CALIFORNIA ATTORNEY'S FEES

Lodestar, Prevailing Party: Reversal Of Judgment For Cross-Complainant And Increased Recovery For Plaintiffs Made Plaintiffs The Prevailing Party So A Fee Order Remand Was Necessary

Given Some Reductions For The Cross-Complaint And Other Issues, Fee Award Had To Be Reassessed—Initial Award Was $388,541, A 50% Reduction From The Original Request.

            In Perera v. Moine, Case No. B319315 (2d Dist., Div. 7 Sept. 18, 2023) (unpublished), plaintiffs were the prevailing party in a breach of contract dispute (based on an initial $750,700.16 compensatory award to plaintiffs after some reductions, including a reduction for a $61,000 on the defendant’s cross-complaint), with the lower court awarding $388,541 in attorney’s fees under a contractual fees clause—a 50% reduction from the $788,072 “ask” for excessive hours for a one-week bench trial, unreasonable charges, and duplication by having too many attorneys working on the case.  In a contemporaneous decision, the 2/7 DCA determined that no recovery was allowable on the cross-complaint and more recovery was owed to plaintiffs, which resulted in a remand of the fee award as described below.

            Defendant argued that plaintiffs were not the prevailing parties, but that was not the case.  If anything, they were more so given the contemporaneous opinion which increased plaintiffs’ recovery by more than $300,000.

            Given the reversal, a remand was necessary on the fee recovery.  The appellate court did not express any opinion on whether the original trial judge’s (Judge Terry Green’s) reductions were or were not appropriate.  It did observe that he has retired from the bench such that the fee motion should be adjudicated before a new judge who was urged to make an order indicating the amount of the award under lodestar principles, recognizing that no statement of decision is mandatory in fee proceedings.

            BLOG OBSERVATION—Judge Green (Ret.) is now a neutral with Signature Resolution.

Construction, Laffey Matrix, Lodestar, Reasonableness Of Fees: Los Angeles County Superior Court Awards A Little Over $1.3 Million In Fees And About $82,000 In Costs In Construction Dispute With Contractual Fees Clause Entitlement

Decision Provides Insights Into Judicial Resolution Of Contested Fee And Costs Issues.

            Because there has not been a lot of fee or costs decisions in the last couple of weeks, we report on a Los Angeles County Superior Court (Norwalk) final ruling on attorney’s fees and costs to a prevailing plaintiff in WnG Construction JV, Inc. v. AAA Solar Electric, Inc., et al., L.A. Superior Court Case No. VC065473 [Judge Porras]. 

            Plaintiff WnG won a construction dispute with a contractual fees clause against the defense, winning compensatory damages of about $3.116 million (inclusive of prejudgment interest) despite an offset and plaintiff not winning all that it wanted.  However, given that plaintiff did gain much of what it wanted, plaintiff was the prevailing party under the fees clause.  Plaintiff then moved for fees and costs, with various law firms submitting fee requests totaling around $2.1 million and with costs claimed of over $205,000.

            After some reductions on both counts, Judge Porras awarded fees of about $1.309 million and costs of around $82,000.

            Here are some interesting highlights to show his thinking on awarding reasonable fees and costs:

• • • An attorney disqualified based on ethical obligation violations is not entitled to any fees, an almost $223,000 reduction;
    • A law firm requesting over $653,000 in fees did not get them because they were involved in a discovery dispute which showed plaintiff deliberately spoliated evidence;
    • The principal law firm did get a majority of its requested fees, although J.D. law clerk/non-J.D. law clerk/secretarial work was not allowed and the main attorney charging $500 per hour for a breach of contract case was reasonable (but not an enhanced $750 hourly rate based on the Laffey Matrix, which the lower court found did not reflect L.A. County rates);
    • A law firm billing for potential post-trial/appellate consultation was not entitled to fees until those events materialized into situations allowing for fee recovery;
    • Although a CCP § 998 offer was rejected and could have potentially resulted in expert fee recoupment (although it is not clear from the record), the failure to identify pre-offer versus post-offer costs did not allow for an award of expert fees without a clearer allocation;
    • Charges for additional or duplicate copies of court reporter transcripts resulted in a reduction of expenses for these items.

            With that said, we give a “shout out” to Thomas F. Nowland, whose law firm and whose principal work led to him receiving a substantial portion of his fees on behalf of his client.  We thank him for providing the fee and costs ruling in this case so it could be shared with you.

Civil Rights, Lodestar, Multipliers: 4/3 DCA Affirms Majority Of $4.053 Million Civil Rights Fee Award To Prevailing Plaintiff, Remanding Solely For A Study Of Hourly Rates Submitted By Three Attorneys

Case Has Interesting Discussions of Civil Rights Lodestar, Multipliers, Hourly Rate Review, and Pro Hac Vice Delayed Admission Principles.

            Presiding Justice O’Leary authored Nachtrieb v. County of Orange, Case No. G060294 (4^th Dist., Div. 3 Aug. 11, 2023) (unpublished), which is a must read for civil rights litigators when it comes to supporting and opposing fee applications under a pro-plaintiff civil rights statute (42 U.S.C. § 1988) after a civil rights plaintiff prevailed against Orange County and two individual defendants to the tune of $1,278,800 in damages.

            What happened next was that plaintiff moved to recoup fees of $4.5 million, but plaintiff also requested an enhancement of the award to $9.9 million.  The defense argued in opposition that no more than $2.2 million in fees were justified.  The lower court awarded fees of $4,053,479 (lauding the success and performance of plaintiff’s attorneys although making reductions), prompting an appeal by the defense and a cross-appeal by plaintiff.

            By and large, the fee award was affirmed, although it was remanded to revisit the hourly rates charged by three of the claiming attorneys.

            Lodestar and multiplier principles do apply in § 1988 cases, with most of the appellate issues reviewed in this case under an abuse of discretion standard.  Even though plaintiff was unsuccessful against certain other defendants, this by itself does not require a reduction under § 1988.  Plaintiff competently supported the fee application, such that the burden of rebuttal fell on the defense, which had to explain excessive, redundant, and unreasonable charges—plaintiff did not have to negate these factors.  The remand occurred because, for three attorneys, the lower court awarded higher rates than those advocated by plaintiff’s fee expert under the Laffey Matrix such that this paradox needed to be resolved. 

            Plaintiff’s cross-appeal arguments were rejected.  There was nothing erroneous about the lower court rejecting a multiplier given a conclusion that the lodestar adequately compensated plaintiff’s attorneys for their work effort.  The lower court correctly excluded 489 hours expended by out-of-state attorneys before they were admitted pro hac vice, given that California does not allow for such compensation. (Golba v. Dick’s Sporting Goods, Inc., 218 Cal.App.4^th 1251, 1255 (2015).)  It further found that the Golba rule was not preempted by other federal civil rights principles because it did not obstruct the purposes of section 1988 but merely required attorney permissive admission as a condition to compensation for work. 

            The appellate court did award appellate costs to the defense, but it clarified that it has no bearing on entitlement to further section 1988 attorney’s fees by plaintiff.  

Lodestar, Multipliers, Reasonableness Of Fees: Plaintiff Properly Awarded $30,450 In Attorney’s Fees Rather Than The “Ask” Of $98,770

Fee Request Reduced On Hourly Rate Ask And Work On An Unfiled Summary Judgment Motion, With Plaintiff’s Multiplier Request Being Denied.

            Plaintiff accepted a defense CCP § 998 offer waiving a car purchase deficiency and paying her $2,001, with the lower court allowed to determine an award of attorney’s fees and costs to plaintiff via a motion.  She moved for $98,770 in fees (inclusive of a 1.5 positive multiplier), but the lower court only awarded $30,450.  She appealed in First Technology Federal Credit Union v. Trojan, Case No. H049919 (6^th Dist. Mar. 10, 2023) (unpublished).

            She did not obtain anything better on appeal, especially given that the lack of a reporter’s transcript of the fee hearing hampered review.  The lower court properly reduced the requested hourly rates by Santa Clara attorneys, because those rates were too high for the type of work which would be charged by attorneys in Monterey (the case venue).  There is a nice discussion of the degree of specificity that a fee claimant needs to show for purposes of justifying retention of an out-of-venue attorney charging higher rates, given that the lower court implicitly found plaintiff’s showing on this issue to be deficient.  The trial judge further did not err in reducing the fee request for work expended on a summary judgment motion that was never filed—with the appellate court locating no authority indicating that such unused work had to be compensated.  Finally, even though the case was taken on contingency, this alone does not mandate a positive multiplier, with the lower court’s determination that the case was relatively uncomplicated in nature.

Lodestar, Reasonableness Of Fees: Fee Award Of $700,000 To HOA In Uncomplicated Homeowner Dispute Was Reversed And Remanded

Record Was Unclear Whether The Lower Court Utilized The Proper Lodestar Reduction Factors For Over-Conferencing, Duplication, Over-Staffing, And Results Obtained.

            Ladera Ranch Maintenance Corp. v. Tinsley, Case No. G060730 (4^th Dist., Div. 3 Jan. 9, 2023) (unpublished) is must reading for practitioners and jurists on salient factors that a party opposing a fee request and a trial judge assessing the same should focus in on for purposes of examining a substantial fee request in a relatively uncomplicated case.

            In this one, homeowners did lose an HOA dispute involving community standards for a large tarp they erected adjacent to their home, failure to replace two trees they removed from their yard, and removal of an entryway chain, as well as lost a cross-complaint against the HOA for trash can, noise/parking, and prank-playing child issues.  HOA then moved to recover attorney’s fees for “a breathtaking number approaching $700,000 ($699,598.72).”  The lower court made some minor haircuts for over-conferencing, pre-litigation activities, unconnected matters, and insurance appointed counsel coordination, awarding HOA a total of $585,067.30.  The trial judge also did note the submitted billings showed duplication, unnecessary work, nonchronological entries, billing for tasks which could have been performed by paralegals, and excessive conferencing with HOA’s corporate counsel. 

