CALIFORNIA ATTORNEY'S FEES

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 A122026 & A123889 (1^st Dist., Div. 2 published Feb. 8, 2010), which was unpublished at the time.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 A1220261/A123883 (1^st Dist., Div. 2 Jan. 19, 2010) (unpublished), winning plaintiffs in a wrongful eviction suit against defendants were awarded $306,321.50 in attorney’s fees and costs under a section of the San Francisco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.

Longshore and Harbor Workers’ Compensation Act and Fair Debt Collection Practices Act: Practitioners Should Get Higher Hourly Rates Based On Two Companion Ninth Circuit Decisions

Federal Court of Appeals Determines That A Broader Relevant Market Study, Not Just Past LHWCA Awards, Is In Order.

     The Ninth Circuit recently decided two decisions that will likely result in higher hourly rates in the lodestar analysis for practitioners submitting fee recovery requests in LHWCA cases, a result that follows from a past decision that seems to countenance a boost in hourly rates for FDCPA practitioners.

     In the companion cases of Christensen v. Stevedoring Services of America, Case No. 07-70247 and Van Skike v. Director, Office of Workers’ Compensation Programs, Case No. 07-73886 (9^th Cir. Mar. 2, 2009) (for publication), some longshoremen challenged fee awards to their attorneys at the hourly rate of $235-$250 based on the Benefits Review Board’s past awards at these rates to practitioners specializing in LHWCA cases, which at 33 U.S.C. sec. 928(a) provides for a “reasonable attorney’s fees” in regard to services performed before the BRB. The attorneys had sought higher rates in the $350 per hour range. On appeal, the Ninth Circuit vacated and remanded so that the fee award could be evaluated under a “market rate” test that likely will lead to awards at higher hourly rates for the LHWCA attorneys.

Class Actions: Third District Publishes Sutter Health Uninsured Pricing Case

 

Decision Discussed in Our January 28, 2009 Post.

     In our January 28, 2009 post, we discussed Sutter Health Uninsured Pricing Case, where the Third District affirmed a $4 million class action fee award that represented 1.4% of the settlement fund recovery and a 2.52 multiplier enhancement on a $1.4 million lodestar.

     Yesterday, the Third District certified this decision for publication; it was originally issued as a unpublished opinion.

Out-of-State Attorneys: Don’t Despair—Ninth Circuit Holds You Can Get Paid As A Consultant Even Though You Are Not California Licensed Or Not Admitted Pro Hac Vice

Holding Draws A Sharp Dissent; Opinion Also Discusses Lodestar and Sufficiency of Fee Substantiation.

     The next case should spur the interest of non-California lawyers wishing to do limited consultation or limited co-counseling with California lawyers in California federal courts. Even if you are not licensed in California or do not obtain pro hac vice rights (the latter being the preferable route), can you get attorney’s fees recovery once a case is favorably concluded and there is a basis for fee recoupment? Answer: Maybe, under the right circumstances. Read this post for the Ninth Circuit’s recent view—and, yes—far from being unanimous as to the right circumstances that may countenance this result.

Private Attorney General Statute: Appellate Court Affirms Trial Court Award Of $43,410.20 To Winning Plaintiff

First District, Division 4 Rejects Plaintiff’s Bid To Capture Full $272,581.10 in Fees That Were Incurred, Applying a Negative Multipler Instead.

     Plaintiff Tanzel won a facial constitutional attack and preemption challenge to a Richmond ordinance authorizing the city to seize and forfeit vehicles used to solicit prostitution or to buy drugs. In a prior appellate opinion sustaining the win, the panel did acknowledge it was “not writing on a tabula rasa, as all of the important legal issues presented [had] been decided by other courts considering similar challenges to nearly identical ordinances enacted by other municipalities.” Except for a single exception, Tanzel’s constitutional attacks were rejected—he was successful on two claims and unsuccessful on three claims if one used a “scoreboard approach.” Plaintiff sought to recover base fees of $181,720.73 with at least a 1.5 multiplier (a minimum adjusted award of $272,581.10) under California’s private attorney general statute (Code of Civil Procedure section 1021.5). The trial court awarded him fees of $37,460.70, applying a negative multiplier of .40 to the lodestar amount. Plaintiff appealed.

Class Action: Court Of Appeal Sustains 1.4% Fund Recovery And 2.52 Lodestar Multiplier In Consumer Class Action

Third District Sustains Substantial Fee Award in Unpublished Decision.

     Who says that class action attorneys are greedy? No matter what your bent, the next case is a refreshing example of how substantial fees are justified in a class action settlement generating substantial recovery for class members.

