CALIFORNIA ATTORNEY'S FEES

Consumer Statutes/POOF!: Elder Abuse Fee Award Reversed Because 2008 Amendments Not Retroactive

 

$326,588 Award Went Bye-Bye.

     Plaintiffs in an elder abuse case where the crucial claims centered about defendants’ undue influence of an elder, causing an amendment to a testamentary trust, fared well in the trial court. The lower court invalidated the trust and awarded plaintiffs attorney’s fees of $326,588 under Welfare & Institutions Code section 15657(a) (an Elder Abuse Act fee-shifting provision).

     On appeal, in McIntosh v. Mathison, Case No. A127421 (1st Dist., Div. 3 Apr. 25, 2011) (unpublished), the fee award was reversed.

     The reason? The Elder Financial Abuse Act’s financial elder abuse sections were amended in 2008 to add undue influence as a violation such that the fee shifting provision applied only if retroactive in nature. Because the 2008 amendments were substantive and nothing indicated an intent that they were to apply to past conduct (the undue influence found here), the fee award had to be vacated -- or, in one of our pet terms, went POOF!

Consumer (Environmental) Statutes: Fourth Circuit Court of Appeals Affirms $483,073.88 Attorney’s Fees Award Under Clean Air Act

Duke Energy Carolinas, LLC Lost Appeal of Adverse Fee Award.

     Because Friday was a slow day for decisions on attorney’s fees issues in the California state courts and Ninth Circuit, we instead review a federal appellate decision affirming a substantial fee award under the Clean Air Act.

     Under the Clean Air Act’s citizen suit provision, a court may award attorney’s fees “whenever the court determines such award is appropriate.” 42 U.S.C. § 7604(d). The district court has discretion to award fees even when the prevailing party only partially prevailed--achieving some success, even if not major success. (Ruckelshaus v. Sierra Club, 463 U.S. 680, 688 (1983).) For example, a party can prevail where an agency is ordered to carry out regulatory duties such as adequately investigate complaints, regardless of the ultimate outcome of the investigation. (W. Va. Highlands Conservancy, Inc. v. Kempthorne, 569 F.3d 147, 152-54 (4th Cir. 2009).)

     Certain plaintiffs citizen groups won a $483,073.88 attorney’s fees award (out of a requested $886,089) against Duke Energy Carolinas, LLC under the Clean Air Act when they were successful in getting a district judge to grant them a summary judgment directing Duke to engage in administrative proceedings to determine if a proposed coal-fired power plant was a major or minor source of pollution. On appeal in Southern Alliance for Clean Energy v. Duke Energy Carolinas, LLC, __ F.3d __, 2011 WL 1421794 (4th Cir. April 14, 2011), Duke argued that plaintiffs’ accomplishment was merely procedural and trivial in nature. Both the district and appellate courts disagreed. They both found that plaintiffs did achieve one of their main goals of their suit and forced Duke to participate in formal administrative evaluations pursuant to the Clean air Act. This certainly qualified as “some success,” requiring affirmance of the district judge’s fee award in favor of plaintiffs.

Consumer Statutes/Equity: Attorney Denied Appellate Fees For Beating A Client’s Claim Requesting A Refund Of Unearned Fees Based On A Technicality

Failure to Award Fees under B & P § 6204(d) Was No Abuse of Discretion.

     Here is an interesting case in the continuing saga of prominent civil rights attorney Stephen Yagman. The case is also poignant in showing how trial and appellate courts will use equitable principles to resolve fee recovery matters.

     In Yagman v. Colello, Case No. B223412 (2d Dist., Div. 4 Jan. 25, 2011) (unpublished), former client obtained a nonbinding State Bar arbitration award against his former attorneys requiring them to refund him $261,000 of a $290,000 fee after the district court disqualified Yagman from representing Colello (even though Colello was convicted and then imprisoned for over 2 years). Yagman then challenged the award through a de novo procedure in court, successfully arguing that former client could not recover any damages based on a one-year statute of limitations. The appellate court, earlier, affirmed the dismissal on the technicality. Yagman then moved to recover $64,768.50 in attorney’s fees incurred in the prior appeal under Business and Professions Code section 6204(d), which does allow the trial court discretion to award such fees to the prevailing party. The lower court, however, found it “would be a gross abuse of discretion to grant the fee request” based on Yagman’s refusal to refund any of the unearned fees when he won on a technical defense rather than refute the arbitrator’s findings that the unearned fee should be returned. Yagman appealed.

     He lost.

     The appellate court, clearly siding with the equities as it saw things, found no abuse of discretion in what the lower court did. It credited the State Bar arbitrator’s findings that Yagman should return the unearned fees and did not find that these findings should be disregarded. The presumption of correctness accorded to the trial court’s order prevailed in this particular appeal.

CCP Section 998, Costs, And Consumer Fee Shifting Statute: Fee Award To CLRA Settling Plaintiff Affirmed Upon Denial of Defense 473 Motion Relating To 998 Offer Containing No Language Dealing With Fees/Costs

Silent 998 Offer Came Back to Bite the Defense as Silence Proves Golden for Prevailing Party.

     Many of the decisions we examine have major object lessons for litigators to pay heed to. After all, we like to say that good case management skills are usually learned through mistakes. This next case illustrates this principle very aptly.

     Wilkinson v. South City Ford, Case Nos. A125299 et al. (1st Dist., Div. 1 Oct. 29, 2010) (unpublished) is a situation where a plaintiff sued on a variety of theories, including under a contract and the Consumers Legal Remedies Act--with there presumably being a fee shifting clause and with CLRA containing a fee shifting provision. After settlement negotiations produced nothing more than a huge gap in expectations, plaintiff accepted a $35,000.01 defense settlement offer under CCP § 998, one that was silent on fees and costs even though an insurance claims supervisor had told defense counsel that he wanted an offer under which both sides were to bear their own fees and costs. The gremlin in this saga is that a 998 offer silent on fees and costs means that the prevailing party is entitled to costs and allowable fees. (Engle v. Copenbarger & Copenbarger, LLP, 157 Cal.App.4th 165, 168 (2007).) 

The Tremeloes - Silence is Golden

Plaintiff moved for judgment based on the 998 offer, as well as fees and costs under Engle (predicated primarily on the CLRA fee shifting statutory provision of Civil Code section 1780(d)). Defendants moved under CCP § 473 for relief from default, arguing that his 998 offer had a “typographical” omission on the fee and costs issue and that drafting counsel had meant to say that both sides would bear their own costs/fees. The trial court denied the 473 motion, entered judgment in plaintiff’s favor to the tune of $35,000.01, and awarded plaintiff costs of $14,834.36 and attorney’s fees of $158,746.25. (Yep, that omission did result in quite a substantial costs/fees award.) Both sides appealed.

     The appellate court sent everyone home in line with what happened below.

Consumer Statutes: Winning Plaintiff’s Request For More Attorney’s Fees Rebuffed In Lemon Law Car Case

$64,000 Attorney’s Fees Sustained on Appeal By Second District, Division 8.

     Plaintiff, in a Lemon Law car case, actually won $37,508.84 for breach of implied warranty and $560 for breach of express warranty as against Mercedes-Benz USA, LLC (MB). Because the Song-Beverly Consumer Warranty Act has a mandatory fee shifting provision for winning car buyers (Civ. Code, § 1794(e)(1)), plaintiff moved to recover fees totaling $512,266.18 (yes, you heard us right), consisting of a $186,000 lodestar plus a multiplier. The trial court awarded $64,000 in fees, which were the fees incurred by plaintiff before MB offered to settle the matter. Apparently not happy at all, plaintiff appealed.

     The fee award to plaintiff was affirmed in Nunan v. Mercedes-Benz USA, LLC, Case No. B215181 (2d Dist., Div. 8 Oct. 21, 2010) (unpublished).

     The abuse of discretion standard was determinative in this one. The amount of the fees awarded was more than the damages award, with the trial court determining the lodestar and then adjusting for any novelty/difficulty/skill displayed by plaintiff’s counsel through its reasoned comments on the record.

     As with fee awards under Civil Code section 1717, equitable considerations do come into play. Although the trial court did note the matter was well tried, it believed plaintiff was asking “way too much money [over $500,000} for this type of trial” (a six-day trial).

Consumer Statutes: CCP § 1032 "Prevailing Party" Standard Does Not Have To Govern Fee Recovery Under CLRA or ASFA

Fourth District, Division 3 Rejects Kim's Reliance on § 1032 Standard.