            The 4/3 DCA, in an opinion authored by Justice Goethals, reversed and remanded for a re-do.  The appellate court was concerned that the lower court abused its discretion by not looking at the bigger picture which showed significant amounts of over-conferencing by six lawyers over uncomplicated issues—well over one-half of a billable year on just the HOA’s complaint, not to mention significant time which could have done by a paralegal and significant over-staffing.  Nothing indicated that the court looked for task padding, attorney stacking, or inflated billing in other areas but over-conferencing.  Beyond that, the fee award must be reasonable in relation to the results obtained.  The record showed that the lower court failed to assess the fee request with factors which would be used when a request is “manifestly excessive.”  A remand was necessary so that the trial judge could restudy the fee request and amplify on his reasoning as for as the ultimate fee awarded.

Fee Clause Interpretation, Lodestar: $547,465.10 Fee Award And $23,589.25 Costs Award To Prevailing Defendant Sellers Affirmed On Appeal

Liability Cap Did Not Apply To Fees, Out-Of-County Attorneys Showed Good Cause To Represent Defendants In Tuolumne County, And Trial Judge Reduced Fee Request By 20%.

            In Apartment Rental Assistance II, Inc. v. 80 Oak Hills, L.P., Case No. F083238 (5^th Dist. Dec. 13, 2022) (unpublished), buyer plaintiffs lost a summary judgment to seller defendants where three purchase agreements had separate fee clauses.  Defendants moved for fees of $677,465.10 and for $23,589.25 in costs, with the lower court awarding them $547,465.10 in fees and the entire “ask” in costs.  Plaintiffs appealed.

            They lost.  Their main argument on entitlement was that there was a “fee cap” in one of the agreements, but a close look at it showed that it only applied to liability determinations—reinforced by no similar cap in the actual fee provisions.  With respect to the amount of lodestar fees awarded, the Fifth District found no abuse of discretion.  Not only did the lower court reduce the fees request by about 20% for excessive associate compensation and assembly of binders, but the out-of-town lead counsel representing defendants showed there was good reason for his firm to be litigating in Tuolumne County because he had years of experience with the clients on real estate matters such that they were justified in not using local counsel without his “experience curve.”

Lodestar, Private Attorney General, Reasonableness Of Fees: FEHA Fee Recovery To Plaintiff’s Attorney Affirmed As Far As Reductions But Remand Issued To Determine Reasonable Hourly Rate Based On Out-Of-Town Rates

Plaintiff’s FEHA Request Was Reduced Drastically, But The Award Likely Will Go Up Some When Out-Of-Town Rates Are Considered—Although The $700,000 Award Was Substantial.

            When you are doing appellate work on abuse of discretion issues, the primary issue may be whether the lower court used the correct legal principles as far as reaching its discretionary decision.  That principle was in play to lead to a limited remand on a fee recovery in Elizondo v. Dept. of Transportation, Case No. C088987 (3d Dist. July 22, 2022) (unpublished).

            In this one, FEHA plaintiff won a $605,000 jury verdict, with the trial court later awarding over $700,000 in attorney’s fees, inclusive of a 1.2 positive multiplier out of a $4 million request (we kid you not), and $117,488.60 in costs (with the costs award largely affirmed on appeal).  The thrust of plaintiff’s appeal was that more fees should be awarded, with the principal contention being that much higher out-of-town hourly rates should have been awarded by a Bay Area attorney versus much lower rates for San Joaquin County attorneys, given that the venue was San Joaquin County.

            The Third District affirmed the fee award, except to remand with a trial court exploration of higher out-of-town hourly rates.  The lower court awarded $350 per hour to plaintiff’s counsel even though Bay Area rates were more in the $825 per hour range.  What led to the reversal was a good evidentiary showing by plaintiff’s counsel that local attorneys in Stockton and Sacramento would not take the case such that local counsel rates were not germane, with the lower court not applying the correct legal principles on out-of-town rates once plaintiff made this evidentiary showing.  With that said, the matter was remanded to look at a higher out-of-town hourly rate, but that did not detract from affirmed conclusions that the lodestar fee request was inflated for lack of preparation by plaintiff’s counsel at some junctures of the litigation, billing for political activities, billing for travel to conferences which could have been attended telephonically instead, billing for ministerial tasks, billing for unrelated administrative proceedings not expressly allowable under FEHA (see K.I. v. Wagner, 225 Cal.App.4^th 1412, 1423 (2014)), overlitigating the case, and billing for unproductive legal research.  Also, no private attorney general fees were justified because simply vindicating one plaintiff in a FEHA case did not meet the significant benefit prong of CCP § 1021.5.

Lodestar, Reasonableness Of Fees: Where Matter Was Not Complex, Administrative Time Billed, and Severely Redacted Time Submissions Provided, Trial Court Was Within Its Discretion To Award $15,000 In Fees Rather Than The Requested $83,631.95

Fee Amount Is Usually A Discretionary Call.

            Bouquet Plaza SDS, LLC v. Kimmel, Case No. B306042 (2d Dist., Div. 2 Feb. 1, 2022) (unpublished) demonstrates how attorney’s fee motions should be attuned to lodestar factors, sometimes even offering voluntary reductions to maximize a favorable decision.  Otherwise, requesting inflated or improper fees could result in a substantially reduced award.

            Plaintiff did prevail against defendant lease guarantor after accepting a CCP § 998 offer of $89,000.  Plaintiff then moved to recover $83,631.95 in contractual attorney’s fees.  The lower court only granted fees of $15,000 after making observations that (1) the case was not that complex; (2) billing of secretarial and some paralegal time was improper; (3) plaintiff’s work activity demonstrated “churning”; and (4) severe redactions to itemized time entries made it difficult to determine exactly what services had been provided.  The appellate court affirmed, given that the award was no abuse of discretion.  The trial judge properly reduced the request based on lodestar factors justifying a downward adjustment.

            The lesson here is to be reasonable when requesting fees.  Attorney credibility is a key underlying construct which must be persuasively presented in fee proceedings.

Civil Rights, Lodestar, Reasonableness Of Fees: $1,113,750 In FEHA Attorney’s Fees In Racial Discrimination/Retaliation Case Garnering $450,001 Compensatory Award To Successful Plaintiff Was No Abuse Of Discretion

Hourly Rate, Lodestar, And Multiplier Conclusions Were Not Beyond Reason.

            Plaintiff in Sterling v. County of Sacramento, Case No. C089616 (3d Dist. Sept. 7, 2021) (unpublished) won $450,001 in compensatory damages under FEHA racial discrimination/retaliation claims.  Plaintiff then moved for over $1.515 million in fees (lodestar plus a positive 2 multiplier enhancement).  The lower court basically sustained the lodestar request, but it instead awarded a 1.5 positive multiplier such that the FEHA fee award was $1,113,750.

            The Third District affirmed the merit and fee results.  The lower court did a proper lodestar analysis, not having to accept “padding” challenges or the defense suggestion that no more than $580,635 should be awarded as fees.  The trial judge awarded an hourly rate of $550 for the lead attorney, which was no abuse of discretion given expert testimony indicating that $650-695 per hour would be justified and given past awards to the attorney above $550.

Costs, Deadlines, Fee Clause Interpretation, Lodestar: L.A. Groundwater Case Fee And Costs Awards Remanded For A Revisit By The Fifth District

Variety Of Costs, Fee Entitlement, And Lodestar Issues Explored In This Unpublished Opinion.

            Antelope Valley Groundwater Cases, Case No. F083138 (5^th Dist. Aug. 24, 2021) (unpublished) was a Los Angeles-venued case which produced a global settlement complete with a provision for certain parties to bear attorney’s fees and costs by class counsel.  Class counsel sought to recover $3,348,160 in attorney’s and paralegal fees (4,538.8 hours at $720 per hour for attorneys; 679.5 hours at $110 or $125 per hour for paralegals).  However, the trial judge awarded class counsel $2,269,400 in attorney’s fees and $80,224 in paralegal fees, reducing the attorney requested hourly rate from $720 to $500 per hour.  He also allocated fees among different parties and rejected two parties’ attempts to pay the awards out over time under Government Code sections 984 and 970.6.  He denied a 2.5 positive enhancement request.  The trial judge also taxed over $24,000 in routine costs requested by class counsel, triggering an appeal by the class.

            The Fifth District (although based in Fresno, not Los Angeles, but assigned the case on appeal for neutrality reasons) reversed and remanded with some specific instructions.  With respect to fees, the appellate panel initially determined that the settlement agreement did authorize fee/costs entitlement and then found that the trial judge’s reasoning on the lodestar was unclear, especially as to why the requested hourly rate was discounted downward from $720 and with a “Great Recession” lower rate rationale not explaining why higher rates were not justified from when it ended (2010 going forward).  Equally salient was the fact the lodestar could not be diminished solely or primarily because a governmental entity was the party with fee/costs exposure.  But the lower court did properly allocate fee/costs recovery among some parties and correctly denied the periodic payment requests because a fees/costs judgment was not a tort judgment against a public entity under section 984 and the requesting entities did not show that the L.A. County Board of Supervisors passed a hardship ordinance for purposes of satisfying section 970.6.  Finally, on the routine cost issues, class counsel did not have to use Judicial Council costs memorandum forms (they are optional only), the trial judge impliedly allowed counsel more time to file the costs memorandum, and there were arithmetic discrepancies which the appellate court could not decipher—sending all of this back for a re-do, including a relook at the enhancement request.               

