Court Opinion

ID: 4674642
Source: CourtListenerOpinion
Date Created: 2021-04-05 20:00:30.703166+00
Date Added: 2024-06-11T08:03:21.703382
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        APR 5 2021
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

INDEPENDENT LIVING CENTER OF                    No.    20-55193
SOUTHERN CALIFORNIA, INC., a
nonprofit corporation; GRAY PANTHERS            D.C. No.
OF SACRAMENTO, a nonprofit                      2:08-cv-03315-CAS-MAN
corporation; GRAY PANTHERS OF SAN
FRANCISCO, a nonprofit corporation;
GERALD SHAPIRO, DBA Uptown                      MEMORANDUM*
Pharmacy and Gift Shoppe, Pharm. D.;
SHARON STEEN, DBA Central Pharmacy;
TRAN PHARMACY, INC.; MARK
BECKWITH; MARGARET DOWLING,

                Petitioners-Appellants,

 v.

RICHARD FIGUEROA, Jr., Acting
Director of Department of Health Care
Services of the State of California,

                Respondent-Appellee.

                   Appeal from the United States District Court
                       for the Central District of California
                   Christina A. Snyder, District Judge, Presiding

                      Argued and Submitted March 25, 2021
                              Pasadena, California

Before: W. FLETCHER, M. SMITH, and CHRISTEN, Circuit Judges.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      Litigation in this case spanned twelve years and included argument at every

level of the federal courts. The case culminated in a fight over attorney’s fees.

Plaintiffs’ counsel, the Friedman Firm, appeals the district court’s finding that the

settlement agreement between the parties barred counsel from recovering their fees

from third-party beneficiaries through a common fund. Counsel also contends that

the district court abused its discretion in calculating the fees that the Department of

Health Care Services (DHCS) owed them pursuant to California’s Private Attorneys

General Act (PAGA), California Code of Civil Procedure § 1021.5. We affirm in

part and reverse in part. Because the parties are familiar with the facts, we do not

repeat them here, except where necessary to provide context for our ruling.

      1. The district court’s interpretation of the settlement agreement to preclude

common fund attorney’s fees is a legal question that we review de novo. Miller v.

Safeco Title Ins. Co., 758 F.2d 364, 367 (9th Cir. 1985) (“When the district court’s

decision is based on an analysis of the contractual language and an application of the

principles of contract interpretation, that decision is a matter of law and reviewable

de novo.”).

      “An agreement to settle a legal dispute is a contract and its enforceability is

governed by familiar principles of contract law.” Jeff D. v. Andrus, 899 F.2d 753,

759–60 (9th Cir. 1989). To interpret the settlement agreement at issue here, we

apply California contract law. See id. at 760. In California, “the interpretation of a

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contract must give effect to the ‘mutual intention’ of the parties.” Waller v. Truck

Ins. Exchange, Inc., 900 P.2d 619, 627 (Cal. 1995) (quoting Cal. Civ. Code § 1636).

“Such intent is to be inferred, if possible, solely from the written provisions of the

contract. The clear and explicit meaning of these provisions, interpreted in their

ordinary and popular sense . . . controls judicial interpretation.” Id. (internal citations

and quotation marks omitted).

         The agreement allowed Petitioners and Intervenors to seek an award of

attorney’s fees from the court under any common benefit theory—including a

common fund—provided that they did not “assert any argument that would require

DHCS or any other state agency to utilize its resources or modify its internal

practices to assist plaintiffs’ counsel in collecting any fee award that the court may

grant.” (emphasis added). The Friedman Firm was precluded from recovering fees

from a common fund because any effort to do so would have required the State to

utilize its resources to some extent. We affirm the district court’s holding on this

issue.

         2. The Friedman Firm also argues that the district court erred when it reduced

counsel’s claimed hours and billing rate in calculating the fees that counsel could

recover from DHCS pursuant to § 1021.5. “On review of an award of attorney fees

after trial, the normal standard of review is abuse of discretion.” Conservatorship

of Whitley, 241 P.3d 840, 845 (Cal. 2010) (internal quotation marks omitted). “A

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district court abuses its discretion when it makes an error of law, when it rests its

decision on clearly erroneous findings of fact, or when we are left with a definite

and firm conviction that the district court committed a clear error of judgment.”

