Court Opinion

ID: 4656065
Source: CourtListenerOpinion
Date Created: 2021-01-29 23:01:57.142039+00
Date Added: 2024-06-11T08:00:37.326503
License: Public Domain

Filed 1/29/21
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                          DIVISION FIVE

 TANIA PULLIAM,                           B293435

         Plaintiff and Respondent,        (Los Angeles County
                                          Super. Ct. No. BC633169)
         v.

 HNL AUTOMOTIVE INC. et al.,

         Defendants and Appellants.

     APPEAL from an order of the Superior Court of Los
Angeles County, Barbara M. Scheper, Judge. Affirmed.

      McCreary, PC and Duncan J. McCreary; McGuirewoods,
Leslie M. Werlin, Jamie D. Wells and Anthony Q. Le for
Defendants and Appellants.

     Rosner, Barry & Babbit, Hallen D. Rosner, Arlyn L.
Escalante and Serena D. Aisenman for Plaintiff and Respondent.

                    __________________________
                         INTRODUCTION
      Defendants HNL Automotive Inc. and TD Auto Finance,
LLC (TD) appeal the trial court’s award of attorney’s fees to
plaintiff following a jury trial on plaintiff’s lemon law claims.
Defendants argue: (1) plaintiff’s counsel failed to provide
evidence of their hourly rates, (2) the trial court erred in refusing
to apportion attorney’s fees, (3) the trial court erred in applying a
lodestar multiplier, and (4) TD was not liable for attorney’s fees
under title 16, section 433.2 of the Code of Federal Regulations
(2020) (the Holder Rule). We affirm the amount of attorney’s fees
awarded, finding no abuse of discretion. We affirm the court’s
ruling that TD is liable for attorney’s fees, and conclude that the
Holder Rule does not limit the attorney’s fees that a plaintiff may
recover from a creditor-assignee.
          FACTS AND PROCEDURAL BACKGROUND
1.    Plaintiff’s Vehicle Purchase
      In July 2016, plaintiff purchased a “Certified Pre-Owned”
2015 Nissan Altima from HNL Automotive Inc. (the dealership)
pursuant to a retail installment sales contract. The contract
included the following language from title 16, section 433.2 of the
Code of Federal Regulations:
      “NOTICE: ANY HOLDER OF THIS CONSUMER
      CREDIT CONTRACT IS SUBJECT TO ALL
      CLAIMS AND DEFENSES WHICH THE DEBTOR
      COULD ASSERT AGAINST THE SELLER OF
      GOODS OR SERVICES OBTAINED PURSUANT
      HERETO OR WITH THE PROCEEDS HEREOF.
      RECOVERY HEREUNDER BY THE DEBTOR
      SHALL NOT EXCEED AMOUNTS PAID BY THE
      DEBTOR HEREUNDER.”
This language is commonly referred to as the Holder Rule.
(Lafferty v. Wells Fargo Bank, N.A. (2018) 25 Cal.App.5th 398,

                                  2
404 (Lafferty).) We discuss in depth the Holder Rule and who is a
holder in the final portion of our Discussion section below.
Following plaintiff’s purchase, TD accepted assignment of the
retail installment sales contract and became the “Holder” of
plaintiff’s retail installment sales contract.
       Advertisements for the particular vehicle plaintiff
purchased showed that it had cruise control, 6-way power-
adjustable seats, and other specific features. Plaintiff is disabled,
and because of her disabilities, cruise control and power-
adjustable seats were necessary features. After the purchase,
plaintiff learned that the vehicle did not have cruise control or 6-
way power-adjustable seats, and did not meet the requirements
of the Nissan Certified Pre-Owned program as advertised.
2.     Plaintiff’s Complaint and Trial
       In September 2016, less than two months after purchasing
the vehicle, plaintiff filed this lawsuit against the dealership and
TD in the trial court. Her complaint had six causes of action,
alleging misrepresentation in violation of the Consumer Legal
Remedies Act related to the vehicle’s certification, breach of
implied warranty under the Song-Beverly Consumer Warranty
Act (Song-Beverly) codified in Civil Code section 1790 et seq.,
fraud and deceit, negligent misrepresentation, violation of
Business and Professions Code section 17200, and violation of
Vehicle Code section 11711 (vehicle fraud).1 Plaintiff alleged that
due to the inclusion of the Holder Rule language in the retail
installment sales contract, TD was liable for all of the
dealership’s misconduct in the sale of the vehicle.
       Trial occurred in April 2018. The cause was submitted to
the jury with directions to return a verdict on four causes of