     In a very interesting case arising out of Orange County litigation, our local Santa Ana appellate court has parted company with another appellate court as far as the "prevailing party" standard to use for fee entitlement purposes under the Consumer Legal Remedies Act (CLFA) or Automobile Sales Finance Act (ASFA).

     Plaintiffs filed an action against Family Honda in Orange County Superior Court over the type of navigation system installed in a white 2007 Odyssey Touring vehicle. On the date set for trial, the case settled in a way by which plaintiffs transferred to Family Honda their 2007 vehicle plus $3,780 in exchange for a black 2009 Odyssey Touring vehicle with a factory installed navigation system. (At one point, plaintiffs had wanted much more in settlement discussions, including that Family Honda pay them $30,000.) After substantial give and take in a mandatory settlement conference, this settlement described above was reached, with the settlement judge retaining jurisdiction to decide if there was a prevailing party and if fees should be awarded.

     Plaintiffs filed a motion seeking fees of $158,872 and costs of $6,474, with Family Honda opposing and filing its dueling fee motion seeking a recovery in the amount of $60,093.15.

     Guess what happened? The trial court declined to award attorney's fees, finding there was no prevailing party, but awarding $6,474 in costs to plaintiffs. Plaintiffs then appealed.

     The Fourth District, Division 3, in a 3-0 unpublished decision authored by Justice Moore, affirmed. The case is Winer v. Family Investment Co., Inc., Case No. G042009 (4^th Dist., Div. 3 Oct. 7, 2010) (unpublished).

     The central issue in the appeal was aptly titled "Costs Gets You Fees?" by Justice Moore. The appellate panel, after noting that neither the CLFA nor ASFA defined "prevailing party" for fee purposes, parted company with the approach taken in Kim v. Euromotors West/The Auto Gallery, 149 Cal.App.4^th 170, 181 (1997), which applied the CCP § 1032 "prevailing party" approach by analogy—a liberal approach given that the plaintiffs need only show they obtained a "net monetary recovery" on their CLRA claim. The Court of Appeal found that Kim's underlying authority for such an approach was not compelling, preferring the "pragmatic approach" endorsed instead by Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4^th 140, 150 (2006) which focuses on who prevailed on a practical level.

     There is also an interesting discussion of what can and cannot be used from settlement discussions at the fee hearing, with the appellate court basically determining that information used by the fee motion judge was reflected in the public record.

     The lower court did not err in concluding that there was no prevailing party in light of the "give and take" in which both sides came down from their initial positions. Fee denial affirmed.

Consumer Statutes: Plaintiff Was Lucky To Get $20,400 In Lemon Law Fees After Rejecting Defense Settlement Offers

Fourth District, Division One Reinforces that Consumer Statutes Are Not a Blank Attorney’s Fees Check.

     This next one is a lemon law case, arising under the Song-Beverly Consumer Warranty Act with a mandatory fee-shifting provision. However, that fee-shifting statute only allows recovery of reasonable attorney’s fees to the prevailing party (Civ. Code, § 1794(d); Nightingale v. Hyundai Motor American, 31 Cal.App.4^th 99, 104 (1994).) The reasonableness language was the rub—and, ultimately, determining factor—in the appellate affirmance of fees to plaintiff’s counsel in a sum much less than the requested amount.

     Plaintiff was awarded $20,400 in fees under the lemon law, rather than the $81,225 she requested. To put things in context, defendant did pay her $9,513.18 in settlement, reserving the reasonableness of fees for determination by the trial court. Even earlier, defendant did make some settlement offers that the appellate court thought were fair in nature, albeit rejected (some informal and some under Code of Civil Procedure section 998).

     The appellate court affirmed the lower fee award, finding that plaintiff was unreasonable in rejecting a $5,100 offer after expending a lot more in fees to garner $9,513.18—even though the defendant offered to allow the trial court to award reasonable attorney’s fees in a post-offer acceptance proceeding. So, as we have seen in other cases, plaintiffs’ attorneys—even in mandatory fee-shifting cases—need to seriously evaluate settlement offers under penalty of getting much, much less fees for prevailing on behalf of their clients. The case is McCarthy v. Hyundai Motor America, Case No. D055817 (4^th Dist., Div. 1 July 14, 2010) (unpublished).

FOIA: No Broader Fee Entitlement To Litigants Who Litigated Before Passage Of The Open Government Act

D.C. Court of Appeals So Rules in Two Cases.

     Two and a half years ago, Congress enacted the Open Government Act, making it easier for plaintiffs to recover attorney’s fees in Freedom of Information Act (FOIA) lawsuits. Prior to the new Act, only FOIA plaintiffs actually awarded relief could recover fees. However, the Open Government Act broadened recovery of fees to lawsuits that led to “a voluntary or unilateral change in position by the agency.”

     However, which fee entitlement scheme applies to FOIA plaintiffs litigating before enactment of the Open Government Act?

     The District of Columbia Court of Appeals apparently has answered that question recently in Judicial Watch v. Bureau of Land Management and John Davis v. U.S. Department of Justice. Judicial Watch had $3,605 in fees involved, while the Davis situation involved more than $112,000 in fees from litigation stretching back more than two decades. The federal appellate court, however, found that the broader fee entitlement from the Open Government Act did not apply to the two FOIA plaintiffs. Even when Congress intends to supersede case law, “its intent to reach conduct preceding the ‘corrective’ amendment must clearly appear.” In these instances, the broader fee entitlement could not be retroactively applied.

     For more on these two decisions, see Brian Westley’s July 7, 2010 post entitled “Two victories for government in FOIA fee award disputes,” available for reading at the website for The Reporters Committee for Freedom of the Press.

Consumer Arbitrations: Consumer Contract Authorizing Fees Runs Afoul Of CCP § 1284.3 Statutory Protections

 

Fourth District, Division 1 Reverses Arbitration Fee Award on Public Policy Grounds on Appeal.

     Code of Civil Procedure section 1284.3(a) is a pro-consumer arbitration provision that states an arbitrator/neutral cannot administer an arbitration for a consumer in a way that makes the consumer responsible to pay attorney’s fees or costs if he/she is not a prevailing party. That statutory protection came into direct conflict with an arbitration clause in a homeowner-contractor pool replastering contract that allowed an arbitrator to award fees to the prevailing party.

     Well, an arbitrator ruled in favor of contractor and hit homeowner with $23,834.24 in fees as the losing party. Homeowner tried to vacate or correct the fee award, but the trial court found that was not a prototypical “consumer” situation because the consumer had “agreed” to arbitration upfront.

     That brought the fee challenge to the Fourth District, Division 1 in Gardner Pool Plastering, Inc. v. Law, Case No. D055220 (4^th Dist., Div. 1 June 10, 2010) (unpublished).

Consumer Statutes And Section 998: Plaintiff’s Waiver Of Fees In Accepting 998 Offer Binds Plaintiff

Second District, Division 3 Also Finds 998 Fee Waiver In Not Illegal under California’s Lemon Law.

     The next case, involving the interplay between Code of Civil Procedure section 998 pretrial offers and California consumer/civil fee shifting statutes, basically holds plaintiff to the bargain reached when he accepted the 998 offer made by defendants.

     In Anderson v. Sullivan Motor Cars, LLC, Case No. B212091 (2d Dist., Div. 3 May 27, 2010) (unpublished), plaintiff sued under various consumer statutes and a car purchase agreement. Certain defendants made a 998 offer to rescind the contract, take back the vehicle, and pay plaintiff $27,000 conditioned upon a release of all defendants and plaintiff’s express waiver of “any claim for attorney’s fees or costs.” Plaintiff accepted the settlement, but then moved to recover attorney’s fees under various fee shifting statutes (the Rees-Levering Motor Vehicle Sales and Finance Act, the Consumer Legal Remedies Act [CLRA], and Civil Code section 1717). The trial court denied the motion on several grounds: (1) because the plaintiff filed a dismissal with prejudice, it lacked jurisdiction to rule on the motion; (2) the dismissal acted as a retraxit; (3) plaintiff was not a prevailing party under Code of Civil Procedure section 1032(a)(4); (4) plaintiff was not the prevailing party pursuant to Civil Code section 1717(b); (5) even if plaintiff were deemed the prevailing party, his acceptance of the 998 offer and execution of a general release waived his claim for fees; and (6) nothing in another consumer scheme prevented waiver of fees as part of a settlement with defendants.

     Plaintiff appealed, but lost his attempts to recoup attorney’s fees.

Non-Taxable Federal Costs: District Courts Can Award Non-Taxable Costs Under the Fair Credit Reporting Act

Ninth Circuit So Holds in 2-1 Decision; Dissent Thinks Majority Decision Allows Recovery of Non-Taxable Costs as Attorney’s Fees in Most Fee-Shifting Statutes.

