Source: http://www.calattorneysfees.com/cases_lodestar/
Timestamp: 2018-03-19 20:25:48
Document Index: 522899970

Matched Legal Cases: ['§ 1983', '§ 1983', '§ 1983', '§ 1983', '§ 552', '§ 1988', '§ 1033', '§ 15657']

CALIFORNIA ATTORNEY'S FEES : Cases: Lodestar
Posted at 01:56 PM in Cases: Class Actions, Cases: Common Fund, Cases: Employment, Cases: Lodestar, Cases: Multipliers | Permalink | Comments (0)
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 (10th 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.
Posted at 02:59 PM in Cases: Lodestar | Permalink | Comments (0)
Posted at 08:00 AM in Cases: Class Actions, Cases: Lodestar | Permalink | Comments (0)
Above: Lockheed Model 18 Lodestar. Source: www.airwaysmuseum.com
Posted at 09:35 AM in Cases: Lodestar, Cases: Private Attorney General (CCP 1021.5) | Permalink | Comments (0)
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 Nov. 23, 2016) (unpublished) is an important primer on the proper methodology to be used when awarding lodestar fees, fees on fees, and costs in civil right cases to prevailing plaintiffs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.”
Posted at 05:51 PM in Cases: Civil Rights, Cases: Lodestar | Permalink | Comments (1)
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 (9th 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.”
Posted at 10:13 PM in Cases: Lodestar, Cases: Special Fee Shifting Statutes | Permalink | Comments (0)
Lodestar/Civil Rights: Sixth District Reverses Civil Rights Fee Award, 80% Of Requested Amount, Based On Trial Judge’s Failure To Provide A Meaningful Explanation Of The Reduction
Court of Appeal Applies Ninth Circuit’s Gates And Moreno Decisions.
Getting a haircut. Camp Shelby. 1941. William Perlitch, photographer. Library of Congress.
Kerkeles v. City of San Jose, Case No. H040915 (6th Dist. Dec. 18, 2015) (published) is a significant 2015 end-of-the year decision, where an appellate court adopted the Ninth Circuit’s heightened scrutiny for civil rights fee awards that were severely reduced in amount as compared to the fee claimant’s request for fees.
In this case, the parties reached a settlement in a civil rights case which expressly allowed the claimant to seek fees under a liberal 42 U.S.C. § 1988 fee-shifting statute, with the defense not contesting that fee entitlement could be had by plaintiff under this federal provision. Plaintiff subsequently requested $2.351 million in fees and costs, consisting of (1) a base lodestar of $1.448 million; (2) a 1.5 multiplier to this amount, which got the request to $2.25 million; (3) $103,000 in “fees on fees;” and (4) costs of a little over $75,000. For you readers out there, plaintiff’s counsel did a great job of providing a “roadmap” for the trial judge by submitting detailed declarations about the case, hourly rates (percipient and expert), work effort, and reasons for a positive multiplier based on counsel working 6 years on a risk-laden contingency basis. In response, the defense opposed with declarations challenging the hourly rate but only objecting to 23.85 hours of total time, then advocating that the lower court should reduce the hourly rates and further reduce the requested lodestar by 50%. The trial judge took the defense’s suggestion hook, line and sinker—reducing the hourly rates, then reducing the lodestar by another 50%, and denying a multiplier, for a total 80% reduced fee award of $436,807.50. (Costs of $23,935.07 were awarded, but plaintiff did not contest that award.) Plaintiff, however, did appeal the fee award.
The Sixth District reversed, finding that the trial judge did not provide an adequate explanation for the large reduction, especially given the pro-fee bent of section 1988 in the civil rights area. In doing so, the appellate court found that the federal approach on fee decision making needed to be followed, heavily relying on Gates v. Deukmejian, 987 F.2d 1392, 1399-1400 (9th Cir. 1992) and Moreno v. City of Sacramento, 534 F.3d 1106, 1111-1119—both of which held that substantial reductions would be subject to heightened scrutiny and that fee “haircuts” over 10% had to be explained in depth by the lower court. The panel even quoted Perdue v. Kenny A., 559 U.S. 542, 558 (2010) for the proposition that a lower court needs to provide a fee decision methodology permitting meaningful review rather than one on “an impressionistic basis.” By sending the matter back down for a “re-do,” the Sixth District also instructed the trial judge to revisit the hourly rate determination by keeping in mind that the contingency risk is a factor to be considered in lodestar analysis.
Posted at 04:17 PM in Cases: Civil Rights, Cases: Lodestar | Permalink | Comments (1)
Deals With Multiple Issues After Lower Court Awarded Only $19,176 Out Of Requested $231,000 In Fees.
In our March 19, 2015 post, we discussed the unpublished decision of Save Our Uniquely Rural v. County of San Bernardino, Case No. E059521 (4th Dist., Div. 2 Mar. 18, 2015). We now can update: the decision was certified for publication on April 13, 2015. The decision awarded only $19,176 out of a nearly $231,000 fee request under the private attorney general statute based on excessive hourly rates, limited success, excessive time on some tasks, and partners engaging in clerical tasks/performing undue legal research.
