Opinion ID: 1407452
Heading Depth: 4
Heading Rank: 2

Heading: Calculation of reasonable attorneys' fees

Text: We turn next to the method of calculating attorneys' fees in this case, and hold that a lodestar analysis is the proper method for determining an award of reasonable attorneys' fees under the state action statute. A lodestar figure is designed to reflect the reasonable time and effort involved in litigating a case, and is calculated by multiplying a reasonable hourly rate by the reasonable time expended. See Dennis v. Columbia Colleton Med. Ctr., Inc., 290 F.3d 639, 652 (4th Cir.2002). Using this as a starting point for reasonableness, a court may consider other factors justifying an enhancement of the lodestar figure with a multiplier before arriving at a final amount. See Edmonds, 658 F.Supp. at 1148. In our opinion, the lodestar method is particularly appropriate in this case because it equally embraces the theory of fee-shifting embodied in the state action statute, as well as the notion of efficiency established by the Court in the underlying litigation. Accordingly, we proceed with a lodestar analysis in order to determine reasonable attorneys' fees in this case. See also Del. Valley Citizens' Council, 478 U.S. at 565, 106 S.Ct. 3088 (noting the strong presumption that the lodestar approach is the most accurate determination of reasonable attorneys' fees in light of the intended purpose of the usual fee-shifting statute); Burke, 206 Ariz. 269, 77 P.3d 444 (finding the lodestar calculation to be the appropriate method of awarding reasonable attorneys' fees where a settlement agreement established a fee-shifting as opposed to a fee-spreading scenario). In determining the reasonable time expended and a reasonable hourly rate for purposes of calculating attorneys' fees, South Carolina courts have historically relied on six common law factors of reasonableness: (1) the nature, extent, and difficulty of the case; (2) the time necessarily devoted to the case; (3) the professional standing of counsel; (4) the contingency of compensation; (5) the beneficial results obtained; and (6) the customary legal fees for similar services. See Jackson, 326 S.C. at 308, 486 S.E.2d at 760. In order to address the exceptional circumstances of this case, this Court instructed the circuit judge in the Layman remand order to give enhanced consideration to three of these factors in determining an award of reasonable attorneys' fees: specifically, the actual amount of work performed, expenses incurred, and the benefit obtained for all of the old TERI participants. Layman v. State, S.C. Sup.Ct. Order dated June 1, 2006 (368 S.C. at 648, 630 S.E.2d at 274). In emphasizing these criteria, this Court intended to remain consistent with the theoretical guidelines for awarding fees pursuant to a fee-shifting statute, while addressing the equitable implications in awarding statutory attorneys' fees to counsel who, over a relatively brief period of time, successfully litigated a claim that yielded 100% recovery for the entire class of TERI plaintiffs. We reiterate that it was error for the circuit judge to read so far into these equity-based specifications to the point of awarding attorneys' fees based on a method commonly associated with an equitable theory (i.e., fee-spreading) that was not in play in this case.
Beginning with an analysis based on the common law factors of reasonableness, we proceed with a lodestar calculation of reasonable attorneys' fees using the hourly rate quotes and time sheets submitted by counsel for TERI plaintiffs. Because neither party disputes that the hourly rates submitted by counsel for the TERI plaintiffs are reasonable given the professional standing of counsel and the nature of the case, the chart below reflects this Court's determination that counsel for TERI plaintiffs' current rates constitute a reasonable hourly rate for purposes of a lodestar calculation. See Liberty Mut. Ins. Co. v. Emp. Res. Mgmt., Inc., 176 F.Supp.2d 510 (D.S.C.2001) (explaining that a reasonable hourly rate is determined by comparing the rates of the prevailing party's attorneys to the prevailing market rates in the community for similar services by lawyers of comparable standing). In order to reflect his role as lead counsel in class action litigation, the lodestar analysis uses Mr. Lewis's premium hourly rate which he typically reserves for difficult cases. Turning next to the reasonable time spent on the litigation, we first consider that the time sheets submitted by counsel for TERI plaintiffs include all of the hours spent on the litigation of the case (designated in the chart below as Total Hours Expended), with no