FEHA: Appellate Court Sustains 1.4-1.6 Multipliers To Plaintiffs' Fee Awards

Second District, Division 6 Rebuffs Challenges to FEHA Multipliers.

     Plaintiffs winning claims under the California Fair Employment Housing Act (FEHA), Gov. Code, § 12900 et seq., are normally awarded fee-shifting awards. Trial courts have ability to enhance the lodestar—the number of hours reasonably expended multiplied by the reasonable hourly rate—by a multiplier in order to fix the fee at the fair market value for the legal services rendered. (Ketchum v. Moses, 24 Cal.4^th 1122, 1134 (2001).) In the next case, plaintiff won a $1.2 million compensatory damage award (reduced from $1.7 million by the trial court), a $1.2 million punitive damage award (reduced from $16.7 million by the trial judge), and awards of attorney's fees to one of his firms in the amount of $300,709.50 (using a 1.4 lodestar multiplier) and to another firm in the amount of $343,265.60 (using a 1.6 lodestar multiplier). Corporate defendant was not happy and appealed, even after plaintiff accepted the remittitur.

M&M's 2008 “Top Ten” Attorney’s Fees Cases

 

Part 2 of 2 – We Finish Off With The Last Five Cases And An  “Honorable Mention”

     Oh, the suspense … and the ball has not yet dropped from above Times Square. You have to go to our prior post to see the first part of this list. Here is the rest of our top ten 2008 attorney’s fees decisions.

5. Christian Research v. Alnor, 165 Cal.App.4^th 1345 (2008): Wholesale Fee Reductions In Order Where Fee Claimant Blockbills, Makes Vague Entries, And Overstaffs The Case.

     Decision contains a good discussion on awarding fees in an anti-SLAPP motion context. Decision suggests that winner should apportion out work related only to the anti-SLAPP motion, should avoid blockbilling, and should not bill for unnecessary duplication. Appellate court sustained wholesale reductions in fees on these grounds, indicating such wide-ranging reductions can be made by state trial judges.

     [Discussed in our August 13, 2008 post; Fourth District, Division 3; author: Justice Aronson]

4. Moreno v. City of Sacramento, 534 F.3d 1106 (9^th Cir. 2008): Fee “Haircuts” Above 10% Must Be Specifically Justified By District Judges.

     District judges must specifically explain “fee haircuts” of more than 10% when reducing fee requests. Contrast this rule with the broader discretion given to state trial judges in Alnor (case #5).

     [Discussed in our August 2, 2008 post; Ninth Circuit Court of Appeals; author: Chief Judge Kozinski]

3. EnPalm, LLC v. Teitler Family Trust, 162 Cal.App.4^th 770 (2008): Case Discusses Lodestar Reduction and Enhancement Factors For Fee Awards Under Civil Code Section 1717.

     Decision contains an extensive discussion of lodestar reductions factor in Civil Code section 1717 fee situations. A dissenting opinion by Presiding Justice Cooper has a useful discussion of factors used to increase or reduce the lodestar in both section 1717 and public attorney general cases.

     [Discussed in our May 12, 2008 post; Second District, Division 8; majority author: Justice Rubin; dissenting author: Presiding Justice Cooper]

2. Vasquez v. State of California, 45 Cal.4^th 243 (2008): Code of Civil Procedure Section 1021.5 Fee Award Does Not Require Reasonable Settlement Efforts As A Mandatory Prerequisite In “Noncatalyst” Cases.

     Reasonable settlement efforts are not a prerequisite for a fee award under Code of Civil Procedure section 1021.5 in “noncatalyst” cases, though it is one of the discretionary factors for trial courts to weigh in determining whether private enforcement was sufficiently necessary to justify awarding fees.

     [Discussed in our November 20, 2008 post; California Supreme Court; author: Justice Werdegar]

1. Olson v. Automobile Club of Southern California, 42 Cal.4^th 1142 (2008): Expert Witness Fees Not Recoverable As Code of Civil Procedure Section 1021.5 Costs.

     Expert witness fees are not recoverable under Code of Civil Procedure section 1021.5 (the private general statute) in addition to attorney’s fees authorized by the same statutory scheme, disapproving Beasley v. Wells Fargo Bank, 235 Cal.App.3d 1407 (1991).

     [California Supreme Court; author: Justice Moreno]

Honorable Mention: Ritter & Ritter, Inc. v. The Churchill Condominium Assn., 166 Cal.App.4^th 103 (2008): Condominium Owner Recovers Substantial Fee From HOA, With Dissent Lamenting Fees Spent On A Matter That Could Have Been Arbitrated In A Couple of Days.