Posted at 10:58 AM in Cases: Lodestar, Cases: Multipliers, Cases: Reasonableness of Fees | Permalink | Comments (0)
Posted at 11:29 AM in Cases: Lodestar, Cases: Multipliers, Cases: Reasonableness of Fees | Permalink | Comments (0)
Lodestar, Reasonableness Of Fees: Trial Court’s Award Of $780,660.80 Out Of Requested $3,639,238.31 To FEHA Prevailing Plaintiff Affirmed On Appeal, Where Plaintiff Recovered $663,983
Lack of Detailed Reasoning Did Not Translate Into Abuse of Discretion, With Lower Court Having Plenty of Ammunition To Lower Requested Fees.
We know that the law in many fee-shifting areas says that awarded fees do not have to be proportional to the ultimate damages awarded, especially in civil rights or consumer areas. However, we would warn all of our followers or first time readers that proportionality is still a factor used by judges in awarding fees in many situations we have posted on over the years, as the next case illustrates from a recent vantage point.
In Kamali v. Cal. Dept. of Transportation, Case Nos. B247756/B250408 (2d Dist., Div. 7 Mar. 17, 2015) (unpublished), a plaintiff prevailed in a FEHA reasonable accommodation/interactive process failure case by which he was awarded $663,983 in total compensatory damages by a jury. He then moved under FEHA’s fee-shifting statute for an award of $3,639,238.31 in attorney’s fees, which drew a vigorous opposition by Caltrans. The lower court awarded $780,660.80 in fees, triggering a cross-appeal from plaintiff.
The fee award stood up on appeal. Despite the lack of a detailed explanation of the basis of the award, the appellate court agreed that no statement of decision or explanatory rulings are required under California law, especially where plaintiff never requested detailed rulings. [BLOG OBSERVATION—The DCA panel here might have been more sympathetic had such a request been made, so PRACTICE TIP for everyone out there.] There was conflicting testimony as to the reasonable hourly rates, reasonableness of certain work, and degree of success given that some claims were tossed at the pre-trial stage. The defense expert had suggested a maximum recovery of $780,660.80 (although Caltrans argued this should then be cut in half). The trial court obviously credited the defense expert’s analysis to a substantial degree, with the appellate court not willing to disturb a trial court’s ruling based on handling the case for over three years.
Posted at 09:22 AM in Cases: Lodestar, Cases: Reasonableness of Fees | Permalink | Comments (0)
Civil Rights/Lodestar/Multiplier: $433,000 FEHA Recovery To Prevailing Plaintiff Affirmed On Appeal
Reduction In Requested Hourly Rate and Denial of Multiplier Were No Abuses of Discretion.
In Shank v. CRST Van Expedited, Inc., Case No. G049844 (4th Dist., Div. 3 Jan. 14, 2015) (unpublished), Plaintiff won a sexual harassment jury verdict against an employer and employer’s trainer, to the tune of $391,000 in compensatory damages and $1.17 million against employer/$3,500 against trainer in punitive damages, all occurring in San Bernardino County Superior Court. (The lower court threw out the punitive damages, but they were reinstated in plaintiff’s appeal of this aspect of the proceedings below.) The trial court then awarded plaintiff FEHA fees totaling close to $433,000, but lowered the requested $450 hourly rate to $350 and denied the request for a multiplier.
The fee award was sustained on appeal.
Justice Thompson, author for a 3-0 panel, determined the reduction in the hourly rate was no abuse of discretion. Many of the declarations supporting the higher rates were from out-of-venue attorneys, with only one being from a San Bernardino attorney, such that the court could use its own experience of Inland Empire hourly rates rather than credit declarations by attorneys practicing outside the county (or inside, from that matter). Plaintiff argued that a federal court had ruled that a judge cannot rely on personal knowledge/expertise alone if other evidence of hourly rates is in the record (Coleman v. Kay, 87 F.3d 1491, 1510 (3d Cir. 1996)), but the appellate court observed that California state law was to the contrary—a judge can rely on his personal experience as far as awarding an appropriate hourly rate. (Ketchum v. Moses, 24 Cal.4th 1122, 1137 (2001) [one of our Leading Cases].) Judge Thompson also observed that “[w]ithout some analysis of why the instant case is comparable, the fee rate in another case is irrelevant.” (Slip Op., p. 31.)
Although hinting that the reviewing panel might have come to a different conclusion on the multiplier question, the abuse of discretion standard required affirmance to the multiplier denial, given the lower court found the case was not that complex, FEHA sexual harassment cases were routinely seen (not that novel), and delay in payment based on the contingency nature of a matter is not a mandatory multiplier factor which must be credited. (Ketchum v. Moses, supra, 24 Cal.4th at 1138.)
Posted at 12:07 PM in Cases: Civil Rights, Cases: Lodestar, Cases: Multipliers | Permalink | Comments (0)
In The News . . . . E.D. Pa. Judge Awards Wage/Hour Attorneys 20% Of Settlement Fund, While D. Mass. Judge Awards Neurotin Class Action Counsel 28% Percentage Of Recovery In Class Action Case
Fee Award in TD Bank Wage/Hour Class Action.
In Keller v. TD Bank, N.A., Civ. Action No. 12-5045 (E.D.Pa. Nov. 4, 2014 Order), U.S. District Judge L. Felipe Restrepo awarded class action counsel exactly what they wanted--$1.2 million in fees out of a $6 million settlement fund in the settlement of a wage/hour class action brought by former tellers of TD Bank. In doing so, District Judge Restrepo observed that the percentage of recovery was the favored fee-setting measure, citing In re Prudential Ins. America Sales Practice Litig., 148 F.3d 283, 333 (3d Cir. 1998). He noted that 19-45% of the common fund was found proper in the Third Circuit in wage/hour cases, expressly determining the 20% request reasonable in nature. He also found the reasonableness was “cross-checked” by the lodestar hours, plus a multiplier shortly above 3—a reasonable result given the experience of the attorneys and the settlement result.
