Defense Prior Efforts To Settle Contained Unreasonable Extraneous Terms And Case Was Hard Fought, Justifying A $575 Hourly Lodestar Rate.
When you try to settle a case, make sure you do not ask for extraneous extractions of an unreasonable or unallowable nature. The failure to do so doomed the defense efforts to challenge the post-settlement fee request of a successful lemon law plaintiff based on prior efforts to settle. Plus, this case establishes that $575 per hour is a reasonable rate for lemon law practitioners in a San Diego state court venue.
Plaintiff in Goglin v. BMW of North America, Inc., Case No. D068442 (4th Dist., Div. 1 Oct. 21, 2016) (published) bought a used BMW for $45,762 but had to sue based on BMW’s alleged failure to disclose collision damage on the used vehicle. BMW did make some offers to settle, but all of them contained Civil Code section 1542 waivers (including a provision that she could not be a class representative) as well as confidentiality/nondisparagement clauses. She finally was able to reach a settlement with a mediator’s assistance, with BMW agreeing to pay $75,000 (without a lot of the other extraneous terms) and allowing the lower court to determine reasonable attorney’s fees under the Song-Beverly Act fee-shifting provision, Civ. Code, § 1794(d), via notice motion later. Plaintiff moved to recoup $200,249.19 in fees and costs for litigation which had produced earlier discovery sanctions of $7,295 against BMW; her counsel sought a lodestar hourly rate of $575-625, with BMW countering that the fees were unreasonable based on its earlier efforts to settle, the relative non-complexity of the matter, and BMW counsel’s charging only $300 per hour. The lower court stuck with the $575 hourly rate, awarding plaintiff fees of $180,262.50 and costs of $4,951.69, or a total of $185,224.19.
None of the challenges by BMW resonated to victory on appeal.
On the first argument that BMW made earlier reasonable efforts to settle, the appellate court rejected this contention because it did insist on extraneous terms which were not necessarily reasonable—the 1542 waiver and confidentiality clauses, even though they were dropped from the ultimate compromise brokered by the mediator.
With respect to the reasonableness of the fee award, the litigation was hard fought, BMW never made it easy on Plaintiff, and BMW admitted that its $300 hourly rate was below the market for most San Diego-venued cases.
BLOG OBSERVATION—Just to show you how disproportional fees and costs can be in statutory fee-shifting situation, BMV was out over $185,000 in fees and costs in tandem with the $75,000 settlement price all over a used vehicle with a $45,762 sales price.