Opinion ID: 2328760
Heading Depth: 2
Heading Rank: 5

Heading: Counsel Fee Enhancement

Text: Finally, KMA argues that the Superior Court erred in affirming the trial court's application of a risk multiplier to the attorneys' fees award under the MMWA. According to KMA, the U.S. Supreme Court prohibited risk multipliers in federal fee shifting cases and, because fees were awarded here pursuant to a federal statutethe MMWAstate courts are bound by that interpretation. KMA's Brief at 35-36 (citing City of Burlington v. Dague, 505 U.S. 557, 559, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992); U.S. CONST., Art. VI, Cl. 2). KMA states that the lower courts ignored Dague to rely on a distinguishable Pennsylvania Superior Court case, Signora v. Liberty Travel, Inc., 886 A.2d 284 (Pa.Super.2005), in awarding the enhanced fee. KMA notes that in Signora, attorneys' fees were awarded pursuant to a Pennsylvania statute rather than a federal statute. And, citing the U.S. Supreme Court's opinion in Dague, the Signora panel observed that federal statutes do not permit enhancement for risk. Id. at 293 n. 14. KMA posits that this Court is bound by U.S. Supreme Court precedent in this matter and should vacate the award of the enhanced fee as contravening that precedent. Bassett responds that Pennsylvania law, not federal law, controls the award of the fee enhancement in this case for several reasons. First, she claims that the Dague decision was limited to the environmental statutes addressed by the High Court. Second, according to Bassett, calculation of attorneys' fees is a matter of exclusive state procedure, not of substantive law. Bassett's Brief at 52 (citing Middlesex County Ethics Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 102 S.Ct. 2515, 73 L.Ed.2d 116 (1982); Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975); Arons v. New Jersey State Bd. of Educ., 842 F.2d 58 (3d Cir. 1988)). Consequently, in Bassett's view, federal fee-shifting provisions cannot override or displace state rules governing the award of attorneys' fees. Id. at 54 (citing Chin v. Chrysler LLC, 538 F.3d 272, 279-80 & n. 5 (3d Cir.2008)). She also insists that the MMWA does not preempt Pennsylvania law with regard to attorneys' fees and the application of the risk multiplier. Id. at 55 (citing 15 U.S.C. § 2311(b)(1)). Finally, Bassett emphasizes that Pennsylvania has a strong public policy to fully compensate parties that incur attorneys' fees where a statute permits fee-shifting. Id. (quoting Solebury Twp. v. Dep't of Envtl. Prot., 593 Pa. 146, 928 A.2d 990, 1004 (2007) (federal standards that have not been incorporated into state statutes can only be supported to the extent that those standards are consistent with Pennsylvania public policy)). According to Bassett, the discretion of state courts to award attorneys' fees is broader than that of federal courts in purely federal cases and, as a result, state courts may adjust the lodestar. Id. at 55-56 (citing Signora, 886 A.2d at 293 & n. 14; Skelton v. Gen. Motors Corp., 860 F.2d 250 (7th Cir.1988); Krebs v. United Ref. Co. of Pennsylvania, 893 A.2d 776 (Pa.Super.2006); Croft v. P & W Foreign Car Serv., Inc., 383 Pa.Super. 435, 557 A.2d 18 (1989)). Bassett claims that to fulfill the consumer-friendly purposes of the MMWA's fee-shifting provision, accounting for the nature of the services, amount of time expended, results obtained, amounts recovered, and for the contingent nature of the fee arrangement, via the application of a risk multiplier, is integral. Id. at 58-61. Bassett asserts that Pennsylvania Rule of Civil Procedure 1716 reflects these considerations and controls the discretionary determination of a `reasonable' class fee by the Commonwealth's courts. [35] Id. at 57 (citing Pa. R.C.P. No. 1716). Also, Bassett avers, the performance of class counsel in this class action met the exceptional case standard and an award of a fee enhancement therefore was appropriate. Id. at 62 (quoting Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 728, 107 S.Ct. 3078, 97 L.Ed.2d 585 (1987) ( Delaware Valley )). In its reply brief, KMA briefly reiterates the arguments in its main appellate brief and adds that application of a risk multiplier is in plain conflict with the language of Section 2310 of the MMWA. According to KMA, the Dague decision applies to all federal fee-shifting statutes, including the MMWA. The trial court agreed with Bassett that class counsel was entitled to an attorneys' fee award equal to a risk multiplier of 1.375 times the $3 million lodestar, for a total of $4.125 million. [36] The court stated that it had discretion to