appellate Law, for bringing this to our attention in his February 11, 2011 post.

          

 

           Above:  Circular Slide Rule from the Museum of HP Calculators.

Common Fund/Multipliers: Recent Vioxx Products Liability Decision Has “Must Reading” Discussion of Common Fund Theory

 

Case Discusses It in Class Action and MDL Complex Litigation Contexts, Also Indicating Perdue Decision Did Not Apply to Using Lodestar as Check on Percentage of Recovery Fee Award.

     For those practitioners dealing with cases where a common fund is created (from which fee awards are frequently sought), we came across a case that is must reading. It is In re Vioxx Products Liability Litig., __ F.Supp.2d __, 2010 WL 5576193 (E.D.La. Oct. 19, 2010), authored by U.S. District Judge Eldon E. Fallon.

     Aside from having a very scholarly discussion of the reasons behind the common fund doctrine, Vioxx was interesting in that it involved the settlement of astronomical litigation where over $4.3 billion was funded and distributed to numerous claimants within 31 months. District Judge Fallon found that the common fund doctrine had been creatively used to assess common benefit fees in favor of attorneys who render legal services beneficial to all MDL plaintiffs, even though they only represented a small segment of the plaintiffs directly.

     Eventually, the district court adopted a “blended” percentage method to determine a reasonable fee award, determining first the valuation of the benefit received by claimants, then selecting a benchmark percentage, and finally adjusting upwards/downwards through a multiplier process. District Judge Fallon determined that 6% of the settlement amount was a reasonable benchmark for a common benefit fee award, but coming out of the contingent fee recoveries of all Vioxx primary plaintiffs’ attorneys. However, the district court then adjusted this percentage upward by .5% to a total of 6.5%.

     Lastly, the district court used a lodestar “check” on the reasonableness of the common fund award. The common benefit fee award came to $315,250,000, not bad at all. In a footnote, District Judge Fallon dismissed that Perdue v. Kenny A., 130 S.Ct. 1662 (2010) impacted using the lodestar as a cross-check of a common benefit awarded as a percentage of a common fund, finding that “[t]he Supreme Court’s holding was informed by the Supreme Court’s lodestar jurisprudence and the statutory purpose of [42 U.S.C.] § 1988.” Id. at *17 n. 25.

Lodestar/Private Attorney General Statute: Negative Multiplier Based On Perception Fee-Owing Government Agency Could Use Money To Fund Ongoing Operations Was No Reason To Reduce Lodestar

 

Second District, Division 8 Believed Financial Factor Could Be Considered Based on Settlement Agreement, But Did Not Beiieve Ongoing Operational “Cut” Rationale Was Justified.

     A redevelopment agency in Rogel v. Lynwood Redevelopment Agency, Case No. B219626 (2d Dist., Div. 8 May 2, 2011) (certified for publication) was exposed to up to $2.7 million in attorneys’ fees requested by plaintiffs prevailing in a public interest suit based upon the private attorney general statute (CCP § 1021.5). However, after the parties settled under an agreement allowing the trial court to consider agency’s financial condition, the lower court cut the $2.7 million lodestar down to $540,000, applying a 0.2 negative multiplier in the process. The reasoning? Agency introduced proof that a fee award in excess of $536,000 would be made at the expense of low and moderate income housing for the City of Lynwood’s residents, with the lower court determining that the money was bettter spent funding ongoing governmental operations rather than paying the prevailing parties in the litigation.

     The appellate court, on review, found this constituted an inappropriate reason to cut the lodestar. Although the settlement agreement allowed consideration of agency’s financial situation, it should not be allowed to override the fact prevailing parties were entitled to a lodestar compensating their attorneys for the market value of their work. “In our view, Serrano III [Serrano v. Priest, 20 Cal.3d 25, 49 (1977)], Horsford [v. Board of Trustees of California State University, 132 Cal.App.4th 359, 400-401 (2005], and Schmid [v. Lovette, 154 Cal.App.3d 466, 476 (1984)] preclude a rule which awards less than the fair market value of attorneys’ fees merely because the case was filed against a government agency. We also see a strong public policy against such a rule. Allowing properly documented attorneys’ fees to be cut simply because a losing party is a governmental entity would defeat the purpose of the private attorney general doctrine codified in Code of Civil Procedure section 1021.5 and would also incentivize governmental entities to negligently or deliberately run up a claimant’s attorneys’ fees, without any concern for consequences.” (Slip Opn., p. 15.) Reversed and remanded for reconsideration of a proper fees award.

