CALIFORNIA ATTORNEY'S FEES

Lodestar/Reasonableness Of Fees: Two Drastic Haircut Fee Decisions--One Reversed And One Affirmed

Justice Bedsworth Gives Us Two Fee Case “Gems.”

     Justice Bedsworth, who sits on the Fourth District, Division 3 (the venue where co-contributors Marc and Mike are based practice-wise), has written two interesting decisions on lodestar/reasonableness of fees. Both involved trial court decisions dramatically cutting fee requests. On appeal, one got reversed and the other got affirmed in 3-0 unpublished decisions. So, here we go on what was at play in each.

More Beds (above) (below)

Haller v. Chiya, Case No. G043566 (4th Dist., Div. 3 May 19, 2011) (Unpublished).

     In a somewhat unusual personal injury case where passenger sued driver/owner of the car when driver fell asleep and struck a parked car off the road, plaintiff passenger--who was injured quite severely--served driver with a $250,000 998 offer after learning of insurance coverage limits. Defendant driver accepted, with plaintiff then seeking $100,000 in attorney’s fees under Code of Civil Procedure section 1021.4 (a fee shifting statute allowing recovery of fess against a defendant who has been convicted of a felony). However, the trial court only awarded $5,150 in attorney’s fees.

     The appellate court ruled that the lodestar adjustments must be explained by stating each reduction factor and dollar adjustment, something not done in this situation. Because the payment to plaintiff did not occur until deep into the case, the fee award should have been justifiably higher, constituting an abuse of discretion even under the deferential standard.

Worley v. Storage USA, Inc., Case No. G043613 (4th Dist., Div. 3 May 20, 2011) (Unpublished).

     This case was an appeal from a prior appellate remand where a $20,000 fee award in a class action (out of a requested $263,606 in fees) was reversed because the lower court was unclear on what method was used to determine the award--value of the case approach (not used in California), a contingency measure, a common fund approach, or lodestar method. The prior reversal was necessitated by the less than 10% fee request award needing to be recalculated through adherence with the proper lodestar method. (See our December 23, 2009 post for a synopsis of the prior appellate decision.) On remand, the trial court reexamined the evidence and determined $26,543.10 was a reasonable fees/costs award.

     On appeal the second time, the appellate court affirmed the fee award. Here, plaintiffs argued that the lower court did an improper “double dip”--namely, reducing the lodestar for various inefficiencies/duplications and then applying a .15 multiplier that resulted in a 85% lodestar discount. Justice Bedsworth, on behalf of the reviewing panel, found this approach was proper, because the cases cited by plaintiffs involved the inverse (increasing the lodestar figure and then using the same factors to add a positive multiplier, which impermissibly gave the fee claimant two separate multipliers). In this instance, the trial court’s power to do what it did was authorized under Chavez v. City of Los Angeles, 47 Cal.4th 970, 990 (2010) [one of our Leading Cases], allowing the lower court to deny completely an inflated request. The lower court decision in this situation “does not reflect ‘double-counting’ of the same factor, as the [plaintiffs] claim, but instead demonstrates the court’s express authority to go beyond simply fixing the inflated request, and take additional action designed to affirmatively discourage such conduct.” (Slip Opn., p. 11.)

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.

Special Fee Shifting Statute/Lodestar: Lodestar Method Used To Determine Reasonable Fee Recovery to Prevailing Claimant In U.S. Civil Forfeiture Proceeding

 

Fee Agreement Can Be Taken Into Account But Payment Goes to Client, Ninth Circuit Holds in a 2-1 Opinion.

     So far today, 2-1 appellate opinions have been the entrees on the menu in the fee area.

     The Civil Asset Forfeiture Reform Act, at 28 U.S.C. § 2465(b)(1)(A), makes the U.S. liable for both reasonable attorney’s fees and costs incurred by a substantially prevailing claimant in a civil forfeiture proceeding initiated by the United States. This special fee shifting provision was up front and center in the next 2-1 opinion from the Ninth Circuit.

     In U.S.A. v. $186,416.00 U.S. Currency, Case No. 07-56549 (9th Cir. Apr. 26, 2011) (for publication), the majority (Circuit Judges Hawkins and Clifton) decided that the lodestar method governed a prevailing claimant’s fee request, even though the fee agreement between plaintiff-counsel could be taken into account. However, the majority determined the fees should be paid to plaintiff, not its counsel, relying on the reasoning in Astrue v. Ratliff, 130 S.Ct. 2521 (2010) [discussed in our June 16, 2010 post] (an EAJA case).

     In an equally scholarly dissent, Circuit Judge Berzon expressed the view that the district judge should have case-by-case discretion to award fees to either plaintiff or plaintiff’s counsel, finding that Ratliff involved a much different statute than the civil forfeiture scheme. (Circuit Judge Berzon did agree with the majority’s conclusion that the lodestar method should apply.)