adjust the lodestar upwards by applying a risk multiplier where class counsel had taken the case for a contingent fee. Tr. Ct. Op., 11/14/07, at 11 (citing Signora, supra ). According to the court, whether a fee enhancement is appropriate requires consideration of several factors: that a contingent fee case is significantly riskier than an hourly fee case, what fee would attract competent counsel, and whether the prevailing class would have obtained representation absent the potential for a fee adjustment. The court emphasized that the Signora court approved the exercise of discretion to adjust the lodestar by reference to Rule 1716 but noted that other Superior Court panels used additional criteria. Id. at 11-12 (citing Logan v. Marks, 704 A.2d 671 (Pa.Super.1997)). Against this legal background, the trial court concluded that a 1.375 risk multiplier was appropriate in view of the extensive work, time, and effort devoted by both sides and specifically [Bassett's] lawyers. . . . Id. at 12. The Superior Court affirmed, quoting at length and without adding to the trial court's analysis of the risk multiplier issue. Generally, where the award of attorneys' fees is authorized by statute, an appellate court reviews the propriety of the amount awarded by the trial court under an abuse of discretion standard. Solebury Twp., 928 A.2d at 997 n. 8. We will not find an abuse of discretion in the award of counsel fees merely because [we] might have reached a different conclusion. Hoy v. Angelone, 554 Pa. 134, 720 A.2d 745, 752 (1998). Rather, we require a showing of manifest unreasonableness, partiality, prejudice, bias, ill-will, or such lack of support in the law or record for the award to be clearly erroneous. Id. To the extent that the issue before us is a question of statutory interpretation, however, our scope of review is plenary and the standard of review is de novo. Solebury Twp., 928 A.2d at 997 n. 8. The authorizing statute here the MMWAis a federal statute. The construction of a federal statute is a matter of federal law. Council 13, 986 A.2d at 80. Pursuant to federal rules of statutory construction, the courts consider the particular statutory language, as well as the design of the statute and its purposes in determining the meaning of a federal statute. Id. (citing Crandon v. United States, 494 U.S. 152, 158, 110 S.Ct. 997, 108 L.Ed.2d 132 (1990)). But, if the MMWA's language is clear, we should refrain from searching other sources in support of a contrary result. See Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 228, 128 S.Ct. 831, 169 L.Ed.2d 680 (2008) (We are not at liberty to rewrite the statute to reflect a meaning we deem more desirable.); Carter v. United States, 530 U.S. 255, 271, 120 S.Ct. 2159, 147 L.Ed.2d 203 (2000) (statutory interpretation begins by examining the text . . . not by psychoanalyzing those who enacted it); United States v. Gonzales, 520 U.S. 1, 6, 117 S.Ct. 1032, 137 L.Ed.2d 132 (1997) (where [g]iven [a] straightforward statutory command, there is no reason to resort to legislative history); Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992) ([I]n interpreting a statute a court should always turn first to one, cardinal canon before all others. We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there. When the words of a statute are unambiguous, then, this first canon is also the last: `judicial inquiry is complete.'). Accord Dooner v. DiDonato, 601 Pa. 209, 971 A.2d 1187, 1195 (2009) (The language used by [Congress] is the best indication of its intent.). In relevant part, Section 2310 of the MMWA provides that: If a consumer finally prevails . . . he may be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of cost and expenses (including attorneys' fees based on actual time expended) determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commencement and prosecution of such action, unless the court in its discretion shall determine that such an award of attorneys' fees would be inappropriate. 15 U.S.C. § 2310(d)(2) (emphasis added). Here, there is no dispute that the MMWA authorizes an award of attorneys' fees to prevailing consumers such as Bassett and the class. 