Class Action/Lodestar/Multiplier: First District, Division 1 Affirms $1,664,777.48 Fee Award, Using A 1.4 Multiplier, When Total Damages/Interest Award Was About $1.2 Milliion

 

Requested 2.0 Multiplier Scaled Back to 1.4.

     Just to show you how class action fee awards can often be larger than the damages awards in protracted, contentious cases, we now digest Alcoser v. Thomas, Case Nos. A124848 et al. (1st Dist., Div. 1 Feb. 16, 2011) (unpublished).

     There, a tenant successfully won a case against a landlord about withholding rent deposits on behalf of a class. After post-trial motions, the total damages/interest award came to about $1.2 million. The lower court, noting landlord’s “scorched earth manner of defending the case,” awarded plaintiffs $1,664,777.48 in attorney’s fees and costs, applying a 1.4 multiplier to the lodestar (a little lower than the 2.0 requested by plaintiffs).

     Landlord’s challenges to the fee award were rejected on appeal, in a 3-0 opinion authored by Justice Dondero. CCP § 1021.5 allowed for recovery of fees in this class action context. Winning plaintiffs presented contemporaneous time records and task-based summaries, sufficient substantiation for fee petition purposes. The 1.4 multiplier was justified based on the “scorched earth” defense of landlord, among other factors.

Allocation/Reasonableness Of Fees/Special Fee Shifting Statutes/Lodestar/Multiplier/Costs/Standard Of Review: Lower Court Did Abuse Discretion In Awarding Certain Expenses As Fees, In Failing To Allocate, And In Applying A Multiplier

Abuse of Discretion Standard Did Not Prevent Reversal When Record Showed Errors, According to Sixth District.

     In an interesting contrast to the way the abuse of discretion standard was deferentially applied in our contemporaneous post in Murrell v. Rolling Hills Community Association, the Sixth District found that the trial court abused its discretion in numerous ways in the amount of fees awarded in a financial elder abuse case (even though the issue of fee entitlement was not disputed).

     Defendant in Bell v. Bunch, Case No. H032980 (6th Dist. Jan. 31, 2011) (unpublished) was found to have committed financial elder abuse against plaintiff. Welfare and Institutions Code section 15657.5(a) has a fee shifting statute. In a postjudgment order which was separately appealed (something we have argued should be done in all cases), the trial court awarded plaintiff statutory fees and costs of $290,684.93 inclusive of a 1.2 multiplier on everything but “fees on fees” plus $5,824 in expert witness and investigation fees. Defendant appealed, challenging entitlement on some of the costs and the amount of fees awarded. (Plaintiff had sought a lodestar of $256,138.75, plus $5,824.43 in expert witness/investigation fees, or a total lodestar of $261,963.18 plus addition of a 1.5 multiplier for a total request of $392,944.77.) Defendant Bunch’s appeal was a good move.

Elderly man clasping cane.  c1900.  H.L. Bundy, photographer.  Library of Congress.

Civil Rights Multipliers: U.S. Supreme Court Narrows Use Of Enhancements In Federal Civil Rights Case

Lodestar Should Capture the Usual Fee Recovery; Federal Judges Must Provide a Reasonably Specific Explanation for All Aspects of a Fee Determination.

At least in the area of federal civil rights cases (although the opinion may have broader applicability), the U.S. Supreme Court has issued an important decision relating to fee enhancements in Perdue v. Kenny A., Case No. 08-970 (U.S. April 21, 2010).