     The next case is an interesting one, provoking a 2-1 decision on an important issue: when are non-taxable costs awardable as attorney’s fees under federal fee-shifting statutes. The question did not get an undivided answer, as a recent Ninth Circuit decision shows.

     In Grove v. Wells Fargo Financial California, Inc., Case No. 08-56964 (9^th Cir. May 20, 2010) (for publication), a 2-1 Ninth Circuit panel potentially held that $6,770.60 in non-taxable costs (cost of postage, faxes, travel, mediation services, and deposition video conferencing services—items that are not specified taxable costs) might well be “attorney’s fees” under the Fair Credit Reporting Act, relying on decisions such as Missouri v. Jenkins, 491 U.S. 274, 285 (1989) and numerous other circuit decisions construing similar language in federal fee-shifting statutes. The case was remanded for the district court to determine if the non-taxable costs were recoverable because they would normally be included in the fee billed by lawyers in the prevailing community.

     Circuit Judge Rymer, in dissent, thought the majority decision was too broad in nature, requiring the federal court of appeals to determine whether Congress intended recovery of non-taxable costs under FCRA. She seemed to suggest that the test adopted by the majority was not narrow enough, meaning that “attorney’s fees” language in all federal fee-shifting statutes would sweep non-taxable costs within its scope if the majority perspective was followed.

Fair Debt Collection Practices Act Costs: Prevailing Defendant Cannot Be Awarded Costs Unless The Plaintiff Brought The Action In Bad Faith And For Harassment Purposes

$6,511.46 Costs Award Against Plaintiff Reversed, Because Bad Faith/Harassment Is Necessary Predicate For Adverse Costs Award in Favor of Prevailing Defendant.

     In Rouse v. Law Offices of Rory Clark, Case No. 09-55146 (9^th Cir. May 3, 2010) (for publication), a district judge awarded $6,511.46 in routine costs to a prevailing defendant in a Fair Debt Collection Practices Act (FDCPA) action even though not finding bad faith or harassment by plaintiff. The district judge found that bad faith/harassment were only predicates for an award of attorney's fees under the FDCPA (specifically, 15 U.S.C. § 1692k(a)(3)), primarily based on the premise that costs is a factor in determining the reasonableness of fees under the FDCPA.

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.

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:

  

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.

In The News . . . . McCourts’ Divorce Fees Pile Up, Large “Lemon Law” Award Against Mercedes-Benz In Wisconsin, And Class Member Objects To Class Action Settlement Garnering Only Fees For Class Counsel

$19 Million in Fee Spent in McCourt’s Divorce.

     Frank McCourt has estimated his divorce-related expenses at $5-$10 million, while Jamie McCourt has estimated her expenses as $9 million (with Jamie asking Frank to pay them), all in the on-going and apparently acrimonious divorce proceeding between Los Angeles Dodger owner Frank and former officer Jamie.

     In an article “High cost of McCourts’ divorce: $19 million in fees” posted by Bill Shaikin on March 5, 2010’s Los Angeles Times Website, several family law experts said they could not recall a divorce costing $19 million. One expert estimated a total cost of $5 million as being “consistent with high-profile” divorce cases. The article indicated that divorce lawyers generally charge from $250 to $750 per hour in the Southland. In comparison, the Britney Spears-Kevin Federline divorce cost $835,000, and former NFL quarterback Berne Kosar spent more than $4 million on attorney’s fees in his divorce.

     The $19 million in fees is more than the Dodgers will spend on their starting infield this season, according to Mr. Shaikin’s article.

Mercedes-Benz Hit With Large “Lemon Law” Judgment by Wisconsin Judge.

     A Wisconsin judge has ordered Mercedes-Benz USA LLC to pay $482,000 in damages and legal fees to a Wisconsin customer who was sold a defective car and not given a timely refund under Wisconsin’s stringent “lemon law.” The judgment broke down to $168,000 in damages plus $314,000 in costs and legal fees for plaintiff’s lawyers. For more information on this case, see Ryan J. Foley’s March 5, 2010 article.

Schering-Plough/Merck Merger Class Action Settles, With All The Money Going To Pay Class Counsel’s Fees.

     As reported in Charles Toutant’s article “Shareholders Cry Conflict of Counsel in Class Action Over Merck Merger” (posted March 8, 2010 on Law.com), some class members are not happy about a settlement in the Shering-Plough/Merck merger class action in which all the money (about $3.5 million) goes to class counsel rather than providing any monetary recovery to shareholders. Objectors cite this result as a reason tort reform is being called for, while class counsel says the objection is “entirely devoid of merit.”

Consumer Fee-Shifting Statute: Plaintiff Obtains Fee Recovery In Lemon Law Case Against GM

 

 

Second District, Division 1 Affirms Substantial Judgment in Favor of Lemon Law Plaintiff.

 

    California’s Lemon Law, codified in the Song-Beverly Act (Civ. Code, § 1790 et seq.), has a mandatory fee-shifting provision in favor of prevailing plaintiffs.  (See Civ. Code, § 1794(d).)  The next decision affirmed a substantial judgment, inclusive of compensatory damages, prejudgment interest, penalties, and fees/costs in favor of the prevailing Lemon Law plaintiff.

 

    The Second District, Division 1, in Lukather v. General Motors, LLC, Case No. B209979 (2d Dist., Div. 1 Feb. 4, 2010) (certified for publication), affirmed an aggregate $185,306.57 judgment in favor of Lemon Law plaintiff, broken down this way:  about $66,000 for compensatory damages and prejudgment interest; about $61,400 in civil penalties authorized under the Act; and $57,755.69 in attorney’s fees, costs, and expenses. 

 

    BLOG UNDERVIEW—The winning plaintiff attorney was Lawrence J. Hutchens, who co-contributor Mike has litigated against.  Mike sends his congratulations. 

Consumer Statutes: Attorney’s Fees Not Authorized To Prevailing Party Under CCP § 527.8 For Winning Harassment Injunction

Court of Appeal Also Affirms Refusal to Award Fees Under Anti-SLAPP Fee Shifting Provision or CCP § 527.6, Also Rebuffing Constitutional Challenges to § 527.8.

     Here is an interesting decision from the Fifth District Court of Appeal involving a refusal to award attorney’s fees to a prevailing party in a rather unusual harassment injunction case.

     Madera Irrigation Dist. v. Pistoresi, Case Nos. F0556668 & F055804 (5^th Dist. Jan. 13, 2010) (unpublished) was sparked by a physical altercation by Mr. Pistoresi (an elected member of the District’s Board of Directors) and District’s general manager. Three lawsuits were spawned from this incident, involving dueling injunction requests under Code of Civil Procedure section 527.6 (which provides individuals with the right to obtain a restraining order when threatened with violence) and a separate District request against Mr. Pistoresi under section 527.8 (which allows employers of an employee who has been threatened with violence to seek a restraining order on behalf of the threatened employee and all of its other employees). The donnybrook lasted so long that, by the time of the preliminary injunction hearing, the dispute was basically moot because the individuals were no longer with the District and the District could not establish that Mr. Pistoresi was any future threat. All requests were denied (after the trial court earlier denied Mr. Pistoresi’s anti-SLAPP motion as well as his request to file a late anti-SLAPP motion). Mr. Pistoresi then sought to recover $128,659 in attorney’s fees as the prevailing party, a request denied by the trial court. Mr. Pistoresi appealed the denial of the anti-SLAPP motion request and the denial of his fee request as against the District.

     On appeal, the Fifth District affirmed, in a 3-0 opinion authored by Acting Presiding Justice Wiseman.

     Mr. Pistoresi was not entitled to any award of fees under the anti-SLAPP fee shifting provision because he never specifically filed an appeal of the order denying his SLAPP motion. Appellate jurisdiction over the issue was lost.

     With respect to his argument that fees were awardable under section 527.6(i) (which they are), Mr. Pistoresi picked the wrong statute, because District brought its restraining order petition under another statute, namely, section 527.8.

     That brought the appellate panel to whether fees were justified under section 527.8. They were not. Section 527.8 does not authorize a fee award. Mr. Pistoresi leveled constitutional challenges for this omission (mainly based on equal protection and due process grounds), but lost this when Justice Wiseman observed that the Legislature could rationally conclude that fees were needed under section 527.6—where an individual against whom an injunction is sought could not afford legal fees compared to an employer acting through legal counsel with bigger financial pockets. (Robinzine v. Vicory, 143 Cal.App.4^th 1416, 1424 (2006).) “We also find merit in the District’s suggestion that another reason to justify a distinction between sections 527.6 and 527.8 is that the availability of fees in section 527.6 might encourage reticent individuals who have been threatened with violence to seek an injunction and thereby reduce the threat of actual harm. There is no need for such an incentive in section 527.8 actions. Employers are often sophisticated business entities, having established relationships with legal counsel, and are motivated to act to reduce the threat of harm to its employees and customers.” (Slip Opn., at p. 9.)