     Decision involved a homeowners association (HOA)-homeowner dispute in which homeowners were awarded $531,159 in fees even though they won only $4,620 in damages from a jury and obtained a mandatory injunction from the trial court. The dissent is memorable for lamenting the amount of fees spent on a matter that should have been arbitrated in a couple of days.

     [Discussed in our July 24, 2008 post; Second District, Division8; majority author: Presiding Justice Cooper; dissenting author: Justice Rubin]

Fourth District, Division Three Affirms Attorney’s Fees Award In Two Real Estate Cases

Seller Hit With Fees In a Water Accumulation Concealment Case; Neighbors Obtain Fees Against Neighbors In Tree Obstruction View Case.

     In these interesting financial times, we find that real estate disputes still fester and produce interesting posts on attorney’s fees issues. The next two cases do not disappoint, originating from our local Santa Ana appellate court.

Seller Real Estate Concealment Case.

     In Johnson v. Dawkins, Case No. G037998 (4^th Dist., Div. 3 Nov. 19, 2008) (unpublished), buyers of a Laguna Hills residence successfully sued for undisclosed water accumulation problems, recovering $97,500 compensatory damages against sellers, some minor punitive damages against one of the sellers and their son, and attorney’s fees of $223,157 based upon a fees clause in the real estate purchase contract under Civil Code section 1717. (For a discussion on the legal basis for such an award, see our May 22, 2008 post.) Except for one issue that resulted in a remand, the judgment was affirmed substantially across the board in buyers’ favor.

     The lower court awarded $223,157 to buyers--even though their attorneys had billed them only $170,873--based on a lodestar enhancement factor. This reduction must have rankled sellers, because they still got hit with an award that was enhanced beyond the discounted fees paid by buyers to their attorneys. Sellers appealed, but lost when the appellate court affirmed the fee award for buyers.

The record below showed that buyers’ attorneys cut their bill from $242,091.50 to $179,873 before a 1.31 multiplier was applied by the trial court. Lodestar enhancers are indeed permissible under Civil Code section 1717. (PLCM Group, Inc. v. Drexler, 22 Cal.4^th 1084, 1095 (2000) [one of our Leading Cases].) The appellate panel had no difficulty concluding that this multiplier was modest given the complexity of the case—reinforced by the prolix opening appellate brief which raised “a seemingly endless stream of issues (some borderline, some arguable, one actually meritorious)—thunders a very great ‘volume’ of support of the soundness of the trial court’s exercise of discretion. The reply brief--even larger—speaks literally another volume.” (BLOG OBSERVATION-So who doesn’t think that appellate courts pay attention to the litigiousness of parties when reviewing discretionary issues?)

Homeowner Association Neighbor Feud—Tree Obstruction/View Protection Case.

     The second case involves a frequently recurring theme—neighbors battling over their right to protect unobstructed views, balanced against other neighbors who do not want to cut their vegetation (usually, palm trees). Unfortunately, the loser can often times bear the attorney’s fees freight, as Ross v. Emley, Case No. G037688 (4^th Dist., Div. 3 Nov. 19, 2008) (unpublished) illustrates.

     This neighborhood tree obstruction dispute arose out of the Meredith Canyon development in San Juan Capistrano. Plaintiff neighbors reached a settlement with defendant neighbors by which their trees had to be trimmed, subject to certain conditions, so that unobstructed ocean views were preserved. The issue of attorney’s fees, however, was reserved for determination by the trial court in the settlement agreement. Ultimately, plaintiff neighbors were awarded $52.750.50 in fees, a reduction of over $8,600 in the amount requested. Defendant neighbors were not happy, appealed, and lost.

     Even though Civil Code section 1717(b)(2) states there is no prevailing party under a fees clause where an action is dismissed pursuant to a settlement, defendants waived this protection by stipulating that the fee question could be decided by the trial court after settlement of the merits of the claims. (Jackson v. Homeowners Assn. Monte Vista Estates-East, 93 Cal.App.4^th 773, 784 (2001).) Beyond that, plaintiffs were entitled to a fee award under Civil Code section 1354—which allows prevailing parties to recoup fees where they enforce CC&Rs. Under section 1354, the trial court has jurisdiction to determine who is the prevailing party even after voluntary dismissal, whether by settlement or otherwise. (E.g., Kim v. Euromotors West/The Auto Gallery, 149 Cal.App.4^th 170, 178 (2007); Parrott v. Mooring Townhomes Assn., Inc., 112 Cal.App.4^th 873, 877 (2003).)

     Because “prevailing party” status depends on a pragmatic determination of the extent to which each party has realized its litigation objectives, the trial court did not err in determining that plaintiff neighbors achieved their main objective by obtaining removal of obstructions to their ocean views.