Here are the highlights from Perdue:

· The lodestar carries with it a strong presumption that its methodology yields a sufficient fee;

· A fee enhancement in civil rights cases may be awarded in rare circumstances where the lodestar does not adequately account for reasonable fee factors;

· Quality of an attorney's performance is an enhancement factor, but only to the extent that it stems from a superior performance rather than the inferior performance by opposing counsel;

· Enhancements are appropriate where (1) the method used to determine the hourly rate does not adequately measure the attorney's true market value; (2) the attorney's performance includes an extraordinary outlay of expenses and the litigation is exceptionally protracted; and (3) an attorney's performance involves exceptional delay in the payment of fees; and

· Federal judges must provide proper justification for fee enhancements, providing a reasonably specific explanation for all aspects of a fee determination inclusive of any enhancement.

The interesting questions are whether this decision will be applied outside the federal civil rights area and whether California state courts will borrow from its reasoning.

  Postscript:  Hat Tip to Julie Brook, of Continuing Education of the Bar, who on May 5 brought to our attention a CEB post on some questions left open by Perdue.

Class Actions: Lodestar/Multiplier Determinations Remanded In Private Attorney General Statute Fee Award

Court of Appeal Also Decides Prejudgment Interest Not Allowable on Fee Awards.

     Okay, so who says we don’t try to give you readers a synopsis of decisions (even though some might be a little wordy)? The next decision—Woosley v. State of California, Case No. B209890 (2d Dist., Div. 5 Apr. 16, 2010) (unpublished)—involves some interesting class action fee award issues. We have, in this post, summarized a 51-page decision, unless you desire to read it yourself.  What a deal!

FEHA: $445,000 Fee Recovery Out Of Requested $1.5 Million Fee Request Affirmed On Appeal

Plaintiff Does Not Convince Appellate Court to Award More, With Fourth District, Division Commenting on Some “Cutting Edge” Substantive Questions.

     Although the next case could be viewed as just a simple abuse of discretion case, it actually discusses some interesting tensions between federal and state cases on the specificity of reasoning that must be given by a trial judge when ruling on an attorney’s fees request. Beyond that, it is fun reading, because the opinion is written by Presiding Justice Sills of the Fourth District, Division 3, who has a very distinctive writing style.

     Magana v. Charlie’s Foods, Inc., Case No. G041153 (4^th Dist., Div. 3 Apr. 8, 2010) (unpublished) involved a FEHA sexual harassment plaintiff who won an award of $1,800 in economic damages, $110,000 in pain and suffering, and $500,000 in punitive damages (with the punitive damages award reversed in a prior appeal). Before that previous appeal was decided, plaintiff’s counsel made a fee motion in which the attorneys requested $1.5 million in fees based on the work of 7 attorneys and 1,901.4 hours of total work (which factored in a requested multiplier of 2). The lower court actually awarded fees of $445,000 (still allowing every hour of work at a lower $234 hourly rate), reducing the lodestar request for the unreasonable fee request, the noncomplexity of the case, the fact only 4 depositions were taken in the case, no experts were utilized, duplication/overlap from using 7 attorneys, and the fact it was unnecessary to have 3 attorneys at trial. Plaintiff appealed, claiming the fee award was too low.

Lemon Law: $170,000 Attorney Fee Recovery Sustained In Song-Beverly Act Case Involving Mobilehome

Fourth District, Division 1 Sustains Lower Court Determination Based on Its Experience With Hourly Rates.

     In Cauchon v. Forest River, Inc., Case Nos. D053864/D054433 (4^th Dist., Div. 1 Apr. 9, 2010) (unpublished), mobilehome purchasers did well in a Song-Beverly Act Warranty Act suit with a mandatory fee-shifting statute in favor of prevailing plaintiffs. Purchasers recovered compensatory damages of $205,700.86, $3,143.23 in incidental damages, and statutory penalties of $52,211.00. Then, the trial court awarded them $170,000 in attorney’s fees (out of a requested lodestar of $194,716.50, $10,000 for fees on fees, and a requested .6 multiplier [the multiplier being denied].) Defendant appealed.