Mike And Marc’s Top Twenty Decisions For 2009

Part 2 of 2: Second Ten Grouping—Nos. 1-10.

     We already gave you our top 11-20 decisions previously this month.

     As noted in an earlier post, we have accumulated our “top 20” attorney’s fees decisions, recognizing that we limit the list to published decisions and that the order reflects nothing about the importance of the decision. Rather, we try to survey decisions of interest in different areas of the substantive law based on all the decisions we have examined during 2009.

     Without further ado, here we go for nos. 1-10. Happy New Year. 

10. Christensen v. Stevedoring Services of America, 557 F.3d 1049 (9^th Cir. Mar.

2, 2009) and Van Skike v. Director, Office of Workers’ Compensation

Programs, 557 F.3d 1041 (9^th Cir. Mar. 2, 2009)

Author: Chief U.S. Dist. Judge Roll, By Designation

     Longshore and Harbor Workers’ Compensation Act attorneys entitled to higher attorney’s fees under broader “prevailing market” test in venue fora rather than just having fees keyed to LHWCA past awards (which have been generally lower in amount).

(See our March 5, 2009 post on this decision.)

9. Peak-Las Positas Partners v. Bollag, 172 Cal.App.4^th 101 (2d Dist., Div. 6

Mar. 16, 2009)

Author: Presiding Justice Gilbert

     Aggressive/tenacious litigation posturing is a factor to be weighed when awarding fees under Civil Code section 1717.

(See our March 16, 2009 post on this decision.)

8. Silver Creek, LLC v. Blackrock Realty Advisors, Inc., 173 Cal.App.4^th 1533

(4^th Dist., Div. 1 May 20, 2009)

Author: Justice McIntyre

     Scoreboard “tie” approach to deciding Civil Code section 1717 “prevailing party” status rejected, with courts needing to determine if either side won their true litigation objectives for purposes of determining which party prevailed.

(See our May 21, 2009 post on this decision.)

7. Hyde v. Midland Credit Mgt., Inc., 567 F.3d 1137 (9^th Cir. June 9, 2009)

Author: Circuit Judge Fletcher

     Attorney’s fees for “bad faith” actions cannot be assessed against plaintiff’s attorneys in Fair Debt Collection Practices Act cases.

(See our June 10, 2009 post on this decision.)

6. Wood v. Santa Monica Escrow Co., 176 Cal.App.4^th 802 (2d Dist., Div. 6

Aug. 13, 2009)

Author: Presiding Justice Gilbert

     Civil Code section 1717 attorney’s fees are only awardable to the overall winner in the litigation, not just the winner of a discrete attorney’s fees proceeding in the case.

(See our August 14, 2009 post on this decision.)

5. Barrientos v. 1801-182 Morton LLC, 583 F.3d 1197 (9^th Cir. Oct. 9, 2009)

Author: Circuit Judge Wardlaw

     Party winning a preemption issue is entitled to fee award under California Civil Code section 1717.

(See our October 10, 2009 post on this decision.)

4. One Star, Inc. v. Staar Surgical Co., 2009 WL 4193643 (2d Dist., Div. 4

Nov. 30, 2009)

Author: Justice Suzukawa

     Revocation of second Code of Civil Procedure section 998 offer means that the first, nonwithdrawn 998 offer is the measuring stick for an award of costs and fees to prevailing party vis-à-vis the ultimate judgment.

(See our December 1, 2009 post on this decision.)

3. Flir Systems, Inc. v. Parrish, 174 Cal.App.4^th 1270 (2d Dist., Div. 6

June 15, 2009)

Author: Justice Yegan

     Fees and costs can be awarded to a prevailing party in a bad faith trade secret misappropriation case even though the losing party won an earlier denial of a summary judgment motion.

(See our June 16, 2009 post on this decision.)

2. Gilman v. Dalby, 176 Cal.App.4^th 606 (3d Dist. Aug. 10, 2009)

Author: Justice Scotland

     Attorney’s liens in personal injury actions have priority over previously-filed medical liens even where plaintiff’s attorney had awareness of the prior medical lien.

(See our August 13, 2009 post on this decision.)

1. Schatz v. Allen Matkins Leck Gamble & Mallory LLP, 45 Cal.4^th 557 (Cal.

Supreme Ct. Jan. 26, 2009)

Author: Justice Moreno

     Predispute provision in attorney retainer agreement, which specifies binding arbitration for fee/costs disputes, is enforceable after Mandatory Fee Arbitration Act (MFAA) requirements are exhausted.

(See our January 26, 2009 post on this decision.)

     BLOG UNDERVIEW—We used “fora” rather than “forums.” There is a big controversy on which word to use, so we simply go with our gut—even though some Internet commentators prefer use of the word “forums.” Guess we better don our togas!

Marc And Mike’s Top Twenty Decisions For 2009

Part 1 of 2: First Ten Grouping—Nos. 11-20.

     As noted in an earlier post, we have accumulated our “top 20” attorney’s fees decisions, recognizing that we limit the list to published decisions and that the order reflects nothing about the importance of the decision. Rather, we try to survey decisions of interest in different areas of the substantive law based on all the decisions we have examined during 2009. Without further ado, here we go.

     YEARLY ROUNDUP

20. Crawford v. Astrue, 2009 WL 3617989 (9^th Cir. Nov. 4, 2009) (en banc)

Majority Author: Circuit Judge Fletcher; Concurring/Dissenting Author:

Circuit Judge Clifton; Dissenting Author: Circuit Judge Ben

     Attorneys representing Social Security disability insurance claimants are presumptively entitled to fee awards under their contingency arrangements; majority reversed magistrate reductions of awards to only 6.68-11.61% of past-due benefits award.

(See our November 5, 2009 post on this decision.)

19. Krug v. Maschmeier, 172 Cal.App.4^th 796 (lst Dist., Div. 4 Mar. 25, 2009)

Author: Presiding Justice Ruvolo

     Prevailing defendants in civil harassment actions can recover discretionary attorney’s fees even if the underlying action was not frivolous or was not brought in bad faith.

(See our March 25, 2009 post on this decision.)

18. Garcia v. Santana, 174 Cal.App.4^th 464 (2d Dist., Div. 7 May 28, 2009)

Majority Author: Justice Zelon; Concurring Author: Justice Woods;

Dissenting Author: Justice Jackson

     Financial condition of indigent litigant is a factor to consider in assessing fees to a prevailing party in a Davis-Stirling Act action.

(See our May 28, 2009 post on this decision.)

17. In re SNTL Corp., 571 F.3d 826 (9^th Cir. June 23, 2009)

Per Curiam Opinion

     Unsecured creditor’s request for postpetition-incurred contractual/statutory fees, arising from prepetition claim, is allowable.

(See our June 23, 2009 post on this decision.)

16. Biltmore Associates, LLC v. Twin City Fire Ins. Co., 572 F.3d 663 (9^th Cir.

July 10, 2009)

Author: Justice Kleinfield

     Attorney’s fees, if other than sanctions or if not awarded for trustee wrongdoing, can only be awarded against trustee in a representative capacity.

(See our July 10, 2009 post on this decision.)

15. Center For Biological Diversity v. Marina Point Development Co., 566 F.3d

794 (9^th Cir. May 14, 2009) (second amendment)

Majority Author: Circuit Judge Fernandez; Concurring Author: Circuit

Judge Rymer; Dissenting Author: Justice Kleinfield

     Attorney’s fees were properly awarded under the Endangered Species Act even though underlying controversy was moot; court will not review the merits determination, if moot, for purposes of testing the fees award; concurring opinion suggests that the U.S. Supreme Court may want to review the issue.

(See our March 28, 2009 post on this decision.)

14. Alan T.S., Jr. v. Superior Court, 172 Cal.App.4^th 238 (4^th Dist., Div. 3 Mar.

18, 2009)

Author: Presiding Justice Sills

     Interesting discussion of problems that plague the family law court system, made in the course of reversing awards for failure to consider the relevant “need” factors under Family Code sections 2030 and 2032.

(See our March 21, 2009 post on this decision.)