     The amount of fees awarded was not excessive, the appellate panel ruled. The trial court disallowed excessive and unsupported fees, as well as not awarding fees until after the defendant neighbors failed to comply with obstruction removal deadlines set by the homeowners’ association. No abuse of discretion was found in the fee award rendered in the case of the feuding neighbors in ocean view neighborhoods rimmed with palm trees.

CCP Section 1021.5: $403,548 Fee Award Sustained As Not Being Excessive In Nature

First District, Division Three Finds No Abuse of Discretion In Awarding Substantial Fees Under Section 1021.5.

     Uphold Our Heritage, an organization of local citizens and architects/authors from around the world, successfully brought a mandamus action against Town of Woodside and Mr. Jobs, an individual seeking a permit to demolish the historic Jackling House (built by a key figure in the American cooper industry and designed by George Washington Smith, a leading architect in the Spanish Colonial Revival style containing many unique cooper fixtures reflective of Jackling’s work in the mining industry). The Town certified an environmental impact report and conditionally authorized the demolition permit. Heritage obtained mandamus from the lower court to set aside approval of the demolition permit based on Town’s feasibility findings not being supported by substantial evidence. The appellate court affirmed the lower court ruling in a published decision. (See Uphold Our Heritage v. Town of Woodside, 147 Cal.App.4^th 587 (2007).)

     So, guess what happened next? You are right, Heritage filed a motion for attorney’s fees under Code of Civil Procedure section 1021.5, California’s private attorney general statute. The trial court awarded Heritage $403,548 in fees on this basis: lodestar of 581.8 hours at hourly rates ranging between $110-500 for attorneys/paralegals/law clerks (a total lodestar figure of $221,774), plus a 2.0 multiplier after credit for noncontingent fees paid, which reflected a reduction in some senior attorney hourly rates, an increase for one junior attorney’s hourly rate, and a reduction of the 2.8 multiplier requested by Heritage in the fee motion. Town/Mr. Jobs appealed.

     The First District, Division Three, in the 3-0 unpublished opinion of Uphold Our Heritage v. Town of Woodside, Case Nos. A120749 & A120757 (1^st Dist., Div. 3 Nov. 12, 2008) (unpublished) authored by Acting Presiding Justice Pollak, affirmed despite the fact the award was substantial in nature.

     Driving the affirmance was the Court of Appeal’s perception that demolition of the home would have eliminated the historic value preservation possibilities for the public, a tangible public interest transcending Heritage’s private interests. Because Heritage was composed of diverse individuals, it did not matter that one member’s personal attachment to the house was at play. (See Mejia v. City of Los Angeles, 156 Cal.App.4^th 151, 159 (2007).)

     Based on the Serrano factors, the appellate panel found that the trial court made proper reductions and increases in arriving at the lodestar, properly awarded paralegal time, and correctly enhanced with a multiplier based on the novel and problematic nature of the dispute. Justice Pollak also found it was appropriate to allow attorney compensation for medial public relations efforts. (See Davis v. City and County of San Francisco, 976 F.2d 1536, 1545 (9^th Cir. 1992), rehg. denied, jdg. vacated in part and cause remanded, 984 F.2d 345 (9^th Cir. 1993).) The panel finally observed that the 2.0 multiplier “is well within the range of acceptability,” citing Wershba v. Apple v. Computer, Inc., 91 Cal.App.4^th 224, 255 (2001) [multipliers can range from 2 to 4 or even higher]; Chavez v. Netflix, Inc., 162 Cal.App.4^th 43, 66 (2008) [2.5 multiplier was not out of line with prevailing case law and did not constitute abuse of discretion].

Court of Appeal Reverses 88% “Haircut” In Fee Award to Landlord in ADA Indemnity Dispute With Tenant

 

Fourth District, Division One Rules That Lower Court May Have Not Used Proper Lodestar Determination Factors in Drastically Cutting Fee Request, Suggesting It Parts Company From Reasoning in The Second District’s EnPalm Decision.

     Notwithstanding the breadth of the abuse of discretion standard, the next case illustrates that appellate court will overturn fee awards where they decide lower courts did not base reductions on objective factors, but instead make awards on subjective beliefs on what is reasonable.