United States v. Hinkson, 585 F.3d 1247, 1260 (9th Cir. 2009) (internal quotation

marks omitted).

      In reducing the Friedman Firm’s rate, the district court weighed the evidence

in the record, including the historical rate the Friedman Firm charged clients, and

the rate that the district court awarded to counsel representing Intervenors. The

district court’s reduction of the Friedman Firm’s fees to $566 per hour between 2008

and 2016, and $628 per hour from 2017 to present, was not an abuse of discretion.

See Highland Springs Conference & Training Ctr. v. City of Banning, 255 Cal. Rptr.

3d 331, 342 (Ct. App. 2019); Morris v. Hyundai Motor Amer., 253 Cal. Rptr. 3d 592,

605 (Ct. App. 2019).

      As to the number of hours the Friedman Firm billed, the district court abused

its discretion in reducing the hours by fifty percent.        California courts have

recognized that “[w]hen a voluminous fee application is made,” a court is permitted

to “make across-the board percentage cuts either in the number of hours claimed or

in the final lodestar figure.” Kerkeles v. City of San Jose, 196 Cal. Rptr. 3d 252, 263

(Ct. App. 2015) (internal quotation marks omitted). However, percentage-based cuts

are “subject to heightened scrutiny,” and the district court still must “set forth a

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concise but clear explanation of its reasons for choosing a given percentage

reduction,” and “independently review the applicant’s fee request.” Id. (internal

quotation marks omitted). Here, the district court inadequately justified awarding

Friedman only fifty percent of his requested hours, while awarding Intervenors’

counsel one hundred percent of theirs.

      3. Finally, Friedman contends that the district court erred in declining to add

a multiplier to Friedman’s requested lodestar fees. “In most contingency cases,

courts may [ ] increase the lodestar amount by applying a multiplier,” designed to

account for “the importance and difficulty of the litigation; the novelty of the issues

involved; the risk of nonpayment for the attorney’s services (the contingency factor);

the skill of the attorney in presenting the case; and the magnitude of the results

obtained.” Caldera v. Dep’t of Corrections and Rehabilitation, 261 Cal. Rptr. 3d

835, 839–40 (Ct. App. 2020). “The district court must apply a risk multiplier to the

lodestar when (1) attorneys take a case with the expectation they will receive a risk

enhancement if they prevail, (2) their hourly rate does not reflect that risk, and (3)

there is evidence the case was risky. Failure to apply a risk multiplier in cases that

meet these criteria is an abuse of discretion.” Stetson v. Grissom, 821 F.3d 1157,

1166 (9th Cir. 2016) (internal quotation marks omitted). We hold that these criteria

counsel in favor of applying a multiplier, as does the delay and the need to ensure

that, in the future, lawyers are not dissuaded from taking up claims that will benefit

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the public interest. The district court erred by failing to apply a multiplier.

      Because of the district court’s thorough fact-finding, we are able to modify

the attorney’s fees award on appeal, conserving judicial resources by avoiding the

need to remand for further proceedings. Pursuant to the foregoing, we hold that the

Friedman Firm is entitled to payment for seventy-five percent of its billed hours, at

the rates set forth by the district court. We further hold that the Friedman Firm is

entitled to a multiplier of 2. The Friedman Firm billed 8,699 hours. Seventy-five

percent of this amount, multiplied by the hourly rate of $628, yields an award of

$4,097,229.00.1     With a multiplier of 2, the Friedman Firm is entitled to

$8,194,458.00 pursuant to California Code of Civil Procedure § 1021.5.             The

judgment of the district court is AFFIRMED in part and REVERSED in part. The

case is REMANDED and the district court is ordered to enter judgment in favor of

the Friedman Firm in the amount of $8,194,458.00.

1
  The district court used the higher hourly rate of $628 for all of the hours it awarded
the Friedman Firm, reasoning that its reduction in the number of hours was based
primarily on pre-2017 flaws in the Friedman Firm’s time records. Following suit,
we do the same here.

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