Fee Award in Neurontin Off-Label Use Class Action.
Pfizer, Inc. was sued in a class action accusing it of illegally marketing Neurontin for off-label use. The case was settled and class action counsel requested $108.3 million in fees and costs based on a $325 million settlement—a third under the “percentage of recovery” method. U.S. District Judge Patti B. Saris, in In re Neurontin Marketing and Sales Practice Litig., Civ. Action No. 04-10981-PBS (D.Mass, Doc. 4303, filed Nov. 10, 2014), found this request too high and awarded fees and costs instead of $91 million, which was 28% of the settlement. District Judge Saris found that a one-third award was too high in “mega-fund” class action settlements, relying on First Circuit cases showing 17.8% was the mean for fee recovery in $250-500 million settlement situations. She also relied on results from a 2010 empirical study by Professor Fitzpatrick of fee awards in class action settlements. Finally, although observing that the hourly rates and hours work were not delineated with great detail, District Judge Saris “cross-checked” by use of the $27.4 million lodestar provided by counsel, determining the $91 million award was reasonable because it was based on a 3.32 positive multiplier enhancement of the lodestar.
Posted at 10:23 AM in Cases: Class Actions, Cases: Employment, Cases: Lodestar | Permalink | Comments (0)
Posted at 11:43 AM in Cases: Lodestar, Cases: Reasonableness of Fees | Permalink | Comments (0)
Posted at 09:44 AM in Cases: Class Actions, Cases: Lodestar, Cases: Multipliers, News | Permalink | Comments (0)
Posted at 11:59 AM in Cases: Lodestar, Cases: Private Attorney General (CCP 1021.5), Cases: Reasonableness of Fees | Permalink | Comments (0)
Equity/Lodestar/Multiplier/Retainer Agreement: $7.8 Million Fee Recovery For Well Known L.A. Attorney’s Work In Divorce Cases Reversed
No Written Retainer Agreement, With Quantum Meruit Jury Verdict Overturned And Reduced To $1.8 Million Plus Some Other Deductions.
This is a doozy of a case involving well known Los Angeles attorney Hillel Chodos, who happened to not have had a written hourly or contingency retainer agreement with an ex-client, a wife involved in an imbroglio of divorce cases (including a Marvin suit). Mr. Chodos charged $1,000 an hour for his time but had to sue ex-client for quantum meruit recovery based on the absence of a retainer and had a jury award him $7.8 million, his lodestar of 1,800 hour for the divorce work plus a multiplier of five—meaning the jury increased his hourly rate to $5,000. Such a result came after a trial where Mr. Chodos and his ex-client put on very conflicting testimony about the value of his services, the time he spent (or should have spent), and the results obtained in the divorce cases (although the results appeared to be quite extraordinary).
The Second District, Division 5, in a 3-0 opinion authored by Justice Mosk, reversed and remanded in Chodos v. Borman, Case No. B252446 (2d Dist., Div. 2 June 18, 2014) (published).
The appellate court determined that it was erroneous for the lower court to have instructed the jury on the availability of a multiplier in these circumstances. In this instance, Mr. Chodos did not bear true contingency risk because there was an hourly arrangement even under a quantum meruit theory. Because quantum meruit theory is fundamentally equitable in application (although legal for purposes of the right to a jury trial), the reviewing panel simply found it would be unfair to allow Mr. Chodos to obtain a recovery in excess of the lodestar.
This result was buttressed by the panel’s belief that Mr. Chodos would be rewarded for violating Business and Professions Code provisions requiring a written retainer agreement. “Therefore, to reward attorney for not complying with the laws requiring written fee agreements would be inequitable and contrary to public policy.” (Slip Opn., p. 28.)
Although not said in the opinion, we believe the appellate court actually took matters in its own hands to avoid further litigation. Based on Mr. Chodos’ testimony about 1,800 hours and a $1,000 hourly rate, it reduced the judgment from $7.8 million down to $1.8 million, with further deductions of about $132,000 to the $1.8 million figure (remanding to the lower court with instructions to enter this judgment).
BLOG OBSERVATION—Especially in the punitive damages area, California appellate courts often will simply reduce an excessive award and direct the trial court to enter judgment based on such a reduction—doing this frequently in cases where it divines that the parties will only litigate for years more if a completely new trial is granted. For an example, see a case co-contributor Mike was involved with many years ago, Las Palmas Associates v. Las Palmas Center Associates, 235 Cal.App.3d 1220 (1991).
Posted at 09:32 AM in Cases: Equity, Cases: Lodestar, Cases: Multipliers, Cases: Retainer Agreements | Permalink | Comments (0)
Class Action: $1 Million In Class Counsel Fees Affirmed By Majority Under Lodestar And Percentage Of Recovery Methods
Dissenting Judge Concerned About Claim Response Rates and Clear Sailing/Reverter Clauses.
Laguna v. Singh, Case No. 12-55479 (9th Cir. June 3, 2014) (published) was a case which shows the divergent views of federal jurists on class action settlements where the common fund value is not of a fully liquidated nature.
