CALIFORNIA ATTORNEY'S FEES

Laffey Matrix/SLAPP: 569 East County Appellate Court Affirms SLAPP Fee Reduction After Rehearing

 

$152,529.95 Fee Request Slashed Down To $30,752.86 Through Actual Fee Order.

    On May 20, 2016 and June 20, 2016, we posted on a case which was later accepted for rehearing by the same appellate panel.  The opinion upon rehearing is now out in 569 East County Blvd. LLC v. Backcountry Against The Drop, Inc., Case No. D068538 (4th Dist., Div. 1 Dec. 5, 2016) (published; rehearing opinion).

    The result did not change upon rehearing.

    Basically, a SLAPP winner decided to request $152,529.95 in mandatory fees, subject only to the fees being “reasonable”—which was the rub in this matter.  This was based on a $750 hourly rate for a senior attorney not experienced on SLAPP matters and on a $350 hourly rate for a fifth year associate.  The lower court found that $275 per hour was more like it for a San Diego-venued case, especially where a seasoned attorney for another party in the case had charged this very same rate.  The trial judge also determined the work was excessive, awarding only $30,752.86 in fees and prompting an appeal by the losing party.

    The appellate court affirmed.  Because this was governed under a deferential abuse of discretion review standard, the lower court had to resolve conflicting testimony about hourly rates and had discretion to pick the appropriate one, not having to accept hourly rates listed in the Laffey Matrix.  (Syers Properties III, Inc. v. Rankin, 226 Cal.App.4th 691, 702 (2014).)  The reviewing court also endorsed these common sense principles in the fee petition area:  (1) lower rates should be utilized by seasoned attorneys doing tasks normally delegated to younger attorneys; and (2) blended hourly rates are acceptable in the right context.  The trial judge did not err in concluding that the fee request was inflated, reducing for that factor also.

Lodestar/Laffey Matrix/Substantiation Of Reasonableness Of Fees: Syers Properties Opinion Now Certified For Publication

 

Reviewed in Our May 6, 2014 Post.

     In our May 6, 2014 post, we reviewed Syers Properties v. Rankin, Case No. A137610 (1^st Dist., Div. 2 May 5, 2014 issued unpublished), which held among other things that: (1) detailed categorical breakout of time spent can substantiate a fee petition in California state courts; (2) the reasonable market hourly rate, not billed rate, is the true lodestar index; and (3) a trial court can, but is not required to, follow the Laffey Matrix, regionally adjusted or otherwise. We can now report that this opinion was certified for publication on May 27, 2014.

Lodestar/Laffey Matrix/Substantiation Of Reasonableness Of Fees: $843,245.27 Civil Code Section 1717 Fee Request/Award Affirmed On Appeal

 

Successful Defendants Substantiated Hours and Hourly Rate Very Well In This One.

     Syers Properties III, Inc. v. Rankin, Case No. A137610 (1^st Dist., Div. 2 May 5, 2014) (unpublished) is a case where a $843,245.27 defense fee award under Civil Code section 1717 was challenged on narrow grounds—with plaintiff disputing the reasonableness of hours claimed and the hourly rate being requested. Because these determinations are determined under a deferential abuse of discretion standard, plaintiff did not prevail on appeal.

     As far as reasonableness of hours claimed, the defense provided detailed declarations by counsel showing (1) attorney’s qualifications and experience, (2) the stages or motions in the litigation in which counsel had been primarily engaged, and (3) the hours billed to defendants within several specific litigation categories, with the defense providing a time bar graph for each category of work performed. Because the lower court could credit the defense declarations of counsel as to work performed, nothing more was required. In fact, the categorical breakout of time was found sufficient, based on a district court decision favoring this approach. (In re HPL Technologies, Inc. Sec. Litig., 366 F. Supp.2d 912, 920 (N.D. Cal. 2005) [categorical approach is “an especially helpful compromise between reporting hours in the aggregate (which is easily to review, but lacks informative detail) and generating a complete line-by-line billing report (which offers great detail, but tends to obscure the forest for the trees)”].)