Appealability, Lodestar, Partition, Substantiation Of Reasonableness Of Fees: Lower Court’s Award Of Fees To Winning Beneficiaries And Property Owner In Partition Action Was Affirmed On Appeal

Apportionment Under Partition Statutes Is Vested Within Lower Court’s Equitable Discretion.

            In Hofmann v. Hofmann, Case No. F079977 (5^th Dist. July 15, 2021) (unpublished), trustee son Michael was obviously not happy when he lost a partition action to trust beneficiaries (his siblings) and the current property owner.  Beneficiaries and property owner, respectively, filed attorney’s fees motions under the partition statutes, primarily Code of Civil Procedure sections 874.010 and 874.040, which allow the lower court wide discretion to determine if fees were incurred for a common benefit or should be apportioned against a loser who drove up the costs of litigation.  That is what happened to trustee Michael, with the lower court granting the beneficiaries $122,395.81 and the property buyer $191,031.50, about a 50% apportionment based on certain interests.  Michael was unhappy, so he appealed.

            The Fifth District affirmed the fee awards.

            With respect to the beneficiaries, they could not entertain the challenges because Michael failed to appeal the post-judgment fee order—something we have constantly reminded our readers to do.

            Although the appeal was timely as to property buyer, the buyer was entitled to fees under sections 874.010 and 874.040 because Michael engaged in some spurious activities and the “common benefit” apportionment was not out of bounds.  Michael also challenged the amount of fees, but the lower court properly utilized the lodestar method and Michael waived any challenge that the requested fees were “padded” because he failed to include the detailed billing records in the appellate record for review. 

Lodestar, SLAPP, Special Fee Shifting Statutes: Pasternack Decision Now Published

Acceptance Of A Reduced Rate From Client Does Not Preclude Attorney From Seeking A Reasonable Hourly Rate Pursuant To The Lodestar Method.

            In our June 10, 2021 post, we discussed Pasternack v. McCullough, Case No. B302137 (2d Dist., Div. 8 June 7, 2021) which was unpublished at the time.  Pasternack follows other California decisions in holding that an attorney is not precluded from seeking a reasonable hourly rate pursuant to the lodestar method – even where the attorney has accepted a reduced rate from a client.  (Chacon v. Litke, 181 Cal.App.4th 1234, 1260 (2010) [discussed in our January 19, 2010 post]; PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (2000) [our Leading Case No. 1].)

            We can now report that Pasternack was certified for publication on June 25, 2021.

Lodestar, SLAPP, Special Fee Shifting Statutes: 2/8 DCA Affirms Fee Award To Prevailing SLAPPing Defendant That Was Greater Than The Fees Paid For Defense By His Insurer

An Attorney Accepting A Reduced Rate From A Client Is Not Precluded From Seeking A Reasonable Hourly Rate Pursuant To The Lodestar Method.

            In Pasternack v. McCullough, Case No. B302137 (2d Dist., Div. 8 June 7, 2021) (unpublished), prevailing defendant on a special motion to strike was awarded $146,010 out of his requested $330,420 in attorney fees. (Code Civ. Proc. §425.16(c)(1).) Plaintiff appealed – arguing that there was no need for the trial court to set a reasonable hourly fee in this case because the fee award should have been limited to the significantly lower amount defendant’s insurer paid for his defense. 

            The 2/8 DCA disagreed – finding the prevailing lodestar adjustment method to be the proper method for determining fees in this case as the SLAPP fee provisions do not provide for restrictions on how the fees are to be calculated.  (Ketchum v. Moses, 24 Cal.4th 1122, 1136 (2001) [our Leading Case No. 8].)  Additionally, the panel found that California law is well-established in allowing an attorney who accepts a reduced rate from a client to seek a reasonable hourly rate pursuant to the lodestar method.  (Chacon v. Litke, 181 Cal.App.4th 1234, 1260 (2010) [discussed in our January 19, 2010 post]; PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (2000) [our Leading Case No. 1].)

            In this case, the trial court properly determined the market rate for defendant’s attorneys based on their experience and complexity of the case instead of narrowly focusing on the “package rate” defendant’s attorneys accepted from defendant’s insurer in this matter.  Additionally, the trial court thoroughly examined the record and reduced both the time and hourly rate claimed by one of defendant’s attorneys, which significantly reduced the award from the original request, and clearly demonstrated that the trial court exercised its discretion.

BLOG UPDATE: We can now report that Pasternack was certified for publication on June 25, 2021.

Lodestar, Multiplier, Reasonableness Of Fees: Prevailing FEHA Plaintiff Only Recovering $400,800 In Fees Out Of Requested $1,064,062.70 Did Not Recover Any More On Appeal

Compensatory Award Was $575,000.

            Plaintiff did prevail on some wrongful termination/FEHA claims to the tune of $575,000 in past noneconomic damages.  Plaintiff later moved to recoup $1,064,062.70 in fees (lodestar of $532,031.35 plus a 2.0 positive multiplier), with the trial judge awarding $400,800.  Both sides appealed, with plaintiff filing a cross-appeal seeking more fees.  Both sides lost in Lave v. Charter Communications, LLC, Case No. D076206 (4^th Dist., Div. 1 Dec. 21, 2020, posted on Dec. 22, 2020) (unpublished).

            The problem was that plaintiff waived any fees challenges by not raising them below—with forfeiture being a key appellate principle often applied if an appellant did not contest it before the trial judge.  With respect to not awarding the 2.0 multiplier, plaintiff could not demonstrate how the lower court abused its discretion, given that a multiplier is not automatic and a discretionary call unless legal criteria are not properly followed in coming to a decision.  That was the case in this particular matter.

Allocation, Consumer Statutes, Lodestar, Multipliers: Santana Decision Now Published

Apportionment Between Song-Beverly Act Fees/Costs And Other Causes Of Action, Where Fees Are Not Permitted, Not Necessary Where Claims Are Inextricably Intertwined.  

            In our September 29, 2020 post, we discussed Santana v. FCA US, LLC, Case Nos. G057244/G058020 (4^th Dist., Div. 3), which was unpublished at the time.

            In Santana, the trial court awarded Song-Beverly Act fees/costs of $510,637.87, including a 2.0 multiplier, after a jury found defendant liable for breach of the express and implied warranty, and fraudulent concealment for plaintiff’s claims arising from the defective vehicle he purchased.

            On appeal, the 4/3 DCA vacated a significant portion of damages awarded to plaintiff when it reversed on the fraudulent concealment claim.  However, the appellate panel affirmed the entirety of the fees/costs awarded by the trial court – finding no abuse of discretion because apportionment between the Song-Beverly claims and non-fee claims was not needed given that plaintiff’s causes of action stemmed from an issue common to all of his claims.  As such, plaintiff’s claims were inextricably intertwined such that apportionment would be impracticable, if not impossible.

            Santana was certified for publication on October 23, 2020.

Lodestar, Substantiation Of Reasonableness Of Fees: Trial Judge’s Award Of $1,000 In Fees/Costs Reversed Where Requested Amount Was $164,768

Appellate Court Needed More Of A Justification For Such A Large “Haircut.”

            For readers who have followed us for some time, you would know that district judges in the Ninth Circuit have to explain “haircuts” from attorney’s fees requests which exceed 10% with some specificity.  (See, e.g., Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9^th Cir. 2008) [enunciating 10% rule]; Vargas v. Howell, 949 F.3d 1188, 1195-1197 (9^th Cir. 2020) (reviewed in our February 7, 2020 post) [reversing 90% reduction due to lack of adequate explanation].). We now report on an unpublished appellate opinion from our own local 4/3 DCA which shows how a substantial reduction led to a reversal and remand, suggesting that state courts are more and more, under the right circumstances, endorsing the federal test for large fee “haircuts.”

            In Ramirez v. CL Education, Inc., Case No. G057779 (4^th Dist., Div. 3 Sept. 30, 2020) (unpublished), plaintiffs settled a Labor Code-heavy case for $25,001 (with a final payment of $5,001 waived based on defense payments) under a written stipulation allowing recovery of attorney’s fees and costs from defendants upon plaintiffs’ motion for same.  In an opposed motion, plaintiffs requested $164,768 in fees/costs (inclusive of a 1.5 contingency multiplier request, but the trial judge only awarded a total of $1,000, with the record unclear whether the lower court had the documentation to fashion such an award.

            The Court of Appeal, in a 3-0 opinion authored by Justice Thompson, reversed and remanded.  Although recognizing the discretion given to trial judges on fee motions, the appellate court could not divine how the $1,000 award was arrived at and indicated such a reduction required at “least some explanation or justification” for purposes of supporting a substantial “haircut” of this nature.  In so doing, it cited Warren v. Kia Motors America, Inc., 30 Cal.App.5^th 24, 36 (2018) where heightened scrutiny was recognized in consumer (specifically, a Song-Beverly Act matter) and civil right cases, although observing in a footnote that the federal “haircut” rationale had not previously been applied in cases under state law fee-shifting statutes.  Interestingly enough, Warren itself cited Mountjoy v. Bank of America, N.A., 245 Cal.App.4^th 266, 280-281 (2016), which in turn applied the federal-type test in a contractual fee wrongful foreclosure matter.  So, the jurisprudence seems to be heading in the direction that substantial “haircuts” in state cases must be explained with some degree of specificity.  This is a fertile area in which to make new caselaw at the state level for litigators.

Allocation, Consumer Statutes, Lodestar, Multiplier: Although Fraudulent Concealment Compensatory And Punitive Damages Were Reversed, $510,637.87 Fee/Costs Award Under Song-Beverly Act Case Affirmed On Appeal

Failure To Apportion/Double Counting Lodestar And Enhancement Arguments Not Supported By The Record.

            In many cases, a fees-seeking litigant needs to apportion between fee entitlement and non-fee entitlement claims, unless the thrust of the case involved a fee entitlement case so that it was inextricably intertwined with a non-fee case.  If so, even a reversal of the non-fee case upholds the fee award on the intertwined fee entitlement basis of the case.

