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.
In Winterrowd v. American Gen. Annuity Ins. Co., Case Nos. 07-56541 & 07-56711 (9th Cir. Feb. 17, 2009) (published), plaintiffs sued for breach of a severance contract, and ran into defendants asserting ERISA preemption defenses. After nearly four years of litigation, the parties reached a settlement by which plaintiffs obtained $288,240.56 and the attorney’s fees issues were left to resolution by the district judge (with appellate rights preserved in case each side did not like the fees ruling). Plaintiffs filed for attorney’s fees recovery under California Labor Code section 218.5, which has a mandatory fee-shifting entitlement provision. The district judge denied awarding fees for work in the district court to an Oregon attorney (father) who was assisting a California attorney (son) in prosecuting the case on plaintiffs’ behalf. The reason: father was not licensed to practice in California and was not admitted pro hac vice in the federal case, contravening California State Bar admission rules. Father had sought recoupment of 140 hours of work at $550 per hour, or $77,000 if our math is correct. (The district judge did award father appellate attorney’s fees from prior proceedings because he was admitted to the Ninth Circuit bar.) Son was awarded fees. Everyone appealed.
So, who won this state versus federal tussle on fees …. drum roll, please, and the winner is: out-of-state attorney this round of the proceedings.
The majority, in a 2-1 decision authored by Circuit Judge Smith, found that father Oregon attorney was entitled to fees in litigating a case in California federal district court even though (1) he was not a California bar member, (2) he did physically appear before the Central District, (3) he did not sign pleadings in the district court case, (4) he had minimal contact with clients or opposing counsel in the case, (5) he was “supervised” by his California attorney (son), and (6) he was not admitted pro hac vice in the district court case (although there was no evidence that he would have not have been routinely admitted).
The majority distinguished the district court’s reliance on Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court, 17 Cal.4th 119, 15-136 (1998), where fees were denied to New York attorneys because they only practiced law in California and none of them were licensed in California. The distinctions: (1) the case was actively prosecuted by a California attorney; (2) it is likely the Oregon attorney would have been admitted pro hac vice had he applied; and (3) Oregon attorney never “appeared” before the California district court, but rendered merely litigation support for his son in California. (See, e.g., Spanos v. Skouras, 364 F.2d 161, 168 (2d Cir. 1966); Dietrich Corp. v. King Resources Co., 596 F.2d 422, 426 (10th Cir. 1979).)
The majority decision also determined that $ 300 per hour was a reasonable lodestar for son, based on expert declarations showing that a reasonable range for this type of case was $200-$435.
Defendants also challenged plaintiffs’ fee substantiation. However, more liberal state law rules prevailed. After noting that some federal courts are more rigorous in requiring contemporaneous, detailed time records, the majority acknowledged that California state law was more lax in not requiring such precise records. (See Martino v. Denevi, 182 Cal.App.3d 553, 558 (1986).)
Circuit Judge Rymer, while concurring in most of the determinations, strenuously dissented on the fees ruling. She found that Birbrower controlled, such that father needed to be a California Bar member or a pro hac vice admittee to be entitled to a fee recovery. Judge Rymer did not believe father’s activities were peripheral or merely “consultant” in nature because, after all, he was seeking compensation for 140 hours at $550 per hour. It was sheer conjecture, the dissent observed, that he would have been admitted pro hac vice. Rather, Judge Rymer found that California admission rules (both state and federal) were important, including the necessity to comply with pro hac vice rules—with the majority decision effectively “undermin[ing] this well-considered structure.”
BLOG UNDERVIEW #1—The majority indicated that its decision accommodated the modern practice of law, where lawyers interact with other lawyers via teleconferences and group emails in other states. The majority said: “Current law does not compel us to be judicial Luddites, and we may properly accommodate many of the realities of modern law practice, while still securing to federal courts the ability to control and discipline those who practice before them.” In dissent, Judge Rymer countered that the case was not about accommodating realities of modern day legal practice, but instead focused on licensing requirements imposed by the California state legislature. Quite an opinion, with an interesting split on both sides of an interesting issue.
BLOG UNDERVIEW #2—O.K., readers, who knows about the Luddites? Well, here is the answer. Luddites happened to be a social movement of British textile artisans in the early 19th century who protested the advent of new mechanical looms which would have left them without work. The term is now used, derisively we might say, to describe anyone opposed to technological progress or change. There you go on the historical origins of an interesting word used by the majority judges in this case.
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