Lodestar/Multiplier: 5 Employees Winning $40,000 Settlement For Labor Code Violations Are Awarded $164,421.16 In Statutory Fees and Costs

 

Trial Court’s Lodestar Calculation and Failure to Apportion Were Correct.

     For those of you practicing employment law, you know by now that many of the Labor Code sections involving wage/hour and meal break violations carry mandatory fee-shifting statutes generally favoring the prevailing plaintiff. Usually, the battle is how much, what if, once liability is established or a settlement is reached. That gets courts into calculating the lodestar and then making any positive or negative enhancements. However, substantial fee awards are made all the time, as the next decision shows.

     Worden v. Solid Rock Construction, Case No. A124514 (1^st Dist., Div. 3 Mar. 30, 2010) (unpublished) concerned 5 employees seeking to recover for wage/hour violations (including penalties) and for meal break violations. After a jury returned partial special verdicts on liability in plaintiffs’ favor, the parties reached a settlement for $40,000, reserving the issue of fees and costs for a later court determination. Plaintiffs sought $196,626.16 in fees and costs, requesting no multiplier if the entire request was granted (but asking for a 1.5 multiplier if the lodestar hours were reduced). The lower court awarded $164,421.16 as statutory fees and costs.

     Defendant employer first argued that the $350 hourly rate used in the lodestar was unreasonably high. This contention was rejected, because plaintiffs’ attorneys presented declaration testimony that this was a prevailing rate in wage/hour cases and courts in different counties had approved hourly rates ranging from $410-450 per hour in these types of cases.

     The defense next argued that the lodestar was too high because plaintiffs only partially prevailed on their claims. True enough, said the appellate panel, but no apportionment was required because the various legal theories shared a common core of facts—employer’s employment practices during the execution of a public works project, with no allocation required between successful and unsuccessful claims.

     Beyond that, plaintiffs’ attorneys did exclude some of the work spent on unsuccessful claim from their lodestar claim, fully satisfying exclusion of work on related unsuccessful claims that at least one decision said needed to be done. (Harman v. City and County of San Francisco, 158 Cal.App.4^th 407, 417 (2007).) Also, the lower court did reduce the lodestar request and properly refused to award a multiplier, showing that its award was hardly an abuse of discretion.

FEHA: $55,000 Fee Award Out Of $564,344.38 Request Affirmed On Appeal

Second District, Division 4 Found No Error In Severely Reducing Lodestar And Not Applying a Multiplier.

     After plaintiff settled with several defendants for $100,000 on FEHA claims, the trial court then had to determine the fee recovery to plaintiff's counsel. Three attorneys requested a total of $564,344.38 in fees (based on a 1.5 multiplier) and $8,175.80 in costs. The trial court found lots of duplication and no justification for an enhancement, awarding $55,000 in fees and $4,740.85 in costs.

     Plaintiff challenged the fee award in Miller v. Hawaiian Gardens Casino, Case No. B214224 (2d Dist., Div. 4 Mar. 30, 2010) (unpublished). The fee award was sustained.

     The appellate panel relied heavily on Chavez v. City of Los Angeles, 47 Cal.4^th 970, 990 (2010), where our state supreme court imbued the trial court with great leeway to reduce or deny altogether an unreasonably inflated FEHA fee request, in affirming the trial court’s award.

     Plaintiff initially argued that state fee awards needed to be explained with particularity, citing to federal case law for this proposition. The Court of Appeal noted that “California courts have explicitly departed from federal law in this regard.” (Gorman v. Tassajara Development Corp., 178 Cal.App.4^th 44, 67 (2009).)