            That is what occurred in Santana v. FCA US, LLC, Case Nos. G057244/G058020 (4^th Dist., Div. 3 Sept. 29, 2020) (unpublished).

            In a defective vehicle case for Song-Beverly Act violations and fraudulent concealment, plaintiff was awarded $1,229,531.71 (of which $1 million was punitive damages under the fraud count) and then awarded Song-Beverly Act fees/costs of $510,637.87 inclusive of a positive 2.0 multiplier, but less than 2.5 multiplier requested by plaintiff. 

            The 4/3 DCA affirmed the fees/costs award in a 3-0 panel decision authored by Justice Ikola, although there was a large scale-back of the fraud damages, paring about $1.134 million from the overall award.

            The defense argued that there needed to be an apportionment, but that did not resonate based on the fraudulent concealment being intertwined and with the defense not offering a realistic apportionment proposal for the trial or appellate courts to consider.

            With respect to the “double dip” argument, the appellate court indicated that a plaintiff could not rely on a contingency risk argument if it was being used to justify the lodestar and an enhancement.  However, that did not occur here because the trial judge did not use the contingency risk to justify the hourly lodestar rate but only used it for true enhancement, also mentioning complexity and attorney skill which would have gotten to the same result.

UPDATE: Santana was certified for publication on October 23, 2020.

Allocation, Lodestar, Reasonableness Of Fees, Substantiation Of Reasonableness Of Fees: Prevailing Plaintiff Correctly Awarded $182,000 Under Contractual Fees Clause After Winning $455,000 In Damages After A Lengthy Court Trial

Fees Award Should Not Get Offset Against Damages, And Trial Judge Awarded Contingency Arrangement Percentage As Fees—Dispensing With The Need For Review Of Detailed Bills.

            Prevailing plaintiff in Pham v. Nguyen, Case No. H044958 (6^th Dist. Apr. 15, 2020) (unpublished), on the heels of winning $455,000 in damages, moved for contractual attorney’s fees.  The trial judge awarded $182,000, which was 40%--the amount of the contingent arrangement between plaintiff and his attorney.  Defendant’s numerous challenges on appeal did not result in any disturbance of the award.

            Plaintiff initially claimed that the fees awarded had to be offset against the damages award.  No way, said the appellate court—that would nugatory the impact of a fees clause and would actually punish an attorney for taking the case on a contingency basis.  No apportionment was required because the compensable and non-compensable units of work were intertwined such that it would have been impractical or impossible to separate out.  With respect to the claim that plaintiff failed to provide evidentiary support for the fee request, the lower court did not err by awarding the contingency fee amount so that billings did not have to be reviewed.

            BLOG COMMENT:  The appellate court also chastised appellant’s attorney for filing noncompliant appellate briefs and recycling arguments from lower court papers.  (See In re Marriage of Shaban (2001) 88 Cal.App.4^th 398, 408 [“Appellate work is most assuredly not the recycling of trial level points and authorities.”].)

Lodestar, Private Attorney General: Third District Affirms Approximate 93% Reduction To Petitioner’s Requested Code Civ. Proc. § 1021.5 Fee Award

Petitioner’s Limited Success – Winning Only 1 Of Its 13 Arguments – Was Crucial Factor In Substantial Reduction From Requested $1,440,713 In Fees To $94,698.33 Even After 1.5 Multiplier Was Applied.

            The Sacramento-San Juaquin Delta Reform Act of 2009 was enacted to address the problems and challenges facing the Delta – the most valuable estuary and wetland ecosystem on the west coast of North and South America, and the hub of California’s water delivery system.  In enacting the Delta Reform Act, the Legislature created the Delta Stewardship Council and charged it with adopting and implementing the Delta Plan to provide a more reliable water supply for California, and to protect, restore and enhance the Delta ecosystem.  The Council adopted the Delta Plan in May 2013, with the regulatory policies approved as regulations by the Office of Administrative Law – codified in the California Code of Regulations at sections 5001-5016 of title 23.

            In Delta Stewardship Council Cases, Case Nos. C082944 and C086199 (3d Dist., April 10, 2020) (unpublished), seven lawsuits – coordinated into one proceeding – were filed by various groups challenging the validity of the Delta Plan, its regulations, and the program-level environment impact report (PEIR) for the Delta Plan.  The lawsuits were based on alleged violations of the Delta Reform Act, the Administrative Procedures Act (Gov. Code, sections 11340 et seq.), and CEQA.  Each lawsuit sought a writ of mandate commanding the Council to vacate and set aside the Delta Plan and its regulations, and to rescind its certification of the PEIR.

            With only a few exceptions involving under-regulation by the Council, the trial court rejected the claims of violations of the Delta Reform Act and Administrative Procedures Act.  Based on the statutory under-regulation violations, the trial court vacated and set aside the Delta Plan and ordered corrections to the identified deficiencies.  As a result, the trial court did not reach the merits of any of the CEQA claims.

            Petitioner from one of the seven cases moved post-judgment for Code Civ. Proc. section 1021.5 attorney fees and costs – seeking $1,440,713 in fees, which included a 2.0 lodestar multiplier.  Although the trial court found petitioner was entitled to section 1021.5 fees based on its successful argument related to the Delta water conveyance and storage systems, it found that petitioner was not successful on its 12 other arguments, that those unsuccessful 12 arguments were not intertwined with the one successful argument, and that the hourly rate requested by two attorneys was unreasonable.  Additionally, the trial court found a 1.5 multiplier to the lodestar more appropriate than the requested 2.0 multiplier – ultimately awarding petitioner $94,698.33.

            Petitioner and the Council appealed – with petitioner arguing it was entitled to the full amount of requested fees as it had achieved its litigation objective, and the Council arguing petitioner was not entitled to the 1.5 multiplier because the trial court erred when it failed to articulate a basis for the multiplier.

            The Third District affirmed – finding the trial court had not abused its discretion, nor committed reversible error.  The 12/13ths reduction to petitioner’s requested award was proper based on petitioner’s limited success, and nothing in the record indicated the trial court did not consider petitioner’s litigation objectives in determining its success.  As to the Council’s claim of trial court error, the Third District found not only that the Council had forfeited the argument by failing to object to the tentative decision issued by the trial court, but also that the Council failed to meet its burden in showing reversible error in the decision the trial court made within its “wide discretion.”  The tentative ruling indicated the trial court had considered the 2.0 multiplier request based on the contingency basis cited by petitioner, and had reduced it to 1.5 with an acknowledgement that some of the work may not have been done on a contingency basis.   

Allocation, Fee Clause Interpretation, Lodestar, Prevailing Party, Reasonableness Of Fees, Section 1717, Settlement: Reasonable Discretion Exercised In Awarding Defendant Only 20% Of Requested $177,712 In Fees

The Legal Principles Of Civil Code Section 1717 and Santisas Governed.

            Both parties appealed the fee results in Rusnak/South Bay v. Glukel Group, Case No. B286513 (2^nd Dist., Div. 3 Sept. 27, 2019) involving a dispute between landlord and tenant – with tenant plaintiff advancing contract and tort claims against landlord. 

            Tenant dismissed its lawsuit during the discovery phase, before depositions took place, and Landlord moved for an award of $177,712 in attorney fees under the lease’s attorney fee provision which entitled the prevailing party to fees.  Although the trial court granted the fee motion, it awarded Landlord with only 20% of the requested fees – apportioning between the contract and tort claims pursuant to Civ. Code section 1717(b)(2), and reducing for excessive and unreasonable fees.  

            On appeal, Landlord argued that it was entitled to all of the fees pursuant to the lease contract, and Tenant argued that Landlord was not the “prevailing party” on the tort causes of action.

            The 2/3 DCA affirmed.  The apportionment and 80% reduction were proper pursuant to the legal principles of Santisas v. Goodin (1998) 17 Cal.4^th 599 [our Leading Case No. 6] and Civ. Code section 1717(b)(2).  First, as to the contract claims, section 1717(b)(2) bars recovery of the fees incurred to defend plaintiff’s contract claims where an action has been voluntarily dismissed as it was here – with Santisas defining the extent of such preclusion to include cases involving a contract that on its own terms authorizes recovery of those fees. 

            As to Tenant’s argument that Landlord was not the prevailing party on the tort causes of action, the 2/3 DCA found the argument meritless – citing the holding in Santisas that the “prevailing party” of tort claims resolved by  voluntary dismissal is governed by the clear and unambiguous language of the contract for purposes of awarding attorney fees.  Here, the relevant fee provision defined “prevailing party” to include “without limitation” a party “who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party . . . of its claims.”  Tenant abandoned its noncontract claims, making Landlord the prevailing party under the unambiguous terms of the parties’ contract. 

Civil Rights, Lodestar, Substantiation Of Reasonableness Of Fees: 9th Circuit Remands Post-Settlement Fee Award In Civil Rights Case For Determination of Reasonable Hourly Rate and Settlement Agreement Date To Determine Fees For Work on Unfiled Motions

There Was Humor Here—Ninth Circuit Agreed Attorney Petitioning For Fees Was Ill-Advised To Put In A Declaration By A Hawaiian Plumber About What The Plumber Charged!

            As you will see, there is some underlying humor simmering in Roberts v. City and County of Honolulu, No. 16-16179 (9^th Cir. Sept. 12, 2019) (published).

            What happened here is that plaintiff settled a civil rights action against Honolulu after trying to settle the matter even before filing a complaint, a factor we bloggers believe was important in the appellate court’s ultimate result.  After a complaint was filed, the parties reached a settlement agreement even though plaintiff’s counsel had begun drafting motions for preliminary injunction/judgment on the pleadings.  Plaintiff moved for attorney’s fees and costs of $40,191.43, which was opposed by Honolulu.  The magistrate recommended an award of $13,912.04 in fees and $400 in costs, after reducing the hourly rates being claimed and reducing for the two unfiled motions.  The district judge awarded $21,302.95, an increase of $7,390.91 from the magistrate judge’s recommendation. 