Civil Rights/Lodestar/Allocation: Appellate Court Affirms Decision To Award $1,000 Winning Plaintiffs Fees Of $60,400 Out Of A Requested $566,510

 

Trial Court Had Discretion to Reduce Lodestar, Parsing Out Unsuccessful Claim Fee Work.

     This next case describes the discretion allowed trial courts in calculating the lodestar as well as a nice job by the defense in mitigating fee exposure by providing the trial court with a basis for awarding fees only on successful claim work.

     In Lorenzen v. Vermont Restaurant, Case No. B219625 (2d Dist., Div. 5 Apr. 25, 2011) (unpublished), plaintiffs prevailed on some, but not all, FEHA claims against defendant former employers. Plaintiffs only garnered $1,000 in damages on their harassment claims, but sought to recover fees of $566,510 (lodestar of $283,255 augmented by a 2 multiplier). Defendants filed papers in opposition to the fee request showing that 75-80% of plaintiffs’ time was expended on unsuccessful claims, further arguing that plaintiffs should only be awarded $8,693.50 using a .15 negative multiplier. After two hearings, the trial court award plaintiffs $60,400 in fees, finding the reasonable fee for all work was $181,200 but that only one-third of that amount should be awarded as the lodestar given the time spent on unsuccessful claims (as shown by the pleadings and trial proof). Plaintiffs appealed, although unsuccessfully as you shall see.

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.

Lodestar/Special Fee Shifting Statute: Lodestar, Not Cost-Plus Method, Governs Fee Recovery Under Special Red Light Abatement Fee Shifting Statute

 

First District, Division 4 Finds McCullough Reasoning Inapt; Also Refuses to Upset Cost Award to City in Separate Appeal.

     In City of Santa Rosa v. Patel, Case Nos. A124199/A124452 (1st Dist., Div. 4 Dec. 21, 2010) (certified for publication), City of Santa Rosa prevailed in a red light abatement action and was awarded $152,506.17 based on a “cost-plus” method to calculate fees under Civil Code section 3496(b), which provides for recovery fees in a nuisance abatement action in which a governmental agency seeks to enjoin the use of a building or place being used for prostitution. City had sought recovery of $274,857.25 under the lodestar method.

     City’s appeal was successful.

     The lower court should have applied the lodestar method rather than the “cost-plus” method under numerous cases, since section 3496(b) has no express directive otherwise. It erred in relying upon inapt reasoning from City of Oakland v. McCullough, 46 Cal.App.4th 1, 6 (1996). The matter was remanded for a recalculation of City’s fees using the lodestar method.

     A companion appeal involved defendants’ challenge to an award of routine costs to City as well as $77,710.22 in demolition costs. In City of Santa Rosa v. Patel, Case No. A122961 (1st Dist., Div. 4 Dec. 21, 2010) (unpublished), the appellate court determined that defendants’ failure to file a motion to tax costs waived the right to object to the cost award on appeal. (Douglas v. Willis, 27 Cal.App.4th 287, 289-290 (1994).)

Lodestar: Second Time Around, Fourth District, Division 2 Sustains Lodestar Analysis Of Trial Court In Awarding $959,925 In Fees

Trial Judge Also Correctly Awarded Interest on Fee Award and $193,800 In Appellate Attorney’s Fees.

     McCasland v. Beckman, Case No. E049166 (4^th Dist., Div. 2 Sept. 10, 2010) (unpublished) (McCasland II) is the second group of appeals addressing attorney’s fees awarded to winners of a contract dispute, after the appellate court affirmed the merits determination by the trial judge. However, in the prior appeal, the Fourth District, Division 2 reversed a $2,734,081 fee award to winners, determining that the lower court did not adequately explain the lodestar basis for its award—which effectively granted fees under a contingency fee agreement that translated to a lodestar plus a 2.8 multiplier. The case was remanded for a re-determination of the amount of fees to be awarded winners.

     On remand, the trial court—a different judge—awarded $959,925 in attorney’s fees based on finding that the case was not difficult, was not novel, and was really only a damages case. The trial court also awarded interest from the date of the original judgment on the attorney’s fees award and determined winners were entitled to $193,800 in appellate fees for prevailing on the prior appeal.

     The panel in McCasland II affirmed across the board.

     The trial judge did not abuse his discretion in applying the lodestar factors this time around and arriving at a much lower fee award.

     No error was committed in awarding interest from the date of the original entry of judgment date, even though losers argued that the trigger date would be the date that winners filed their post-appeal fees motion. The reason was that the prior reversal was for all practical purposes only a modification because fees of some amount were clearly deserving to the winners. Because the prior reversal was a modification, interest was to run from the date of the original judgment. (Munoz v. City of Union City, 173 Cal.App.4^th 199, 203-204 (2009).)

     The appellate fee award was no abuse of discretion because (1) it was adequately supported by detailed billing statements (Horsford v. Board of Trustees of California State University, 132 Cal.App.4^th 359, 396 (2005)), and (2) the appellate hourly fee rate of $300 was not excessive (Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4^th 140, 155 (2006) [attorneys based in inland San Diego County charged hourly rates of $350, $275 and $270]).