15 U.S.C. § 2310(d)(2). The salient question is whether, in view of the authorizing statute, the trial court abused its discretion in factoring the class counsel's risk into its calculation of the final award of attorneys' fees. On its face, Section 2310(d)(2) contains no language authorizing a mandatory contingency multiplier nor does it give the courts discretion to apply such a multiplier to supplement the actual fee. The provision explicitly states that attorneys' fees are to be based on actual time expended, and does not provide for a discretionary fee enhancement. In practical terms, this means that the amount of attorneys' fees authorized by the MMWA is a factor of the actual hours expended and billed by the attorneys in the casethat is, the lodestar. See Dague, 505 U.S. at 559, 112 S.Ct. 2638 (product of reasonable hours times a reasonable rate is lodestar); Stair v. Turtzo, Spry, Sbrocchi, Faul & Labarre, 564 Pa. 305, 768 A.2d 299, 308 n. 8 (2001) (same). Thus, Section 2310(d)(2) specifically addresses fee awards and permits only fee awards equal to the lodestar, with no mention, much less approval, of a contrary scheme of fee enhancement such as a contingency multiplier. The plain language of Section 2310(d)(2) is clear and unambiguous regarding attorneys' fees equaling the lodestar. [37] Moreover, even assuming arguendo that Section 2310(d)(2) is subject to a construction contrary to its plain terms, U.S. Supreme Court precedent provides additional strong legal support for KMA's position that the statute does not allow for a contingency multiplier in the present circumstances. Congress qualified the right of consumer-plaintiffs to recover costs and expenses, limiting recovery to those costs and expenses reasonably incurred. See 15 U.S.C. § 2310(d)(2). Controlling case law from the U.S. Supreme Court directs that the reasonable hours times reasonable rate lodestar is strongly presumed to be a reasonable attorney fee. Dague, 505 U.S. at 562, 112 S.Ct. 2638; see also Perdue v. Kenny A., 559 U.S. ___, 130 S.Ct. 1662, 1669, 176 L.Ed.2d 494 (2010). The Dague Court further held that a contingency multiplier is generally incompatible with Congressional intent that only reasonable attorneys' fees could be recovered under federal fee-shifting statutes. Dague, 505 U.S. at 562-67, 112 S.Ct. 2638. [38] The High Court made plain that its consideration extended to federal fee-shifting statutes in general and that the Court intended to speak broadly to provide general guidance. Dague clearly indicated that it intended its analysis of the contingency multiplier to extend to all federal fee-shifting statutes, as follows: [The Clean Water Act and the Solid Waste Disposal Act] authorize a court to award costs of litigation (including reasonable attorney . . . fees ) to a prevailing or substantially prevailing party. This language is similar to that of many other federal fee-shifting statutes, see, e.g., 42 U.S.C. §§ 1988, 2000e-5(k), 7604(d); our case law construing what is a reasonable fee applies uniformly to all of them. 505 U.S. at 561-62, 112 S.Ct. 2638 (emphasis in original; internal citations omitted). The Supreme Court, of course, is the final word on federal statutory interpretation and our decisional mandate is to follow its teachings. See Council 13, 986 A.2d at 77 (It is fundamental that by virtue of the Supremacy Clause, the State courts are bound by the decisions of the Supreme Court with respect to . . . federal law, and must adhere to extant Supreme Court jurisprudence.). [39] Here, the lower courts failed to consider or apply the strong presumption in favor of equating the counsel fee with the lodestar; rather, the courts considered impermissible factors in enhancing the attorneys' fee award. Bassett insists that the MMWA allows for enhancement of the attorneys' fee award beyond the lodestar by application of a risk multiplier. She claims essentially: (1) that Dague 's holding was limited to the environmental statutes at issue in that case; (2) that the MMWA gives state courts discretion to award contingency multipliers available through state procedural rules; and (3) that Pennsylvania public policy supports the exercise of discretion in the application of a contingency multiplier to promote the pro-consumer purposes of the MMWA. [40] We must reject Bassett's arguments. Bassett's argument that Dague's holding must be deemed limited to the environmental statutes at issue there, the Solid Waste Disposal Act and the Clean Water Act, proceeds as follows. Section 2310(d)(2) of the MMWA is different from the fee-shifting provisions in Dague, Bassett argues, because it awards an aggregate amount of expenses in addition to costs as incurred by the consumer/plaintiff, which necessarily should include contingent fees. Bassett's Brief at 54, 59-60. We recognize that the High Court concluded Dague by saying we hold that enhancement for contingency is not permitted under the fee-shifting statutes at issue and, of course, the MMWA was not specifically at issue. Dague, 505 U.S. at 567, 112 S.Ct. 2638 (emphasis added). Nevertheless, the