1     All subsequent statutory references are to the Civil Code
unless indicated otherwise.

                                 3
action. The jury found for plaintiff on one cause of action—
violation of the implied warranty of merchantability under Song-
Beverly. The jury’s findings established plaintiff purchased a
motor vehicle from the dealership, the dealership was in the
business of selling motor vehicles to retail buyers, the dealership
failed to adequately package and label the 2015 Nissan, and the
vehicle failed to conform to the promises or affirmations of fact
made on the container or label. The jury found that the purchase
contract for the vehicle was assigned from the dealership to TD.
       The jury found that plaintiff’s total damages were
$21,957.25. On May 29, 2018, the court entered judgment in
favor of plaintiff and against the dealership and TD, jointly and
severally, in the amount of $21,957.25. The judgment left blank
the amount of costs, attorney’s fees, and prejudgment interest to
be awarded.2
3.     Posttrial Motion for Attorney’s Fees
       On July 26, 2018, plaintiff filed a posttrial motion seeking
the award of attorney’s fees. Plaintiff sought $169,602, which
consisted of a lodestar figure of $141,335 and a 0.2 multiplier.
Plaintiff supported the motion with declarations from Hallen D.
Rosner and Michael A. Klitzke, respectively the partner and
associate from Rosner, Barry & Babbit LLP, who had been
working on her case. Rosner’s declaration authenticated the
firm’s attached billing records, provided citation to similar cases
where the firm’s hourly rates had previously been approved,
described each attorney’s experience and qualifications, noted

2      The record does not include motions or orders related to
costs or prejudgment interest, but the case summary indicates at
least the issue of costs was litigated by the parties. We do not
discuss costs or prejudgment interest as they are not raised on
appeal.

                                 4
that the firm’s rates were not increased in contingency matters,
and explained the risks the firm weathered in taking this used-
vehicle case on a contingency basis. Klitzke’s declaration
authenticated documents related to the litigation, as well as
various communications between himself and opposing counsel.
He also described his legal experience and explained his hourly
rate.
       In the motion, plaintiff asserted that TD was liable for
attorney’s fees in addition to the amounts plaintiff paid under the
retail installment sales contract. Plaintiff argued the Holder
Rule did not bar plaintiff’s recovery of attorney’s fees from TD.
       In its opposition, defendants objected to the declarations of
plaintiff’s counsel in support of the motion, and argued plaintiff
failed to provide evidence of Rosner’s hourly rate. Defendants
asserted that the fee award should be reduced by 83 percent
because plaintiff succeeded on only one of the six causes of action
that had been alleged. Defendants also argued the lodestar
multiplier was not appropriate because the lawsuit was not
exceptionally difficult and plaintiff’s counsel was not
exceptionally skilled. Lastly, citing Lafferty v. Wells Fargo Bank
(2013) 213 Cal.App.4th 545, 563, defendants argued pursuant to
title 16, section 433.2 of the Code of Federal Regulations, that TD
was not liable for the attorney fees because as the holder of the
retail installment sales contract, its liability could not exceed the
amount plaintiff paid to TD.
       On August 29, 2018, the trial court heard argument from
counsel. In response to defendants’ argument that plaintiff’s fees
should be apportioned, the court found that defendants’
“mathematical” proposal of giving plaintiff one-sixth of the fees
was not appropriate. The court stated: “I’ve decided they
[plaintiff’s counsel] have satisfied the burden establishing that
there is no need for any sort of allocation, and it in fact would be

                                  5
impossible, and your failure to make any suggestion to the
contrary other than your mathematical equation I think
demonstrates that. It’s just the facts and the legal theories were
completely intertwined, and I don’t think that there is any way
that the court can or should be required to go through on a line-
by-line basis and try to figure out what work went – somehow
went to a fraud cause of action that did not also relate to the
successful cause of action.”
       In response to defendants’ argument that a multiplier
should not be applied to the lodestar figure because it was a
simple case, the court stated: “You didn’t make it simple, Mr.
McCreary [defense counsel], nor did your client. I was here for
this, so this is not just counsel amongst themselves discussing
how, you know, difficult discovery . . . which is out of the presence
of the jury. I saw plenty in my handing of this case, and whether
it was because of your client or for some other reason, what would
have been or could have been a fairly simple case was made much
more complicated by your client’s posture in this matter from the
beginning to the end, as far as the court’s concerned.”
       In an eleven-page minute order explaining its decision, the
court awarded plaintiff $169,602 in attorney’s fees.3 The court
reiterated that apportionment was not necessary or possible
based on intertwined facts of the case and that $141,335 in fees
was reasonably incurred by plaintiff in prosecuting the action.
The court indicated it was capable of assessing whether the

3     Plaintiff points out that defendants failed to include the
judgment in the record. We observe that the judgment on the
jury verdict can be found in the first volume of the clerk’s
transcript at page 121. The minute order granting attorney’s fees
directed the clerk to affix the attorney fees order to this
judgment.