     The intermediate court also addressed an issue that has sometimes perplexed these co-contributors: even though no statement of decision is required on fee decisions, do you still need to ask the lower court to explain its fee calculations although an explanation is not necessarily required? We got an answer—yes, you do. Here is the Court’s analysis: “While appellant correctly contends that he had no ‘right’ to a statement of decision on an attorney fees motion, it does not follow that he can complain on appeal about the court’s lack of specificity regarding the fee award calculation when he never asked for such an explanation below.” (Slip Opn., pp. 12-12.) [BLOG OBSERVATION—A little of a Catch-22? Perhaps, but this does counsel that the record still needs to be made until the jurisprudence sorts out these somewhat conflicting principles.]

     In large part, the appellate court agreed with the lower court that a lot of the lodestar work was duplicative and unnecessary. After all, three attorneys worked on the case, unnecessary hours were devoted in adversarial skirmishing between attorneys, and some time was devoted improperly to media relations. (California Common Cause v. Duffy, 200 Cal.App.3d 730, 754 (1987).) Given that the case was non-complex and involved a single plaintiff, the lodestar reductions did not constitute an abuse of discretion.

     No error was committed in failing to enhance the fee award because the lodestar figure already encompassed the contingency factor.

     Costs were properly reduced because investigation expenses, FedEx charges, postage charges, fax charges, phone charges, and copying charges were not recoverable expenses under Code of Civil Procedure section 1033.5.

Consumer Legal Remedies Act: Kim Fee Dispute Has Finally Come Home to Roost

Second District, Division 8 Affirms $84,500 Fee Award to Prevailing Plaintiff in CLRA Action.

After two appeals, plaintiff finally has won finality with respect to a $84,500 fee award entered in his favor under the CLRA after winning a battle against a Porsche Turbo Coupe seller for a refund because the car needed various repairs. Plaintiff sought fees and costs of $179,031 (based upon a claimed $113,760 lodestar, which was requested to be enhanced with a 1.5 multiplier). The trial court awarded plaintiff $84,500 (based on a 1.5 multiplier on some work), over vociferous objections by defendant, which appealed.

At last, the fee award was affirmed in Kim v. Euromotors West/The Auto Gallery, Case No. B214656 (2d Dist., Div. 8 Mar. 26, 2010) (unpublished), bringing finality to a very hard fought controversy.

Before addressing the defense challenges on appeal, the appellate court reminded all of us about the syllogistic analysis to be applied in statutory fee-shifting disputes: (1) calculate the lodestar¹; (2) determine if the lodestar needs to be adjusted by positive or negative multipliers; (3) make sure “double count” factors are not used; and (4) make a decision.

The defense challenge to the lodestar boiled down to contending that the trial court had to explain its mathematical calculations in support of the award. Because no request was made below, the trial court was not required to do so. (Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4^th 140, 156 n. 7 (2006).)

Defendant next argued that the trial court failed to precisely articulate how it applied the multiplier enhancement factors. Wrong, said the Court of Appeal. The lower court did factually demonstrate the basis for application of an enhancement, and that is all the law requires. (Thayer v. Wells Fargo Bank, 92 Cal.App.4^th 819, 835 (2001).)

Finally, the defense was not happy with the trial court awarding costs on the first appeal. Even though prior awards denying costs to plaintiff had been reversed, the effect was that no orders were entered such that the prior denial had no effect and leaving the trial court to redo the decision. (Cf. Weisenburg v. Cragholm, 5 Cal.3d 892, 896 (1971).)

¹ Death Star:

  

Ralph Act: $456,705 Fee Award To Plaintiff Affirmed On Appeal

Both Sides Appealed the Fee Award, But The Trial Court’s Award Stood Firm.

     The Ralph Act (Civil Code, § 51.7) provides that all persons within California’s jurisdiction have the right to be free from violence or intimidation because of sex, race, color, religion, ancestry, national origin, disability, medical condition, marital status or sexual orientation with respect to business establishments of every kind. Civil Code section 52(b)(3) allows for a discretionary award of attorney’s fees to parties denying rights provided by section 51.7. The next decision focused on this fee-shifting provision.