     Quin v. El Cajon Grand Cocktail Lounge, Case No. D052193 (4^th Dist., Div. 1 Nov. 6, 2008) (unpublished) concerned a landlord who ultimately prevailed against a tenant for indemnification arising out of an Americans with Disabilities Act suit with an outsider. The indemnification dispute was based on an attorney’s fees clause in the lease, triggering Civil Code section 1717’s fee-shifting policy. The ADA dispute settled for $6,000, and landlord made certain changes to the premises (having a total cash value of $11,463). Landlord later prevailed in the subsequent indemnification lawsuit against tenant, seeking to then recover attorney’s fees in the amount of $171,569.50 and costs of $7,377.34 based on 605.6 hours of legal services during twenty months of litigation at a blended $281.65 hourly rate. Tenant opposed the request as unreasonable, observing his attorneys had spent $70,000 in fees to litigate the case from start to finish and also noting that tenant has offered to settle the entire matter for a $45,000 lump sum settlement payment. Otherwise, tenant provided no rebuttal attorney declarations to buttress the unreasonableness challenge. The trial court awarded landlord all of her requested costs but only $21,123.75 in fees—about 12% of the requested fees. In essence, the lower court felt that the fee claim was excessive because both the ADA and indemnifications claims were fairly routiine in nature and the fees were exorbitant when compared to the ultimate ADA settlement figure. Landlord was unhappy and appealed, winning reversal and a remand from the Fourth District, Division One.

     Justice O’Rourke, writing for a 3-0 panel, acknowledged that the abuse of discretion standard was the governing one, but also observed that reversal may be had where the fee award record “is unclear whether the trial court’s award of attorney fees is consistent with the applicable legal principles.” (Slip Opn., at p. 10, citing Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4^th 140, 148-149 (2006); Nichols v. City of Taft, 155 Cal.App.4^th 1233, 1239-1240 (2007); Horsford v. Bd. of Trustees of Cal. State Univ., 132 Cal.App.4^th 359, 393 (2005).) With that standard in mind, the review began.

     The Court of Appeal overviewed its discussion by citing to Ketchum, Serrano III, and PLCM (see our Leading Cases) for the proposition that trial courts must carefully review attorney documentation of hours expended, reducing the hours for “padding “ in the form of inefficient or duplicative efforts. (The appellate panel also cited Christian Research Inst. v. Alnor, 165 Cal.App.4^th 1315, 1321 (2008), a decision by Justice Aronson from the Santa Ana Court of Appeal, reviewed in our August 13, 2008 post.) It further noted that lower courts should not mistakenly intertwine considerations relevant to the lodestar determinations with factors relevant to lodestar adjustment. (See Slip Opn., at p. 12, citing Northwest Energetic Services, LLC v. Cal. Franchise Tax Bd., 159 Cal.App.4^th 841, 879 (2008).)

     Appellant landlord argued that the trial court myopically focused on only one PCLM factor—the “nature of the litigation.” Respondent tenant countered that the Second District in EnPalm, LLC v. Teitler Family Trust, 162 Cal.App.4^th 770, 773, 775-778 (2008) [reviewed in our May 12, 2008 post] upheld a similar 90% fee reduction by use of equitable considerations including the unreasonableness of the requested fees.

     Because the Fourth District, Division One believed that Ketchum and PCLM mandated objective consideration of all hours expended, it believed the record was not clear that the lower court used a proper initial lodestar calculation before proceeding to apply the lodestar adjustment factors. It was especially disturbed by the fact that respondent tenant did not provide some particularized explanations—such as by attorney declarations—about why the efforts of counsel were inefficient or duplicative. (Slip Opn., at pp. 17-18, citing Premier Medical Mgt. Systems, Inc. v. CIGA, 163 Cal.App.4^th 550, 564 (2008) [generalized challenges to fee unreasonableness do not suffice].) The sole declaration offered by respondent’s counsel did not demonstrate specifically why landlord counsel’s time was inflated, duplicative, inefficient or unproductive. Once the fee proponent submits appropriate documents regarding the hours actually expended, the burden shifts to the fee opponent to prove otherwise: “Absent a particularized showing from respondents demonstrating how or why the documented hours spent by appellants’ counsel were inflated or duplicative, or counsel’s work on the matter inefficient or unproductive, we find little in the record to support an inference that the trial court analyzed these threshold reasonableness questions in calculating the initial lodestar figure.” (Slip Opn., at pp. 19-20.) Rather, two errors were made by the lower court: (1) it cut fees based on its subjective belief about the reasonable time which should have been spent by landlord; and (2) it may have used lodestar adjustment factors in initially determining the reasonable lodestar.

     Now, things really became interesting, because the Fourth District, Division One had to confront EnPalm, a 2-1 Second District decision affirming a 90% fee reduction. Justice O’Rourke determined that much of the EnPalm discussion was dicta, because the appellate challenges in that case were unsupported by the record. However, the 4/1 panel distinguished EnPalm “because the trial court there looked to the particular circumstances of the parties’ litigation conduct in that case and made an undisputed finding as to the necessity of counsel’s fees in the absence of supporting billing documentation.” (Slip Opn., at pp. 21-22.) Justice O’Rourke could not make a determination that the lower court in the case before it made such a clear finding that appellant’s conduct was unreasonable and, unlike EnPalm, the supporting fee documentation was adequate.