            The Ninth Circuit vacated and remanded because the correct legal standard was not followed.

            It agreed that the attorney has the responsibility to submit supporting evidence for requested hourly rates.  Plaintiff’s counsel submitted his own declaration, a co-counsel declaration, declarations from other Hawaiian attorneys familiar with counsel’s work, “and an (ill-advised) declaration from a plumber.”  (Tee hee!)  Plaintiff’s lead counsel’s declaration also referred to hourly rates in San Diego, the Laffey Matrix describing D.C. area rates, and the plumber’s affidavit (the inclusion of which was even described as “inexplicable” by the Ninth Circuit panel).  In its award, the district judge ignored this inapt proof but relied on the hourly rates awarded to the two attorneys in other civil right cases in the District of Hawaii.  This reliance was error—examination of prior fee awards was not an acceptable substitute for considering the declarations actually submitted and explaining why those declarations did not establish the prevailing hourly rate in the district.  So, the matter had to be remanded so that the correct legal standard could be applied to the case. 

            With respect to the time spent on the two unfiled motions, the Ninth Circuit panel remanded because it was a “close question” on whether this time should have been compensated given the status of pending settlement discussions. 

            The moral of this one may well be this:  Don’t submit plumber declarations in support of a fee motion!

Consumer Statutes, Lodestar: Lodestar Analysis Governs A Song-Beverly Act Fee Recovery Despite A Contingency Fee Arrangement

Contingency Fee Arrangement Has Probative Value, But It Is No Dispositive Indicator.

            Litigants and their counsel in lemon law cases must keep in mind that the there is an attorney’s fees shifting provision, Civil Code section 1794(d), which allows fees to the prevailing product buyer “based on actual time reasonably expended, determined by the court to have been reasonably incurred by the buyer in connection with the commencement and prosecution of such action.”  However, many of these cases are taken on a contingency basis.  So, for a prevailing plaintiff buyer in these cases, what is the measure of recovery where the Song-Beverly Act fee-shifting provision allows for recovery of “actual time expended” by buyer’s attorneys?

            The answer is the classic lodestar, not impacted by any percentage of recovery, said the 2/7 DCA in Hanna v. Mercedes-Benz USA, LLC, Case No. B283776 (2d Dist., Div. 2 June 18, 2019) (published). 

            After four CCP § 998 offers by the defense, plaintiff accepted the fourth one indicating that Mercedes would pay plaintiff “a sum equal to the aggregate amount of costs and expenses, including attorney’s fees based on actual time reasonably incurred in connection with the commencement and prosecution of this action pursuant to Civil Code Section 1794(d), to be determined by court motion if the parties cannot agree.”  They could not.  Plaintiff then requested $274,615.82 in fees and costs (inclusive of a 1.5 multiplier on the lodestar request of $172,712.50).  [NOTE TO ALL—The car purchase was for $52,948.54, showing you how hefty lemon law fees can be if a resolution is not accomplished early on, although it looked like Mercedes tried here.]  After an opposition and reply, the lower court awarded $60,869 in fees, principally based on limiting recovery of fees after a certain date to $15,000 due to its interpretation of the contingency agreement between plaintiff and her counsel.

            The problems here were basically three-deep in number.  First of all, the fee limitation after a certain date was error given that additional fees incurred to establish liability or damages are properly includable in a fees award under section 1794(d), even though settlement efforts produced the additional “recovery.”  Second, although the contingency agreement could be considered in awarding fees, the lower court misread the retainer which applied actually to all time expended.  However, the third reason was the killer:  the lodestar approach, not a contingency arrangement, is the governing standard for fee awards in the Song-Beverly Act area.

Lodestar, Multiplier, Private Attorney General, Special Fee Shifting Statute: Plaintiff Taxpayer Properly Awarded Fee Of $116,647.47 For Prevailing In Political Reform Act Action

60% Total Positive Multiplier And Lodestar Awards Were No Abuse Of Discretion.

            California’s Political Reform Act, codified at Government Code sections 81000 et seq., prohibits a public employee from influencing a governmental decision in which he/she has a financial interest.  There are liability provisions which allow a prosecutor or taxpayer to challenge the particular activity, with the trial judge given the discretion to award attorney’s fees to either the prevailing plaintiff or prevailing defendant. (Gov. Code, §91003(a), 91005.)

            In Holloway v. Vierra, Case No. H044505 (6^th Dist. March 14, 2019) (unpublished), a plaintiff taxpayer challenged a defendant water district director’s receipt of real estate commission benefit in a District real estate purchase under the Political Reform Act. Plaintiff earlier suffered a demurrer without leave, but later revived the action through a successful appeal generating a published opinion. Plaintiff eventually prevailed after a trial, moving for fee recovery under both Government Code section 91003(a) and California’s private attorney general statute. The trial judge awarded him $116,647.47, inclusive of a 60% positive multiplier to bring his attorney’s discounted fees to Bay Area market prices and 10% of the total being a reward for championing a difficult case.

            The Sixth District affirmed the fee award against defendant. There was fee entitlement under both statutory bases. The amount of the fees granted by the lower court was no abuse of discretion. The multiplier properly compensated plaintiff’s attorneys for discounted rates in getting to the proper lodestar amount, with the difficulty and uncertainty of the case also supporting a positive enhancement.

Class Action, Costs, Lodestar, Reasonableness Of Fees, Section 998: Trial Judge Properly Awarded Class $333,000 In Attorney’s Fees Out Of Requested $780,845.62

However, Lower Court Did Properly Award Voluntary Mediation Expenses And Expert Fees Incurred By The Class After Rejection Of A CCP § 998 Offer.

            In Diaz v. Grill Concepts Service, Inc., Case No. B284146 (2d Dist., Div. 2 Oct. 19, 2018) (unpublished), former restaurant employees of a Daily Grill brought a class action for being paid less than a “living wage” and eventually won a judgment of $300,751.31 after restaurant admitted a major degree of liability. The trial judge awarded the class $9,775 in voluntary mediation expenses and $7,497.80 in expert witness fees incurred by the class after restaurant rejected a CCP § 998 offer of $499,999 inclusive of fees and costs. The class moved to recoup $780,845.62 in attorney’s fees (which included a 1.5 multiplier) under CCP § 1021.5 and Labor Code § 218.5. However, the lower court only awarded $333,000 in fees, after reducing for duplication and block billing, consisting of a $222,000 lodestar augmented by a 1.5 multiplier. As a cross-check, the lower court found the fees reasonable because they equaled 71% of the benefits obtained by the class (which was well above a 33% contingency threshold).

            The restaurant appealed the costs awards, while the class appealed the fee award.

            Nothing changed on appeal.

          The lower court had discretion to determine the voluntary mediation expenses were “reasonably necessary” to the litigation, and no discretion was abused in this case. With respect to the expert witness fees, restaurant did reject a 998 offer which did not outstrip the judgment plus total fees and costs awarded (given the wording of the 998 offer). The fact that the 998 offer was structured as a firm number plus future fees/costs did not make the offer uncertain, given there is some “estimation uncertainty” always present in such offers. (Elite Show Services, Inc. v. Staffpro, Inc., 119 Cal.App.4^th 263, 266-270 (2004).)

            That shifted attention to the class fee award. Here is what the appellate court had to say in affirming the lower court’s ruling:

• The lower court did not have to accept, carte blanche, the requested fees numbers by a fee applicant, with the court making sufficiently clear why it made certain reductions based on duplication, block billing, and unreasonable hourly rates;
• Although opposing counsel’s work effort can be probative, it was not error to fail to compare defense work to the class work because the opposition work was not reviewed by the lower court for duplication, inefficiencies, and block billing;
• Use of a “blended rate” for class counsel is not per se impermissible and was not so in this case;
• Class counsel’s use of declarations from fellow “friends” did not have to be automatically credited but could be discounted based on bias; and
• Although the lower court “cross-checked” by the class benefits (not including the fee recovery), no sole methodology is proper; but, in any case, even if the benefits plus fee recovery was used, the fee recovery was still 41% of the total recovery—well above a 33% contingency or percentage-of-recovery measure.

Insurance, Lodestar, Reasonableness of Fees, Special Fee-Shifting Statutes, Substantiation of Reasonableness of Fees: Third Circuit Upholds District Court’s Decision Denying Entire Almost $950K Fees And Costs Request To Successful Plaintiff

Amount Requested Under Bad Faith Statute Was “Outrageously Excessive” Allowing District Court To Deny The Request Altogether As Thoroughly Explained In Its “Well-Reasoned One-Hundred-Page Opinion”

            Ouch! Talk about learning a lesson the hard way! In a precedential opinion for a case decided by Justices Greenaway, Jr., Restrepo, and Bibas, and authored by Justice Greenaway, Jr., the Third Circuit Court of Appeals declares, in a very clear and unambiguous fashion, that the submission of a fee petition is not the “opening bid in the quest for an award.”

            In  Clemens v. New York Mutual Fire Insurance Company, [ Download Opinion here]No. 17-3150 (Fed. Cir., Sept. 12, 2018) (precedential), Plaintiffs sued insurer under a contractual underinsured motorist (UIM) claim and a claim under the Pennsylvania Bad Faith Statute following a serious car accident.

            The UIM claim was settled for $25,000 after insurer removed the case to federal court, and the bad faith claim proceeded to a week-long jury trial wherein Plaintiff was awarded $100,000 in punitive damages.