     So, what about the hourly rate being requested by prevailing defense counsel? The defense relied on counsel declarations about reasonableness of rate, bolstered by the Laffey Matrix rates adjusted to the San Francisco area by using locality pay tables. Plaintiff, however, argued that the rates were exorbitant because insurance defense firms charged much below the prevailing market rates so that they were stuck with these lower hourly rates. On review, the appellate court found that the real inquiry was looking to hourly rates compensating for the difficulty or complexity of the matter in the court venue at issue. The standard is not tied to the actual rate billed, but the reasonable market rate. (Nemecek & Cole v. Horn, 208 Cal.App.4^th 641, 652 (2012).) Defense counsel did rely on a regionally-adjusted Laffey Matrix, which the appellate court dealt with this way: “. . . the trial court was neither required to follow the Laffey Matrix nor to adopt the rate defense counsel opined was the ‘market rate’ for the services of this type.” However, the lower court did credit the Laffey Matrix (adjusted or otherwise), so be it. However, in further reasoning, the reviewing court did indicate the lower court has considerable discretion to determine the proper market for work being charged, whether insurance defense litigation versus general civil litigation. Based on this “market” definition, the hourly rate could be limited based on the demarcation. “Again, we emphasize that such determinations lie within the broad discretion of the trial court.” (Slip Opn., p. 12.) Fee award affirmed—no abuse of discretion.

     For a discussion of mediation confidentiality in the companion case, Syers Properties III, Inc. v. Rankin, Case No. A136018, see the May 6, 2014 blawg post on California Mediation and Arbitration.

Laffey Matrix: DKN Holdings Decision Just Published

 

U.S. Attorney’s Office Laffey Matrix Not Binding On State Courts In Determining Hourly Rates.

     On April 9, 2014, we posted on DKN Holdings, LLC v. Faerler, a Fourth District, Division Two unpublished decision finding that the U.S. Attorney’s Office Laffey Matrix (developed for the D.C. area) was not binding on state courts when determining reasonable hourly rates for state court practitioners in fee contests. We can now report that this decision was published on April 25, 2014, keeping in mind that the 4/2 DCA is usually the most conservative intermediate appellate court when it comes to publication.

Laffey Matrix: Riverside Superior Courts Laugh Off Laffey Matrix On Hourly Rates

Number of Years of Experience But One Factor.

     The winner of a commercial lease dispute with a fees clause was awarded $54,817.50 in fees, about 30% less than requested. On appeal, the loser argued that the trial court had to rely on the U.S. Attorney’s Office’s Laffey Matrix information in fixing fees. The appellate court in DKN Holdings LLC v. Faerber, Case No. E056294 (4^th Dist., Div. 2 Apr. 9, 2014) (unpublished) disagreed, holding it not was not determinative and factors other than years of experience can be considered when calculating fee awards.

Laffey Matrix: Both U.S. Attorney’s Office And Adjusted Matrices Are Out

 

     Although there is a raging debate on which one to use, both the U.S. Attorney’s Office version and the Adjusted version of the Laffey Matrix are out for 2013-2014. (If you go to our category “Laffey Matrix,” you will get posts on the debate.) However, here is what the recent matrices show for hourly rates, based on years of attorney experience or classification as a paralegal/law clerks for the June 1, 2013 – May 31, 2014 time frame:

Classification U.S. Attorney’s Matrix Adjusted Matrix

Attorney – 20+ years of experience $510 $771

Attorney – 11-19 years of experience $450 $640

Attorney – 8-10 years of experience $360 $567

Attorney – 4-7 years of experience $295 $393

Attorney – 1-3 years of experience $250 $320

Paralegal/Law clerk $145 $175

     The Matrix revealed.

