Source: http://thecomplexlitigator.com/post-data/tag/Attorney%27s+Fees
Timestamp: 2019-04-22 04:10:00+00:00

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I take this opportunity to say I told you so. "We clarify today that when an attorney fee is awarded out of a common fund preserved or recovered by means of litigation (see Serrano III, supra, at p. 35), the award is not per se unreasonable merely because it is calculated as a percentage of the common fund." Laffitte, et al. v. Robert Half International, Inc., et al., at p. 2 (August 11, 2016). See the rest if you have the time, but this should put an end to the spreading nonsense that lodestar is the method for calculating fees in common fund class action settlements.
Funny timing on this one. In Episode 14 of the Class Re-Action podcast, our discussion turned at one point to fee awards in class actions. We briefly mentioned Laffitte v. Robert Half International, Inc. (November 21, 2014), but didn't dive under the hood. But now that I've had a chance to read it, I see that a postscript to the podcast is in order. In Laffitte, the Court of Appeal (Second Appellate District, Division Seven) considered an appeal by an objector to a class action settlement. One issue the Court touched on was the propriety of using a percentage of the fund to award fees (with a lodestar crosscheck), rather than the currently trendy approach of using lodestar with a percentage crosscheck. Here's a rundown of the Court's opinion.
The plaintiff settled a class action lawsuit against a group of defendants related to Robert Half International Inc. for $19 million. The trial court granted the parties’ ex parte application for an order amending the settlement agreement, class notice, and claim form. Among other things, the amended settlement agreement said that Robert Half would pay a gross settlement amount of $19,000,000. Subject to court approval, the settlement agreement listed the following payments would be made from the gross settlement amount: class counsel attorneys’ fees of not more than $6,333,333.33 (one third of the gross settlement amount) and costs not to exceed counsel’s actual costs, class representative payments not to exceed $80,000, settlement administrator fees not to exceed $79,000, civil penalties owed to the California Labor and Workforce Development Agency, and applicable payroll taxes on the employees’ recovery.
In support of their motion for attorneys’ fees, class counsel submitted declarations from the attorneys in each of the three law firms serving as class counsel. The attorneys did not submit detailed time records. The declarations stated that class counsel worked a total of 4,263.5 hours on the case (and anticipated working 200 hours on the appeal) and, using the hourly rate for each attorney, calculated that the total lodestar amount was $2,968,620 ($3,118,620 including the appeal). Class counsel requested a lodestar multiplier of between 2.03 to 2.13 for a total requested attorneys’ fee award of $6,333,333.33.
The notice given to the class members complied with California Rules of Court rule 3.769 by apprising them of the agreement concerning attorneys’ fees. The notice told the class members that class counsel could receive up to $6.3 million in attorneys’ fees. The notice also advised the class members of the procedures for objecting to the proposed settlement and appearing at the settlement hearing, where they could present their objections to any aspect of the settlement, including the amount of attorneys’ fees to be awarded to class counsel.
Slip op., at 13. Positive number one from this opinion: no need to copy the approach of In re Mercury Interactive.
The trial court did not use the percentage of fund method exclusively to determine whether the amount of attorneys’ fees requested was reasonable and appropriate. The trial court also performed a lodestar calculation to cross-check the reasonableness of the percentage of fund award. This was entirely proper. “[A]lthough attorney fees awarded under the common fund doctrine are based on a ‘percentage-of-the-benefit’ analysis, while those under a fee-shifting statute are determined using the lodestar method, ‘[t]he ultimate goal . . . is the award of a “reasonable” fee to compensate counsel for their efforts, irrespective of the method of calculation.’ [Citations.]” (Apple Computer, Inc. v. Superior Court (2005) 126 Cal.App.4th 1253, 1270.) It therefore is appropriate for the trial court to cross-check an award of attorneys’ fees calculated by one method against an award calculated by the other method in order to confirm whether the award is reasonable.
Brennan argues that, in connection with the court’s lodestar calculations, class counsel did not submit detailed attorney time records. Such detailed time records, however, are not required. “It is well established that ‘California courts do not require detailed time records, and trial courts have discretion to award fees based on declarations of counsel describing the work they have done and the court’s own view of the number of hours reasonably spent.