Court's analysis made plain that its approach to reasonable fees under all such fee-shifting provisions was uniform. Id. at 561-62, 112 S.Ct. 2638 (caselaw construing what is a reasonable fee applies uniformly to all federal fee-shifting statutes); accord Signora, 886 A.2d at 293 n. 14 (Enhancement for contingency is not permitted under federal fee shifting statutes.). Writing for the Dague Court, Justice Antonin Scalia focused on whether a reasonable attorneys' fee award may include a contingency enhancement of the lodestar. The High Court concluded that the lodestar benefits from a strong presumption of reasonableness because it generally reflects the merits and difficulties of a case, i.e., the risk of loss. For an attorney who expected a premium over his hourly rates when he or she accepted a contingency fee case, the lodestar enhancement [would] amount[ ] to double counting the risk of loss and is unreasonable. 505 U.S. at 562-63, 112 S.Ct. 2638. The Court also discussed various approaches to lodestar enhancement and decided that all the approaches suffered from similar infirmities: undesirable social costs (such as creating incentives to bring nonmeritorious claims and overcompensating cases with above-average chances of success), added incentives for burdensome satellite litigation over attorneys' fees, and inconsistency with the Court's general rejection of contingent fees. Id. at 563-66, 112 S.Ct. 2638 (rejecting, inter alia, the Delaware Valley approach, see supra at n. 2). Importantly, reasonableness of the attorneys' fees is the linchpin under the MMWA just as it was under the statutes analyzed in Dague. Compare 15 U.S.C. § 2310(d)(2) (courts may award expenses, including attorneys' fees reasonably incurred by the plaintiff) with 42 U.S.C. § 6972(e) (courts may award costs of litigation that include reasonable attorney . . . fees) and 33 U.S.C. § 1365(d) (same). Bassett's argument regarding the limiting language notwithstanding, Dague plainly requires rejection of the non-textual contingency multiplier that the lower courts engrafted here onto the MMWA. Bassett also insists that we limit the application of Dague to federal-question [sic] cases pending only before the federal courts under exclusively federal statutes. Bassett's Brief at 54. According to Bassett, because the MMWA incorporates state law, it is subject to state procedural rules and interpretations and its variations regarding contract laws and counsel fee decisions. But, Bassett's description of the MMWA is inapt and her attempt to divorce the trial court's award of attorneys' fees here from the plain language of Section 2310 and controlling precedent is unavailing. The MMWA is an act that provides, inter alia, federal standards governing contents of warranties and minimum standards for warranties. See, e.g., 15 U.S.C. §§ 2302, 2304, 2311(c). Failure to comply with the MMWA's requirements or prohibitions constitutes an unfair method of competition, in violation of 15 U.S.C. § 45. See 15 U.S.C. § 2310(b). The MMWA does not create a cause of action for breach of warranty, but it also does not preempt a breach of warranty claim or, generally, any right or remedy of any consumer under State law. See 15 U.S.C. § 2311(b)(1). According to Section 2310(d)(1) of the MMWA, a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief in federal or state court, pursuant to appropriate jurisdictional requirements. 15 U.S.C. § 2310(d)(1) (emphasis added); see 15 U.S.C. § 2310(a)(3), (d)(3), (e). Thus, claims for violation of the MMWA and breach of warranty are separate causes of action that may be joined when filing suit in state or federal court. If the consumer prevails on either cause of action, she is entitled to recover costs and expenses, as described in Section 2310(d)(2). Contrary to Bassett's assertions, we perceive no clear Congressional intent from the plain language or the statutory scheme of the MMWA that attorneys' fees would be calculated subject to state procedural rules and interpretations. Accord Chin, 538 F.3d at 279-80 & n. 5 (holding that for New Jersey procedural rule permitting counsel fees to apply, consumers must have asserted New Jersey cause of action authorizing fees). Indeed, because Section 2310(d)(2) of the MMWA is a provision of a federal statute, we are bound in our interpretation of that provision by decisions of the U.S. Supreme Court by virtue of the Supremacy Clause. Council 13, supra . In the same vein, Bassett argues that the award of attorneys' fees is traditionally a matter of procedure exclusively governed by state law and procedure, specifically Pennsylvania Rule of Civil