                                 6
lodestar was reasonable. The court also stated Rosner’s hourly
rate was obvious from the billing records, and pointed out that
defendants did not claim his rate to be unreasonable. The court
largely overruled defendants’ evidentiary objections to plaintiff’s
counsel’s declarations.4
                            DISCUSSION
       Defendants contend on appeal that (1) plaintiff’s attorneys
failed to provide evidence of their hourly rates and failed to
establish that their hourly rates are the prevailing rates in the
community; (2) attorney’s fees should be reduced because plaintiff
did not succeed on all claims; (3) the court abused its discretion
by applying a lodestar multiplier to the fees, and (4) TD is not
liable for attorneys’ fees in this matter. We address each issue in
turn.
1.     Legal Overview for Awarding Attorney’s Fees in
       Lemon Law Cases
       The jury found defendants liable for breach of the implied
warranty of merchantability under Song-Beverly, commonly
known as the automobile “lemon law.” (Duale v. Mercedes–Benz
USA, LLC (2007) 148 Cal.App.4th 718, 721.) In its more typical
application, Song-Beverly requires automobile manufacturers to
repair a new motor vehicle within a reasonable number of
attempts. If the manufacturer cannot repair the vehicle, the
manufacturer must replace it or pay restitution to the buyer, at
the buyer’s election. (§ 1793.2, subd. (d)(2).) The present case is
not about unsuccessful efforts to repair a vehicle but is for breach

4      The court sustained a single hearsay objection to an exhibit
titled “United States Consumer Law Attorney Fee Survey Report
2015-1016,” which was attached to attorney Klitzke’s declaration
in support of plaintiff’s motion for attorney’s fees.

                                 7
of the implied warranty of merchantability in the sale of a vehicle
to plaintiff.5 Section 1794, subdivision (a) permits the buyer to
bring an action for recovery of damages and other relief.
       If the buyer prevails in the action against the seller, “the
buyer shall be allowed by the court to recover as part of the
judgment a sum equal to the aggregate amount of costs and
expenses, including attorney’s fees based on actual time
expended, determined by the court to have been reasonably
incurred by the buyer in connection with the commencement and
prosecution of such action.” (§ 1794, subd. (d).) “[A] prevailing
buyer has the burden of showing that the fees incurred were
allowable, were reasonably necessary to the conduct of the
litigation, and were reasonable in amount.” (Doppes v. Bentley
Motors, Inc. (2009) 174 Cal.App.4th 967, 998 (Doppes).) “The
reasonable hourly rate is that prevailing in the community for
similar work.” (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th
1084, 1095.)
       Courts apply the lodestar method in calculating attorney’s
fees. (Robertson v. Fleetwood Travel Trailers of California, Inc.
(2006) 144 Cal.App.4th 785, 818-819 (Robertson); Ketchum v.
Moses (2001) 24 Cal.4th 1122, 1135 (Ketchum).) “That method
requires the trial court to first determine a touchstone or lodestar
figure based on a careful compilation of the actual time spent and
reasonable hourly compensation for each attorney. [Citation.]
The touchstone figure may then be augmented or diminished by

5      Section 1792 provides: “Unless disclaimed in the manner
prescribed by this chapter, every sale of consumer goods that are
sold at retail in this state shall be accompanied by the
manufacturer’s and the retail seller’s implied warranty that the
goods are merchantable. The retail seller shall have a right of
indemnity against the manufacturer in the amount of any
liability under this section.”

                                 8
taking various relevant factors into account, including (1) the
novelty and difficulty of the questions involved and the skill
displayed in presenting them; (2) the extent to which the nature
of the litigation precluded other employment by the attorneys;
and (3) the contingent nature of the fee award, based on the
uncertainty of prevailing on the merits and of establishing
eligibility for the award. [Citation.] As the Supreme Court
subsequently explained, the initial lodestar amount is based on
the reasonable rate for noncontingent litigation of the same type,
which amount may then be enhanced (e.g., through use of a so-
called multiplier) to account for factors such as the contingent
nature of the case: ‘The purpose of such adjustment is to fix a fee
at the fair market value for the particular action. In effect, the
court determines, retrospectively, whether the litigation involved
a contingent risk or required extraordinary legal skill justifying
augmentation of the unadorned lodestar in order to approximate
the fair market rate for such services.’ ” (Robertson, supra,
144 Cal.App.4th at p. 819.) “In making its calculation, the court
may rely on its own knowledge and familiarity with the legal
market, as well as the experience, skill, and reputation of the
attorney requesting fees.” (569 East County Boulevard LLC v.
Backcountry Against the Dump, Inc. (2016) 6 Cal.App.5th 426,
437 (569 East County).)
       “We review an award of attorney fees under [Song–Beverly]
for abuse of discretion. [Citations.] We presume the trial court’s
attorney fees award is correct. . . . ‘The “ ‘experienced trial judge
is the best judge of the value of professional services rendered in
his [or her] court, and while his [or her] judgment is of course
subject to review, it will not be disturbed unless the appellate
court is convinced that it is clearly wrong.’ ” ’ ” (Doppes, supra,
174 Cal.App.4th at p. 998.)