     BLOG OBSERVATIONS—Quin is an interesting case. One can certainly argue that it is in conflict with EnPalm, notwithstanding the dicta/distinguishing nuances taken by the Fourth District, Division One. However, the decision does highlight the importance of making very particularized challenges to “padding” with supporting evidence, because generalized objections may be superficially disregarded by reviewing courts—as Quin amply demonstrates.

Proofread Your Work: Submission of Subpar Written Papers Or Sloppy Work Product Can Lead To A Reduction In Fees

Transylvania Feral Court Slashes Attorney’s Fees Award Drastically For Spoor Work Product.

     Although we usually confine our posts to California-oriented cases, settlements, or fee issues, the following fee reduction ruling by a Philadelphia-based federal district judge was too good to pass up and also offers some sobering lessons to practitioners seeking fee awards when their written paperwork has not been proofread carefully enough.

     U.S. District Judge J. William Ditter Jr., in McKenna v. City of Philadelphia, had to rule on a fee request by a winning plaintiff in a civil rights case, which was governed by a mandatory fee shifting statute (42 U.S.C. sec. 1988).  Plaintiff won $150,000 in a jury trial, and plaintiff’s attorney sought more than $180,000 in attorney’s fees for the work of two attorneys. 

     Judge Ditter only awarded plaintiff $26,278.75 in fees for the work of the two attorneys.  Among other things, the district judge was flabbergasted by the typographical and other errors riddling the fee petition itself, with our personal favorite being the typo “mocong papers” (rather than “moving papers”).  He was equally unimpressed by the proposed order lodged by the winning attorneys, where they wrongly cut and pasted from a different document—forgetting to change the erroneous defendants’ names or the incorrect dollar figures from the prior template being used, leading the district judge to comment “[i]t is suggested that I sign an order which recites the wrong amount of McKenna’s judgment and orders thee strangers to this action to pay attorneys’ fees and costs.”

     The defense had asked Judge Ditter to reduce the fee award to about $19,500.  Ultimately, the district judge found the proper lodestar was about $105,000, but should be reduced by 75% for claims rejected by the jury and for the sloppy work product submitted to the court on prior occasions.  The reduction was justified, according to Judge Ditter, because of the questionable time records, lack of candor, slip-shod submissions, and failure to apportion out hours devoted to work for three other plaintiffs who had not been successful.  In a “postscript” paragraph worth quoting, Judge Ditter whimsically observed:  “A long time ago in a galaxy far, far away, each lawyer knew he and she could not nail any old slap-dash parchment to the church door and expect someone else to pay for it.  Most lawyers who practice in this court also know that.  They all should.”

     In an earlier case, a U.S. magistrate judge reduced the same lead attorney’s requested hourly rate in a civil rights fee award request from $300 per hour to $150 per hour based on his sloppy work. 

     Lead attorney did admit in an interview that he relied too heavily on spell-checking software and did not proofread enough.  These mistakes were costly, costly to the tune of almost $80,000 based on the lodestar that the district judge found to be reasonable in nature.  Hope u al had fun reding this blawg.  If you want some more information on the circumstances of the McKenna ruling, see the October 8, 2008 article by Shannon P. Duffy, “Typos and Errors Lead to Slashed Fees for Attorney,” available for reading on Law.Com. 

Two Winning Civil Rights Plaintiffs’ $421,357 Fee Award Affirmed On Appeal

Court of Appeal Sustains $336,800 Lodestar Plus 0.25 Multiplier.

     Two high school freshmen sued the Poway School District, a principal, and an assistant principal, alleging various federal and state civil rights violations arising out of failure to quell peer sexual orientation harassment of an anti-gay nature.  Following a jury trial, the two plaintiffs were awarded damages of $175,000 and $125,000, respectively.  Plaintiffs then filed a motion for attorney’s fees based on Code of Civil Procedure section 1021.5 and 42 U.S.C. section 1988.  The trial court granted the fee motion under section 1988, awarding fees of $421,357 and costs of $29,040.68.  Both sides appealed, including plaintiffs’ cross-appeal of the denial of fees to them under Code of Civil Procedure section 1021.5.

     In Donovan v  Poway  Unified School  District, Case No. D047199 (4th Dist., Div. 1 Oct. 10, 2008) (certified for publication), the Court of Appeal decided that Title IX’s elements govern peer sexual orientation harassment claims under Education Code section 220 and that money damages are available in a private enforcement action—affirming the compensatory award in plaintiffs’ favor.  It also affirmed the fee determination, deeming that plaintiffs were really challenging the award as too low given that either of the two statutes relied on by the trial court entitled them to recover attorney’s fees as prevailing parties. 