The majority decision affirmed a $994,800 attorney’s fees award to class counsel in a franchisee misclassification class action, even though the settlement was a coupon settlement structured with clear sailings/reverter clauses. The majority found that the lodestar was the best method to fix fees where primarily injunctive relief was involved, with the award being about a third of the actual $3 million in fees incurred by class counsel. The percentage-of-recovery “cross check” was less certain, but the district court believed that the settlement might be worth $4 million, so 25% of that matched up with the lodestar analysis.
Because it is difficult to value injunctive relief, the majority put a lot of stock in the arms-length negotiations to rebut a concern about settlement collusiveness.
In dissent, District Judge Chen (N.D. Cal.) believed that the settlement had some serious red flags, with the settlement value being the upfront concern.
Raising red flags. Carol M. Highsmith, photographer. 2010. Library of Congress.
He believed that in light of an actual 9% payout rate on a coupon type settlement, only $82,025 was the value to the class—hardly justifying a $1 million payout to class counsel. Given that the fees were not tied to actual distributions, in tandem with the existence of clear sailing/reverter provisions, he had serious troubles with endorsing the settlement and fees award.
Posted at 11:13 PM in Cases: Class Actions, Cases: Lodestar | Permalink | Comments (0)
Lodestar/Laffey Matrix/Substantiation Of Reasonableness Of Fees: Syers Properties Opinion Now Certified For Publication
Reviewed in Our May 6, 2014 Post.
In our May 6, 2014 post, we reviewed Syers Properties v. Rankin, Case No. A137610 (1st Dist., Div. 2 May 5, 2014 issued unpublished), which held among other things that: (1) detailed categorical breakout of time spent can substantiate a fee petition in California state courts; (2) the reasonable market hourly rate, not billed rate, is the true lodestar index; and (3) a trial court can, but is not required to, follow the Laffey Matrix, regionally adjusted or otherwise. We can now report that this opinion was certified for publication on May 27, 2014.
Posted at 10:01 AM in Cases: Laffey Matrix, Cases: Lodestar, Cases: Substantiation of Reasonableness of Fees | Permalink | Comments (0)
Lodestar/Multiplier/Reasonableness Of Fees: Second District, Division 4 Unpublished Decision Has Outstanding Discussion Of Lodestar/Multiplier Factors, Limited Success, And Opposing Counsel Fees In Sustaining Lower Court Fee Award In Overtime Employee Cas
$603,150 Out of Requested $1,512,794.50 Was the Award, With Defense Counsel Getting Paid $1,070,000 by Safeway.
Although unpublished, the Second District, Division 4 has done an outstanding job of analyzing a reasonableness of fee award where both sides (prevailing employee and defending former employers) appealed, with employee arguing the fee award was too small and the opponents arguing it was way too high. In the end, the fee award stood as fashioned by the lower court in Heyen v. Safeway, Inc., Case No. B243610 (2d Dist., Div. 4 May 23, 2014) (unpublished).
Plaintiff, after 10 years of litigation when an overtime class was not certified, finally prevailed by obtaining an award of a little over $26,000 under an exempt employee theory from former employers Safeway and Vons. Because the prevailing employee is entitled to fees under Labor Code section 1194(a), she sought to recover $1,512,794.50 in fees in a heavily contested proceeding, but was awarded $603,150 instead—only 40% of the request. Both sides appealed, and the result did not change following appellate review.
In setting the amount of fees, a lower court has considerable discretion and the award usually has to shock the conscience to be overturned. (In re Tobacco Cases I, 218 Cal.App.4th 570, 587 (2013).) Here is how various issues were handled by the 2/4 DCA:
1. Hourly Rates. Plaintiffs claimed hourly rates ranging from $150-$1,000. Although the appellate court was somewhat concerned about the $1,000 rate (given the proof showed top L.A. earners at the time billed out around $850-860 per hour), the trial court’s 60% reduction in the fee request caused the awarded “blended” rate to be $258 per hour. In tandem with the fact the defense was paid $1,070,000 by its clients, the smaller $603,150 award based on some $1,000/hourly time was not deemed enough to remand on this issue.
2. Plaintiff’s Limited Success. This was the main factor leading the lower court to apply a .4 negative multiplier (60% reduction in the request). Here, plaintiff did not succeed in showing policy-wide problems in 3 stores (just 1) and only obtained recovery of about 25% of her requested unpaid time. The reviewing court had a nice discussion of the “limited success” lodestar factor, especially cases talking about the relatedness of claims, compensation being okay for unsuccessful legal theories (versus claims), and discretionary lower court authority to reduce for limited success. (See, e.g., Sokolow v. County of San Mateo, 213 Cal.App.3d 231, 249 (1989); Harman v. City & County of San Francisco, 158 Cal.App.4th 407, 417-418 (2007) [Harman II].)
3. Multipliers. Even with the negative multiplier, the lower court did find that exceptional skill was shown by plaintiffs’ attorneys, who had to combat an experienced defense team of 35 lawyers at different times—with the reviewing court finding probative the amount of time and expense incurred on the defense side of the picture. Also, the preclusion of other employment and contingent risk factors were present in the case.
4. Multiple Recovery and “Double Counting” Defense Arguments. In contending the fee award was too high, the defense first argued that giving credit for pre-December 2006 discovery work could result in a multiple recovery in other cases. However, the lower court dealt with that concern by saying it would award for this work in this case but would not allow a fee petition in other cases relating to this work. With respect to the “double counting” argument that the lower court unwittingly applied overlapping lodestar and multiplier factors, the reviewing court—after acknowledging that some inherent tension exists in this area—found that not to be the case because the exceptional skill, employment preclusion, and contingent risks factors were independently at play so as to justify the award.
