Case Involved San Francisco Penalty Refunds Of $1.7 Million Which Were Affirmed In A Prior Published Opinion.
Plaintiffs in Gajanan, Inc. v. City & County of San Francisco, Case No. A168328 (1st Dist., Div. 2 Apr. 10, 2025) (unpublished) sued defendants to obtain tax penalty refunds in a case under San Francisco regulations, eventually winning tax refunds of $1.7 million which were affirmed in a prior published opinion. San Francisco later passed regulation amendments which were beneficial after the adjudication of plaintiffs’ lawsuit. Plaintiffs then moved to recover $7,051,644 ($4,684,931 lodestar with some upper adjustments and discounts, and an ask for a 1.4 multiplier based on the contingency risk taken on by plaintiffs’ attorneys). City argued the fee award should be $2.1 million. After some very contested hearings involving a lengthy, detailed fee submission, the lower court awarded plaintiffs $5,265,265.20 under the private attorney general statute, CCP § 1021.5.
The 1/2 DCA affirmed the award. It agreed that plaintiffs vindicated an important right for Bay Area taxpayers in obtaining a broader interpretation of the standard for tax penalty waivers, with publication of the prior appellate opinion being probative on the issue. Also, the panel concurred with the lower court’s assessment that plaintiffs’ suit was a catalyst for the subsequent beneficial regulatory amendments. Private enforcement was necessary given the narrower stance taken by defendants on the penalty issue, and the actual costs of the litigation showed that the costs/benefit analysis favored plaintiffs. The interest of justice factor under section 1021.5 did not support paying fees out of plaintiffs’ recovery.
The attacks on the amount of the award were rejected also. Although out-of-state Denver attorneys did less than 5% of the work on an overflow basis, this was not a disqualifying factor for those hours because plaintiffs had a California lead attorney supervising the case and actively involved in the matter. The defense’s complaint about deposition preparation and 3 attorneys being at a deposition was found unpersuasive under the circumstances of the case, where City took 21 depositions and plaintiffs took 6.
Finally, 812 hours for “fees on fees” work was found warranted given the detailed nature of the fee submissions and the need to reply/file supplemental papers in response to the City’s opposition.
BLOG BONUS COVERAGE: City asked that plaintiffs’ supplemental declarations be stricken, a request denied by the lower court. The appellate court reminded practitioners that they should ask for a continuance and permission to respond to supplemental declarations rather than just ask that those declarations be stricken—otherwise, waiver may come into play.
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