However, Not All Is Lost … Plaintiffs Only Get About 23% Of Requested Fee Amount, Inclusive Of 1.25 Multiplier.
We have to say that all readers interested in fee issues need to read Britto v. Zep, Inc., Case No. A141870 (1st Dist., Div. 5 Sept. 25, 2015) (unpublished)—it gives a great roadmap on reasonableness of fees analysis, how someone should attack defense efforts to impeach fee reasonableness, and the difference in standards for fee proceedings in state versus federal courts.
Briefly stated, two sales representatives—although losing class certification on employment claims—managed to obtain $48,000 in compensation, PAGA civil penalties of $275,000 payable to a state agency, and costs and fees by later court determination. (No one challenged fee entitlement by the two plaintiffs, based on Labor Code fee-shifting provisions and an accepted CCP § 998 offer which contained a fee-shifting provision.) They sought $5,031,480 in fees based on about a $1.67 million lodestar and 3 times positive multiplier. The lower court awarded $1,162,000, with was inclusive of a 1.25 multiplier—only about 23% of the total request.
Both sides appealed, the defense arguing that too many hours were approved at too high of an hourly rate and no multiplier should have been ordered, while plaintiffs argued a higher hourly rate was appropriate. Nothing changed on appeal, but we summarize the interesting discussion given that the fee proceeding was highly contested with prolix pleadings.
1. Plaintiffs’ Showing. They did provide detailed submissions of qualifications, hourly rates, and billings (some redacted), including submission of prior fee awards in local courts and National Law Journal surveys on fees.
2. Defense Attack. The defense did attack the hourly rates with expert testimony and analysis of why some fee components were suspect.
3. Plaintiffs’ Counterattack. Plaintiffs deposed the main defense fee expert, showing he was never qualified as an expert and had minimal experience in the area, leading the lower court to strike the defense report. Plaintiffs also found a declaration by one of the defense attorneys in another case supporting higher hourly rates than she testified to as being reasonable in this case. Both of these were good impeachment devices, to say the least. Plaintiffs also introduced SEC filings showing that the defense spent multi-millions in defending the case.
4. Unsuccessful Motions Versus Unsuccessful Claims Can Get Compensated. The appellate court reviewed case law showing that unsuccessful motions versus claims can be entitled to compensation; also, unsuccessful motions which lead to successful claims are worthy of compensation.
5. Redacted Time Entries Fine At State Level. Federal courts require much more detail in fee submissions, but—in contrast--redacted time entries or detailed attorney declarations summarizing time will suffice in California state courts.
6. Comparative Hourly Rates. Smaller firms should not necessarily be relegated to rates lower than big firm counterparts.
7. Multipliers. Taking a case on a contingent fee basis is a significant basis, combined with a delay in compensation, to justify a positive multiplier. Contrary to federal case law which is antagonistic to multipliers in certain legal areas, California state law is more liberal.
This case is good reading for any attorneys or fee experts when it comes to supporting and attacking fee petitions in California state courts.
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