$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Fourth District, Division 3 ruled in Worley v. Storage USA, Inc., Case No. G041170 (4th Dist., Div. 3 Dec. 21, 2009) (unpublished), a 3-0 decision authored by Acting Presiding Justice Bedsworth.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.)
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