Laffey Matrix: Third Circuit, In Late 2013, Approves Updated Laffey Matrix Use By District Judge

 

     For those of you following our hourly rate analysis in the fee substantiation area, we have posted in the past on the use of the Laffey Matrix and related permutations in our December 31, 2010 post. We now have an update for you from the Third Circuit Court of Appeals (federal level).

     In Interfaith Community Organization v. Honeywell International Inc., 2013 WL 3379319 (3d Cir. July 8, 2013), the Third Circuit affirmed a district judge’s decision to use the adjusted/updated Laffey Matrix pegged to the CPI rather than the unadulterated Laffey Matrix. In doing so, the federal appeals court bolstered its affirmance based on the district court reasoning in Salazar v. District of Columbia, 123 F. Supp.2d 8, 15 (D.D.C. 2011).

     However, a caution is in order here by us bloggers. The use of these matrices is factually intensive, so that they only have value depending on the forum, venue, and circumstances involved—really, a critical analysis or “check” on other information, except maybe in the D.C. area (at best).

Reasonableness Of Fees: Virginia-Based Courts Offer Laffey Matrix Adjustment Alternative And Tweaks To Calculating Fees Based On Degree Of Success

 

Given California’s More Liberal Approaches, These Alternatives Might Offer Guidance.

     California endows trial judges with quite a bit of discretion when fixing the reasonableness of fees in a fee petition proceeding. Hourly rates can be pegged based on attorney declarations, surveys, matrices, and the like. Lodestar adjustments, upward or downward, are based on multiple factors, including a litigant’s degree of success.

     Virginia federal courts have now offered some tweaks to approaches utilized by federal courts in determining reasonableness in fees, keeping in mind they are only instructive because California does not follow federal guidelines on some issues. (Example: most California state courts do not endorse Perdue v. Kenny A., 130 S.Ct. 1662 (2010), a U.S. Supreme Court decision not favoring positive multipliers in civil rights cases.)

     In Grissom v. The Mills Corp., 549 F.3d 319, 323 (4th Cir. 2008), a fee petitioner attempted to prove the correctl hourly rate primarily through lead counsel’s declaration and the Laffey Matrix development of hourly rates for lawyers practicing in Washington, D.C. The Fourth Circuit, although finding the Matrix a “useful” starting point, found it did not necessarily reflect hourly rates for attorneys practicing in Reston, VA. Instead, it developed its own table of hourly rates based on what lead counsel and other attorneys had been awarded previously, adjusted by inflation in fees based on inflation rates obtained from Inflation.com. It also endorsed a fixed-percentage approach as far as reducing fees downward based on plaintiff’s degree of success (in situations where a litigant was successful and unsuccessful on mixed claims).

     About four years later, Bradford v. HSBC Mortg. Corp., 859 F.Supp.2d 783 (E.D.Va. 2012) made its own “tweaks” to Grissom, besides rejecting the idea that the relevant attorney community for a fee award was limited to the practice area involved in the particular case (not accepting the notion that fees had to be based on hourly rates for attorneys specially practicing in the TILA area). Based on Perdue’s expression that a lodestar approach has to be objectively based if possible, Bradford found that the Grissom approach had to be “adapted” in two respects. First, district courts should try to actually calculate the hours spent on successful and unsuccessful fee tasks for apportionment or, if this is impossible based on the state of billing records, then calculate a fixed percentage downward adjustment based on the plaintiff’s degree of success. Second, after that, district courts should make multiplier adjustments but exclude any enhancement factors used in calculating the lodestar in the first place. (Id. at pp. 790-791.)

     Although not binding, these cases may provide ways in which to offer proof in support of hourly rates or lodestar settings, depending on the circumstances.

Substantiation Of Fees: Laffey, Adjusted Laffey Matrix, Or Hybrid Approach For Determining Reasonable Hourly Lodestar Rate--Part 2 of 2

Adjusted Laffey Matrix Methodology and U.S. District Judge Walker’s Approach.