                                 9
2.    Substantial Evidence Supported the Lodestar Amount
      Defendants assert plaintiff “did not establish or mention
Mr. Rosner’s hourly billing rate whatsoever. Mr. Rosner did not
provide any evidence of his hourly rate, and Appellants were
unable to determine from the submissions Mr. Rosner’s hourly
rate.” (Emphasis omitted.) Defendants mischaracterize the
record.
      Plaintiff’s fee motion was accompanied by a declaration
from Rosner. Attached to that declaration was a copy of the
firm’s invoice for all work completed on the case. The invoice
included a description of the work performed, identification of the
attorney that performed the work, and that attorney’s hourly
rate. Multiple attorneys from the firm worked on the case, and
each attorney’s hourly rate was reflected on the invoice, including
(as noted by the trial court) Rosner’s own rate. Substantial
evidence supported that part of the lodestar based on counsel’s
hourly rate and hours worked.
      Defendants also argue that plaintiff’s counsel failed to
establish that their hourly rates are the prevailing rates in the
community. Rosner’s declaration dedicated three paragraphs and
multiple exhibits to establishing that the firm’s rates are
competitive in the local market, and he attached a national
survey of prevailing rates among consumer protection attorneys,
including rates for California attorneys. The declarations of
Rosner and Klitzke included a section on the experience and
qualifications of each attorney and paralegal who billed on the
case. Defendants offer no authority to suggest that further
evidence is needed to establish market rates in the community.
The evidence was sufficient for the trial court which also
observed that it was capable of assessing market rates in the
community sua sponte. (See 569 East County, supra,
6 Cal.App.5th at p. 437 [“In making its calculation, the court may

                                10
rely on its own knowledge and familiarity with the legal market,
as well as the experience, skill, and reputation of the attorney
requesting fees.”].) Substantial evidence supported the lodestar
amount.
       In three conclusory sentences in their opening brief and
without citation to authority, defendants generally argue that the
trial court improperly overruled their foundation and hearsay
objections to Rosner’s and Klitzke’s declarations. Defendants fail
to make specific arguments about each objection on appeal or
provide legal support for their position. We consider those points
no further as “issues not addressed as error in a party’s opening
brief with legal analysis and citation to authority are forfeited.”
(Golden Door Properties, LLC v. Superior Court (2020)
52 Cal.App.5th 837, 890.)
3.     No Abuse of Discretion in Refusing to Apportion the
       Fee Award
       We also find no abuse of discretion in the trial court’s
refusal to apportion attorney’s fees based on plaintiff’s success on
one cause of action.
       When a plaintiff is successful, “the fact that he or she has
prevailed on some claims but not on others is a factor to be
considered in determining the amount of the fee awarded.”
(Lyons v. Chinese Hosp. Assn (2006) 136 Cal.App.4th 1331, 1345.)
Nonetheless, it is well-established that “ ‘[a]ttorneys fees need
not be apportioned between distinct causes of action where
plaintiff’s various claims involve a common core of facts or are
based on related legal theories.’ ” (Graciano v. Robinson Ford
Sales, Inc. (2006) 144 Cal.App.4th 140, 159; Downey Cares v.
Downey Community Development Com. (1987) 196 Cal.App.3d
983, 997; see Harman v. City and County of San Francisco (2007)
158 Cal.App.4th 407, 421 [“There is ‘no mathematical rule
requiring proportionality between compensatory damages and

                                11
attorney’s fees awards, [citation], and courts have awarded
attorney’s fees where plaintiffs recovered only nominal or
minimal damages.”].)
       Here, the court found that apportionment was not possible
because the claims involved a common core of facts and
intertwined legal theories. The record supports the court’s view.
Plaintiff’s claims are based on a single set of facts: the dealership
falsely representing that the vehicle had cruise control, 6-way
power-adjustable seats, and other specific features. Each of
plaintiff’s causes of action revolve around these
misrepresentations. Defendants do not explain how the causes of
action were distinct from one another or based on different sets of
facts.
       We find no abuse of discretion.
4.     No Abuse of Discretion in Applying a Lodestar
       Multiplier
       Defendants argue the court abused its discretion in
applying a lodestar multiplier to attorney’s fees because the
“lawsuit was [a] simple factual and legal case involving a car
transaction where the jury determined that the labeling on the
car was incorrect under the Song Beverly Act.”
       Our Supreme Court has instructed that while the lodestar
amount “is the basic fee for comparable legal services in the
community; it may be adjusted by the court based on factors
including . . . (1) the novelty and difficulty of the questions
involved, (2) the skill displayed in presenting them, (3) the extent
to which the nature of the litigation precluded other employment
by the attorneys, [and] (4) the contingent nature of the fee
award.” (Ketchum, supra, 24 Cal.4th at p. 1132.)
       Here, plaintiff solely requested a multiplier based on her
counsel’s contingent risk. “The purpose of a fee enhancement, or
so-called multiplier, for contingent risk is to bring the financial

                                 12
incentives for attorneys enforcing important constitutional rights
. . . into line with incentives they have to undertake claims for
which they are paid on a fee-for-services basis.” (Ketchum, supra,
24 Cal.4th at p. 1132.) The lodestar enhancement “is intended to
approximate market-level compensation for such services, which
typically includes a premium for the risk of nonpayment or delay
in payment of attorney fees.” (Id. at p. 1138.)
        Defendants focus on the novelty of the case in arguing the
multiplier was an abuse of discretion. Defendants do not address
the contingency risk, or any other factor that courts may consider
when awarding a multiplier enhancement.
        We conclude the trial court did not abuse its discretion in
awarding a 0.2 multiplier to account for the inherent risks
associated with taking the case on contingency and fronting all
costs of litigation. Rosner’s declaration explained that the firm
bills at the same rate for contingent and non-contingent cases.
Rosner also attested to the risks associated with contingent
cases. The requested multiplier was modest and it accounted for
the risk plaintiff’s counsel took in litigating the case against
defendants whom the court found made the case challenging and
protracted. The trial court specifically found defense counsel’s
litigation tactics complicated the case and made what could have
been a “simple” case into a difficult one.6 On this record, there
was no abuse of discretion.

