Civil Rights Plaintiff Obtains Ninth Circuit Reversal Of 40% Diminishment of Attorney’s Fees Award

Chief Justice Kozinski Overturns Excessive Fee Haircut And Sets A Presumptive 10% Standard For Review of Fee Haircuts.

            Part of blogging is to recognize and “hat tip” posts by our colleagues.  Greg May, of the California Blog of Appeal, posted a very informative post on Moreno v. City of Sacramento, Case No. 06-15021 (9^th Cir. July 28, 2008), an opinion written by Chief Justice Alex Kozinski on behalf of a 3-0 panel.  We flesh out some other points from the opinion and attempt to answer Mr. May’s question on flat fee billing.

            In Moreno, a civil rights plaintiff won a $717,000 damages award against the City of Sacramento and several other defendants.  Plaintiff’s attorney sought an attorney’s fees award under 42 U.S.C. sec. 1988, the federal fee-shifting provision in the civil rights area.  She sought recovery of $704,858.07 for her herself and her staff—consisting of almost 2,000 hours of her time at a rate of  $300 per hour—after discounting about 9% of total hours spent on the case.  The district court slashed the request on these bases:  (1) 25-33% of time spent on research, appeal and trial preparation was unnecessary; (2) lead counsel’s time spent in summarizing depositions should be reduced to paralegal hourly rates; and (3) lead counsel’s hourly rate was excessive, reduced from $300 to $250 an hour.  The resulting award was only $428,053.00, 40% lower than the requested fees.

            Guess what?  Justice Kozinski, with his pragmatic élan, vacated the reduced fee award and remanded in line with the Court of Appeals’ decision.

            To us, Moreno is significant in requiring that a district court can impose no greater than a 10% reduction—characterized as a “haircut” by Justice Kozinski (careful, depending on the amount of hair)—in a discretionary exercise “without a more specific explanation.”  This means that there must be a clear articulation for a reduction above this 10% level—clearly, a significant bright line standard to be satisfied in the future.  Justice Kozinski was particularly persuaded by the lead attorney’s 9% voluntary reduction, which meant that over a third was chopped off when considering the remaining 25% in reductions. 

            What stands out in Moreno is the practical approach by the court, with an appellate panel not forgetting that disputes involve real life lawyering:

·       Duplication is to be expected when a case languishes on for years and “there is no reason why the lawyer should perform this necessary work for free”;

·       Lawyers in contingency fee cases are not likely to inflate their fees in obtaining a payoff that is uncertain and speculative in nature;

·       Time spent in “stop and starting” when trials are continued should not be presumptively labeled as duplicative in nature because “duplication always happens when a task is started, stopped and then taken up again later”;

·       Fees spent on appeal should not be discounted—especially for a win—even though they do not superficially appear commensurate with trial court tasks (because different skill sets are involved);

·       Undue reductions of investigation and interview time must be explained with specificity;

·       A fee cannot be based on speculative theories of attorney micromanagement, namely, how other firms might have staffed the case (the proverbial debate between using senior versus junior attorneys on certain tasks, which involve judgment calls about what to delegate and utilization of competent junior personnel);

·       Hourly rate reductions are suspect if based on a district court’s general policy for a long time span that does not take into account changed circumstances and the unique factual context of the case; and

·       A district court needs to monitor its reductions to avoid “double dipping” between its different categories of “haircuts.”

Here is the bottom line sentence from Moreno:  “If opposing counsel cannot come up with specific reasons for reducing the fee request that the district court finds persuasive, it should normally grant the award in full, or with no more than a haircut [i.e., 10%].”  (Id. at 9531.) 

            Greg May asked in his post on Moreno whether anyone had ever had a trial court simply adopt a flat fee arrangement as the appropriate award, rather than base an award on the lodestar.  We do not have a spot-on answer for Mr. May, but do observe that Mike Hensley, a long time ago, in All-West Design, Inc. v. Boozer, 183 Cal.App.3d 1212 (1986) came close to obtaining an apt response.  There, the appellate court affirmed a fee award of $15,000 to winning plaintiff’s counsel based on a one-third contingency fee arrangement, which was adopted by the trial court without any time records (even though counsel estimated he spent 200 hours at a $75 hourly rate, a “check” for the contingency fee award that was validated). 

            We would note that California state decisions do not require contemporaneously recorded time sheets for an award under section 1988, but strongly indicate they are preferred, citing to an older Tenth Circuit case in the process.  See, e.g., Best v. California Apprenticeship Council, 193 Cal.App.3d 1, 15 (1987).  Other cases are to the same effect outside of the section 1988 context.  See Wershba v. Apple Computer, Inc., 91 Cal.App.4^th 224, 255 (2001).   However, in some statutory fee contexts (such as inverse condemnation, where the public fisc is involved), fee awards must be based upon reasonable hours actually expended, not just contingency fee arrangements.  Andre v. City of West Sacramento, 92 Cal.App.4^th 532, 536-537 (2001). 

            However, Mr. May is a savvy litigator.  Mike Hensley recently had a Ventura County Superior Court judge note that, although fees are frequently based on contingency fee arrangements, reasonableness could only be assessed if the fee claimant provided lodestar/billing record information as a “check” on the contingency fee bargain reached between attorney and client. 

            (BLOG CROSS-OVER ISSUE—If you are a defendant prevailing below, it will almost be imperative that billing records are produced, because apportionment issues invariably arise.  There is case law indicating that defendants can be ordered to produce records to determine how much time spent was spent on particular tasks and that the trial court can reduce defense compensation due to a failure to maintain time records.  See, e.g., Anderson v. Young, 2008 WL 1727915 at *7 (6^th Dist. Apr. 15, 2008).)

Comments

[Greg May]

Thanks so much for responding to my query. I suspect that a court facing a flat fee arrangement will treat it as you have described the treatment of contingent fees.

[Mike & Marc]

Gideon Kanner raises a very nice question. Prof. Kanner is preeminent in the field of eminent domain and inverse condemnation. Therefore, Mike and Marc invite Prof. Kanner to comment further about the question that he has asked and enlighten us -- why do courts display such a concern for the "public fisc" in inverse condemnation cases when fee awards are at issue? And we invite our readers to chime in.

[Gideon Kanner]

I find it fascinating that when it comes to inverse condemnation the courts abruptly display a concern for the "public fisc." Isn't that fisc just as public in other cases brought against public bodies? So why the different approaches?