     The facts in Benham v. S&J Security and Investigation, Inc., Case No. B207420 (2d Dist., Div. 5 Mar. 8, 2010) (unpublished), are not pretty. Boiled down, a female and her companion apparently were falsely imprisoned by a Walgreen security company over apparently stealing some weight loss formula drinks, although sexual innuendos were allegedly made by some of the security guards against the female. The result was a fairly substantial verdict for the female plaintiff, augmented by a trial court award of fees in the amount of $456,750 under Civil Code section 52(b)(3).

     Neither side was pleased with the fee award, filing respective appeals.

Rees-Levering Automobile And Sales Finance Act: First District Affirms Fee Recovery Lodestar Of $83,346 For Lead Attorney, But Rejects 1.5 Multiplier

 

Court of Appeal Also Rejects Asymmetrical Interpretation of Fee-Shifting Provision.

     The next case, Alarcon v. Fireside Bank, Case Nos. A117148 & A118566 (1^st Dist., Div. 3 Mar. 8, 2010) (unpublished), pitted two different statutes against each other, both contained in the Rees-Levering Automobile and Sales Finance Act (ASFA), Civil Code section 2981 et seq., a pro-consumer automobile sales financing statutory scheme. The first was section 2983.4, which provides for a mandatory award of reasonable attorney’s fees and costs to a prevailing party under ASFA. The second was section 2983.5(a), which provides that the “liability” of an automobile seller’s assignee “may not exceed the amount of the debt owing to the assignee at the time of the assignment.” Did the latter provision “cap” an assignee’s liability, even for attorney’s fees as the losing party, to the debt owing to assignee?

     No, said the First District, Division 3, in a 3-0 decision penned by Justice Jenkins.

     There, plaintiff automobile buyer (an individual consumer) won rescission, debt cancellation, and a small damage award under ASFA against the assignee. The lower court also awarded plaintiff $125,019 in attorney’s fees against assignee, based upon the lodestar for lead counsel enhanced by a 1.5 multiplier. Assignee appealed, raising two challenges based upon the statutory tension and another directed to the amount of fees awarded.

     The appellate court did not accept assignee’s position that the section 2983.5(a) “cap” applied to an attorney’s fees award. After all, assignee was arguing for an “asymmetry in fee awards” position, where a buyer’s award of fees was capped but no limitation was placed on fees available to a winning assignee of seller—a very uneven result that cut against the pro-consumer bent of the whole statutory scheme.

     However, that did not end the inquiry. The appellate court found that the 1.5 multiplier should not have been granted and reversed the amount of the enhancement. This was based on the fact that the experience of lead counsel (whose time formed the foundation for the lodestar) had been already factored into sustaining a higher $435 hourly rate; any fee enhancement was in effect an “unfair double counting” of factors already used in setting the lodestar. This meant that the fee award was cut down to the $83,346 lodestar awarded by the lower court.

     BLOG UNDERVIEW—Although recognizing that a de minimus violation of ASFA led to a sizeable fee award, the appellate court found this justified by the pro-consumer legislative purpose behind the statutory scheme. The Court of Appeal even went on to parrot the quote on our Mission Statement—“in some cases ‘attorney fees become the tail that wags the dog in litigation.’” (Slip Opn., p. 32.) Co-contributor Mike’s Labrador Riffle goes “woof” to this observation.

FEHA Award: Court Of Appeal Affirms $84,000 Fee Award Out Of Requested $686,290.50

Plaintiff Only Won $55,000 Jury Verdict Plus $18,000 in Costs.

     Although awards to winning plaintiffs under the California Fair Employment and Housing Act are encouraged, they must be reasonable in amount. Otherwise, the trial court has broad discretion to deny them in entirety or substantially chop them down from their higher requests. The next case is an excellent illustration of a situation where an appellate court affirmed a lower court’s determination that a large reduction was in order before awarding fees to a FEHA plaintiff’s attorneys.