     Plaintiffs were awarded their requested lodestar of $336,800, based on 1,528 hours of legal work by their counsel (with the trial court only deducting 2 hours of work).    Plaintiffs requested a 1.7 multiplier (for a total award of $572,560), but the trial court believed that a .25 multiplier (producing the actual $421,357 award) was appropriate. 

     In a nice review of lodestar enhancement principles, Justice Nares—writing for the 3-0 panel—observed that trial courts have broad discretion to increase or decrease the lodestar figure.  (Ketchum v. Moses, 24 Cal.4th 1122, 1132 (2001); Nichols v. City of Taft, 155 Cal.App.4th 1233, 1240 (2007).)  The Court of Appeal found that the trial court had thoughtfully applied the Ketchum lodestar adjustment factors—novelty/difficulty of questions; skill displayed; preclusion of other employment; and contingent risk of the award—in coming to a 0.25 multiplier.  The merits and fee judgments were affirmed across the board.

     This case illustrates how difficult it can be to surmount the abuse of discretion standard where careful findings in support of a fee award are made by the court below.

Trial Court Correctly Denied A Multiplier In Sexual Harassment Case Against Ralphs Grocery

Court of Appeal Also Refuses to Create a New Rule Requiring A Statement of Decision in an Attorney’s Fee Proceeding.

            Plaintiffs in a sexual harassment contingency case against Ralphs Grocery won substantial compensatory and punitive damage awards through years of contentious litigation.  After over ten years of litigation, plaintiffs moved for an award of attorney’s fees based on a lodestar on merits work of $6,945,916 and on a lodestar on “fees on fees” work of $373,244.50, to be enhanced by a requested 2.0 multiplier on the merits lodestar component and a requested 1.5 multiplier on the fees on fees lodestar component.  Plaintiffs also asked that 2006 billing rates be used to calculate the fee award.  Ralphs argued that the hourly rates were unreasonable, the requested multipliers should be denied, and the lodestar amount reduced by $2,722,628.53. 

            The trial court awarded the 2006 fee rates requested by Plaintiffs even though the rates were not justified as being reasonable for the San Diego market.  The trial court calculated the lodestar amount at $6,759,249.77 for merits work and $279,933.38 for fees work, but declined to award any enhancements to the lodestar amounts.   The trial court went through the Ketchum v. Moses, 24 Cal.4^th 1122 (2001) multiplier factors, finding no enhancement was justified.  However, the lower court did award interest on the fees award from the date of the prior judgment.  The trial court declined plaintiffs’ request to issue a statement of decision.  Plaintiffs later obtained a $444,248.77 supplemental fee award.  Ralphs paid all the awarded fees and costs, and plaintiffs appealed the failure to award a multiplier and failure to issue a statement of decision.

            In Gober v. Ralphs Grocery Co. (Gober III), Case No. D050962 (4^th Dist., Div. 1 Sept. 30, 2008) (unpublished), the Fourth District, Division 1 initially observed that plaintiffs likely waived their challenge to the multiplier by accepting payment from Ralphs.  However, the appellate panel proceeded to consider the merits anyway.

            Plaintiffs argued that the trial court erred because the use of multipliers for contingent risk is mandated.  Appellate response:  “Simply put, Plaintiffs are wrong,” citing Ketchum, supra, 24 Cal.4^th at 1138; Nichols v. City of Taft, 155 Cal.App.4^th 1233, 1240-1241 (2007); Horsford v. Bd. of Trustees of Cal. State Univ., 132 Cal.App.4^th 359, 395 (2005); Greene v. Dillingham Constr., N.A., Inc., 101 Cal.App.4^th 418, 426-427 (2002).

            The Court of Appeal also found that the trial court did consider the contingent risk when it set the lodestar amounts.  That meant the question boiled down to whether the lower court abused its discretion in determining that the lodestar amounts adequately compensated counsel for contingent risk.  The appellate panel noted that any risk had effectively evaporated in August 2000, when the California Supreme Court denied review of the substantial awards, after which Plaintiffs only had limited success for future activity (after four of them declined consent to a punitive damage award equal to 15 times their compensatory recovery in July 2002).  The multiplier was properly refused based on other actions of the lower court—awarding requested higher billing rates that were not justified by proof and awarding interest on the fees award from the date of judgment. 

            Plaintiffs also requested the appellate panel to “require” trial courts to issue written statements of decision when making attorney’s fees awards.  The Court of Appeal refused this invitation, citing cases such as Ketchum, supra, 24 Cal.4^th at 1140 for the proposition that a statement of decision is not required in the fee hearing context.  “Since a statement of decision was not required, the trial court did not err by failing to issue one and we decline to create a new rule of law requiring a statement of decision when deciding attorney fee motions.”  (Slip Opn., at p. 10.)