Special Fee Shifting Statutes: Losing Plaintiff In Unsuccessful Overtime/Meal Break Superior Court Action Required To Pay Attorney’s Fees Of $28,731.25 To Employer

First District, Division Two Finds Fee Motion Timely and Fee Award Reasonable in Amount.

     In Cun v. Café Tiramisu, Case No. A124985 (1^st Dist., Div. 2 July 7, 2010) (unpublished), plaintiff ex-employee lost a superior court FLSA action following a de novo Labor Commissioner hearing in which she claimed to have not been paid overtime and to have been denied meal breaks by her employer/alleged joint employer. Because fees incurred in the action were awardable to employer under Labor Code section 98.2(c), employer timely filed a motion for fee after entry of judgment but then sent an amended notice of motion confirming a new hearing date of the motion as ordered by the court, also submitting unredacted versions of invoices filed with the initial moving papers. The trial court granted employer’s motion for fees, awarding it $28,731.25.

     To say the least, ex-employee was grumpy about the result, and appealed. Her challenges were not found persuasive.     

     Although arguing the fee motion was untimely filed, this one did not come close to catching the favor of any appellate eyes. The original noticed motion was timely, with the amended motion merely confirming the court-set hearing date and containing only unredacted versions of information previously filed. Put another way, plaintiff had not demonstrated prejudice.

     Then, plaintiff’s attorney complained about the fact that defense counsel charged $370 per hour. However, the trial court properly used the lodestar approach and the disparity in hourly rates is one factor to consider, but was hardly determinative. The defense success could well be attributable in large measure to the high quality of trial work by employer’s counsel. Fee award affirmed.

     BONUS:  Recipe for Tiramisu.  Link to the Wikipedia article on Tiramisu.

     

                 Above:  From Wikipedia article on the FLSA.

Equity: Common Fund Debate . . . . Lodestar Or Percentage Of Recovery . . . . U.S. District Court Opts For Lodestar

USDJ Chooses Lodestar in Wage/Hour Class Action Fee Recovery Settlement.

     Our friend and fellow blogger H. Scott Leviant has reported on Anderson v. Nextel Retail Stores in his June 30, 2010 post at The Complex Litigator website.

     There, U.S. District Judge Stephen Wilson, in a common fund wage/hour class action settlement, chose the lodestar fee recovery methodology over the percentage-of-recovery method (presumptive in the Ninth Circuit). District Judge Wilson found that the case was “run of the mill”—a proposition vigorously disputed by Mr. Leviant in his  June 30 post—and rejected awarding plaintiffs’ attorneys a 1.64 lodestar multiplier, the result if the percentage-of-recovery method has been adopted.

Longshore and Harbor Workers’ Compensation Act: Van Skike And Christensen Followed In Recent Ninth Circuit Unpublished Memorandum Decision

 

ALJ Determination Based On Lower Fee Rates From Prior LHWCA Cases Rejected by Ninth Circuit.

     In our March 9, 2009 post, we explored two Ninth Circuit companion opinions, Van Skike v. Dir., Office of Workers’ Comp. Programs, 557 F.3d 1041 (9^th Cir. 2009) and Christensen v. Stevedoring Servs. Of Am., 557 F.3d 1049 (9^th Cir. 2009). There, the Ninth Circuit dramatically improved the lots of LHWCA attorneys seeking fee awards, determining that the relevant community for purposes of pegging a prevailing market rate cannot be based solely on lower LHWCA rate-settings.

     These decisions were followed, yet again, by the Ninth Circuit in Nasser v. Dir., Office of Workers’ Comp. Programs, Case No. 09-70706 (9^th Cir. Apr. 26, 2010) (unpublished memorandum decision).

     There, the ALJs awarded a LHWCA attorney an hourly rate of $285 based on six prior reported LHWCA cases with an awarded range of $225-$300. However, the attorney had presented rate surveys and attorney affidavits from a broader community of similarly-experienced attorneys doing work of comparable complexity showing that much higher hourly rates were in order—evidence apparently ignored by the ALJs.

     The Ninth Circuit vacated the fee decision and remanded for reconsideration in light of the Van Skike and Christensen decisions. Also, the ALJs were instructed to reconsider their reduction of “fees on fees” (fees spent on presenting the fee request) based on attorney’s previous failure to obtain his requested hourly rate—a reversal required given that attorney had now won the hourly rate issue on appeal.

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.

Section 1717 And Unlicensed Contractor: No One Is Happy About $2,000 Fee Recovery

Award Is Sustained, But Winning Subcontractor Under Contract With Fees Clause Fights Back Unlicensed General Contractor’s Illegality Argument.

     Usually, under our category “Unlicensed Contractors,” we are dealing with decisions where an unlicensed contractor wins a dispute with a fees clause and attempts to obtain an award of attorney’s fees—not very successfully. In the next case we look at, the losing contractor attempts to shield off a fee recovery under a broad contractual fees clause by claiming that the contract was illegal so that no award was authorized to the victorious licensed contractor. This did not work when it came to the flip side of the coin.