     Jimenez v. Too Fast, Inc., Case No. B212231 (2d Dist., Div. 1 Feb. 26, 2010) (unpublished) involved a situation where plaintiff suing under FEHA obtained a jury verdict of $55,000 plus costs of $18,000 even though seeking damages in the $275,000-$775,000 range. Plaintiff’s two set of attorneys sought $686,290.50 in fees, based on a claimed 872.8 total hours spent by the two attorneys and a paralegal (factoring in a 1.75 multiplier, based on attorney hourly rates of $475/$500 and the paralegal’s hourly rate of $115). One of the attorneys requested $42,560 (based on 89.6 hours) for preparing the fee motion.

     The trial court, who felt that the jury could have defensed the matter, believed the fee request was unreasonable and inflated in nature, awarding plaintiff $84,000 in fees based on 240 hours multiplied by $350, rejecting a multiplier, and determining that both attorneys would have to divide up respective fees from the total amount awarded. The lower court found the trial did not take even 20 hours of jury time, there were no expert witnesses, and the case was not complicated.

     The Second District, Division 1 affirmed.

     Only hours reasonably spent are subject to compensation under the FEHA fee-shifting statute. (Horsford v. Board of Trustees of California State University, 132 Cal.App.4^th 359, 394 (2005).) The recent state supreme court case of Chavez v. City of Los Angeles, 47 Cal.4^th 970, 990-991 (2010) recognized that a trial court does not abuse its discretion in denying fees altogether in a FEHA case where the fee request is unreasonably inflated. In Jimenez, the trial court obviously felt the fee request was unreasonably inflated and indicated it was being generous in awarding what it did. Given that the fees could have been denied altogether, the substantial reduction was not an abuse of discretion under the circumstances.

Private Attorney General Fee Award: $423,975 Award In First Impression Case Of Difficulty Affirmed

 

First District, Division 1 Rejects State’s Challenges to Amount of Fee Award.

     In an earlier appeal, certain plaintiffs successfully enjoined enforcement of certain legislation allowing for incarceration for drug-related probations violations because such a sanction was inconsistent with Proposition 36 (the Substance Abuse and Crime Prevention Act of 2000). Plaintiffs also successfully defended this result in a prior appellate proceeding. Subsequently, the lower court awarded them $423,975 in attorney’s fees (the full requested lodestar of $233,777.50 plus $14,868 for work on the fee motion, enhanced by a 1.75 multiplier) under California’s private attorney general statute (Code of Civil Procedure section 1021.5).

     State defendants appealed only the amount of the fee award in Gardner v. Schwarzenegger, Case No. A125000 (1^st Dist., Div. 1 Feb. 22, 2010) (unpublished). Defendants were not successful, with the full fee award being affirmed on appeal.

     With respect to the awarded lodestar, the Court of Appeal found that the hourly rates—ranging from $195 for paralegals to $640 for the lead attorney plus $590 per hour for the attorney working on the fee motion—were consistent with the market rate for San Francisco attorneys with comparable skill and experience. The opinion has a nice discussion of cases where other hourly rates were pegged in lodestar cases, but the appellate panel here found that the distinguishing factor was that the case before it involved first impression, difficult public interest issues justifying the higher rates.

     Plaintiffs had asked for a multiplier of 2.5, but the lower court found a 1.75 enhancement was appropriate. Defendants challenged that determination also. However, the lower court had carefully determined that the contingent risk factor justified the award, because society cannot expect skilled hourly attorneys to give up hourly work for risk-laden public interest work without some incentive for doing so. Nonetheless, some decrease in the requested multiplier was correct given the financial crisis facing California, with the lower court properly giving some weight to this factor. In fact, a multiplier may be based on a single relevant factor—in this case, risk. (Krumme v. Mercury Ins. Co., 123 Cal.App.4^th 924, 947 (2004).)

     Finally, even though some county officials were involved initially in the suit, no apportionment of fees was necessary between the state and county because the county officials did not really enter into the interpretative fray about the statute and Proposition 36.

Opium Den.  1909.  Library of Congress.

Civil Rights: Court Of Appeal Affirms Lower Court’s Award of $6,659.15 To Plaintiff Who Had Limited Success And Recovered Only $5,000 In Disability Case

Second District, Division 6 Rejects Plaintiff’s Request for Award of $114,895 in Fees and $27,441.35 in Costs.