            Following the jury trial verdict, Plaintiffs filed a petition for $946,526.43 in attorneys’ fees and costs, and an additional $175,630 in interest on the claims. District court awarded only $4,986.58 in interest, finding Plaintiffs entitled to interest on only the $25,000 in UIM damages, and awarded not one penny of the requested fees/costs, denying $1,117,169.85 of Plaintiffs’ total request.

            Plaintiffs appealed on the denial of fees/costs claiming the requested fees/costs were mandatory under the Pennsylvania Bad Faith Statute which provides that “[in[ an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions: (1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%; (2) Award punitive damages against the insurer; and (3) Assess court costs and attorney fees against the insurer.” Plaintiffs relied on the word “all” in the “, , , may take all of the following actions” language. Both the district and federal appeals courts relied on the same language, but focused on the word “may.” This one, tiny little three-letter word gave the district court discretion in awarding attorney’s fees or in denying them altogether under circumstances such as the ones involved in this case.

            Here, Plaintiff’s counsel did not maintain contemporaneous time records. Instead, they had one attorney recreate the time records by retrospectively estimating the length of time spent on each individual task for not only herself, but for others – including colleagues with whom she could not consult because they had already left the firm. Ironically, Plaintiffs’ counsel included in the fee request $27,090 for the 64.5 hours spent recreating the time records.

            Failure to maintain contemporaneous time records did not automatically kill the fees request, but caused the court to conduct a “more exacting scrutiny than we would bring to contemporaneous and detailed records.” Grendel’s Den, Inc. v. Larkin, 749 F.2d 945, 952 (1^st Cir. 1984).

            So, what did that more exacting scrutiny reveal? It revealed that Plaintiffs’ counsel was entitled to only thirteen percent (13%) of the requested fees after disallowing time entries that were so vague (e.g. “Communicate,” “Other” and “Review/Analyze” with no additional explanation) that there was no way to discern whether the hours billed were reasonable, and other entries the court found to be unnecessary and excessive, such as the 562 hours billed for “Trial Prep.”

            Finally, Plaintiffs’ counsel failed to meet their burden of showing that their requested hourly rates were reasonable. They provided the court with no affidavits identifying their usual billing rates and levels of experience, and had only one of the five billing attorneys testify at the fee petition hearing about her background and experience.

            Bottom line, the District Court found the request so “outrageously excessive,” it exercised its discretion to award no fees at all.

BLOG OBSERVATION: We agree with the Third Circuit’s conclusion. It is the duty of the requesting party in a fee petition to make a good faith effort to exclude hours that are excessive, redundant, or otherwise unnecessary.

Fee Substantiation, Lodestar: Detailed Fee Billings Not Required For Substantiation And Fee Recovery Does Not Need To Be Proportional To Damages Awarded Under Contractual Fee Recovery

$625-675 Partner Hourly Rates And $395-475 Associate Hourly Rates Were Found Reasonable For Los Angeles Attorneys.

             In SP Investment Fund I v. Grossman, Case No. B284289 (2d Dist., Div. 4 Aug. 29, 2018) (unpublished), prevailing plaintiff moved for attorney’s fees based on a contractual fees clause, winning the whole requested tamale (including additionally requested fees) in the sum of $450,608.00 despite the fact that jury awarded damages were only $294,620.90.

             Losing defendant apparently was appalled at the fee award and appealed. Unfortunately, nothing changed at the appellate level.

             Although miffed that only attorney declarations were provided, California state courts—unlike most federal courts—are more liberal, accepting attorney declarations rather than detailed billing statements to substantiate fee requests. (Lunada Biomedical v. Nunez, 230 Cal.App.4^th 459, 487-488 (2014).) The Los Angeles rates for partners of $625-675 over a 2015-2017 time frame and for associates of $395-475 over the same time frame were not found unreasonable. The defense argued that the fee award had to be proportional to the damages awarded, but this was not a defensible argument. (Concepcion v. Amscan Holdngs, Inc., 233 Cal.App.4^th 1309, 1321 (2014).)

Employment, Lodestar, Multiplier: Employer Not Winning Total Defense Victory In De Novo Sup. Ct. Appeal Of Labor Comm. Award Properly Hit With Adverse Fee Award Of $86,160 Even Though Labor Comm. Award Only $4,250 (Rev. Down To $2,250 By Court Of Appeal)

Limited Success Argument Does Not Diminish Fee Recovery In This Particular Context.

            In Nishiki v. Danko Meredith P.C., Case No. A147733 (1^st Dist., Div. 4 Aug. 1, 2018) (published), an employer suffered an adverse Berman hearing award before the Labor Commissioner for waiting time penalties for failure to deliver a check for final wages to the tune of $4,250 although employee lost two other claims for unpaid vacation and rest period premium wages (with the rest period claim being by far and away the largest claim). The employer did a de novo appeal to the superior court, which also awarded $4,250 for waiting time penalties. Employer should have stopped after the Labor Commissioner award, because the superior court awarded employee $86,160 in attorney’s fees (out of a requested $90,900) under Labor Code section 98.2(c). Although there is a very commonsense discussion of waiting time penalties of use for employment practitioners, with the appellate court reducing the penalty award down to $2,250, the fee award was upheld by the 1/4 DCA panel.

            Under section 98.2(c), an employee successful in a de novo appeal, obtaining an amount greater than zero, can obtain the full costs of litigation, including reasonable attorney’s fees, against the employer. The statute is designed to act as a disincentive to appealing the Labor Commissioner’s decision. Employer argued that employee’s fee award was too much because employee did not prevail on two of her claims. This argument was rejected based upon the very particular “disincentive” rationale of section 98.2 and above zero success language of the statute—with the appellate court candidly stating that “defendant has only itself to blame” by appealing the Berman hearing award. The superior court’s award of a 1.5 positive multiplier presented no problem given the contingency risk taken by employee’s counsel. Finally, $650 per hour for a San Francisco 20-plus decade practicing attorney was not an unreasonable lodestar hourly rate.

            BLOG OBSERVATION—An employer needs to carefully consider the appeal of a Berman hearing award, especially where it is in the range here. The employer must appeal quickly, post a full bond or cash undertaking for the award in quick fashion (with the period being jurisdictional), and new claims can be raised by the employee in the de novo hearing—not to mention the fee-shifting disincentive repercussion!

Civil Rights, Lodestar, Reasonableness Of Fees: Over Vigorous Dissent, Ninth Circuit Rules That C.D. Cal. Local Rule Default Judgment Fee Schedule Does Not Apply Where Plaintiff Obtaining Default Judgment Asks For Lodestar Fees In ADA Case

Dissenting Circuit Judge Believed That Not Adhering To Local Rule Suggestions Would Lead To Potential Abuse.

            The Ninth Circuit, in Vogel v. Harbor Plaza Center, LLC, No. 16-55229 (9^th Cir. June 25, 2018) (published), visited the issue of how attorney’s fees in an American with Disabilities Act (ADA) case should be handled in an uncontested default judgment situation. This issue actually produced a majority, concurring, and dissenting opinions, although the majority opinion (agreed to by the concurring judge) found that the lodestar approach should be used where a successful plaintiff requests ADA fees which exceed the caps under a Central District of California Local Rule which has a much lower limit tethered to the amount of the default judgment.

            What happened here is that a plaintiff obtained a default judgment in an ADA case after the defense failed to appear at a pretrial conference. Plaintiff then sought $36,671.25 in attorney’s fees after winning statutory damages of $4,000 and costs of $3,590.83. However, the district judge awarded only $600 fees under C.D. Cal. Local Rule 55-3 which did allow fees in excess of this amount to be determined by the district judge under certain conditions. Plaintiff appealed, with no appearance filed by the defense.

            The Ninth Circuit majority opinion found that it was error for the district judge not to use the lodestar fee approach even in an uncontested default judgment proceeding, rather than presumptively apply the Rule 55-3 caps. The district court did, in the majority/concurring view, have to consider a lodestar request over the default judgment rule schedule of fees. In essence, the ADA lodestar approach prevailed over the C.D. Cal. default judgment fee schedule.

            The majority opinion did indicate that the district court did have to scrutinize plaintiff’s request, if one over the scheduled amounts, for reasonableness.

            Concurring Circuit Judge Christen believed that the district court did not have to adhere to local default judgment fee schedules in a civil rights case like the ADA case before it.

            Dissenting Senior Circuit Judge Kleinfeld believed that uncontested default judgments should be governed by the Local Rule as a starting point and that the district judge did not abuse his discretion in rejecting an increase in this matter. Otherwise, ADA plaintiffs will abuse requests by “puffing” up the presumptive schedule fee in many cases, in the dissent’s view.

Lodestar/Substantiation Of Reasonableness Of Fees: Prevailing Party’s Attorney’s Declaration And Billing Statements Constituted Adequate Substantiation

Full Fee Request Properly Awarded By The Trial Court, Which Did Not Need To Expressly Discuss Lodestar Factor Consideration In Her Ruling

            As we have observed before, federal courts generally require more detailed substantiation in support of fee requests and require district judges to explain their fees awards with some specificity.  (See posts under our Home Page category, “Substantiation of Reasonableness of Fees.”)    By way of contrast, Aliu v. Elavon Inc., Case No. B269451 (2d Dist., Div. 3 Apr. 4, 2018) (unpublished) shows key differences in what is required for fee petitions or rulings on them in the California state court system.