     Haskell Canyon Partners, L.P. v. E&M Concrete Constr., Inc., Case No. B215200 (2d Dist., Div. 4 Apr. 5, 2010) (unpublished) concerned a situation where an unlicensed general contractor was sued along with a licensed subcontractor by plaintiffs in a construction defect suit, with general seeking equitable indemnity against sub. The general-sub contract had two broadly worded attorney’s fees clauses, one for fees to the prevailing party “in any court action arising out of the Agreement or the enforcement or breach thereof” and another for “any action brought against general by third parties, in which E&M is joined as a party.” Both sub and general eventually settled with plaintiffs, although sub settled first and with both compromises confirmed as good faith settlements. Sub sought $125,160 in fee recovery because general’s equitable indemnity cross-complaint was dismissed in the good faith settlement process (although it took sub three attempts to get there). However, it came out in the fee battle that sub’s attorneys had agreed to litigate the case for a negotiated $7,500 cap. The trial court awarded sub $2,000 in fees, with both sides appealing.

Homeowner Associations: $783,944 Awarded to L.A. County As Winner In Public Hiking/Equestrian Trail CC&R Contest With HOA

CC&R Count Justified Fees to County.

     We have told you before that HOA contests can be expensive. Yes, they can. Many times, very expensive for the losing HOA, which likely will have to pass losing fees through to homeowners via special assessments or other insolvency options.

     In County of Los Angeles v. La Vina Homeowners Assn., Case No. B210444 (2d Dist., Div. 8 Apr. 5, 2010) (unpublished), County brought an action based upon nuisance and CC&R breach theories against HOA for failing to include public hiking and equestrian trails within the residential subdivision. Lots of evidence showed this was the intent, but the trails inadvertently got omitted from final maps. After a 23-day bench trial, County prevailed and was subsequently awarded $783,944 in attorney’s fees as the prevailing party under the CC&Rs.

     HOA appealed, but the fee award was affirmed. County’s lodestar was $825,395, and it acceded to a 5% reduction to the actual award amount. The appellate court found the hard work of the 3 successful County attorneys, at a “solid but moderate” $ 334 average hourly rate, well justified the fee award. Smart lawyering by the County to agree to a modest discount; it paid off in this one.

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:

  

Special Fee Shifting Provisions: Settlement Agreement Allowing For Patients’ Rights Fee Award Affirmed On Appeal

Second District, Division 6 Affirms $125,290 Fee Award in Action Where Plaintiff Settled For $126,000 on Various Counts.

     Settlement agreements are generally enforced by their terms, especially where they involve enforcement of public policy fee-shifting statutes. The next case demonstrates this principle very well.

     In Rodriguez v. Victoria Ventura Health Care LLC, Case No. B216355 (2d Dist., Div. 6 Mar. 24, 2010) (unpublished), defendants agreed to a settlement agreement under which they settled a negligence, elder neglect, and Patients’ Right (Health & Saf. Code, § 1430(b)) (PR) action for $126,000. The settlement agreement (through acceptance of a CCP § 998 offer) provided that plaintiff would be awarded attorney’s fees on the PR cause of action in an amount to be determined on noticed motion, because Health and Safety Code section 1430(b) provides that a prevailing plaintiff is entitled to attorney’s fees. (However, the fee-shifting provision only applies as against a skilled nursing facility licensee.) Even though plaintiff sought $247,104 in lodestar fees and over $19,000 in costs in subsequent proceedings (as well as a 2.0 multiplier), the trial court awarded $125,290 in attorney’s fees (after applying a 1.3 multiplier) and $7,164.37 in costs. Defendants appealed.

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: EEOC Stung With $4,560,285.11 Fee/Costs Award In Title VII Section Suit Found To Be Groundless By Iowa U.S. District Judge

Court Discusses Substantive Fee Shifting Statute, Lodestar Factors, and Non-Cost Expense Reimbursement Issues in Recent Decision.

      EEOC v. Boot, Case No. 07-CV-95-LLR (N.D. Iowa Feb. 9, 2010 Order), is an unusual decision where a United States district judge awarded $4,560,285.11 in fees and costs (broken down as $4,004,371.65 in fees, $463,071.25 in “non-cost” out-of-pocket expenses also awardable as fees, and $92,842.21 in routine costs under 28 U.S.C. § 1920) against the EEOC and in favor of CRST Van Expedited, Inc. in a Title VII sexual discrimination suit brought on behalf of 270 female drivers. It contains some very nice discussions of the fee shifting statute allowing such an award, application of lodestar factors, and items that are awardable as fees even though they are out-of-pocket expenses not recoverable as § 1920 routinely taxable costs.

