FEHA: $445,000 Fee Recovery Out Of Requested $1.5 Million Fee Request Affirmed On Appeal

Plaintiff Does Not Convince Appellate Court to Award More, With Fourth District, Division Commenting on Some “Cutting Edge” Substantive Questions.

     Although the next case could be viewed as just a simple abuse of discretion case, it actually discusses some interesting tensions between federal and state cases on the specificity of reasoning that must be given by a trial judge when ruling on an attorney’s fees request. Beyond that, it is fun reading, because the opinion is written by Presiding Justice Sills of the Fourth District, Division 3, who has a very distinctive writing style.

     Magana v. Charlie’s Foods, Inc., Case No. G041153 (4^th Dist., Div. 3 Apr. 8, 2010) (unpublished) involved a FEHA sexual harassment plaintiff who won an award of $1,800 in economic damages, $110,000 in pain and suffering, and $500,000 in punitive damages (with the punitive damages award reversed in a prior appeal). Before that previous appeal was decided, plaintiff’s counsel made a fee motion in which the attorneys requested $1.5 million in fees based on the work of 7 attorneys and 1,901.4 hours of total work (which factored in a requested multiplier of 2). The lower court actually awarded fees of $445,000 (still allowing every hour of work at a lower $234 hourly rate), reducing the lodestar request for the unreasonable fee request, the noncomplexity of the case, the fact only 4 depositions were taken in the case, no experts were utilized, duplication/overlap from using 7 attorneys, and the fact it was unnecessary to have 3 attorneys at trial. Plaintiff appealed, claiming the fee award was too low.

     The Court of Appeal affirmed.

     Plaintiff’s first argument—characterized as a “riff” (a musicological term for a repeated chord progression)

based on Horsford v. Bd. of Trustees of Calif. State University, 132 Cal.App.4^th 359 (2005)—was that counsel in a civil rights case is automatically entitled to a multiplier greater than one. After noting that Horsford was factually distinguishable because there was a need to get out-of-county lawyers charging higher hourly rates, Justice Sills observed that there was no issue of geographical disparity because the lawyers were from the Orange County area. Also, unlike Horsford, the lower court did not completely ignore time records, which led to a reversal in that other published decision. Beyond that, the Horsford appellate court (although a different panel) later repudiated any suggestions that a lower court was required to apply a fee multiplier in a civil rights case. (Nichols v. City of Taft, 155 Cal.App.4^th 1233, 1236, 1238 (2007).) Justice Sills even went on to observe, “The hint, of course, is that Horsford might have gotten a little bit sideways of the Supreme Court’s Ketchum [24 Cal.4^th at p. 1138] on the multiplier issue, at least as Horsford was arguably misread by the trial judge in Nichols.” (Slip Opn., p. 5.) There was no abuse of the discretion in failing to apply a multiplier, given that courts have upheld negative applications as low as .20, .15, and .35.

     In an interesting footnote related to this initial argument, our local appellate court noted that plaintiffs’ counsel would have loved to accept a .90 multiplier (a 10% fee “haircut”). Plaintiffs’ counsel argued that the lower court should just adopt a 10% hair cut—one that the Ninth Circuit in Moreno v. City of Sacramento, 534 F.3d 1106 (9^th Cir. 2008) [see our post of August 2, 2008] said could be made without any detailed discussion as to why—but the lower court’s dismissive response was equally entertaining: “Nice try, Mr. Matern.”

     The real issue devolved into whether the lower court’s 44% downward adjustment of the lodestar was an abuse of discretion, a deferential standard that is usually very hard to surmount. This centered on whether the lodestar requested hours were hours reasonably spent. Keep in mind, said Justice Sills, that a fee request unreasonably inflated is itself grounds to reduce the award or deny one altogether, citing our state supreme court’s recent decision in Chavez v. City of Los Angeles, 47 Cal.4^th 970, 991 (2010) [one of our Leading Cases]. Because the lower court concluded there was fee padding (too many lawyers, like cooks, in the kitchen), the record fully supported the substantial reduction. (See Donahue v. Donahue, 182 Cal.App.4^th 259, 272 (2010) [reviewed in our February 27, 2010 post].) [By the way, Justice Sills broke the fee padding into these components: (1) task padding—attorneys working on a task that only one attorney actually implemented; (2) attorney stacking—sending 3 attorneys to trial when 2 would have done; and (3) over-conferencing—too much conferencing between the 7 attorneys on the case.]