            Aliu was a situation where the trial judge awarded full requested fees to a prevailing party to the tune of $91,828.75 in a contract-based lawsuit.  Attorney for the prevailing party submitted a declaration describing the work and a copy of his firm’s time sheets.  That sufficed, because California does not require detailed time records, with lower courts having discretion to award fees based on declarations of counsel describing the work done and the court’s own view of the number of hours reasonably spent.  (Raining Data Corp. v. Barrenechea, 175 Cal.App.4^th 1363, 1375 (2009).)  Also, a California trial judge is not obligated to discuss the lodestar factors in issuing a ruling on a fee request, although the record in Aliu demonstrated that she did.  (Ketchum v. Moses, 24 Cal.4^th 1122, 1140 (2001) [our Leading Case No. 8].)  Finally, the trial judge can back up his/her ruling through his/her own judgment of the value of the work based on direct observation of the attorney’s services and his/her own legal expertise based on prior hearings/being a practitioner in the past, as again was done in Aliu.  (PLCM Group, Inc. v. Drexler, 22 Cal.4^th 1084, 1095-1096 (2000) [our Leading Case No. 1].) 

Landlord/Tenant; Lodestar; Special Fee Shifting Statute: Two Fee Orders Reversed On Appeal

Trial Judge Failed To Honor Voluntary Dismissal By Plaintiffs In Awarding Fees To Defense, While Lower Court Failed To Utilize Lodestar Methodology In Awarding Reduced Fees To Plaintiffs Under Settlement Agreement.

            Duncan v. Nathan, Case No. A147468 (1^st Dist., Div. 5 Feb. 5, 2018) (unpublished) involved a landlord-tenant dispute involving claims for negligence, quiet enjoyment breach, San Francisco rent ordinance violations, constructive eviction, and intentional infliction of emotion distress by tenants against landlord/affiliates.  On the eve of trial, plaintiffs settled with the real landlord for $12,500 each, with a reservation of the fees issue for the trial judge to decide later.  Against defendant landlord manager, the jury awarded $2,153.03 against manager on the negligent claim, but found for her on the remaining claims which survived a nonsuit motion (with the jury finding for the defense on the statutory ordinance eviction claim asserted by plaintiffs).  Subsequently, the lower court awarded the defense the entirety of her requested fees based on a fee-shifting provision in the San Francisco ordinance, and awarded plaintiffs $3,750 in fees each (much reduced from the almost $142,000 lodestar request plus a 1.35 positive multiplier) based on the settlement stipulation fee reservation clause.

            Plaintiffs appealed both fee awards, prevailing on both challenges on appeal.

            With respect to the fee award in favor of the defense, the appellate court determined that the trial judge erred in not granting plaintiffs’ request for a voluntary dismissal of the San Francisco ordinance eviction claim, although it did remand for a look at whether there was another ground for fee entitlement.

            On plaintiffs’ appeal of the reduced fee awards (about 30% of the $12,000 settlement), the appellate court found that the lower court had failed to follow the lodestar methodology in determining the amounts of fees to be awarded, instead focusing on the financial condition of the nominal landlord (meager) and plaintiffs (who appeared to be well heeled).  Given the failure to follow the correct methodology, the matter was reversed to use the correct test, factoring in the results obtained against landlord, any unnecessary or excessive litigation, and time spent litigating claims against the landlord manager. 

            BLOG OBSERVATION—The appellate court did not discuss whether financial condition was a relevant consideration under Civil Code section 1717.  There is a split of thinking on this issue, as we discussed in our April 13, 2016 post of a Sixth District unpublished decision, McNeil v. Symmetricom, Inc.

Civil Rights, Lodestar, Multiplier, Reasonableness Of Fees: Trial Judge Properly Cut Lodestar By 25%, And Applied A 1.5 Positive Multiplier, For Total Fee Award Of $752,925.92 In Case Garnering Compensatory Damages Of $625,000 To Plaintiff

Trial Judge Also Properly Awarded $15,000 Supplemental Fees For Posttrial Work.

            For those of you not practicing in the employment/FEHA area, civil rights plaintiffs in disability/harassment/failure to accommodate cases are entitled to recovery of attorney’s fees under a pro-plaintiff statutory fee-shifting provision to be construed liberally to allow plaintiff full compensation for prevailing in these types of cases.  The fee (which must be reasonable and not inflated or subject to other infirmities) is calculated by using the lodestar, namely the number of hours multiplies by a reasonable hourly rate for practitioners in the community where the case was venued, augmented or decreased by certain enhancement factors (with the lodestar sometimes adjusted upward for the plaintiff’s attorney carrying the risk of the case on a contingency basis).  These principles were well summarized and at play in Estelle v. Los Angeles County MTA, Case No. B268085 (2d Dist., Div. 7 Nov. 17, 2017) (unpublished), authored by a 3-0 panel by Justice Segal.

            In Estelle, Plaintiff, an MTA business driver obtained a jury verdict of $625,000 in a disability/failure to engage in interactive process case.  Under the FEHA fee-shifting statute, plaintiff then requested total fees of $1,171,128, which was inclusive of a 1.75 positive multiplier enhancement.  The lower court reduced the base lodestar by 25% for plaintiff’s unsuccessful work on some claims, but did positively adjust the reduced lodestar through an award of a positive 1.5 multiplier—resulting in a total fee award of $752,925.92.  Later, plaintiff requested supplemental fees of $75,640.50 (lodestar plus a positive 1.5 multiplier request) for posttrial work, but the trial judge found this excessive and awarded $15,000 instead.  All this prompted an appeal by the defense.

            Nothing changed on appeal.  The 1.5 multiplier was no abuse of discretion especially given that the case was taken on a contingency basis and the lawyering was found to be acceptable.  Supplemental fees for posttrial and appellate work are allowed under interpretative case law, with the trial judge exercising judgment in reducing for what he deemed to be excessive work when fashioning his $15,000 award.

Lodestar: Non-Prevailing Parties’ Failure To Properly Present Financial Information To Diminish Lodestar Request Sustained Large Fee Award

Appellants Failed To Follow Trial Court Options, Or Ask For Sealing Of Financial Records Under Applicable California Rules Of Court.

            After a prior appeal in which the reviewing court remanded a sanctions/fee award to consider what causes of action it related to and also consider the financial circumstances of appellants as far as the lodestar amount, the appellants in Garau v. Torrance Unified School District, Case No. B268172 (2d Dist., Div. 7 Nov. 13, 2017) (unpublished) seemingly failed to follow the trial court’s directives as far as presenting financial information and never followed the motion procedure to seal financial records under California Rules of Court, rules 2.550 and 2.551.  Instead, it relied on stale and cursory fee waiver information.  That led to the trial judge’s lodestar fee award of $644,037 against appellants.  Unfortunately for them, that was affirmed on appeal under the deferential abuse of discretion standards given that they failed to properly submit financial information as a mitigating lodestar consideration. 

Lodestar/Reasonableness Of Fees: $262,400 Fee Award In Real Estate Misrepresentation Case Won By Defendant Sellers Affirmed On Appeal

Various Lodestar Challenges Are Rejected In Unpublished Portion of Opinion.

            In RSB Vineyards, LLC v. Orsi, Case Nos. A143781/A145029 (1^st Dist., Div. 3 Sept. 29, 2017) (partially published; fee discussion not published), the trial and appellate courts confronted a plaintiff misrepresentation action relating to its purchase of a residence with a vineyard/wine tasting building from various seller defendants.  Plaintiff’s theory was that certain structural and other problems were not properly disclosed.  Plaintiff lost a summary judgment to the defense, with the trial judge awarding attorney’s fees of $262,400 and $4,868 in expenses to the defendants under a contractual clause allowing “reasonable” fees and costs to the prevailing parties.

            Appealing plaintiff lost both the merits and the fee award challenges. 

           Although unpublished, the fee proceeding basically pitted the defense attorney’s showing against a fee expert opining that only half of the requested fees should be granted.  The trial court went with the defense showing, a showing sustained on appeal.  The complaint pre-filing efforts were found compensable.  (Stokus v. Marsh, 217 Cal.App.3d 647, 656 (1990).)  The trial judge did not have to credit the opposition’s fee expert given the need to consider all the evidence and the judge’s experience in dealing with the overall case.  Finally, the trial judge could award a lodestar hourly rate commensurate with hourly rates for practitioners in the community rather than a lower rate billed to the client based on whatever factors were in play.  Fee award affirmed.

Class Action, Common Fund, Employment, Lodestar, Multiplier: N.D. Cal. District Judge Ilston Awards Wage/Hour Class Action Counsel $15,200,002.90 In Hybrid Statutory Fee/Common Fund Case Against Wal-Mart

District Judge Confronts Multiple Issues In Reaching Fee Award.

            U.S. District Judge Susan Ilston in Ridgeway v. Wal-Mart Stores, Inc., Case No. 08-cv-05221-SI (N.D. Cal. Sept. 14, 2017 Doc. #606) confronted numerous issues in deciding the appropriate award to class counsel in a truck driver employee class action case against Wal-Mart for wage hour violations, with a judgment producing a $60.8 million common fund available for distribution to class members.  Eventually, as we detail below, District Judge Ilston awarded $15,200,002.90, 25% of the common fund, although she did an analysis under both the fee-shifting statute (California Labor Code section 1194(a)) and the common fund doctrine.

            As an overview, District Judge Ilston characterized this as a “hybrid action,” involving potential fee recovery under a specific fee-shifting statute and the common fund doctrine.  Class counsel wanted a fee recovery of $20,266,670.50 (one-third of the common fund), while Wal-Mart argued that no more than $2,831,149.09 should be awarded—quite a discrepancy. 