6      It appears that during litigation, defendants made it
difficult to secure witnesses, refused to appear and complete
depositions, and withheld documents.

                                13
5.     The Holder Rule Does Not Limit TD Auto Finance’s
       Liability for Attorney’s Fees
       Defendant TD alone argues that it is not liable for
attorney’s fees based on the Holder Rule (16 C.F.R. § 433.2). We
disagree.
       a.     The Holder Rule
       The Federal Trade Commission (FTC) “promulgated the
Holder Rule in 1975 as a consumer protection measure to
abrogate the holder in due course rule for consumer installment
sale contracts that are funded by a commercial lender.
[Citations.] ‘Under the holder in due course principle, the
creditor could “assert his right to be paid by the consumer despite
misrepresentation, breach of warranty or contract, or even fraud
on the part of the seller, and despite the fact that the consumer's
debt was generated by the sale.” ’ [Citation.] ‘Before the FTC
rule, if a seller sold goods on credit and transferred the credit
contract to a lender, the lender could enforce the buyer’s promise
to pay even if the seller failed to perform its obligations under the
sales contract. Similarly, despite a seller’s breach, the buyer was
obligated to pay the lender under a consumer loan contract that
directly financed the purchase of goods or services from the
seller.’ ” (Lafferty, supra, 25 Cal.App.5th at pp. 410–411.) “ ‘In
abrogating the holder in due course rule in consumer credit
transactions, the FTC preserved the consumer’s claims and
defenses against the creditor-assignee. The FTC rule was
therefore designed to reallocate the cost of seller misconduct to
the creditor. The commission felt the creditor was in a better
position to absorb the loss or recover the cost from the guilty
party—the seller.’ ” (Id. at p. 411.)
       The FTC’s regulation requires the following notice to be
given in every consumer installment sales contract that is funded

                                 14
by a commercial lender (Lafferty, supra, 25 Cal.App.5th at
p. 404):
       “NOTICE: ANY HOLDER OF THIS CONSUMER
       CREDIT CONTRACT IS SUBJECT TO ALL
       CLAIMS AND DEFENSES WHICH THE DEBTOR
       COULD ASSERT AGAINST THE SELLER OF
       GOODS OR SERVICES OBTAINED PURSUANT
       HERETO OR WITH THE PROCEEDS HEREOF.
       RECOVERY HEREUNDER BY THE DEBTOR
       SHALL NOT EXCEED AMOUNTS PAID BY THE
       DEBTOR HEREUNDER.” (16 C.F.R. § 433.2.)
       The FTC regulation requiring use of this notice is known as
the Holder Rule.7 Somewhat more informally, the liability
imposed by the notice – in contrast to the otherwise applicable
holder in due course principle – is also known as the Holder Rule.
       b.     The Parties’ Contentions and Overview
       The parties wrestle with the final sentence of the Holder
Rule, which states that recovery by the debtor shall not exceed
the amounts paid by the debtor under the installment sales
contract. TD asserts that this limits plaintiff’s recovery of both
damages and attorney’s fees to the amount she paid under the
retail sale installment contract. Plaintiff argues the limit applies
only to compensatory damages.
       A number of voices, including state and federal courts, the
California Legislature, and the FTC, have all expressed opinions

7      The Regulation provides that it is a deceptive trade practice
to omit the Holder Rule Notice in a consumer credit contract.
(16 C.F.R. § 433.2.) A consumer credit contract is, in turn,
defined as “[a]ny instrument which evidences or embodies a debt
arising from a ‘Purchase Money Loan’ transaction or a ‘financed
sale’ ” as those terms are themselves defined by regulation.
(16 C.F.R. § 433.1(i).)

                                15
on the issue – many of them contradictory. A broad overview of
the situation, which we will discuss in greater detail below, is
this: In California, the Third Appellate District in Lafferty,
supra, 25 Cal.App.5th 398, held that the Holder Rule’s cap on
recovery applies to attorney’s fees as well as damages. In
response to Lafferty, the California Legislature enacted a statute,
Civil Code section 1459.5, intended to abrogate Lafferty and allow
recovery of attorney’s fees in excess of the Holder Rule’s cap.8
       In the meantime, other jurisdictions were also struggling
with the issue. Some courts found the Holder Rule’s cap applied
to attorney’s fees. (E.g., Simpson v. Anthony Auto Sales, Inc.
(W.D. La. 1998) 32 F.Supp.2d 405, 410; State ex rel. Stenberg v.
Consumer’s Choice Foods, Inc. (Neb. 2008) 755 N.W.2d 583, 595;
Scott v. Mayflower Home Imp. Corp. (2001) 363 N.J.Super. 145,
165-166, overruled on other grounds by Psensky v. American
Honda Finance Corp. (2005) 378 N.J.Super. 221, 231.) Others
found it did not. (E.g., Oxford Finance Cos. v. Velez (Tx.Ct.App.
1991) 807 S.W.2d 460, 464-465.) Still others imposed attorney’s
fees on holders in excess of the cap without even addressing the
issue. (E.g., Diaz v. Paragon Motors of Woodside, Inc. (E.D.N.Y.
2008) 2008 WL 2004001; In re Stewart (E.D.Pa. 1988) 93 B.R.
878, 879.)
       At the same time, as part of its review of its regulations,
the FTC sought comments on the costs, benefits, and impact of