Slip op. at 24-25. The Court then concluded that there was no reason to find the “clear sailing” provision suspect in this matter. The trial court was affirmed and costs were awarded to the plaintiff and defendants, indicating the Court’s view of the lack of merit in the appeal.
I've had a long-running debate going with several of the judges in the complex litigation program regarding fee awards in class actions. I contend that California has long recognized contingent fee awards, and there is nothing about class actions that justifies a "lodestar first" approach that seems to be a trend. A decision issued yesterday didn't settle the debate (it's a decision in a lodestar award situation, not a common fund recovery), but it adds a bit of clarity in other respects. If you are a plaintiff-side practitioner, you need to know about this one. In Concepcion v. Amscan Holdings, Inc. (February 18, 2014), the Court of Appeal (Second Appellate District, Division Seven) considered a defendant's appeal of a $350,000 fee award following settlement of a Song-Beverly Credit Card Act suit.
Counsel for plaintiffs submitted declarations describing, in general terms, the categories of work they performed. The trial court then required the in camera submission of billing records that were not provided to the defendant's attorneys. On appeal, the defendant argued that class counsel failed to submit sufficient evidence to justify the fee award and, in particular, did not demonstrate the time expended by the six law firms involved was reasonably necessary and nonduplicative. The defendant also argued that the trial court’s in camera review of class counsel’s billing records to support the award was fundamentally unfair and denied it due process. The Court agreed that it was improper for the court to rely upon billing information not provided to the defendant, preventing any opportunity to challenge it.
Upon learning that the Court rejected in camera review of billing records, you might be tempted to conclude that this means that detailed billing records must be provided to the defendant. That is not required, and it is also why this case is important.
Slip op., at 18. The clear message is that, while it is proper for counsel to decline to submit billing sheets, the "reasonable" fees must be supported with a detailed declaration as an alternative approach. It would appear that, to be definitely safe, a declaration for this purpose must include a thorough summary of the number of hours spent on various categories of work in the case. But the practice of requiring the submission of detailed billing records is improper. Whether you want to go that route and tell the trial court it is improper is another story.
The Court essentially held that, while billing records weren't necessary to support a fee request, once provided, they had to be shared. The Court dismissed the argument that the records were likely to contain a large volume of privileged information, suggesting that redaction would suffice. The Court also found that cursory declarations with total numbers of hours were insufficient. So, sufficient lies somewhere between billing records and cursory declarations with total hours listed. Now you know what you can't do, what you don't have to do, and what you probably ought to do.
This isn't really on topic, but it was interesting enough to note. In Sands & Associates v. Martin Juknavorian (October 10, 2012), the Court of Appeal (Second Appellate District, Divsion One) held that the Of Counsel relationship is sufficiently "close, personal, continuous, and regular" that a firm represented by Of Counsel to the firm cannot recover fees as a prevailing party, even when a prevailing party clause applies to the dispute.
Decision forthcoming in Kirby, et al. v. Immoos Fire Protection, Inc.
The court limited review to the following issues: (1) Does Labor Code section 1194 apply to a cause of action alleging meal and rest period violations (Lab. Code, § 226.7) or may attorney’s fees be awarded under Labor Code section 218.5? (2) Is our analysis affected by whether the claims for meal and rest periods are brought alone or are accompanied by claims for minimum wage and overtime?
While this case ostensibly addresses issues of first impression in California, like many such decisions it was only a matter of time. In Aleman v. Airtouch Cellular (December 21, 2011), the Court of Appeal (Second Appellate District, Division Two) examined claims for reporting time pay and split shift premiums. The case was brought by former employees of AirTouch. The plaintiffs worked mostly as retail sales representatives or customer service representatives at AirTouch stores and kiosks. Plaintiffs alleged that AirTouch did not properly pay its nonexempt employees for attending mandatory store meetings.
On the reporting time claim, the Court concluded that the plaintiffs were not entitled to receive "reporting time pay" for attending meetings at work, because all the meetings were scheduled and they worked at least half the scheduled time. This issue stems from the argument that reporting time pay should be based on a two-hour minimum. Thus, goes the argument, if you are called into a meeting one day for two hours, you should get two hours of pay, even if the meeting last 90 minutes. This theory is dead. If a meeting is scheduled, and the meeting lasts at least half the scheduled time, that is good enough.