Here is the poignant ending remark by the appellate court: “In conclusion, we note, as did the Court of Appeal in Harman II, that there is a great degree of subjectivity inherent in any attorney fee award. The Harman II court expressed it this way: “In this appeal we are confronted with the taxing problem of determining the reasonableness of an attorney fee award that far exceeds the monetary award recovered at the end of protracted and hard-fought litigation. The lodestar method . . . is so fraught with subjective factors that its real-life application is not easily reduced to the mathematical precision the method seems to invite. [Citation.] Application of the lodestar method in this case also comes at a time when the trial court and the parties have the benefit of hindsight of over seven years of litigation. In this era of ever increasing legal fees and costs, few would claim to have the prescient abilities necessary to predict the final outcome of this litigation that started [eight years earlier].” (Harman II, supra, 158 Cal.App.4th at p. 415.) These observations are as relevant in the present case as they were in Harman II. The trial court’s determination of reasonable attorney fees and our review of that award is necessarily subjective, as reasonable minds may differ regarding how many hours were fairly expended in prosecuting this case, what a reasonable hourly rate is, and what degree of success Heyen achieved. Nonetheless, despite the subjective nature of the inquiry, an attorney fee award is statutorily required in this case. Having reviewed the entire record, we conclude that the attorney fee award did not constitute an abuse of the trial court’s broad discretion.”
Posted at 08:31 PM in Cases: Lodestar, Cases: Multipliers, Cases: Reasonableness of Fees | Permalink | Comments (0)
Civil Rights/Lodestar/Multiplier/Substantiation Of Reasonableness Of Fees: 88% Court Ordered Reduction In Civil Rights Fee Request Reversed
Remanded To Decide If Multiplier Appropriate Upon Reversal of State Claim Giving Rise To Positive Enhancement.
The Ninth Circuit in Chaudhry v. Interfaith Communities United For Justice and Peace, Case No. 11-55820 (9th Cir. May 19, 2014) (published) is an interesting decision involving federal civil rights/attendant state law (CA Civil Code section 52.1) claims arising out of Los Angeles’ delay in notifying a Muslim family about the death of a family member so he could be buried in accordance with religious beliefs.
After the appellate court reversed a damage limitation order on the civil rights claim and a dismissal of the state court excessive force claim, it had to address the district judge’s award of only $73,125 in attorney’s fees under the federal civil rights fee-shifting statute out of a requested $1,007,849.25—an 88% reduction of the requested fees. It vacated the fee award.
The first problem was the district judge’s decision to award only a “blended” hourly rate of $325 per hour given the involvement of attorneys with different experience and different hourly rates. Plaintiff did submit attorney affidavits to meet the initial burden of proof, shifting the burden of the rebuttal on the defense. The district judge did not explain why $325 was the prevailing rate in the community for all of the variant attorneys involved.
The second problem was that the 88% reduction, a big one, was not adequately explained by generalized district court conclusions of duplication/overstaffing. After all, Plaintiff had voluntarily reduced the request by 10%, and City defendants only asked for a 20% reduction. The district court also reduced the lodestar another 25% for limited success, but this had to be revisited because of the reversal of the dismissal of some of the claims.
The third issue was that the state law claim dismissal was reversed, which carried a possible upside of a multiplier under California state law—with a remand being in order. (Mangold v. Cal. PUC, 67 F.3d 1470, 1478-1479 (9th Cir. 1995).)
Fee fix “re-do” ordered in this one.
Posted at 12:58 PM in Cases: Civil Rights, Cases: Lodestar, Cases: Multipliers, Cases: Substantiation of Reasonableness of Fees | Permalink | Comments (0)
Lodestar/Laffey Matrix/Substantiation Of Reasonableness Of Fees: $843,245.27 Civil Code Section 1717 Fee Request/Award Affirmed On Appeal
Successful Defendants Substantiated Hours and Hourly Rate Very Well In This One.
Syers Properties III, Inc. v. Rankin, Case No. A137610 (1st Dist., Div. 2 May 5, 2014) (unpublished) is a case where a $843,245.27 defense fee award under Civil Code section 1717 was challenged on narrow grounds—with plaintiff disputing the reasonableness of hours claimed and the hourly rate being requested. Because these determinations are determined under a deferential abuse of discretion standard, plaintiff did not prevail on appeal.
As far as reasonableness of hours claimed, the defense provided detailed declarations by counsel showing (1) attorney’s qualifications and experience, (2) the stages or motions in the litigation in which counsel had been primarily engaged, and (3) the hours billed to defendants within several specific litigation categories, with the defense providing a time bar graph for each category of work performed. Because the lower court could credit the defense declarations of counsel as to work performed, nothing more was required. In fact, the categorical breakout of time was found sufficient, based on a district court decision favoring this approach. (In re HPL Technologies, Inc. Sec. Litig., 366 F. Supp.2d 912, 920 (N.D. Cal. 2005) [categorical approach is “an especially helpful compromise between reporting hours in the aggregate (which is easily to review, but lacks informative detail) and generating a complete line-by-line billing report (which offers great detail, but tends to obscure the forest for the trees)”].)