8      Section 1459.5 provides: “A plaintiff who prevails on a
cause of action against a defendant named pursuant to Part 433,
Title 16 of the Code of Federal Regulations or any successor
thereto, or pursuant to the contractual language required by that
part or any successor thereto, may claim attorney’s fees, costs,
and expenses from that defendant to the fullest extent
permissible if the plaintiff had prevailed on that cause of action
against the seller.”

                                16
the Holder Rule. (80 FR 75018.) It received a number of
responses, a handful of which mentioned attorney’s fees and an
even smaller number of which identified the split in the law
regarding the application of the cap to attorney’s fees.
( [as of January 26, 2021] as archived .) The FTC issued a Rule Confirmation in which it
confirmed the Holder Rule with no modifications, but volunteered
its opinion that the Holder Rule’s cap applied to attorney’s fees.
(84 FR 18711.)
       Thereafter, the issue presented itself again in California,
this time, before the First Appellate District, Division Five, in
Spikener v. Ally Financial, Inc. (2020) 50 Cal.App.5th 151
(Spikener). The Spikener court concluded that the FTC’s
construction of the rule was “dispositive on the Holder Rule’s
application to attorney fees.” (Id. at p. 158.) The court also
determined that Civil Code section 1459.5 was preempted by the
Holder Rule as so interpreted. (Id. at p. 160.)9
       Not surprisingly, TD would have us follow Lafferty and
Spikener.10 In our ensuing discussion, we first disagree with
Lafferty’s interpretation of the Holder Rule, and conclude that the
Holder Rule’s cap itself does not apply to attorney’s fees. Then,
we disagree with Spikener’s conclusion regarding the binding

9     Unlike Spikener, Lafferty was not a preemption case.
Lafferty interpreted the Holder Rule’s cap as applying to
attorneys’ fees. (Lafferty, supra, 25 Cal.App.5th at p. 414.)

10    When the parties briefed this issue, Spikener had not yet
been decided. Upon this court’s request, the parties addressed
Spikener at oral argument.

                                17
nature of the FTC’s contrary interpretation in its Rule
Confirmation.
       c.    The Holder Rule Cap Does Not Apply to Attorney Fees
       Preliminarily, we set forth the rules of interpretation which
apply to regulations. Next, we discuss the rationale of the
Lafferty court which led it to conclude the Holder Rule’s cap
applies to attorney’s fees. Lastly, we explain our disagreement
with Lafferty and proffer our own, contrary, interpretation.
             (i)    Rules of Regulatory Interpretation and
                    Standard of Review
       Generally, we apply the same rules governing statutory
interpretation to the interpretation of administrative regulations.
(Regents of the University of California v. Public Employment
Relations Bd. (2020) 51 Cal.App.5th 159, 187.)
       “In interpreting a statute, our primary goal is to determine
and give effect to the underlying purpose of the law. [Citation.]
‘Our first step is to scrutinize the actual words of the statute,
giving them a plain and commonsense meaning.’ [Citation.] ‘ “If
the words of the statute are clear, the court should not add to or
alter them to accomplish a purpose that does not appear on the
face of the statute or from its legislative history.’ ” [Citation.] In
other words, we are not free to ‘give words an effect different from
the plain and direct import of the terms used.’ [Citations.]
However, ‘ “the ‘plain meaning’ rule does not prohibit a court
from determining whether the literal meaning of a statute
comports with its purpose or whether such a construction of one
provision is consistent with other provisions of the statute.” ’
[Citations.] To determine the most reasonable interpretation of a
statute, we look to its legislative history and background.”
(Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332.)