     Here are the highlights from this decision:

• Fee shifting statute. 42 U.S.C. 2000e-5(k) allows a district court, in its discretion, to assess attorney’s fees against the EEOC in this type of case if the prevailing defendant shows the action was frivolous, unreasonable, groundless or vexatious in nature. (Marquardt v. Lodge 837, 26 F.3d 842, 849 (8^th Cir. 1994).) This standard was met because the district judge was convinced that the EEOC did not investigate before filing the complaint on behalf of 67 drivers (having no reasonable basis for the claims).
• Taxing costs for both stenographic and videotaped depositions. Under the new version of 28 U.S.C. § 1920(2), the district judge decided that--based on use of disjunctive “or” language—costs should be awarded only for stenographic or videotaped depositions, but not for both. The district court did note that there were decisions the other way, but they did not consider the current version of § 1920(2).
• Lodestar/application of national rates to the Title VII dispute. The district judge found that the case did not involve a specialized area of the law so as to justify Jenner & Block’s hourly rates that were way higher than the rates charged by defendant’s local counsel. The court lowered J & B rates to the local rates in setting the lodestar.
• Reasonable “non-cost” expenses recoverable as attorney’s fees. The district judge found that reasonable out-of-pocket expenses not within the § 1920 costs ambit could be recoverable as attorney’s fees. (Pinkham v. Camex, Inc., 84 F.3d 292, 294-295 (8^th Cir. 1996).) So, for example, the court did allow recovery of such items as long distance phone expenses, messenger/overnight express expenses, investigator fees, expert witness fees, postage, travel expenses, and printing/copying costs under the fee rubric. However, the district judge did deny recovery of most mock jury fees as not being necessary for the litigation, although noting that they have been awarded in other instances. (See, e.g., Confederated Tribes of Siletz Indians of Or. v. Weyerhaeuser Co., 2003 WL 23715982 at *8 (D.Or. Oct. 27, 2003).) The court also denied computer legal research, finding that item should have been factored into the attorneys’ hourly rates. Demonstrative trial exhibit expenses were rejected based on faulty documentation.

     For more information on this decision as well as a PDF link to the decision itself, see Martha Neil’s article “EEOC Hit with $4.5M Legal Fee Award In Losing ‘Pattern & Practice’ Case, Plans Appeal,” posted February 17, 2010 on the American Bar Association website (an article written for the ABA Journal).

Special Fee Shifting Statutes: Chacon Opinion – Involving San Francisco Rent Stabilization and Arbitration Ordinance – Is Published.

 

     In our January 19, 2010 post, we examined Chacon v. Litke, Case Nos. A122026 & A123889 (1^st Dist., Div. 2 published Feb. 8, 2010), which was unpublished at the time. This decision established that the lodestar analysis was the presumptive method for gauging special fee-shifting provisions, including those enacted under governmental ordinances. On February 8, 2010, the Court of Appeal certified it for publication so that it can now be cited. 

Rent Stabilization Ordinance: Winning Plaintiffs In Wrongful Eviction Action Awarded $306,321.50 In Attorney’s Fees

Lodestar Is the Standard, and Attorney Still Entitled to Lodestar Fees Even Where Client Agreement Was Below Market or Discounted in Nature.

The lodestar method is the one used most often by trial courts in awarding both attorney’s fees under contractual provisions and fee-shifting statutes. What about county ordinances containing fee-shifting sections? Answer: lodestar also.

In Chacon v. Litke, Case Nos. A1220261/A123883 (1^st Dist., Div. 2 Jan. 19, 2010) (unpublished), winning plaintiffs in a wrongful eviction suit against defendants were awarded $306,321.50 in attorney’s fees and costs under a section of the San Francisco Rent Stabilization and Arbitration Ordinance that simply allows the trial court to award a prevailing party reasonable attorney’s fees and costs “pursuant to court order.” The lower court did just that, also determining that $350/hour was a reasonable lodestar rate for plaintiffs’ lead attorney. (Lead attorney, in a contingency arrangement, agreed to charge plaintiffs $300/hour.) Miffed defendants appealed, challenging use of the lodestar and allowance of an hourly rate in derogation of the contractual agreement with client.

Result: affirmed.

The lodestar is the presumptive method in all fee-shifting statutes, unless some contrary intention appears. (Ketchum v. Moses, 24 Cal.4^th 1122, 1126 (2001).) The Court of Appeal also relied on treatise writer Mr. Pearl’s commentary that Ketchum so held. The appellate panel presumed that the Board of Supervisors also intended to use the lodestar method in setting a fee award.

The trial court’s fee award was not excessive. The lower court rejected a 1.5 multiplier request and plaintiffs’ request for a $400/hour rate for their lead attorney. However, the appellate court found no abuse in allowing $350/hour as a reasonable hourly rate. Beyond that, it held—citing Mr. Pearl’s CEB treatise at § 12.26—that the lodestar applies even if the attorney charges nothing, charges below market, or charges at a discounted rate.

Above:  Evicted sharecroppers along Hwy. 60.  New Madrid County, Missouri.  Arthur Rothstein, photographer.  January, 1939.  Library of Congress.