13. Ramon v. County of Santa Clara, 173 Cal.App.4^th 915 (6^th Dist. May 4, 2009)

Author: Acting Presiding Justice Mihara

     Plaintiff’s amicus curiae work in related action was proper basis for additional fee award under California Code of Civil Procedure section 1021.5 (the private attorney general statute).

(See our May 4, 2009 post on this decision.)

12. Law Offices of Andrew L. Ellis v. Yang, 178 Cal.App.4^th 869 (2d Dist., Div. 3

Oct. 27, 2009)

Author: Justice Aldrich

     Trial courts have discretion to award or deny anti-SLAPP attorney’s fees to defendants in cases where plaintiffs dismiss their actions without prejudice.

(See our October 28, 2009 post on this decision.)

11. Galleria Plus, Inc. v. Hanmi Bank, 2009 WL 3859491 (2d Dist., Div. 4

Nov. 19, 2009)

Author: Presiding Justice Epstein

     Code of Civil Procedure section 128.7 sanctions cannot be granted unless a prior, unfiled “safe harbor” motion has set a definitive hearing date in the motion sent to the opponent.

(See our November 20, 2009 post on this decision.)

Our next top 10 will follow shortly before the New Year. Happy Holidays to everyone.

Ninth Circuit Denies En Banc Review Request in Citizens for Better Forestry

 

     In our June 10, 2009 post, we discussed Citizens for Better Forestry v. U.S.D.A., Case No. 07-16077 (9^th Cir. June 9, 2009), where certain public interest groups were denied recovery of attorney’s fees under EAJA. Recently, on December 14, 2009, the Ninth Circuit denied one of the environmental group’s requests for en banc review.

EAJA: Ninth Circuit Reverses Fee Award Because Various Federal Court Actions Were Not Equivalent To Judicially Sanctioned Relief

Temporary Stay, Magistrate Tentative Summary Judgment Ruling, and Dismissal Based on Ripeness/Mootness Did Not Justify Fee Award.

     The prevailing party in a dispute governed by the Equal Access to Justice Act (EAJA), 28 U.S.C. sec. 2412, is entitled to an award of attorney’s fees if the party achieved “a material alteration in the legal relationship of the parties that is judicially sanctioned.” This provision was front and center in a recent Ninth Circuit case, reversing an award of EAJA fees to environmental organizations, in Klamath Siskiyou Wildlands Ctr. v. Bureau of Land Mgt., Case No. 98-35463 (9^th Cir. Dec. 15, 2009) (for publication).

     The real issue in this case was whether environmental organizations were EAJA prevailing parties when, before judgment, BLM withdrew its challenge to a timber sale. The district court awarded plaintiffs fees, but the Ninth Circuit reversed—so that the answer to the question was “no” under the particular circumstances at issue.

     “All together, [the] case law establishes that the sine qua non of prevailing party status is an enforceable, judicially sanctioned award of much of the relief the plaintiff sought.” (Slip Opn., p. 16553.) Based on this precept, the Ninth Circuit found that none of the following developments in the litigation qualified as judicially sanctioned relief:

• A stipulated order temporarily staying a timber sale (this was not equivalent to a preliminary injunction under the specific facts);
• A magistrate judge’s findings and recommendations in favor of plaintiffs on summary judgment motions, which were never adopted by the district court with any finality;
• A district judge’s dismissal based only on ripeness/mootness grounds (which demonstrated no judicial relief should be granted); and
• The ruling of the Ninth Circuit in the separate case of Klamath Siskiyou Wildlands Ctr. v. Boody, 468 F.3d 549 (9^th Cir. 2006), because it did not constitute direct judicially sanctioned relief in the pertinent, pending action—even if the earlier actions caused a capitulation in favor of plaintiffs.

     BLOG UNDERVIEW—This case has an interesting discussion of how to treat badly splintered decisions from the U.S. Supreme Court from a precedential standpoint.

Legal Aid Organizations Receiving Grants Under LSC: Federal Restrictions On Seeking Attorney’s Fees Beat As-Applied Constitutional Challenges

Ninth Circuit So Rules in Split Decision.

     Congress has imposed certain restrictions on legal aid organizations that receive federal grants through the Legal Services Corporation (LSC), including that grantee attorneys cannot claim, collect, or retain statutory attorney’s fees. (45 C.F.R. sec. 1642.3.) Recently, in Legal Aid Services of Oregon v. Legal Services Corporation, Case Nos. 08-35467, 08-35483 & 08-35492 (9^th Cir. Nov. 23, 2009), the Ninth Circuit—in a 2-1 decision—rejected as-applied First Amendment constitutional challenges to these and other restrictions. The majority did not believe that the fee restrictions were “viewpoint-based,” because they did not forbid legal services lawyers from arguing that an adverse party is not entitled to fees. In dissent, Circuit Judge Pregerson saw it differently, finding that the restrictions prevented the legal aid organizations from taking similarly situated cases or class actions that might motivate the defendants to truly change their behavior—distortion arguments that were not properly vetted in the litigation.

Consumer Statutes: Prevailing Defendant Under Consumer Statute Used Only As UCL Predicate Cannot Recovery Fees From Losing Plaintiff

“Borrowing” Statute’s Fee Provision Does Not Translate to Fee Exposure Under UCL.

     In a case of first impression, the Second District, Division Three reconciled two conflicting statutory schemes, deciding that a prevailing defendant was not entitled to a fee recovery under a fee-shifting statute used only as a “borrowing” statute predicate under California’s Unfair Competition Law. (Defendant sought to recover $29,723.50 in attorney’s fees under the fee-shifting provisions of the Rees-Levering Motor Vehicle Sales and Finance Act.) However, because this statutory scheme was only used as the predicate for a UCL claim, the UCL policy of not awarding fees to a successful defendant trumped the reciprocal provision of the “borrowed” statute. This result was reached in Davis v. Ford Motor Credit Co., Case No. B204047 (2d Dist., Div. 3 Nov. 19, 2009) (certified for publication).

Consumer Statutes: Court Of Appeal Reverses Refusal To Award Reasonable Attorney’s Fees To Plaintiff Under Settlement Arrangement With Car Manufacturer

Fourth District, Division 3 Utilizes De Novo Review to Determine Plaintiff’s Entitlement to Fee Award.

     The next case demonstrates how the standard of review can be appeal determinative. The appellate panel utilized the de novo standard, which led to the conclusion that the trial court erred in denying plaintiff entitlement to fees under car lemon laws where the settlement agreement with car manufacturer called for them—even though the key issue on remand will be the amount of fees given that plaintiff’s settlement was very modest indeed.

     The Fourth District, Division 3, in Vazquez v. Hyundai Motor America, Case No. G041152 (4^th Dist., Div. 2 Oct. 13, 2009) (unpublished), confronted a situation where a plaintiff with car lemon law gripes actually settled twice with a car manufacturer given some ambiguities in the initial settlement agreement. Plaintiff apparently obtained an initial compromise by which the car dealership paid $6,000 in cash and the car manufacturer agreed to defend the fee application to be subsequently brought by plaintiff.

     (This settlement was much less than the almost $81,000 plaintiff asked for in an MSC statement, broken down as $54,000 to plaintiff and almost $27,000 in fees and costs to her attorneys.) In the second agreement, car manufacturer also agreed to reimburse plaintiff, less mileage and other offsets, the amount of $3,171.77 and also pay off her loan in return for a lawsuit dismissal and return of the car. The second agreement provided that the trial court, in binding fashion, could determine the proper amount of fees, but that if the fee award was between zero and $2,999.00, plaintiff would get a “guaranteed” minimum of $3,000 in any event. Plaintiff filed a fee motion seeking $51,012 in fees and costs, plus a multiplier enhancement of 1.5. The trial court denied fees outright, and plaintiff appealed.

     She won on appeal.

[Photo:  July 1942.  Even the oldest jalopies were out to have their tanks filled on the day before stricter gasoline rationing went into effect.  Photographer:  Marjorie Collins.  Library of Congress]

EAJA Federal Circuit Court Split: U.S. Supreme Court To Hear Case On Whether Social Security Disability Fee Awards Are Payable To Client Or Client’s Attorney

High Court To Resolve Split Among Federal Courts of Appeals.

     In our September 12, 2009 post on Stephens v. Astrue, 565 F.3d 131 (4^th Cir. 2009), the case involved a split among the federal circuit courts on whether Social Security disability fee awards go to the claimants or their attorneys. This is not an insignificant issue, because the Government takes the view that if the award goes to the claimant that means it is subject to offset for pre-existing debts owed by claimant to governmental entities (such as child support or delinquent taxes). This could mean claimant’s attorney recovers no fees for winning disability benefits for the client. We predicted in our post that this case would need to be resolved at some point.