     Although the courts will award appropriate attorney’s fees to prevailing plaintiffs in civil rights disability cases, they will also discount for limited success and overinflated claims of complexity in litigation of the case.

     Molski v. Evergreen Dynasty Corp., Case No. B208988 (2d Dist., Div. 6 Sept. 14, 2009) (unpublished) illustrates this result in a recent “real time” case just decided upon appeal.

     There, disabled plaintiff sued for multiple violations under civil rights and other state statutes, many of which carried mandatory fee-shifting provisions in favor of prevailing plaintiffs. However, plaintiff only recovered mandatory minimum awards totaling $5,000 and lost several claims (including claims with punitive damage exposure) against the main company defendant (respondent on appeal). Also, another defendant settled for $14,950 before trial, with no apportionment between damages and attorney’s fees. Plaintiff failed to serve a costs memorandum, but did move to recoup $114,895.00 in fees and $27,441.35 in routine costs.

     The trial court awarded $6,659.15 in fees, using a reasonable lodestar ($66,591.50) but then reducing it by a tenth based on lack of difficulty, limited success and skill displayed, and the absence any evidence showing that plaintiff’s counsel had to forego other work. Plaintiff (or likely his attorney), not being a “happy camper,” appealed.

Private Attorney General Statute: Trial Court Properly Awarded Plaintiffs $336,350 In Fees Rather Than Requested $1.49 Million (And Correctly Denied 2.0 Multiplier)

First District, Division 5 Determines Trial Court Properly Applied Serrano III Factors.

     Even under fee-shifting, public interest statutes, our California Supreme Court in Serrano v. Priest, 20 Cal.3d 255, 49 (1977) (Serrano III) mandated that multiple factors be used to increase or decrease a lodestar figure requested by victorious litigants. In the next case we discuss, the lodestar was decreased based on various factors. The disgruntled plaintiffs, who requested an award of $1.49 million plus a 2.0 multiplier after winning a publicized high school student editorial battle with a school district, were only awarded $336,350 in attorney’s fees under Code of Civil Procedure section 1021.5, with no one contesting student’s entitlement to fees. (Plaintiffs were represented by Pacific Legal Foundation, an entity receiving private support for purposes of bringing public interest lawsuits.) Plaintiffs appealed the trial court’s lodestar decreases under Serrano III. How did they do?

     Plaintiffs overall lost in Smith v. Novato Unified School District, Case No. A122105 (1^st Dist., Div. 5 May 28, 2009) (unpublished). The appellate panel found the lower court did not commit error in reducing the lodestar ($672,700) for (1) time spent on successful claims, (2) various Serrano III factors, and (3) substantial padding in the form of inefficient or duplicative efforts by multiple attorneys involved on plaintiffs’ behalf.

FEHA: $1,059,350.60 Fee Award, Based on 1.5 Multiplier, Affirmed On Appeal

Use of Multiplier Appropriate Even Where Substantial Punitive Damages Also Were Awarded.

     Bimbo Bakeries, known for selling such brands of Orowheat and Entemann’s, suffered an adverse jury verdict based on plaintiff’s complaint for wrongful termination, gender and pregnancy discrimination, and violation of related California statutes. The jury awarded plaintiff $340,700 in compensatory damages and also assessed $2 million in punitive damages against Bimbo Bakeries. Because section 12965(b) of the Fair Employment and Housing Act (FEHA) permits the trial court to award attorney’s fees and costs to a prevailing party, the lower court also awarded plaintiff fees in the amount of $1,059,350.60 using a 1.5 multiplier. Bimbo Bakeries appealed use of the multiplier.

     The First District, Division 4, in Lopez v. Bimbo Bakeries USA, Inc., Case Nos. A119263 & A119720 (Apr. 23, 2009) (unpublished), rejected defendant’s arguments relating to the use of the multiplier.

           1939 World's Fair. Wonder Bakery.  Library of Congress.