                                 18
      We review statutory interpretation and preemption
questions de novo. (Spielholz v. Superior Court (2001)
86 Cal.App.4th 1366, 1371.)
             (ii) Lafferty’s Rationale
      In Lafferty, the plaintiffs purchased a vehicle under an
installment contract, which was later assigned to a holder, i.e. a
credit company. (Lafferty, supra, 25 Cal.App.5th at p. 405.) Like
the case at bar, the plaintiffs sued the holder pursuant to the
Holder Rule. (Id. at pp. 406–407.) After the plaintiffs and the
holder entered into a settlement agreement where the holder
paid the plaintiffs the amount paid under the installment
contract, the plaintiffs moved for attorney fees. The trial court
denied fees as barred by the Holder Rule’s limitation on recovery
in excess of the amount paid by the plaintiffs under the
installment sales contract. (Id. at pp. 407-408.)
      Relying on two California and two out-of-state cases, the
Lafferty court stated the “term ‘recovery’ is broad and regularly
used to include compensatory damages, punitive damages,
attorney fees, and costs.” (Lafferty, supra, 25 Cal.App.5th at
p. 412.) The Lafferty court held: “a consumer cannot recover
more under the Holder Rule cause of action than what has been
paid on the debt regardless of what kind of a component of the
recovery it might be—whether compensatory damages, punitive
damages, or attorney fees.” (Id. at p. 414.)
             (iii) Our Interpretation of the Language of the
             Holder Rule
      The statutory interpretation question for us is: Does the
word “recovery,” as used in the Holder Rule, include attorney’s
fees. If “recovery” includes attorney’s fees, then the Holder Rule’s
limitation that recovery “by the debtor shall not exceed amounts
paid by the debtor hereunder,” means that the court would add
the attorney’s fees to the compensatory award and limit the total

                                19
recovery to the amount the debtor paid under the purchase
agreement. That is Lafferty’s holding. (Lafferty, supra,
25 Cal.App.5th at p. 412.)
       Black’s Law Dictionary defines “recovery” as “1. The
regaining or restoration of something lost or taken away. . . . [¶]
2. The obtainment of a right to something (esp. damages) by a
judgment or decree. . . . 4. An amount awarded in or collected
from a judgment or decree.” (Recovery Definition, Black’s Law
Dict. (11th ed. 2019) available at Westlaw; see Wasatch Property
Management v. Degrate (2005) 35 Cal.4th 1111, 1121–1122,
[“When attempting to ascertain the ordinary, usual meaning of a
word, courts appropriately refer to the dictionary definition of
that word”].) The dictionary definition of recovery focuses on
damages, i.e. restoring money that was taken away from the
plaintiff, and does not expressly address attorney’s fees.
       To the extent that Lafferty cites several cases that discuss
recovery to include attorney’s fees in contexts outside the Holder
Rule, we do not find these to be persuasive in defining recovery
for the purpose of the Holder Rule. The Rule’s legislative history
makes clear that the objective of the Holder Rule was to compel
“creditors to either absorb seller misconduct costs or return them
to sellers, by denying sellers access to cut-off devices,” thereby
discouraging “predatory practices and schemes.” (Preservation of
Consumers’ Claims and Defenses, 40 FR 53506 (Nov. 18, 1975)
p. 53523.) In its “Statement of Basis and Purpose” published in
the Federal Register in conjunction with the Holder Rule’s
enactment, the FTC stated: “It is unfair to subject an innocent
party to costs and harm occasioned by a guilty party. Consumers
are clearly injured by a system which forces them to bear the full
risk and burden of sales related abuses. There can be little
commercial justification for such a system. The desired
reallocation of cost and risk will both reduce the costs of seller

                                20
misconduct in the marketplace and return the residuum to the
guilty parties. Consumers and honest merchants will benefit as
prices come to reflect actual transactions costs and honest
merchants no longer need compete with those who rely on
abusive sales practices.” (Ibid.)
       The FTC also found that pre-existing law placed consumers
in a precarious position of being financially incapable of enforcing
their rights in court: “The Commission further finds that
aggrieved consumers are often not in a position to take advantage
of the legal system. Where seller misconduct in a credit sale
transaction has given rise to consumer injury, the consumer is
theoretically in a position to seek damages or other relief from
the seller in court. . . . However, in such cases the consumer
must pay the creditor holding his note or contract whether or not
he ultimately receives a judgment against the seller. . . . [S]uch
damages are rarely enough to attract competent representation.
The sheer costs of recourse to the legal system to vindicate a
small claim, together with the days of work that must be missed
in order to prosecute such a claim to judgment, render recourse to
the legal system uneconomic. In addition, the worst sellers . . .
prove difficult to locate and serve, and the marginal liquidity
which characterizes their operations makes collection of a
judgment difficult or impossible even if they are successfully
served. Bankruptcy or insolvency becomes a final barrier to
recovery.” (40 Fed. Reg. 53512.) The Holder Rule was the FTC’s
answer to such consumer impediments.
       In August 1976, at a congressional hearing on the recently
enacted Holder Rule, acting director of the FTC’s Bureau of
Consumer Protection, Margery Waxman Smith, made the
following statements, which echoed the FTC’s comments above:
             “In times past, when sellers were fewer and
       consumer credit was less pervasive, it may have been

                                21
reasonable to conclude that consumers could assess
the risks of seller nonperformance more efficiently
than a note purchaser. Under these conditions, a
rule of law favoring holders-in-due course may have
promoted economic efficiencies. But in today’s
complex credit-oriented economy of mass production
and distribution, where buyers and sellers transact
impersonally for standardized products, it may no
longer be most efficient to place all the risks of seller
nonperformance on the buyer. This is particularly
true where the creditor has frequent dealings with
the seller though common ownership, affiliation or a
regular course of dealing. The Commission’s rule, in
short, carefully shifts some of these risks from
consumers to those who have a better and more
efficient means of assessing them, pricing them, and
shifting them back to the seller.
       “The purpose of the rule is to recognize these
realities. Consumers who are victimized by seller
misconduct and compelled to pay a third-party
creditor are not in a position to obtain redress for
their injuries, thus shifting the costs back to the
seller. The reasons for this situation are many. They
revolve around the costs of taking time off from work,
finding legal representation in a context which the
law would generally classify as a small claim,
undertaking the costs of litigation, and meeting a
rigid payments schedule whatever the ultimate result
of such efforts may be.
       “Creditors, in those situations to which the rule
applies, are in a position to shift the risk back where
it belongs, either directly or through the price