     Well, it obviously was—in the near future!

     On September 30, 2009, the U.S. Supreme Court granted certiorari in Ratliff v. Astrue, an Eighth Circuit case addressing this very issue. The Supreme Court case is Astrue v. Ratliff, assigned case no. 08-1322.

Consumer Statutes And Requests For Admissions: Court Of Appeal Denies Unfair Competition Defendants' Request For Fees Under Section 17200 Or Under RFA Sanctions Statute

No Basis For Fees Based On Defensed Claims; No Abuse of Discretion in Denying RFA Sanctions.

      In Chichi v. Ennen, Case No. D053410 (4^th Dist., Div. 1 Sept. 18, 2009) (unpublished), plaintiffs brought a class action under California's unfair competition statute based on violations of several other California statutes. After plaintiffs rested their case-in-chief at a bench trial, the trial court decertified the class and granted an oral motion for judgment against plaintiffs.

     Defendants then moved to recover attorney's fees based on two grounds: (1) a contractual attorney's fees clause in the contract involved in the overall tapestry of the UCL claim; and (2) the RFA statute that allows a party to recoup fees for proving the truth of certain requests that were denied by plaintiffs.

     Defendants did not succeed on appeal.

     As to the first ground, the Court of Appeal found no basis to award fees to defendants under the UCL. "The unfair competition law does not provide for attorney fees. Although a prevailing plaintiff on an unfair competition claim may seek attorney fees as a private attorney general under Code of Civil Procedure section 1021.5, a prevailing party has no such right." (Slip Opn., at p. 4, citing Walker v. Countrywide Home Loans, Inc., 98 Cal.App.4^th 1158, 1179-1180 (2002).)

     Defendants then tried to argue there was a contractual basis for fee recovery under Civil Code section 1717. Wrong again, said the appellate panel. The UCL claim did not allege any contract was breached and did not seek enforcement of the contract; so, only a UCL claim was involved that conferred no basis for a fee award.

     Defendants then defaulted to Code of Civil Procedure section 2033.420(b), which allows a court to award fees as a cost of proof for failing to admit an RFA under specified circumstances. (See our category "Requests for Admissions" to explore this statute more fully.) The problem with this argument is that any challenge to a lower court ruling is reviewed under a deferential abuse of discretion standard. (Laabs v. City of Victorville, 163 Cal.App.4^th 1242, 1275-1276 (2008).) In this instance, nothing in the record indicated that the plaintiffs lacked a reasonable basis for contesting the matters referred to in the RFA. Given this determination, the refusal to award fees was sustained on appeal.

Special Fee Shifting Statute: Split Among Federal Circuit Courts On Whether EAJA Fee Awards Are Payable To Claimant Rather Than Attorney, Allowing Offsets By Government Entities

Fourth Circuit Concludes Fees Are Payable to Claimant.

     Here is an interesting issue that has drawn a split among federal courts of appeals: whether attorney’s fees payable under the Equal Access to Justice Act, 28 U.S.C. section 2812 (EAJA), in Social Security Act benefit cases go to the claimant or the attorney. The importance of the answer to this issue may have a wide-ranging impact on the claimant--if the fees go to the claimant, the government can take the position they are subject to administrative offset for the collection of other debts (such as child support or state income taxes). See 31 U.S.C. section 3716.

     The Fourth Circuit, in Stephens v. Astrue, 565 F.3d 131 (4^th Cir. 2009), decided that the plain meaning of section 2412(d)(1)(A) of the EAJA shows that fees go to the “prevailing party,” namely the claimant. It observed that, in other areas, Congress has directed payments of fee awards to attorneys, when this result was desired. (See SSA section 206(b).) A contrary award to an attorney by a magistrate judge was vacated.

     Stephens is in conflict with decisions to the contrary in the Sixth, Eighth, and Eleventh Circuits, which hold that attorney’s fees are payable directly to the attorney.

     This issue appears one that may be reviewed and resolved by the U.S. Supreme Court at some point in time, given that the result in Stephens might provide a disincentive for attorneys to take on SSA benefit cases if fees go to the claimant and could be offset by other debts in entirety.

Hate Crime Statutes: Arbitration Expense and Fee Award Reversed And Remanded Because Armendariz Prohibition on Expenses Applies To Statutory Hate Crime Claims

Second District, Division One, Does Remand For Proper Expense/Fee Determination and For Examination of Allocation Issues.

     Armendariz v. Foundation Health Psychcare, 24 Cal.4^th 83, 110-113 (2000) determined that arbitral expenses beyond what a plaintiff litigant would have borne in a court case cannot be imposed in cases involving statutory rights enacted for a public reason. (In Armendariz, the claims were brought under FEHA; other cases have extended Armendariz to wrongful employment termination claims (if based on violation of public policy), California consumer vehicle leasing statutes, franchise investment statutes, the trade secret statute, and California’s unfair competition statute.)

     Recently, the Second District, Division One confronted the issue of whether the Armendariz prohibitions applies to civil claims brought under California’s hate crime statutes, namely, the Ralph Civil Rights Act (Civil Code sections 51.7 and 52.1) and the Tom Bane Civil Rights Act (Civil Code section 52.1). By a 2-1 panel vote, it decided that Armendariz did apply.

     In brief, D.C. v. Harvard-Westlake School, Case No. B204634 (2d Dist., Div. 1 Aug. 14, 2009) (certified for publication) involved a hate crimes case (involving both statutory and common law tort violations) that was ordered to arbitration based on an enrollment agreement between student and school mandating arbitration. A student sued Harvard-Westlake School alleging it was liable under the state’s hate crimes laws for death threats he received from classmates who misperceived his sexual orientation. The enrollment agreement specified JAMS arbitration and provided that the prevailing party was entitled to recover all reasonable attorney’s fees incurred in any arbitration or litigation. The matter was ordered to arbitration, where school prevailed on all claims and was awarded all requested fees and costs in the hefty sum of $521,227.68 by the arbitrator ($12,492.15 of which was arbitration fees and costs). The trial court confirmed the claims were arbitrable but did not rule on the propriety of arbitral expense/attorney’s fees award.

     Student appealed, and won a reversal in a 2-1 opinion authored by Presiding Justice Mallano.

Elder Abuse: Senate Bill 1140, Effective January 1, 2009, Strengthens Elder Abuse Protections And Has Fee-Shifting Impetus

Effect of New Law Explored in Steven Riess’ Article in August 2009 California Lawyer.

     For those attorney readers practicing in the elder abuse area, there is an excellent article that is must reading in the August 2009 edition of California Lawyer. It is authored by Steven Riess and is entitled “Combating Financial Abuse of Elders.”

     This article explores the expansion of protections in the elder abuse areas that occurred with the January 1, 2009 effectiveness of Senate Bill 1140, which amended various parts of the Welfare and Institutions Code. Mr. Riess explores the impact of these amendments in detail.

     Among other things, Senate Bill 1140 now authorizes the recovery of attorney’s fees and costs to prevailing plaintiffs in elder abuse “undue influence” and abusive sale practice cases. (See, e.g., Welf. & Inst. Code sections 15657.5(a) and 15657.6.)

     Mr. Riess is a San Francisco attorney who participated in the drafting of Senate Bill 1140.

FOIA: No Fees Recoverable Where Documents Voluntarily Turned Over Before 2007 Amendments

Ninth Circuit Determines 2007 Catalyst Amendments Are Not Retroactive in Nature.

     Under the Freedom of Information Act, 5 U.S.C. § 552, a complainant in a FOIA action is deemed to be eligible for an award of attorney's fees if he has "substantially prevailed" on his claim. 5 U.S.C. § 552(a)(4)(E) (prior to 2007 amendments). However, under 2007 amendments, FOIA was modified to delineate that a complainant has "substantially prevailed" if the complainant has obtained relief through "either (i) a judicial order, or an enforceable written agreement or consent decree, or (ii) a voluntary or unilateral change in position by the agency, if the complainant's claim is not insubstantial." 5 U.S.C. § 552(a)(4)(E)(i) & (ii). (The (ii) prong is also known as the catalyst theory of recovery.)

     In Oregon Natural Desert Assn. v. Locke, Case No. 06-35851 (9^th Cir. July 8, 2009) (for publication), the Ninth Circuit decided that the FOIA 2007 amendments were not retroactive in nature and that the catalyst theory did not allow recovery for pre-2007 voluntary turnovers of documents by an agency in a FOIA case. As a result, an attorney's fees award of $46,889.02 to an FOIA complainant had to be reversed and remanded for purposes of striking portions of the award that represented catalyst theory recovery.