Procedure 1716. [41] We recognize that the question of what in particular is substantive and what is procedural is not always clear. See Laudenberger, 436 A.2d at 155 (noting substantive effect of new procedural rule permitting pre-judgment interest). But that is not so in this instance where, given the interplay between the MMWA and Rule 1716, the effect of accepting Bassett's argument would be to import the rule for substantive purposes so as to undo the express terms of the federal statute. Bassett also looks to the MMWA's savings clause and concludes that Congress intended to preserve a consumer/plaintiff's right under state law, which in Pennsylvaniaas Bassett would have itpermits a contingency multiplier. Bassett's Brief at 55, 60-61 (citing 15 U.S.C. § 2311(b)(1) (Nothing in this chapter shall invalidate or restrict any right or remedy of any consumer under State law or any other Federal law.)). According to Bassett, the right to a contingency multiplier is vested and embodied in Pennsylvania procedural Rule 1716(5), which states, inter alia, that [i]n all cases where the court is authorized under applicable law to fix the amount of counsel fees it shall consider, among other things . . . whether the receipt of a fee was contingent on success. Even aside from Dague, we hold that the MMWA's savings clause is not applicable here and that no general right to a contingency multiplier exists in Pennsylvania. Rule 1716 is a rule of procedure prescribed by this Court that does not purport to create any substantive right to a contingency multiplier in all cases. See PA. CONST. Art. V § 10(c) (The Supreme Court shall have the power to prescribe general rules . . . if such rules are consistent with this Constitution and neither abridge, enlarge nor modify the substantive rights of any litigant.). Under Pennsylvania law, the contingency multiplier of Rule 1716 cannot be fairly construed as a right or remedy that was intended to be preserved under the MMWA's savings clause so as to undo the express substantive terms of the federal statute. Finally, we must reject Bassett's claim that Pennsylvania's strong public policy to justly compensate parties who incur attorney fees and are entitled to attorneys' fees under fee-shifting provisions justifies an application of the contingency multiplier here. Bassett's Brief at 55 (citing Solebury Twp., 928 A.2d at 1004) (awarding attorney fee under Pennsylvania's Clean Streams Law, 35 P.S. § 691.307(b)). [42] Pennsylvania generally adheres to the American Rule, under which a litigant cannot recover counsel fees from an adverse party unless there is express statutory authorization, a clear agreement of the parties, or some other established exception. Trizechahn Gateway LLC v. Titus, 601 Pa. 637, 976 A.2d 474, 482-83 (2009); see Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247-70, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975) (providing exhaustive discussion of American Rule and concluding that Congress and not courts may dispense with it and devise new rules to reallocate costs between litigants). According to this standard, what Bassett identifies as a strong public policy is not sufficient to overcome the presumption that the American Rule applies. There is nothing inherently unjust about limiting this form of compensation to actual costs. [43] Moreover, like Congress, our General Assembly has created several exceptions to the American Rule extant in Pennsylvaniavia fee-shifting provisionsthat allow courts to award attorneys' fees as a remedy to well-defined parties. See 42 Pa.C.S. § 2503 (listing categories of litigants who may receive attorney fee awards); Lucchino v. Commonwealth, 570 Pa. 277, 809 A.2d 264, 267-68 (2002) (listing Pennsylvania statutes with fee-shifting provisions). We cannot torture our procedural rule to supplant the legislative prerogative. Rule 1716's actual procedural purpose is as follows. With respect to authorized counsel fee awards under legislation, courts must weigh the considerations of Rule 1716 as a matter of procedure. See, e.g., Signora, supra . But, the procedural vehicle does not create the underlying entitlement. Here, the class requested attorneys' fees under a federal statutethe MMWA. The plain language of the MMWA and the High Court's clear precedent provide no basis to trigger our procedural rule. Applying Dague to the federal statute at issue here by no means interferes with Congressional intent to preserve distinct state rights or remedies. Accordingly, we reverse the order below to the extent it provides for enhancement of the attorneys' fee award beyond the amount of the lodestar.