            On the Labor Code fee-shifting front, she found that the hourly rates requested were acceptable, decided to make no reductions for vague time entries, and did not reduce for block billed entries under the circumstances.  District Judge Ilston also found that 64% time billing by higher level partners was appropriate for the case, determined that most of the time on lost or abandoned claims were interrelated to successful claims (doing a minor reduction for meal break claims), and put an imprimatur on continuing education work which aided class counsel in their work.  However, she did make reduction for these items:  (1) 30% reduction in travel time for class counsel from mainly Fresno to the San Francisco court venue; (2) a 5% across-the-board reduction proposed by class counsel for redundant work, plus a little more too [HINT TO PRACTITIONERS—class counsel was wise to propose this reduction even though they did not have to, the district judge accepting this as overall reasonable in nature]; and (3) no allowance for class counsel’s legislative lobbying efforts.  That brought the lodestar request down to $6,491,662.12 (down from the requested $7,320,454.75).  Class counsel requested a 2.71 positive multiplier and Wal-Mart advocated zero.  After agreeing that contingent risk, results obtained (each class member would likely get around $70,000), complexity, and preclusion of employment factors tilted in favor of a positive multiplier, District Judge Ilston granted a 2.0 positive multiplier, for a total statutory-fee award of $12,983,324.25. 

            That shifted things to fee recovery under the common fund doctrine.  She acknowledged that the Ninth Circuit has a 25% presumptive percentage-of-recovery award in common fund cases, although this had not been adopted conclusively by California state courts (given that diversity law applied).  Plaintiff asked for one-third, but District Judge Ilston decided to go with the 25% benchmark.  So, that meant that the total fee award based on the 25% was $15,200,002.90, with an offset allowed for the prior $12,983,324.25 statutory fee award, such that an additional $2,216,678.65 was added through the common fund doctrine.  When all the math is done, $15,200,002.90 is the result, plus some additional costs and litigation expenses.

Lodestar: Percentage Of Recovery Fee And Incentive Awards Reversed By Tenth Circuit

Lodestar Method Should Have Been Used Instead.

North Star.  Photo:  Udo Kugel.  2001. Wikipedia.  Public domain.

        Chieftan Royalty Co. v. Enervest Energy Institutional Fund XIII-A, No. 16-6022  (10^th Cir. July 3, 2017) (published) was a class action based on diversity jurisdiction where a district judge awarded class counsel fees and a class representative an incentive award based on the percentage of recovery method.  These determinations were reversed on appeal.  Since fee awards are substantive in nature, Erie required application of Oklahoma state law which has adopted the lodestar method for compensation of requested attorney’s fees.  The incentive award was overturned because such awards should not be based on percentage-based formulas but instead upon proof as to the value of the work by the class representative. 

Class Action/Lodestar: Recent 2017 Article Suggests N.D. Cal. Federal District Judges Are Using Lodestar Rather Than Percentage Of Recovery Fee Methodology In Class Action Mega Settlement Cases

Three Federal Judges Opted To Use Lodestar Method In Recent Cases.

        National Association of Legal Fee Analysis (NALFA) recently summarized a recent Reuters article suggesting that some federal judges in the Northern District of California have opted to use the lodestar approach to awarding fees, versus the percentage of recovery method, in mega-class actions with sizable settlements.

        Here are the specifics:

• District Judge Lucy Koh in a Disney/Dreamworks case awarded fees of $18.5 million (lodestar plus a “doubling” multiplier), although class action counsel had requested $31.5 (21% of the $150 million settlement);
• District Judge William Alsup used the lodestar approach in awarding fees in a $200 million settlement against Wells Fargo in 2015; and
• District Judge Charles Breyer, in the VW dealer wing of the clean diesel class action litigation, awarded $3 million to class counsel (using the $1.5 million lodestar, but doubling to $3 million) as opposed to the $28.6 million request based on a 2.4% recovery by dealers in a billion dollar settlement context.

        We will say that the California Supreme Court provided state court judges with flexibility to use either approach in the Lafitte decision, 1 Cal.5th 480 (2016) [one of our top 20 2016 Year-End decisions]. Looks like federal judges are using discretion to deviate from the normative practice of utilizing the percentage of recovery methodology at the federal level, depending on the case circumstances.

Lodestar/Private Attorney General: 1021.5 Fees Must Be Based On Lodestar Methodology, Not Percentage Of Recovery Test

 

 

Re-Do Was The Result In This One.

 

            In Seltzer v. R.W. Selby & Company, Inc., Case No. B270168 (2d Dist., Div. 2 May 3, 2017) (unpublished), a trial judge in a class action case awarded $29,409 in attorney’s fees to class counsel under the private attorney general statute based on the percentage-of-recovery method rather than the lodestar method.  Class counsel has requested a lodestar of almost $473,000 plus a multiplier based on risk.  The class recovery was $88,227, such that the actual fee award was a third of that.

            The 2/2 DCA reversed.  Notwithstanding the equities, the appellate court determined that the lodestar method had to govern as a matter of law based on Serrano v. Priest, 20 Cal.3d 25, 48, fn. 23 (1977) (Serrano III) when it came to a private attorney general recovery.  Even though the percentage-of-recovery method could be used as a cross check, the lodestar governed until Serrano III is abrogated for 1021.5 purposes, according to the appellate court.  A re-do was required, one based on the lodestar methodology. 

Lodestar/Private Attorney General: 1021.5 Fees Must Be Based On Lodestar Methodology, Not Percentage Of Recovery Test

Re-Do Was The Result In This One.

           Above:  Lockheed Model 18 Lodestar.  Source: www.airwaysmuseum.com

            In Seltzer v. R.W. Selby & Company, Inc., Case No. B270168 (2d Dist., Div. 2 May 3, 2017) (unpublished), a trial judge in a class action case awarded $29,409 in attorney’s fees to class counsel under the private attorney general statute based on the percentage-of-recovery method rather than the lodestar method.  Class counsel has requested a lodestar of almost $473,000 plus a multiplier based on risk.  The class recovery was $88,227, such that the actual fee award was a third of that.

            The 2/2 DCA reversed.  Notwithstanding the equities, the appellate court determined that the lodestar method had to govern as a matter of law based on Serrano v. Priest, 20 Cal.3d 25, 48, fn. 23 (1977) (Serrano III) when it came to a private attorney general recovery.  Even though the percentage-of-recovery method could be used as a cross check, the lodestar governed until Serrano III is abrogated for 1021.5 purposes, according to the appellate court.  A re-do was required, one based on the lodestar methodology. 

Civil Rights/Lodestar: Trial Court Award Of Fees Under Section 1983 Reversed And Remanded For Impermissible Double Deduction From Lodestar And Failure To Consider Limited Success In Calculating Fees On Fees

 

Also, Costs Improperly Excluded From Fee Calculus As Permitted Under § 1983.

    The Third District in Clapp v. Terry, Case No. C076562 (3d Dist. Nov. 23, 2016) (unpublished) is an important primer on the proper methodology to be used when awarding lodestar fees, fees on fees, and costs in civil right cases to prevailing plaintiffs under 42 U.S.C. § 1983.

    There, plaintiff won $12,533.43 compensatory and $500 punitive damages in total against two defendants in an excessive force case, although losing related claims and obtaining no verdict against the County, its sheriff, or a deputy.  Plaintiff then made two applications for fees and costs pursuant to 42 U.S.C. § 1983. 

    On the first one where $440,473 in fees was sought, the trial judge made some lodestar reductions for efficiency and deduction of hours spent against defendants for which no recovery was had, and then made a .4 further reduction for limited success in the case, bringing the fee award down to $167,116.32.  The lower court also failed to award some costs which were included in the fee request.  Plaintiff appealed those determinations.

    The second application, for “fees on fees,” sought $72,506.50 in fees and $2,126.70 in costs.  The lower court awarded them all, determining that the limited success consideration only went to the merits and should not be factored into the “fees on fees” calculation.  This prompted an appeal by the two losing defendants.

    The Third District sorted through the lower court’s methodology, reversing and remanding the various determinations.  The main infirmity with the fee award on the first application was the lower court’s utilization of an impermissible “double deduction” by initially reducing for unsuccessful hours and then again doing a further .4 reduction for the same limited success factor.  The trial judge also failed to award costs/expenses included in the fee requests, which are compensable as fees under § 1983 (with California’s normal routine costs analysis being irrelevant).  The flaw in the “fees on fees” calculation was the lower court’s failure to consider degree of success in awarding the fees sought under the second application.  Remanded for a “re-do.”

Lodestar/Special Fee Shifting Statute: Ninth Circuit Remands FOIA Fee Award For A “Re-Do” Given That District Court Relied On Stale Cases On Prevailing Hourly Rate For Winning Plaintiffs

 

Majority Found Appeal Notice Encompassed Fee Award, But Dissent Did Not Agree And Found Plaintiffs Did Not Provide Hourly Rate Evidence In The Right Time Period And For FOIA Cases.

     Hiken v. Department of Defense, No. 13-17073 (9^th Cir. Sept. 6, 2016) (published) is a situation where magistrates, district judges, and the Ninth Circuit dealt with a fee award to winning plaintiffs in a Freedom of Information Act (FOIA) case, which has a fee-shifting statute allowing fees to a substantially prevailing party under 5 U.S.C. § 552(a)(4)(E).

     Plaintiffs moved for fees of $381,633.39 based on its current billing rates, with the government opposing based on lower prevailing market rates ($200 versus the much higher current billing rates claimed by plaintiffs). The district judge eventually granted the lower $200 hourly rate, awarding $180,520 after one district judge went with the lower hourly rates and a magistrate judge went with higher rates. The Ninth Circuit, in a 2-1 opinion, remanded for a “re-do,” over the dissent of Circuit Judge Rawlinson.

     Plaintiffs first had to surmount a jurisdictional hurdle that the appeal dealt with post-fee order events rather than an appeal from the fee award itself. The majority liberally construed the notice, while the dissent would have gone the other way.

     On the merits, the majority believed the district judge had relied on stale decisions on the prevailing hourly market rates under the lodestar analysis as well as decided plaintiffs were entitled to fees on appeal. Circuit Judge Rawlinson believed that the district judge did not commit error by relying on government hourly rate information because plaintiff never put in relevant hourly rate evidence for the pertinent time period and for FOIA cases. Remanded for a “re-look.”