Class Actions: Class Action Fee Settlement Remanded Because Trial Judge Failed To Use Lodestar Method

 

$20,000 Fee Award Reversed Where Class Action Attorney Requested $263,606 in Fees.

     The next case illustrates that California courts generally require use of the lodestar method in non-common fund cases. Trial judges cannot simply use the common fund method in a case that really isn’t a fund case; in these instances, the lodestar method must be used.

     That is exactly what the Fourth District, Division 3 ruled in Worley v. Storage USA, Inc., Case No. G041170 (4^th Dist., Div. 3 Dec. 21, 2009) (unpublished), a 3-0 decision authored by Acting Presiding Justice Bedsworth.

     There, 437 claims were ultimately paid out of a class action settlement involving a class of 2,103 individuals. Plaintiff’s main attorney requested $263,606 in fees and $2,615 in costs. The trial judge only awarded $20,000 in fees.

     The appellate panel reversed. It found that the lower court had used the common fund approach for setting fees, even though settlement agreement provided fees would be paid in addition to the class recovery. Instead, the trial judge should have used the lodestar method, with the record being unclear that the correct methodology was used. Defendant argued that a court may depart from the lodestar method in exceptional cases, but Justice Bedsworth disagreed by observing “[t]he cases relied on do not recognize an exceptional circumstances exception to the lodestar requirement.” (Slip Opn., p. 9.) Defendant also argued the lower court had discretion to reduce the lodestar by 90% based on the results obtained, but the appellate panel found that this type of reduction only occurred where there were extraordinary circumstances (such as finding the prevailing party lied about material matters). None of the cases cited by defendant showed that a percentage fee is the be-all-and-end all approach. (BLOG OBSERVATION—There are California cases endorsing use of the percentage fee method as at least a “cross check” on the lodestar approach.)

Fee Substantiation: Plaintiff’s Declaration About Hourly Rates And Small Law Firm Survey Deemed Sufficient Substantiation For Fee Request, Especially Given No Challenge By The Defense

Third District Also Addresses Clerical Time and Multiplier Issues.

     Plaintiff won a jury verdict of $16,536 on a failure to accommodate discrimination claim. Under the fee-shifting provisions of the Fair Employment and Housing Act (FEHA; Government Code section 12965(b)), the trial court awarded plaintiff $189,503.40 in fees, after lodestar deductions for clerical tasks, duplicative entries, and excessive travel time and then enhanced by a 1.5 multiplier (out of a requested $171,981 lodestar and requested 2.0 multiplier). Defendant Club Fresh was unhappy, appealing the fee award.

     The Third District affirmed in Maldonado v. Club Fresh, Case No. C055954 (3d Dist. Oct. 9, 2009) (unpublished).

     Club Fresh argued that plaintiff’s declaration about reasonableness of hourly rates was incompetent to prove reasonableness of the fees. Actually, this was wrong—a declaration of plaintiff’s counsel is sufficient evidence of the market rates charged in the legal community, especially where no evidence is presented to the contrary. (Davis v. City of San Diego, 106 Cal.App.4^th 893, 902-904 (2003); Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4^th 140, 154 (2006); MBNA America Bank, N.A. v. Gorman, 147 Cal.App.4^th Supp. 1, 13 (2006); but see Nichols v. City of Taft, 155 Cal.App.4^th 1233, 1237-1238 (2003) [different result where defense presented opposition declarations on local community legal rates].) Here, Club Fresh presented no contrary proof. Also, the appellate panel did note that there was corroboration from a CPA expert, who used information from Altman & Weil, Inc., The Small Law Firm Economic Survey (2006) and International Paralegal Management Association and Altman Weil, Inc., Annual Compensation Survey for Paralegals/Legal Assistants and Managers (2006).

     Defendant next attacked the allowance for clerical services. The appellate court found that discounts had been made for attorney clerical work, but that clerical services essential to legal representation and ordinarily billed in the legal marketplace may be included in a fee award. (Salton Bay Marina, Inc. v. Imperial Irrigation Dist., 172 Cal.App.3d 914, 951 (1985).)

     Club Fresh attacked the 1.5 multiplier granted by the trial court in the fee award. Although attacking the lower court’s failure to articulate a reason for the multiplier, the appellate panel observed that the trial court is not required to issue a statement of decision with regard to a fee award. The multiplier was justified based on the contingency risk to the case, the complexity of the issues, and the need to encourage private attorneys to litigate these types of cases.

     Club Fresh was shocked at the size of the award as compared to the modest jury verdict. However, the Court of Appeal countered that California does not impose a rule of proportionality on fee awards and has rejected federal rules that limit fee enhancements generally and exclude consideration of the contingent nature of the payment. (Ketchum v. Moses, 24 Cal.4^th 1122, 1140-1141 (2001) [one of our Leading Cases].)

     However, the appellate court denied plaintiff’s requests for an award of fees on appeal, finding it did not go the merits of her underlying claims but only the fee award itself.