So, what about the hourly rate being requested by prevailing defense counsel? The defense relied on counsel declarations about reasonableness of rate, bolstered by the Laffey Matrix rates adjusted to the San Francisco area by using locality pay tables. Plaintiff, however, argued that the rates were exorbitant because insurance defense firms charged much below the prevailing market rates so that they were stuck with these lower hourly rates. On review, the appellate court found that the real inquiry was looking to hourly rates compensating for the difficulty or complexity of the matter in the court venue at issue. The standard is not tied to the actual rate billed, but the reasonable market rate. (Nemecek & Cole v. Horn, 208 Cal.App.4th 641, 652 (2012).) Defense counsel did rely on a regionally-adjusted Laffey Matrix, which the appellate court dealt with this way: “. . . the trial court was neither required to follow the Laffey Matrix nor to adopt the rate defense counsel opined was the ‘market rate’ for the services of this type.” However, the lower court did credit the Laffey Matrix (adjusted or otherwise), so be it. However, in further reasoning, the reviewing court did indicate the lower court has considerable discretion to determine the proper market for work being charged, whether insurance defense litigation versus general civil litigation. Based on this “market” definition, the hourly rate could be limited based on the demarcation. “Again, we emphasize that such determinations lie within the broad discretion of the trial court.” (Slip Opn., p. 12.) Fee award affirmed—no abuse of discretion.
For a discussion of mediation confidentiality in the companion case, Syers Properties III, Inc. v. Rankin, Case No. A136018, see the May 6, 2014 blawg post on California Mediation and Arbitration.
Posted at 06:43 AM in Cases: Laffey Matrix, Cases: Lodestar, Cases: Substantiation of Reasonableness of Fees | Permalink | Comments (0)
Lodestar/Probate/Section 1717/Substantiation Of Fees: Court Affirms Fee Award On Fiduciary Duty Claims As Arising On Contract, Denies Fee Request Against Trustee Whose Opposition Was Not Frivolous, And Remands Lodestar Calculation
Looks Like Decades Trust Disputes Are Drawing To An End.
Holt v. Denholm, Case Nos. G045496 and G046293 (4th Dist., Div. 3 Apr. 28, 2014) (unpublished)—both authored by Presiding Justice O’Leary--are two appeals involving cross-over probate and Civil Code section 1717 issues in a long-running battle between different sides of a family trust—pitting a former trustee/beneficiary (and related businesses and business partners) against other beneficiaries. On the whole, the two appeals resulted in a mixed bag of rulings all around (most of which were affirmed), not to mention a lot of attorney’s fees and other expenses.
Appeal #1 involved some beneficiaries (the Holts) filing suits challenging the conduct of trustee/beneficiary Denholm. However, the Holts sued one of Denholm’s businesses and one of his business partners (both of which were LLCs, and had operating agreements of which the Trust was an LLC member), with the Holts claiming that they were owed fiduciary duties based on Trust LLC membership duties. The LLCs were dismissed and awarded $479,164.25 in fees against the Holts based on the LLC operating agreement fee clauses. Although claiming that the breach of fiduciary claims were not “on the contract” under Civil Code section 1717, the appellate court’s examination of the LLC membership/operating duties as flushed out in the pleadings and litigation claims showed that they did arise from the contract so as to give rise to 1717 exposure. Fee award affirmed in appeal #1.
Appeal #2 involved several challenges: (a) Holts’ denial of obtaining fees against trustee Denholm under Probate Code section 17211(b), which does allow fee recovery if a trustee in bad faith contests challenges to an accounting; (b) a Denholm-related LLC (CALCO) obtaining a fee award under Civil Code section 1717 on the same grounds as the two LLCs retaining an award in Appeal #1, with the Holts complaining; and (c) CALCO’s argument that the $21,333 fee award was inadequate given its underpinning was a simple formula with no relation to proper lodestar analysis. Holts lost the argument that they should obtain fees against trustee Denholm, because he defeated 5 causes of action and his opposition to their suit was not frivolous as required under section 17211(b). (Uzyel v. Kadish, 188 Cal.App.4th 868, 928, 928 n. 48 (2010).) CALCO’s entitlement to a 1717 award tracked the same basis as the award on breach of fiduciary claims in Appeal #1. Holts argued that CALCO’s fee substantiation was inadequate, but the appellate court rejected the notion that bills and time sheets had to be provided in addition to submitted billing statements. However, CALCO’s award was reversed and remanded to use lodestar analysis rather than the lower court’s application of a 1/44 ratio grounded in the number of litigation players involved. The lower court was instructed to look at hours expended, prevailing hourly rates, equitable considerations, nature of the litigation, and skilled required, all the normal lodestar issues rather than resort to a formulaic approach.
Posted at 09:30 AM in Cases: Lodestar, Cases: Probate, Cases: Section 1717, Cases: Substantiation of Reasonableness of Fees | Permalink | Comments (0)
In The News . . . Two Federal Court Of Appeals Decisions Use Different Methods To Fix Attorney’s Fees In Class Actions
Third Circuit Sustains Using Percentage of Recovery Method, “Cross Checked” By Lodestar Analysis, In Setting Class Action Counsel Fees.
In Dewey v. Volkswagen of America Inc., Case Nos. 13-1123/1124 (3d Cir. Feb. 12, 2014) (not published/not precedential), the Third Circuit Court of Appeals sustained a $9,207,248 attorney’s fees award to class action counsel representing plaintiffs in a class action against V.W. resulting in a $69,277,430 settlement over leaky sunroofs. The district judge primarily used the percentage of recovery method, using 15.38% to get to a $10,967,773 “base line.” However, she “cross-checked” the result based on the lodestar analysis, determining that the percentage of recovery figure was inclusive of a 2.38 multiplier. However, because the case was not that complex, she reduced the multiplier to 2.0 and awarded $9,207,248, 13.3% percentage of settlement recovery as fees. Some objectors challenged the result, arguing that New Jersey law required the district judge to use the lodestar analysis. However, the Third Circuit rejected the notion that federal law could not be used, with the percentage of recovery being the main index applied among federal circuits in normal circumstances.