     In our December 28, 2010 post, we discussed the Laffey Matrix, which has gained acceptance by some judges in determining reasonable hourly rates for attorneys when it comes to presentation of proof in fees petitions. We now give you an introduction to alternative methodologies in the form of the the Adjusted Laffey Matrix and U.S. District Judge Vaughn Walker’s own adjustment approach using the Laffey Matrix.

     Adjusted Laffey Matrix. Sometimes known as the Updated or Alternative Laffey Matrix, this one is an adjusted methodology prominently advocated by economist Dr. Michael Kavanaugh from Batavia, Ohio. This Adjusted Matrix has two significant differences from the ordinary Laffey Matrix: (1) it is geared to the national Consumer Price Index specific to legal services; and (2) it uses 1988-1989 (rather than 1981-1982) rates for the Washington D.C. Metropolitan Area developed in response to the remand in Save Our Cumberland Mountains v. Hodel, 857 F.2d 1516 (D.C. Cir. 1988) (en banc). Several courts have argued that the Adjusted Matrix yields better results and is more accurate because (1) applying the CPI legal services component inflation rate effectively captures more relevant data (being more reliable than general CPI increases relating to non-legal services or goods), and/or (2) the use of 1988-1989 base hourly rates is better than utilizing older base rates. (See, e.g., Salazar v. District of Columbia, 123 F. Supp.2d 8, 14-15 (D.D.C. 2000) [District Judge Kessler] (agreeing with point 1 above); Interfaith Community Organization v. Honeywell International, Inc., 426 F.3d 694 (3d Cir. 2005) (finding Salazar persuasive).)

     Courts Declining to Use Adjusted Laffey Matrix. Particularly for the D.C. area, other courts have rejected use of the Adjusted Laffey Matrix, although there certainly is a split among the D.C. district judges because others do rely on it over the original Laffey Matrix preferred by other judges. (See, e.g., Woodland v. Viacom, Inc., 255 F.R.D. 278, 280 n. 1 (D.D.C. 2008) [District Magistrate Judge Facciola] (listing D.D.C. cases where variant approaches are taken with respect to use of the Adjusted Matrix]; see also Miller v. Holzmann, 575 F.Supp. 2, 17-18 (D.D.C. 2008) [District Judge Lamberth] (arguing that Dr. Kavanaugh’s use of a national CPI index is not geographically specific enough when it comes to calculating D.C. hourly rates).) Many of the courts disagreeing with use of the Adjusted Laffey Matrix seem to congregate in the D.C. area and have a problem with its use for purposes of calculating D.C. hourly rates.

     District Judge Walker’s Approach. U.S. District Judge Vaughn Walker of the Northern District of California uses the original Laffey Matrix but then adjusts its D.C.-based rates for the specific locality of the lawyers seeking fees through use of local-oriented CPI indices. Most of his uses of this approach have occurred in securities class action contests. (See, e.g., In re HPL Technologies, Inc. Sec. Litig., 366 F. Supp.2d 912 (N.D. Cal. 2005); In re Chiron Corp. Sec. Litig., 2007 WL 4249902 (N.D. Cal. Nov. 30, 2007); In re Portal Software, Inc. Sec. Litig., 2007 WL 4171201 (N.D. Cal. 2007) [class actions]; accord, Martin v. FedEx Ground Package System, Inc., 2008 WL 5478576 (N.D. Cal. 2008); Garnes v. Harnhardt, 2006 WL 249522 (N.D. Cal. 2006).) For an article that criticizes using the Laffey Matrix in the class action context versus the actual billing rates of attorneys in the relevant community, see W.B. Rubenstein, Reasonable Rates: Time To Reload The (Laffey) Matrix, CLASS ACTION  ATTORNEY FEE DIGEST 47-51 (Feb. 2008).