     Then, Justice Sills turned to an economic analysis of the award—“effective per hour compensation.” He started things out with a bang: “ . . . this can be a touchy subject. Law is a profession of egos. ‘Scorpions in a bottle’ was a phrase used to describe nine men with a traditional judicial temperament working in a great think tank in Washington—how much more does the phrase apply to trial lawyers who are accustomed to the mortal engines of trial procedure, the rude throats of opposing counsel, and the pride, pomp and circumstance of glorious litigation.” (Slip Opn., p. 10.) However, he went on to observe that an effective rate of $234 per hour for the 1,901.4 total hours of work ain’t all that bad, working out to about $400,000 per year assuming that an attorney bills a close-to-sane 1700 hours a year. Here is another classic quote: “(At an insane 1900 billed hours a year, the figure works out to almost $450,000 a year.) Even allowing 50 percent for overhead, $400,000 a year is, for most people, even attorneys, real money.” (Slip Opn., p. 11.)

     That brought the appellate court to the statement of decision issue, one that is different at the federal versus state judicial levels. In California, litigants are not entitled to a “line-by-line” evaluation of their billing sheets. (Gorman v. Tassajara Development Corp., 178 Cal.App.4^th 44, 101 (2009) [reviewed in our October 7, 2009 post].) Justice Sills provided the reason for this rule in this colorful passage: “Imposing a burden on the trial judge to articulate, line by line, why a fee request is too high is also inconsistent with the whole edifice of the abuse of discretion standard. Such a requirement converts a process that must necessarily entail the evaluation of the ‘gestalt’ of a case into a seemingly endless series of binary scrimmages to the general obfuscation of the big picture.” (Slip Opn., p. 11.) Because no statement of decision is required in this context, the trial court had no burden to articulate, line by line, what charges it thought were out of line.

     However, that still did not end things. Plaintiffs’ counsel brought a reconsideration motion based on the Ninth Circuit’s Moreno decision, arguing that Moreno required a “specific articulation” of the “court’s reasoning” where there is a “large” disparity between the lawyer’s request and the ultimate award. Justice Sills rejected this argument, again in very colorful fashion:

“We do not read Moreno to require a line-by-line analysis of an attorney fee request even of federal district courts, much less state trial courts. ‘Specific articulation’ does not mean ‘line by line.’ Of course, the case does arguably fasten on federal district courts in the Ninth Circuit a significant obligation of explanation for fee reductions in federal civil rights cases.

“Whether, in the present case, this trial court’s minute order and remarks at oral argument still might pass muster under the new Ninth Circuit Moreno standard is a matter we need not tackle. California trial judges might indeed do well, of course, to heed – to use the Ninth Circuit’s own self-descriptive phrase – the wisdom of the oracle at Pasadelphi [i.e., legal  theory of precedent was ‘now so riddled with lesions and encrustations we can never be quite sure which portions of our case law are holdings and which dicta, unless and until the Oracle at Pasadelphi tells us’]. Bacon  said writing makes an exact man, and a trial judge’s well-thought-out analysis of why he or she thinks a fee request to be too high can never harm the quality of that judge’s decision-making.” (Slip Opn., p. 13.)

     However, he noted that such “exertions” are beyond what is required of California trial judges, who are not even required to prepare statements of decisions in response to attorney’s fee motions. As long as the fee award can be “rationalized” under the abuse of discretion standard, it must be upheld, with the one at issue easily satisfying this test.