distinction between time associated with the TERI participants' claims giving rise to the instant case, and time associated with the Working Retirees' claims, which were remanded. Although the record indicates that Working Retirees constituted roughly one-third of the class of plaintiffs in Layman, we do not find it necessary to adjust the total hours expended by this proportion in order to arrive at a reasonable fee in this case. Not only were the same legal theories advanced on behalf of both the TERI participants and the Working Retirees, making their claims virtually indistinguishable, but more importantly, guiding jurisprudence explicitly holds that a party need not be successful as to all issues in order to be found to be a prevailing party for purposes of awarding attorneys' fees under the state action statute. [8] Heath, 302 S.C. at 182, 394 S.E.2d at 711. Only in an abundance of caution, however, do we reduce the number of total hours expended by three percent (3%), rounded down to the nearest tenth, in order to account for any time devoted solely to the Working Retirees' claims, thereby arriving at what we view as a reasonable number of hours expended on the TERI participants' claims (appearing as Net Hours Expended in the chart below). See Edmonds, 658 F.Supp. at 1135 n. 18, 1147 n. 44 (performing a lodestar analysis and adjusting the time devoted to litigating the underlying case by two to three percent in order to account for the fact that some hours may not be properly compensable). Based on the foregoing, the Court calculates the lodestar fee in this case as follows: Total Net Hours Hours Expended Expended Hourly Rate Totals Lewis & Babcork A. Camden Lewis 139.5 135.3 $600.00 $81,180.00 Keither M. Babcock 224.8 218.0 $350.00 $76,300.00 Ariail E. King 109.7 106.4 $225.00 $23,940.00 Peter D. Protopapas 14.6 14.1 $250.00 $ 3,525.00 William A. McKinnon 262.1 254.2 $225.00 $57,195.00 Brady R. Thomas 25.2 24.4 $200.00 $ 4,880.00 Paralegals 271.3 263.1 $ 80.00 $21,048.00 Law Clerks 144.2 139.8 $ 70.00 $ 9,786.00 Richard A. Harpootlian, P.A. Richard A. Harpootlian 97.5 94.5 $500.00 $47,250.00 David Scott 96.8 93.8 $250.00 $23,450.00 Heather Herron 44.6 43.2 $ 80.00 $ 3,456.00 Holli Langenburg 5.1 4.9 $ 80.00 $ 392.00 ____________ TOTAL $352,402.00
Using the lodestar calculation of $352,402.00 as a starting point for a reasonable fee in this case, we further conclude that enhancing the lodestar figure through a multiplier is necessary to reflect the exceptional circumstances of this case as emphasized by the Court in the remand order. See Blum, 465 U.S. at 897, 104 S.Ct. 1541 (recognizing that an enhanced lodestar award may be justified in some cases of exceptional success (quoting Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983))). More specifically, we find that the expedited litigation timeline imposed by the Court, the wholly successful recovery for the entire class of TERI participants, the extraordinary sum of money returned to the TERI participants and ultimately saved by the TERI participants, and the termination of governmental acts constituting a breach of contract are exceptional circumstances which justify the use of a multiplier. Accordingly, we apply a multiplier of 1.25 to the lodestar calculation in order to arrive at a reasonable fee that adequately compensates counsel for the TERI plaintiffs. [9] To this total, we add the expenses incurred by counsel for the TERI plaintiffs, which this Court directed the circuit judge to include in the award of attorneys' fees, even though the state action statute does not mandate such reimbursement. [10] See also Hyatt v. Apfel, 195 F.3d 188, 192 (4th Cir.1999) (affirming a multiplier of 1.333 applied to a lodestar calculation of attorneys' fees to be paid by the defendant government entity on account of the exceptional results obtained by plaintiffs' counsel); Edmonds, 658 F.Supp. at 1148 (applying a multiplier of 1.15 to 1.25 to the lodestar fees for the plaintiffs' various attorneys to account for the exceptional circumstances surrounding the amount of money involved and the results obtained in the case). Adjusting the lodestar calculation to reflect the exceptional circumstances of this case emphasized by this Court in the remand order, we calculate a reasonable attorneys' fee as follows: Lodestar base calculation $352,402.00 Multiplier × 1.25 ____________ Subtotal $440,502.50 Add expenses incurred + 4,724.10 ____________ TOTAL ENHANCED LODESTAR $445,226.60 Accordingly, we hold that an enhanced lodestar figure equaling $445,226.60 constitutes a reasonable award of attorneys' fees to counsel for TERI plaintiffs under the state action statute.