Seventh Circuit Affirms District Court’s Use of Lodestar in Fixing Class Counsel Fees Where Class Action Claims Rate Was Low.
Well, apparently normal circumstances were not in play for a district judge fixing class action counsel fees in Americana Art China Co., Inc. v. Foxfire Printing & Packaging, Inc., 743 F.3d 243 (7th Cir. Feb. 18, 2014). There, in a “FAX blasting” (also known as junk FAX) class action, a district court used a lodestar rather than a percentage of recovery method for purposes of awarding attorney’s fees to class counsel. The settlement was $6.1 million and, using a one-third percentage of recovery standard, fees would have been $2,033,333.33. However, because the class action claim rate to the settlement fund was only around 7%, the district judge utilized the lodestar analysis and augmented it with a 1.5 positive multiplier, producing a fee award of $1,147,698.70, a $855,634.63 reduction from the percentage of recovery result. Plaintiffs appealed, but the Seventh Circuit affirmed. It especially liked the district judge doing some “equitable balancing”—something, the federal appeals court remarked, district courts should do--by making the fees have some proportionality to the actual amount paid to the class.
Posted at 05:54 PM in Cases: Class Actions, Cases: Lodestar, Cases: Multipliers, News | Permalink | Comments (0)
Civil Rights/Costs/Lodestar: FEHA Winning Plaintiff Entitled To Almost $88,500 In Costs, But Trial Court Utilized Incorrect Lodestar Analysis On Reasonable Hourly Rate And Determining Hours Worked When Awarding $484,687.50 Out Of Requested $1,675,627.50
Matter Remanded for Re-fixing of Fees Award.
Plaintiff winning a California Family Rights Act, some FEHA, and two common law claims—obtaining a jury verdict of $287,400--moved to recover about $95,000 in routine costs and $1,675,627.50 in fees enhanced by a 2.0 positive multiplier for well over $3 million in requested fees. The trial judge in Taylor v. Long Beach Memorial Med. Center, Case Nos. B240823/B242767 (2d Dist., Div. 8 Mar. 27, 2014) (unpublished) awarded $88,488.59 in routine costs and $484,687.50 in FEHA fees.
Both sides appealed, with plaintiff winning a remand for a redetermination of the fees award.
In regard to the costs award, that was affirmed in these ways: (1) expert witness fees were properly awarded under FEHA in the lower court’s discretion, with the appellate court finding that the plaintiff was okay to seek them through a costs memorandum rather than filing a separate motion per Anthony v. City of Los Angeles, 166 Cal.App.4th 1011, 1015-1017 (2008)—in other words, no prejudice given that the defense got to contest the amount through its motion to tax costs; (2) voluntary mediation fees were proper, because a lower court can determine they are necessary and proper under CCP § 1033.5(c)(2), (4); (3) videotaped depositions not used at trial can still be awarded as costs because plaintiff showed they were used at court-ordered settlement conferences and because plaintiff abandoned using one of them after deeming the testimony redundant; and (4) some costs wrongfully inserted in the wrong category of the Judicial Council form again resulted in no prejudice to the defense.
On the fee award, the appellate court found some errors in the lodestar analysis of the lower court, which relied significantly on a defense fee expert’s testimony. First, the fee expert erroneously used a uniform hourly rate, when each attorney’s hourly rate must be established. Second, the fee expert used a survey of small firms across all of California rather than rates for the Los Angeles legal community. Third, the fee expert did not survey employment practitioner rates. Fourth, the fee expert used a “macro” level analysis of what hours were reasonable without tethering that to any actual analysis of the billings, which the appellate court deemed plucking a number out of thin air—especially given that the number endorsed by the trial court was less than hours expended by the defense in the case, the party not having the burden of proof.
Posted at 05:08 PM in Cases: Civil Rights, Cases: Costs, Cases: Lodestar | Permalink | Comments (0)
Lodestar/Multiplier/Settlement/Reasonableness Of Fees: Plaintiff Recovering $2.25 Million Dependent Abuse Verdict Also Recoups Additional $333,727.56 In Fees And $31,016.22 In Costs
Much Less Awarded Than Requested $1.042-1.390 Million in Fees; Plaintiff Stipulated to Costs Reduction, With Modified Judgment Entered Accordingly.
This case is an interesting illustration of how lower courts will reduce an inflated fee request to calculate a lodestar as well as enforce a “high/low” stipulation that was silent with regard to fees/costs. The opinion shows good some good and bad things each side did in this case, providing practice pointers (or, as co-contributor Mike says, “we all learn good case management through mistakes”).