On the split shift differential claim, the Court concluded, consistent with at least one treatise to examine the issue, that the split shift differential is intended only to protect the minimum wage law. Thus, if your pay for the hours worked is enough to satisfy the split shift premium of one extra hour of pay at minimum wage, then no further pay need be supplied.
On the plus side, the Court explicitly held that an award of attorney's fees was improper, since both reporting time pay and split shift pay were governed by Labor Code section 1194, governing payment of minimum wages. Since the one-way fee shifting statute controls the claims, defendant could not recover fees. Phew.
On a petition for review, review was granted, and the matter held, in United Parcel Service Wage And Hour Cases (February 24, 2011) (fees not available to defendant prevailing on Labor Code section 226.7 claims), covered previously on this blog here. Review was previously granted in a case addressing this issue: Kirby v. Immoos Fire Protection, Inc. (July 27, 2010).
On a petition for review, review was denied in Price v. Starbucks Corporation (February 17, 2011).
For those keeping track of such things, United States District Court Judge Marilyn Hall Patel (Northern District of California) found "reasonable attorneys fees based on rates of $650 for partner services, $500 for associate attorney services and $150 for paralegal services. See Suzuki v. Hitachi, 2010 WL 956896 *3 (N.D.Cal. March 12, 2010)." Faigman v. AT&T Mobility LLC, 2011 WL 672648 (N.D.Cal. Feb 16, 2011). The opinion also noted that counsel requesting a higher rate should provide information supporting the departure from those presumptively reasonable hourly rates.
The 2000 amendment providing a pay remedy bears sufficient hallmarks of a penalty designed to shape employer behavior, and is sufficiently distinct from the customary types of bargained-for wages recognized under the law, that we cannot conclude the Legislature intended a claim under Labor Code section 226.7 to be interpreted as a claim for “nonpayment of wages” within the meaning of section 218.5. The section 226.7 pay remedy for missed meal and rest breaks was enacted 14 years after the Legislature enacted the reciprocal fee recovery provisions of section 218.5. It is therefore not reasonable to assume that when the Legislature enacted section 218.5 in 1986 to provide for recovery of prevailing party fees in claims for nonpayment of wages and benefits, it intended that provision to permit a prevailing employer-defendant to recover fees from an employee raising a claim for denial of breaks -- a claim which at that time only supported injunctive relief.
Construing the entire statutory scheme with a view toward protecting employees, as we must, we find that a claim for remedial compensation under Labor Code section 226.7 does not trigger the reciprocal fee recovery provisions of section 218.5. Since none of the claims on which UPS prevailed permit the recovery of attorney fees, the award of statutory fees to UPS was in error.
Considering the current state of Kirby, it seems like this decision will be citable law for about 90 days, give or take a week here or there. If a Petition for Review wasn't granted, we'd certainly have a good idea about how a part of Kirby will be decided.
Untited States District Court Judge Saundra B. Armstrong (Northern District of California) granted in part and denied in part the unopposed motion of plaintiffs for an award of incentive payments and attorney's fees. In re Wal-Mart Stores, Inc. Wage and Hour Litigation, 2011 WL 31266 (N.D.Cal. Jan. 05, 2011). Counsel requested 33.3% of the maximum settlement amount of $86 million. The Court agreed that a departure from the 25% benchmark in the Ninth Circuit was appropriate but not to that degree. The Court awarded a fee equal to 27% of the maximum settlement amount.
Upon review of the record in this case, the Court finds that Plaintiffs are entitled to a reasonable incentive payment. However, the Court finds the requested award of $25,000 per named Plaintiff to be excessive, in view of the nature of their assistance in this case. First, the Court notes that the named Plaintiffs have not indicated in their declarations the total number of hours they spent on this litigation. Rather, they generally explain that they were deposed, responded to written discovery, and assisted and met with counsel. Second, in arguing that $25,000 is an appropriate award, Plaintiffs cite to cases that are clearly distinguishable. For instance, in Brotherton v. Cleveland, 141 F.Supp.2d 907 (S.D.Ohio 2001), the court awarded $50,000 to a single named plaintiff, finding that “she has spent approximately 800 hours working on this litigation.” Id. at 914. By contrast, here, there is no evidence that the named Plaintiffs' involvement reached anywhere near this level.
Slip op., at 4. The Court awarded $5,000 to each plaintiff.

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