Class Actions: $3 Million Fee/Costs Award Affirmed in B&P Section 17200 Consumer Privacy Class Action Against Bank of America

First District, Division 5 Rejects Clear Sailing Clause/Class Counsel Conflict Challenges to Fee Award.

     In the next case that we review, the Court of Appeal dealt with “clear sailing clauses” in class action settlements and the claim that class counsel conflicts in obtaining fees need “structural” review. The appellate panel found that these clauses are very customary and that the trial court can easily make sure that attorney’s fees are reasonable in class action settlements—in fact, that is the charge of the lower courts.

     In re Consumer Privacy Cases, Case Nos. A120591 et al. (1^st Dist., Div. 5 June 30, 2009) (certified for partial publication, with the fee award portions published) dealt with the class action settlement of a Business & Professions Code section 17200 case against Bank of America alleging that it violated customer privacy by providing customer information to third party and direct telemarketers for a fee. A settlement was reached by which Bank guaranteed it would provide aggregate benefits to the class of $10.75 million, plus additionally providing financial privacy kits to requesting customers and paying $3.25 million to a privacy-related cy pres fund. In the settlement agreement, Bank agreed that it would not oppose class counsel’s application for an award of attorney’s fees and costs to be determined by the court as long as the amount did not exceed $4 million (this is known as a “clear sailing clause” in class action nomenclature). Later, the trial court awarded class counsel $2,907,982 in fees (based on a $1,671,704 lodestar with a 1.75 multiplier) and $110,373 in costs. Fees were awarded under the “private attorney general statute” (Code of Civil Procedure section 1021.5) and the “common fund doctrine.” The lower court actually denied almost $1 million in claimed fees and costs to class counsel. Certain objectors appealed the fee/cost orders.

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.

Private Attorney General Statute: Lodestar Fee Award Affirmed, But Multiplier Determination Remanded For Further Consideration

First District, Division 1 Suggests Trial Courts Should Explain Multiplier Determinations With Some Specificity.

      For all of you attorneys practicing in areas that may trigger application of the private attorney general statute (Code of Civil Procedure section 1021.5), the next case will be of great interest. Not only does it highlight some discrepancies in adjudging fee awards under section 1021.5, the decision comes out and urges trial judges to explain their grants of multipliers with some degree of specificity.

      Americans for Safe Access v. County of Alameda, Case Nos. A121390, A122619 (1^st Dist., Div. 1 May 22, 2009) (unpublished) involved plaintiffs' summary adjudication and permanent injunction wins about the integrity of certain electronic voting machines under Elections Code section 15630. Plaintiffs' law firm, which specialized in elections law, requested a section 1021.5 fee award of $1,055,255.26 (a $519,207.26 lodestar, based on attorney hourly rates of $410-625, enhanced by a 2.0 multiplier). Plaintiffs submitted detailed billing and fee survey information to supports its request, with County mainly opposing the hourly rates being claimed. The trial court did reduce the hourly rates and awarded a total fee award of $875,182.80 (awarding a 2.0 multiplier found as an appropriate enhancement). County appealed.

     It lost on the merits judgment and the lodestar fee component, but obtained a reversal and remand with respect to the multiplier.

Unruh Act: Court Of Appeal Affirms $12,436 Attorney’s Fees Award Based On Limited Success Of Plaintiff

 

In a Split Opinion, Second District, Division 6 Rejects Plaintiff’s Requested $24,871.75 In Light of His Recovery of $4,000 Minimum Statutory Damages.

     In cases involving mandatory fee-shifting statutes (such as the Unruh Act, Civil Code section 52(a)), we have seen an emerging theme that encompasses a large number of attorney’s fees recoveries: the success of the litigant usually has a great deal to do with the fee award in connection with the trial court’s discretionary decision making calculus. The next decision we examine is no exception to this observation even though a dissenting justice saw things differently.

     Plaintiff in Barrette v. Costco Wholesale Corp., Case No. B202606 (2d Dist., Div. 6 Apr. 16, 2009) (unpublished) won minimum statutory damages of $4,000 under the Unruh Act arising out of a violation under the American with Disabilities Act (ADA, 42 U.S.C. sec. 12182). The small award was the result of defendant moving quickly to put policies in place to rectify future ADA violations. The trial court awarded plaintiff only about one half of requested fees--$12,436 out of the sought-after $24,871.75 lodestar (originally, plaintiff sought $27,278, but the trial court eliminated $2,856.25 to reach the lodestar amount). Plaintiff appealed, claiming a higher fee award was in order.

In-House Counsel Fee Shifting Compensation: Lodestar Is the Presumptive Measure

PLCM Is the Leading Case Under Civil Code Section 1717, And Likely In Other Contexts.