FLSA: Expert Witness Fees Not Recoverable As Attorney's Fees Or Costs

Nontestimonial Expert Costs Cannot Be Recouped Under FLSA.

     A colleague that co-contributor Mike worked with at a past law firm called and asked if expert witness fees for nontestimonial work were recoverable by a plaintiff in an action brought under the Fair Labor Standards Act of 1938 (FLSA), given that 29 U.S.C. § 216(b) provides that a prevailing plaintiff may be reimbursed for "a reasonable attorney's fees … and costs of the action."

     The answer appears to be "no."

Labor Commissioner Appeals: Employer Wins $10,000 Fee Award Against Unsuccessful Ex-Employee

Fees Can Be Awarded Under Labor Code section 98.2(c).

     An employer is entitled to an award of reasonable attorney’s fees, in an amount to be determined by the trial court, when an employee unsuccessfully appeals from a Labor Commissioner’s ruling to the trial court. (Lab. Code sec. 98.2(c).) Cooper v. Golden Gate Reporters, LLC, Case No. A122156 (1^st Dist., Div. 4 June 26, 2009) (unpublished) involved application of this provision, where a trial court awarded winning employer $10,000 out of a requested $16,000 in fees. The award was affirmed under the deferential abuse of discretion standard.

     BLOG UNDERVIEW—The Court of Appeal actually helped employee out upfront. She appealed from a minute order awarding fees, not the later signed judgment. However, the appellate court liberally construed the notice of appeal to encompass the later order—a determination that has or has not been endorsed by other courts depending on the circumstances.

Special Fee Shifting Statute: California Fair Debt Collection Practices Act Does Allow For Enhancement of Fee Awards Using Multipliers

First District, Division 1 Holds that Civil Code section 1788.30(c) Language Does Not Preclude Use of Multipliers.

     Civil Code section 1788.30(c), part of the Robbins-Rosenthal Fair Debt Collection Practices Act, allows a prevailing debtor enforcing any liability under the Act to recover “reasonable attorney’s fees, which shall be based on time necessarily expended to enforce the liability . . . .” Does this language allow for enhancement through use of a multiplier in the right case? Answer: You know already from the headline—yes it does.

     Komarova v. National Credit Acceptance, Inc., Case Nos. A121316 & A122041 (1^st Dist., Div. 1 June 25, 2009) (certified for publication) so held. There, under some egregious circumstances involving mistaken identity theft, plaintiff was awarded $197,905 in compensatory damages under the Act and $67,905 compensatory damages for intentional emotional distress. The jury also awarded her punitive damages of $75,000, all because a collection agency refused to believe that plaintiff (who spells her first name Anastasiya) was not Anastasia Komarova (no “y” in the first name). Later, plaintiff moved to recover a fee award of $378,375 under the Act (a $252,250 lodestar increased by a 1.5 multiplier). After the defense claimed that “at most $60,000” was reasonable, the trial court reduced the lodestar by 35%--to $163,962 (apportioning out work on the emotional distress and other non-fee type of work)—and multiplied by 1.25, resulting in a award of $204,953. After adding more time for posttrial work (with no multiplier), the grand total fee award clocked in at $230,740.50. Defendant appealed.

Arithmetica instructs an algorist (left) and an abacist (right).  Wikipedia.

FDCPA: Attorney’s Fees For “Bad Faith” Actions Cannot Be Assessed Against Plaintiff’s Attorneys

Ninth Circuit Addresses First Impression Issue, Departing From Result Reached by Other Federal Courts.

     The Federal Debt Collection Practices Act (FDCPA), at 15 U.S.C. section 1692k(a)(3), provides that a district judge may award to the defendant reasonable attorney’s fees on a finding that an FDCPA action was brought “in bad faith and for the purpose of harassment.” Although this provision can obviously result in fees being assessment against the FDCPA plaintiff, can it also mean that plaintiff’s attorney can be exposed to fee exposure under this statutory provision?

     The Ninth Circuit recently answered “no,” in Hyde v. Midland Credit Mgt., Inc., Case No. 07-55326 (9^th Cir. June 9, 2009) (for publication).

     It based its decision on similar reasoning employed in a False Claims Act case, Pfingston v. Ronan Engineering Co., 284 F.3d 999, 1006 (9^th Cir. 2002). The Court of Appeals also was not persuaded by limited contrary analysis in Fourth Circuit and S.D.N.Y. decisions, which either involved imposition of sanctions based on multiple grounds or without precise consideration of the narrow issue under consideration in Hyde.

Lemon Law: Appellate Court Affirms $344,600 Fee Award, Adds Another $57,587 For Discovery Referee Fees, And Remands For More Postjudgment Fees

Fourth District, Division 3 Affirms and Augments Fee Awards, After Also Determining that Defense Tactics Required Terminating Sanctions For Bad Faith Discovery Abuses.

     Here is another wild one, dictated by the unusual set of facts at play. It is also a modern day parable reminding all litigators that they need to avoid “hiding the ball” during discovery. The decision also reinforces that, by and large, trial court reductions for inefficiencies and padding will be affirmed under the deferential abuse of discretion review standard.

     Doppes v. Bentley Motors, Inc., Case No. G038734 (c/w other cases) (4^th Dist., Div. 3 June 8, 2009) (certified for publication) was a 3-0 decision emanating from our local Santa Ana Court of Appeal, authored by Justice Fybel. The opinion is not only interesting reading, but reinforces that litigation attorneys will be punished for discovery abuses—with appellate jurists determining that punishment should be increase over and above recommendations by discovery referees and trial judges. However, the case also happens to be instructive in the attorney’s fees area.

     Briefly summarized, plaintiff won a lemon law vehicle case against a defendant based on the car having an obnoxious odor in the interior. Defendant engaged in numerous discovery tactics that led to numerous terminating sanctions requests (including behavior relating to defendant’s failure to produce responsive e-mails), but the discovery referee recommended giving--and ultimately the trial court only gave—an adverse jury instruction. The jury awarded plaintiff $214,300 as vehicle reimbursement and additional prejudgment interest (with the prejudgment interest determination affirmed in a separate opinion). Plaintiff moved to recover $586,844.63 in attorney’s fees under Civil Code section 1794(d), a mandatory, plaintiff-oriented, fee-shifting provision. The trial court actually awarded plaintiff $344,600 in fees based on its own detailed spreadsheet analyzing the specific fee substantiation. The lower court denied all paralegal time billed; disallowed $53,213 as time spent against another nonliable party and on unsuccessful claims; reduced the billing rate of the lead attorney from $400 to $300 per hour; allowed recovery for only one attorney at trial; disallowed all time billed for sanctions motions before the discovery referee; and reduced the amount billed by one attorney’s office by 25% “for general excessive time billing for items.” Plaintiff later moved for further postjudgment attorney’s fees of $72,789.80, but the trial court only awarded $4,427. Plaintiff appealed.

Lemon Law: Reject An Early Settlement Offer In the Ballpark … And Suffer The Consequences!

Fourth District, Division 2 Reminds Fee-Shifting Plaintiffs To Not Eschew Early Compromise Proposals.

     The next case reminds all of us that the system is geared for resolution—resolution being another word for settlement early on in the game, under the right circumstances, under the right case, and under reasonable efforts to resolve the matter.

Miss Rose Cade , who has also been nominated "Southern California's Swat the Jinx Girl"-- Queen of the Lemons.  February 13, 1920.  Library of Congress

     Lemon law attorneys representing plaintiff apparently rejected an early settlement offer that offered to restore the status quo and pay fees as determined by the court. Plaintiff did not accept the offer and then moved for substantial fees. Guess what happened at the trial and appellate court levels? Answer: Read on, especially if you want to be tough and unyielding—and you may not like the result.

     In Lopez-Bradley v. Hyundai Motor America, Case No. E045233 (4^th Dist., Div. 2 May 7, 2009) (unpublished), plaintiff sued under California’s Lemon Law to repair, replace, or rectify problems relating to a 2003 Hyundai Elantra in the wake of mechanical problems occurring after 27,000 miles. Defendant manufacturer offered to replace the car with a comparably equipped 2006 model with a statutory mileage reduction for prior use of the car or offer a reimbursement deal along similar lines. Plaintiff rejected the informal offers, and made no counteroffer. The case eventually settled for $11,000, although plaintiff reserved the right to move for attorney’s fees under Lemon Law fee-shifting statutes.

     Plaintiff predictably sought fees of $56,880 for 65.8 hours of attorney time billed at rates ranging from $400-500 per hour—keeping in mind the settlement was $11,000.

