First District Affirms Trial Court Fee Award Reflecting the Risks of a Contingency Case.
Mr. Leviant, the CEO of The Complex Litigator blog, recently welcomed us to the blogosphere and asked if we would be commenting on class action fee awards. “Yes,” is the answer, and this is our first specific post in the area—with more to come.
In Amaral v. Cintas Corp. No. 2, Case Nos. A114510 and A114981 (1st Dist., Div. 3 June 11, 2008) (certified for publication), defendant Cintas was sued by plaintiff, representing a class of employees who worked in the company’s stockroom or laundry production facilities, for violations of the City of Hayward Living Wage Ordinance (LWO), various Labor Code violations relating to unpaid wages and unpaid benefits, and Business and Professions Code section 17200. The trial judge found liability on summary judgment/adjudication cross-motions and eventually awarded plaintiff class $790,489 in unpaid hourly wages, $14,254 in unpaid vacation benefits, and $258,900 in Labor Code penalties. Later, plaintiffs moved to recover costs and attorney’s fees under Code of Civil Procedure section 1021.5 (the public interest/private attorney general fee statute) and the fee-shifting provisions of the Labor Code and the LWO. The trial judge awarded plaintiffs fees of $1,199,500 (applying a 1.65 multiplier to a $727,000 lodestar) plus $60,611 for work on the fee motion itself.
Cintas filed a notice of appeal both from the judgment and the fee award. (BLOG OBSERVATION—As noted in recent posts of June 6 and 7, 2008, Cintas did it right—it appealed the fee order separately, with the Court of Appeal consolidating the two appeals so they could be considered together.)
After affirming the underlying judgment, the First District panel (in a 3-0 published decision authored by Presiding Justice McGuiness) also sustained the fee award.
Citing Ketchum v. Moses, 24 Cal.4th 1122, 1131-1134 (2001) (one of our “Leading Cases”), the Court of Appeal observed that a trial court has discretion to adjust the lodestar amount to factor into account unique circumstances of the case. In doing so, the lower court is determining, by hindsight, whether the litigation involved a contingency risk or required extraordinary skill in order to justify an increase to the “unadorned lodestar.” Plaintiff asked for a multiplier of 2.0, but the appellate court agreed that the trial court was within its discretion to award a smaller 1.65 multiplier. The trial court did award plaintiffs’ counsel for their skill in litigating a case with first impression issues and for prosecuting the case on a contingency basis.
Cintas argued that the trial judge unduly focused on the “contingent nature” of the case, without gauging the comparative number of total hours billed by the class action firm or the sacrificed opportunities made by the winning firm. Too narrow of a focus, Justice McGuiness penned. After all, a contingent case means that the firm might not have received any compensation, forget sacrificing other opportunities. In these circumstances (a winner take all case), “an enhanced fee award is necessary to compensate attorneys for taking such risks ….” (Slip Opn., at p. 60.) Beyond that, however, the appellate court noted that the class action firm—a small firm at that—spent substantial time well in excess of 2,100 hours on the case.
On a related note, the appellate court affirmed a determination that plaintiffs were not entitled to recovery of over $40,000 in expert witness fees, noting that this recovery was foreclosed recently in Olson v. Automobile Club of So. Cal>., 42 Cal.4th 1142, 1151 (2008) [experts fees not recoverable by the prevailing party in a private attorney general action because Code of Civil Procedure section 1021.5 only speaks to attorney’s fees rather than expert fees].
For a review of the merits of the underlying judgment, see The Complex Litigator's June 11, 2008 post.
(A TASTE OF THINGS TO COME—Over $60,000 in fees were awarded for counsel’s work on the fee motion papers. This was proper, as we explore in a future post.)
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