     We would like to thank Michael J. Ireland, General Counsel of Majestic Investment Group in Woodland Hills, for this message: “I don’t know if there are many of us out there, but I would like to see cases discussing calculation of fees awards to In House Counsel.” We have not seen any along the way since we have been blogging in this area, but set forth what seems to be California law on the subject. Put another way, this one is for all you California in-house counsel out there that get involved in litigation with fee-shifting clauses or statutes.

Cases Under Review: U.S. Supreme Court Grants Certiorari To Resolve Split On Fee Enhancements

 

Issue Is Whether District Judges Can Enhance Lodestar Based Solely on Quality of Attorney Performance and Results Obtained Under Federal Fee-Shifting Statute.

     Yesterday, the U.S. Supreme Court granted certiorari on an attorney’s fees issues that has generated a split among federal appellate courts on whether district judges can enhance lodestars based solely on the quality of an attorney’s performance and results obtained under a fee-shifting statute when these same factors were already utilized in reaching the lodestar calculus.

     The case accepted for review is Perdue v. Kenny A., No. 08-970 (U.S. Apr. 6, 2009). There, class action attorneys successfully brought an action against Georgia and several of its governmental agencies/officials to change Georgia’s foster care system, which the suit did—a settlement brought about reduced case loads and more personnel, among other improvements. The class action attorneys then moved for fees, with District Judge Marvin Shoob awarding them a $6 million lodestar plus a $4.5 million enhancement based on class counsel’s skill, commitment, dedication, and professionalism under the federal civil rights statute (42 U.S.C. sec. 1983) containing a fee-shifting provision.

     Stay tuned for our post on this decision when it comes down from the high court. This decision will impact numerous cases involving about 100 fee-shifting statutes. Opponents that do not believe fees should be enhanced for these factors alone argue that enhancement is effectively a “double dip” for what is considered initially in determining the appropriate lodestar.

     HAT TIP to Benjamin Shatz of enBanc, the Los Angeles County Bar Association’s official blog for bringing this important development to our attention.

FEHA: Court of Appeal Affirms Award Of Lower Fee Award To Winning Plaintiff

First District, Division 4 Sustains Fee Award of $676,001 Based on a 1.25 Multiplier, Rather than Plaintiff’s Requested $940,590.87 Lodestar Plus a Proposed 2.0 Multiplier.

     The First District, Division 4, in the unpublished decision of Tarver v. City and County of San Francisco, Case No. A116731 (1^st Dist., Div. 4 Mar. 23, 2009) (unpublished), has penned a nice opinion showing the deference that appellate courts will give to well-reasoned decisions by trial courts, even where the lower courts reduce proposed lodestars and award diminished multipliers.

Labor Code Violations: Trial Court Award Of $236,760 To A Single Prevailing Plaintiff Affirmed On Appeal

First District, Division Two Sustains Lower Court’s Application of 1.5 Multiplier.

     Labor Code section 218.5 authorizes a mandatory award of attorney’s fees to a prevailing party in any action for nonpayment of wages if any party requests fees and costs upon initiation of the action. Labor Code section 1194(a) mandates an award of reasonable fees and costs to an employee recovering unpaid minimum wages or overtime compensation. These two statutes were the ones that led to a substantial fee recovery by a prevailing single plaintiff, with the Court of Appeal sustaining the award on appeal.

     In Ahmed v. Good Nite Management, Inc., Case No. A120400 (1^st Dist., Div. 2 Mar. 19, 2009) (unpublished), plaintiff won a bench trial by which he was awarded $293,999.55 in compensation for overtime and missed meal periods. The defendant hotel claimed he was an exempt employee, but that defense did not prevail. Plaintiff was able to take advantage of the four-year limitations reach-back period under Business and Professions Code section 17200. Plaintiff was also awarded attorney’s fees under sections 218.5 and 1194(a) in the amount of $236,760. Hotel appealed, but did not overturn either the merits or fee determinations.

FEHA: 25% Of Requested Fees Awarded Based On Apportionment

Second District, Division 3 Sustains Application of Negative Multiplier Based on Plaintiff Prevailing On Only One of Four Claims.

     The California Fair Employment and Housing Act, Government Code section 12900 et seq. (FEHA), has a mandatory fee-shifting provision for prevailing plaintiffs. (Gov. Code, sec. 12965(b).) Nonetheless, it is tempered by mandating only awards of reasonable fees and costs in the discretion of the trial court. This means that the lower court can either enhance or reduce the award depending on the circumstances, as the next case illustrates.

     In Weisdorf-Mahserjian v. Serco, Inc., Case No. B206243 (2d Dist., Div. 3 Mar. 6, 2009) (unpublished), plaintiff pled 5 FEHA cause of action but only prevailed on a retaliation claim for which a jury awarded $43,866.58 for past economic loss. Plaintiff then moved for a $180,545.50 fee award—broken down as a lodestar of $144,434 (number of hours worked by attorneys times their applicable hourly rates) plus a requested 1.25 multiplier. The defendant opposed, arguing fees should be denied outright or that plaintiff should only be awarded 25% of the lodestar because she only prevailed on one out of her four claims.