     The trial court awarded fees in the amount of $3,600, finding that the reasonable amount of attorney time to resolve the dispute was no more than 12 hours at a rate of $330 per hour. In pragmatic fashion, the lower court found that most of the time expended on the case occurred after defendant made reasonable offers to settle and that most expenses would have been avoided had plaintiff’s counsel engaged in good faith negotiation.

     The Fourth District, Division 2 issued a tentative decision by which it proposed to affirm the judgment. (BLOG OBSERVATION—This one division of the Fourth District issues tentative decisions before argument for guidance of the parties. No other intermediate appellate courts have this protocol.) Plaintiff then moved to dismiss the appeal, which was granted by the appellate court.

     BLOG UNDERVIEW—The lesson from this case is pretty evident: try to work out a problem with the opponent; if you refuse reasonable offers to settle, you will not get much sympathy from courts along the way.

Mixed Result In Decade Long Litigation: Substantial Attorney’s Fees Award Goes “Poof” When Plaintiff Should Have Been Given Leave To Amend, But Plaintiff Denied Post-Judgment Enforcement Fees

Second District, Division 7 Publishes Decision in Decade Long Battle Arising From Credit Impairment Allegations.

     Although too long to recite in detail (43 pages in length), Sanai v. Saltz, Case Nos. B198217 & B202787 (2d Dist., Div. 7 Jan. 26, 2009) (certified for publication) chronicles a donnybrook between a former in pro per renter (a transactional lawyer who learned litigation along the way), credit-reporting service, and landlord over a credit reporting dispute arising out of claimed unpaid rent under $5,000. (Yes, you heard that right.) The case demonstrates the “poof” principle and reinforces that a judgment must award fees in order for the judgment creditor to obtain post-enforcement attorney’s fees by statute.

      Click it up; here are the facts.

Trial Court Retains Jurisdiction To Award Attorney's Fees to Prevailing Defendant After Granting A Motion To Quash Based Upon Lack of Personal Jurisdiction

Sixth District Affirms Grant of $34,492 in Attorney's Fees.

            Our first post was on May 11, 2008, surveying Profit Concepts Mgt., Inc. v. Griffith, 162 Cal.App.4^th 950, 955-956 (2008).  In that case, Justice Fybel of our local Santa Ana-based Court of Appeal affirmed an award of attorney's fees to a defendant who successfully moved to quash service for lack of personal jurisdiction.  Now, we can report that the Sixth District backed that result, squarely deciding that the trial court has jurisdiction to award fees in such a situation.

            In Shisler v. Sanfer Sports Cars. Inc., Case No. H032027 (6^th Dist. Sept. 25, 2008) (certified for publication) (Shisler II), the Sixth District held that a trial court still has power to rule upon a collateral motion for attorney's fees after granting a motion to quash for lack of personal jurisdiction.  The Sixth District did note that the same result was reached in Profit Concepts, even though the jurisdictional issue was not explicitly considered.  The appellate panel found support in Frank Annino & Sons Constr., Inc. v. McArthur Restaurant, Inc., 215 Cal.App.3d 353, 357 (1989) and Berard Construction Co. v. Municipal Court, 49 Cal.App.3d 710, 715-716 (1975), even though distinguishing Berard in one major respect—a distinction of Berard also noted previously by Justice Fybel in Profit Concepts.

            With the jurisdictional issue resolved, the appeal centered upon whether there was a statutory basis for awarding fees to defendant.  There were two potential bases:  California's Consumer Legal Remedies Act (CLRA), Civ. Code, § 1750 et seq., or the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), Fla. Stat. § 501.201.  Here is how those inquiries panned out:

·       CLRA – No.  Civil Code section 1780(d) only allows a fees award to a prevailing defendant upon a showing of subjective bad faith (Corbett v. Hayward Dodge, Inc., 119 Cal.App.4^th 915, 924 (2004)), which was precluded because the trial court found there was no subjective bad faith.  (BLOG CROSS-OVER—We previously explored a similar result reached by Justice Ikola, on behalf of the Fourth District, Division Three, in the unpublished decision of Olson v. Irvine Imports, discussed in our September 25, 2008 post.)

·       FDUTPA – Yes.  Because the motion to quash ruling was tantamount to a final judgment and the appellate process had been exhausted by plaintiff in unsuccessfully challenging the result in Shisler I, the Florida fee-shifting provision in FDUTPA was sufficiently broad to allow defendant entitlement to fees.  Because plaintiff's lawsuit indicated that Florida law governed, the FDUTPA provisions were substantive in nature so as to be a predicate for a fee award. (Cf.  Miller v. Union Pac. R.R. Co., 147 Cal.App.4^th 451, 458 (2007).) 

So, in the end, defendant's fee award was affirmed. 

Consumer Legal Remedies Act Is Generally Non-Reciprocal In Nature

Fourth District, Division Three Affirms Denial of Fee Award Where Trial Court Found No Bad Faith on the Part of Losing Plaintiff; Automobile Sales Finance Act Did Not Provide Basis For Fee Award Either.

            Certain truisms abound in the California attorney’s fees area.  Each side bears their own respective costs (including attorney’s fees) in the absence of a contract of statute dictating otherwise.  The primary contractual fee authorization section, Civil Code section 1717, is imbued with mutuality—except in rare instances, one-sided attorney’s fees clauses are interpreted as reciprocal in nature.  However, that same mutuality result does not necessarily occur with respect to statutory fee-shifting statutes.  That depends on the legislative wording of the particular issue at stake.  The next case illustrates the non-reciprocal nature of the fee-shifting provision of the Consumer Legal Remedies Act (CLRA), Civil Code section 1750 et seq.

            In Olson v. Irvine Imports, Inc., Case No. G039692 (4^th Dist., Div. 3 Sept. 24, 2008) (unpublished), plaintiff sued for CLRA violations.  Defendants prevailed after a jury trial and moved to recover attorney’s fees.  Under the CLRA, the fee-shifting provision is non-reciprocal by only awarding fees to prevailing defendants unless the plaintiff brought the CLRA claim in subjective bad faith.  Otherwise, the fee-shifting provision is mandatory, albeit in plaintiff’s favor.  (Civ. Code, sec. 1780(d); Corbett v. Hayward Dodge, Inc., 119 Cal.App.4^th 915, 924, 926 (2004).)  The trial court denied the fee request, observing “there was really no bad faith with regard to bringing this action….I think it was a great case, both sides did a great job.”  Defendants appealed the fee denial.

            Justice Ikola, writing for a 3-0 panel of the Fourth District, Division Three, affirmed.  Aside from not providing an adequate record to demonstrate an abuse of discretion in the ruling, defendants did not dispute that the plaintiff’s complaint survived summary judgment and that the jury vote was 9-3 for the defense.  This demonstrated that plaintiff’s claims had “at least some merit.” 

            Defendants then argued that fee recovery should have been allowed under the Automobile Sales Finance Act (ASFA), Civil Code section 2981 et seq.  ASFA awards attorney’s fees to the prevailing party in any action on a contract subject to ASFA, if the prevailing party actually prevailed on an ASFA claim.  (Civ. Code, sec. 2983.4; Brown v. West Covina Toyota, 26 Cal.App.4^th 555, 566 (1994).)  This contention failed because (a) the complaint contained no ASFA claim; (b) ASFA does not allow for fee recoupment simply because an automobile sales contract was part of the backdrop of an action; and (b) the defense construction of ASFA “would nullify the CLRA’s non-reciprocal attorney fee provision whenever a plaintiff alleges a business misrepresented the terms of an automobile sales contract.  Consumers buying cars would receive less protection under the CLRA than consumers buying other goods.  Defendants offer no persuasive authority the Legislature countenanced this absurd result.”  (Slip Opn., at p. 5.) 

            Beyond that, Justice Ikola cited authorities indicating that non-reciprocal fee shifting statutes usually prohibit an attorney’s fees award to the defense for successfully defending the statutory claim and non-statutory claims that overlap—with any other result superimposing a judicially declared principle of reciprocity on a non-reciprocal fee-shifting statute.  (See Carver v. Chevron U.S.A., Inc., 119 Cal.App.4^th 498, 504 (2004); Wood v. Santa Monica Escrow Co., 151 Cal.App.4^th 1186, 1191 (2007).)  Furthermore, the defense never demonstrated that any of the requested fees were solely allocable to non-CLRA claims, and the nature of the case showed that all claims seemed to “overlap” the CLRA cause of action. 

In Olson, plaintiff lost the merits battle, but did not suffer fee exposure based on the non-reciprocal operation of the CLRA fee-shifting statute.