Gerard v. BHC Alhambra Hospital, Inc., Case No. B248197 (2d Dist., Div. 7 Mar. 18, 2014) (unpublished) involved a plaintiff suing defendant for claims mainly coalescing around dependent adult abuse charges. The good defense preventive action was getting both sides to agree, before the jury returned from deliberations, to a “high/low” stipulation putting a ceiling and floor on any gross jury verdict, namely no more than $2.25 million as the “high” and $250,000 as the “low.” The bad thing for the defense is it was silent on the issue of fees and costs, although a defense representative felt it had been conceptually agreed to the restriction also encompassing fees/costs before—although nothing was put on the record about such an arrangement. Wanna guess the jury verdict? Answer: a little shy of $6 million, with the lower court honoring the $2.25 million ceiling parameter. Then, plaintiff moved to recover statutory fees under the dependent abuse statute (Wel. & Inst. Code, § 15657(a)) of a requested $1,042,898.62 - $1,390,531.50 range (inclusive of a requested 1.5-2.0 multiplier). This was found by the lower court to be an inflated request, which made deductions for excessive/inefficient/block billed time, excessive hourly rates (rejecting $375 and $600 requested rates because the case was not that complex), and non-recoverable medical negligence work time, also denying any positive multiplier to plaintiff. The lower court gave a 52% across –the-board reduction, awarding fees of $333,727.56 plus eventual costs of $118,229.80.
Defendant hospital appealed on numerous bases, obtaining only a costs reduction conceded by plaintiff.
The defense argument that no fees/costs were awardable based on the “high/low” stipulation failed because the stipulation was silent on this important topic and also only discussed the arrangement in connection with the “gross jury verdict.” (PRACTICE TIP #1: Deal expressly with fees/costs in any such stipulation, a settlement agreement, or a 998 offer.) Also, unlike federal courts, the superior judge here did not have to “show his/her work” by providing the math breakout of the award, given that the reasons for the reduction were articulated. (PRACTICE TIP #2: Although no statement of decision is required in state courts, co-contributor Mike likes to provide the math in the ultimate fee order—listing the hourly rate and amount of work found reasonable, plus any reasons for an enhancement or an award of “fees on fees”.) Plaintiff did agree that certain expert witness fees and investigation/copying/postage fees were not recoverable under Davis v. KGO-T.V., Inc., 17 Cal.4th 436, 438 (1998) [statutory FEHA case], stipulating to a costs recovery of $31,016.32 which was adopted by the appellate court. (PRACTICE TIP #3: If you recognize that an award should be reduced either substantively or due to arithmetic errors, concede it in the brief so that the appellate court can just modify the judgment and affirm—avoiding time by another trip before the lower court.)
Posted at 10:07 PM in Cases: Lodestar, Cases: Multipliers, Cases: Reasonableness of Fees, Cases: Settlement | Permalink | Comments (0)
Lodestar/Reasonableness Of Fees: Lower Court’s Award Of Civil Code Section 1717 Fees To Winning Defendant Was No Abuse Of Discretion
Unpublished Decision Has Nice Review of Lodestar Setting and Appellate Review Principles.
DEI, LLC v. Capital Partners Services Corp., Case No. D062553 (4th Dist., Div. 1 Feb. 13, 2014) (unpublished) is not remarkable for the appellate court’s affirmance of a $134,092.00 attorney’s fees award (out of a requested $153,527.50) to the winning defendant under Civil Code section 1717, but is remarkable for its nice summary of these lodestar and review of fee order principles:
1. Calculation of the lodestar is the method used to gauge fully compensatory, reasonable fees to be awarded to a prevailing party;
2. A party challenging fee submissions must contest specific items rather than make just general arguments that claimed fees are excessive, duplicative, or unrelated to compensable work;
3. A fee award on a lodestar calculation is reviewed under a highly deferential abuse of discretion standard;
4. The trial court is not required to explain the lodestar calculation;
5. A percentage reduction for excessive billings is permitted;
6. Padding is not subject to compensation;
7. Block billing is not objectionable per se unless there is a need to separate out work that qualifies for compensation from work that does not;
8. Vague entries are subject to lower court reduction; and
9. An opposing party litigating tenaciously cannot later be heard to complain about the time the prevailing party spent in response.
Posted at 04:46 PM in Cases: Lodestar, Cases: Reasonableness of Fees | Permalink | Comments (0)
Class Actions/In The News: New York District Judge Approves $544.8 Million Fee Award In Visa/MasterCard Antitrust Merchant Class Action
Court Utilizes “Sliding Scale” Percentage of Fund Approach, Checked by Lodestar With Multiplier.
After approving a settlement producing a $5.7 billion settlement fund in a class action case brought by merchants against Visa, MasterCard, and several banks relating to certain interchange rates, U.S. District Judge John Gleeson then had to deal with the motion for an award of attorney’s fees and expenses in In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig., Case No. 1:13-cv-03059-JG-JO (E.D.N.Y. Jan. 10, 2014, Doc. No. 18) (for publication). He produced a published decision with an interesting approach, after noting there were few comparators to help guide judges in these types of mega-cases.
He eventually awarded $544.8 million in fees and a little over $27 million in expenses, although class counsel had requested a fee of $570 million (about 10% of the common fund).
District Judge Gleeson primarily relied on the percentage of fund approach, but decided that a graduated decreasing schedule was in order, going from 33% of the initial zero-10 million tranche and then winding down in intervals to 6% for the $4-5.7 billion tranche. He observed that this was in keeping with cases finding that the percentage of fund fees should decrease as the size of the fund increases. A lodestar “check” also confirmed the propriety of the award--$160 million was expended in fees, such that the eventual award was one with a 3.41 multiplier—well within the acceptable range for mega-cases.
Posted at 10:06 PM in Cases: Class Actions, Cases: Lodestar, Cases: Multipliers, News | Permalink | Comments (0)