     So, there you have the pros and cons of the Laffey Matrix, Adjusted Laffey Matrix, and U.S. District Judge Walker’s modified Laffey Matrix approach, with courts and experts split on which approach is superior depending on the circumstances and requested hourly fees in a given case.

So make up your mind . . .

Substantiation Of Fees: Laffey Matrix Versus Adjusted Laffey Matrix . . . Or Hybrid Of A Matrix--Part 1 of 2

 

Hourly Market Rate Analysis Frequently Involves Use Of the Laffey Matrix, Although Some Courts Do Not Like It.

     When one is petitioning for fees or contesting a petition for fees, it is usually incumbent to utilize the lodestar approach by determining the prevailing hourly market attorney rates in the relevant community (most often, the county or district of the litigation venue in question). Various methods are used by fee proponents or contestants, such as a matrix, billing surveys (such as those reported by the National Survey Center, the National Journal, and Legal Times), attorney declarations, and evidence of recent court awards of fees to attorneys with comparable qualifications handling similar cases. (Salazar v. District of Columbia, 123 F. Supp.2d 8, 14 (D.D.C. 2000).) Some of the common matrices used to establish reasonable hourly attorney rates are the Laffey Matrix or the Adjusted Laffey Matrix (or hybrids of one or the other). We now provide a discussion about how courts treat use of these matrices, whether accepting them, criticizing them, rejecting them outright, or adjusting them further.

     Laffey Matrix. The Laffey matrix is an inflation-adjusted grid of hourly rates for lawyers of varying levels of experience in Washington D.C. used for many years by the U.S. Attorney’s Office for determining fees in litigation claims (especially civil rights litigation). This matrix was approved originally in Laffey v. Northwest Airlines, Inc., 572 F. Supp. 354, 371-375 (D.D.C. 1983), aff’d in part, rev’d in part on other grounds, 746 F.2d 4 (D.C.Cir. 1984). The matrix starts with attorney’s fees rates previously adopted by the courts as reasonably reflecting the local market (1982 hourly rates for the Washington D.C. metropolitan areas approved by the D.C. Cir. in 1983) and then updates them by applying the change in the Metropolitan Washington area Consumer Price Index (CPI) to those 1982 rates. The U.S. Attorney in the DOJ continues to use a version of the Laffey matrix. It has been cited as good evidence of market hourly rates for attorneys practicing in the federal employment arbitration or gender discrimination areas of law. (See, e.g., Save Our Cumberland Mountains v. Hodel, 857 F.3d 1516, 1525 (D.C.Cir. 1988) (en banc) [federal employment arbitration]; Woodland v. Viacom, Inc., 255 F.R.D. 278, 280 (D.D.C. 2008) (approving Laffey matrix rates in gender discrimination action].)

     Circuit Courts Not Condoning Use of Laffey Matrix. The Fourth Circuit has expressly disapproved reliance on the Laffey matrix, requiring instead that fee awards be based on prevailing market rates established by other forms of evidence (such as the proof listed in paragraph 1 above). (Robinson v. Equifax Information Services, LLC, 560 F.3d 235, 245 (4th Cir. 2009).) The Ninth Circuit recently questioned the reliability of this matrix and sustained a district judge’s refusal to use it, because (1) acceptance of the matrix for the D.C. area did not mean it is a sound basis for determining rates elsewhere (especially a legal market 3,000 miles away), and (2) it was questionable whether the matrix was a reliable measure of rates even in Alexandria, Virginia, located just across the river from Washington, D.C. (See Prison Legal News v. Schwarzenegger, 608 F.3d 446, 454 (9th Cir. 2010).)

     In our Part 2 post in this area, we will explore criticisms of the Laffey Matrix, judicial sentiment on the Adjusted Laffey Matrix, and U.S. District Judge Walker’s own twist on using the Laffey Matrix.

     For our previous posts on the Laffey Matrix, see our June 10, 2010 post and our March 5, 2009 post on the subject.