Breaking News: Supreme Court Denies Review of Harman v. City and County of San Francisco

Denial of Writ of Certiorari Leaves Court of Appeal Opinion – and Fee Award -- Intact.

            On June 23, 2008, the Supreme Court of the United States denied the petition for writ of certiorari for San Francisco v Harman, Allen.  ---S.Ct.---, 2008 WL 1955817 (U.S. Cal.), 76 USLW 3611. 

            

            In Allen Harman v. City and County of San Francisco, 158 Cal.App.4^th 407 (2007) (First District, Division 1), the Court of Appeal held that the trial court could award over $1.1 million in fees in a civil rights case, where compensatory damages came to $30,300.  The opinion provides a thorough lodestar analysis in a civil rights case.  (Allen Harman, a white male airport employee, claimed that he had been subjected to illegal discrimination in his employment.) 

            The Court of Appeal opinion emphasizes the importance of a detailed record below, and of the trial judge’s exercise of discretion.  “In conclusion,” wrote Justice Swager, “we borrow from Justice Powell’s observations in his concurring opinion in Riverside: ‘On its face, the fee award seems unreasonable. But [we] find no basis for this Court to reject the findings made and approved by the [court] below.’ . . . . Although we may have exercised our discretion differently, we ‘cannot conclude that the detailed findings made by the [trial court], . . . were clearly erroneous, or that the [trial court] abused its discretion in making this fee award.’”

            Hat tip to Mr. Harman’s attorney, Paul J. Beard II of the Pacific Legal Foundation, for bringing this news to our attention.

DERIVATION OF THE USE OF “LODESTAR”—A STRANGE TERM STILL USED. BUT WITH A MURKY FUTURE.

Use of Lodestar Goes Back to 1973 Third Circuit Opinion, With Recent Second Circuit Opinion Actually Abandoning Its Use In Some Contexts.

        “Lodestar” is a much used term in fee proceedings, referring to the product of the attorney’s usual hourly rate and the number of hours expended on behalf of a client. This measure is used as the base for awarding fees in normal civil, class action, and numerous stautory fee-shifting cases.

        Because Marc Alexander used to be a history professor, he throws out a challenge to his contributor Mike Hensley—how did the term “lodestar” come to be used in the fee proceeding area? That sent Mike to work, and work he did to answer Marc’s question. In the process, he learned that some recent courts do not like the term in some contexts.

        At first, he found only dictionary definitions that, while interesting from a word derivation context, did not help on answering the specific inquiry. “Lodestar” goes back to middle English use, meaning “the star that guides.” Nice etymology, but hardly the answer that Marc was looking for. More work.

        After some more searching, Mike found a delightful exchange between United States Supreme Court Justices and Petitioner’s counsel in City of Burlington v. Dague, 505 U.S. 557 (1992). In that case, a justice asked Michael B. Clapp, Petitioner’s counsel, if he knew where the term “lodestar” came in the fee award context. Mr. Clapp responded that the term was coined by the Third Circuit Court of Appeals in the early development of fee calculation methodology, although Mr. Clapp did not identify the particular case. Otherwise, Mr. Clapp could not explain the derivation. One of the justices indicated that it struck him/her as a “strange kind of term.” This colloquy then transpired:

“Q: But it nevertheless was adopted by this Court, wasn’t it?”

“(Laughter.)

“A: The term was adopted by this Court.

“Q: Well, we do do strange things.”

        So, what was the case? Mike did some more research and determined that “lodestar” was first used by the Third Circuit way back in 1975, in the venerable decision of Lindy Bros. Builders, Inc. v. Am. Radiator & Stnd. Sanitary Corp., 487 F.2d 161 (3d Cir. 1973).

        Mike’s discovery was confirmed in 2006 by the Second Circuit in Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of Albany, 484 F.3d 162 (2d Cir. 2007) (where one of the panelists was Retired Associate Justice O’Connor sitting by designation). However, the Second Circuit also observed that the “lodestar” term has shifted in meaning over time such that it has become unhelpful, even indicating that the use of the term would be abandoned in the opinion. The federal appellate court confirmed that district courts should use a wide range of case-specific variables in setting a reasonable hourly rate, meaning that even out-of-district rates could be used for the appropriate case.

        Although some might be alarmed by the Arbor Hill abandonment of the term, we believe that “lodestar” is too firmly entrenched in the jurisprudence. We do not predict that it will dwindle in use given the frequency with which jurists have used the term since 1973