                           22
       mechanism. They deal in volume while consumers
       deal once. Creditors enjoy ready access to
       commercial information which consumers cannot
       obtain. They have the leverage to return risks to the
       sellers they finance. They can spread information
       costs over many transactions. All together their
       comparative advantage here is incalculable.
       [¶]
              “The required provision does contain one
       express cautionary limitation on a creditor’s
       exposure. The consumer may never recover
       consequential damages under the provision which
       exceed the amount of the credit contract.”
(Consumer Claims and Defenses: Hearings Before the Subcomm.
on Consumer Protection and Finance of the Comm. on Interstate
and Foreign Commerce House of Rep., 94th Cong., 2nd Sess.
(1976), Serial No. 94-145, pp. 22-23.)
       Acting Director Smith’s comments indicate that at the time
the FTC’s position on the limitation on recovery was that the rule
limited consequential damages, not attorney’s fees. To include
attorney’s fees in the Holder Rule’s limitation on recovery would
be out of sync with its objective of reallocating the costs of the
seller’s misconduct from the consumer back to the seller and
creditor. Attorney’s fees “is a form of compensation that, along
with an award of actual damages, permits the consumer to be
made whole. . . . [O]ne of the objectives of the Holder Rule is to
internalize the costs of a seller’s misconduct. Those costs include
the expense of obtaining compensation for injury caused by the
seller’s misconduct.” (Greenfield & Ross, Limits on a Consumer's
Ability to Assert Claims and Defenses under the FTC's Holder in
Due Course Rule (1991) 46 Business Lawyer 1135, 1148.)

                                23
        One commentator suggested that if the creditor is not
responsible for attorney fees and costs, there would be an
incentive to intentionally prolong litigation and cause a consumer
to spend more prosecuting the case than the recovery available
under the sales contract. “Exposure to liability for fees and costs
. . . has a tendency to cut down on litigation and encourage
settlement because commercial parties have less incentive to stall
the litigation until the case goes away. This ability to stall is
especially implicated when the commercial parties have the
resources to continue the litigation while wearing down the
resources of the consumer.” (Rosmarin, Consumers-R-Us: A
Reality in the U.C.C. Article 2 Revision Process (1994) 35 Wm. &
Mary L.Rev. 1593, 1615.) “The statutory availability of attorney’s
fees and costs to a prevailing consumer is another way to level
the playing field between the consumer and commercial parties to
the transaction.” (Id. at p. 1616.) Both consumer rights and the
rule’s purpose would be frustrated if attorney fees were not
recoverable from both the seller and the creditor-assignee.11
        d.    The FTC’s Rule Confirmation Does Not Change This
              Result
        Were we writing on a clean slate – or one which involved
only Lafferty – our analysis would be complete. But TD argues
that, as Division Five of the First District held in Spikener, the
language in the FTC’s Rule Confirmation is entitled to such
deference as to preclude our interpretation to the contrary and,
therefore, to preemptively nullify Civil Code section 1459.5. Our
rejection of this argument begins with an explanation of how the
relevant language in the FTC’s Rule Confirmation came to be.

11    Of course, the California Legislature has taken a similar
view in its enactment of Civil Code section 1459.5.

                                24
             (i)   History of the FTC’s Rule Confirmation
       In December 2015, the FTC requested public comment on
“the overall costs and benefits, and regular and economic impact”
of the Holder Rule “as part of the agency’s regular review of all
its regulations and guides.” (80 FR 75018.) The request for
comment identified 15 questions on which the FTC sought
comment, including whether the Holder Rule should be modified
in any way, but asked no questions specifically about attorney’s
fees. (80 FR 75019.) If the responding party believed any
modifications to the Rule should be made, the party was also
required to answer sub-questions on what evidence supported the
proposed modifications, and how the modifications would affect
the costs and benefits of the rule for consumers and businesses.
(80 FR 75019.)
       Nineteen comments were received, ranging from multi-
page analyses of the Holder Rule submitted by consumer
advocacy groups and trade associations for consumer credit
agencies to single paragraphs submitted by individuals.
( [as of January 26, 2021], archived at .)
       Of the nineteen comments received, only six of them
addressed the issue of attorney’s fees under the Holder Rule –
their positions differed both on whether the Holder Rule cap did
apply to attorney’s fees and whether it should. Two consumer
organizations believed that the Holder Rule’s cap did not
presently apply to attorney fees, but requested the FTC to clarify
that it did not. Specifically, the National Association of
Consumer Advocates asked that the FTC “clarify that the Holder
Rule’s cap on recovery does not apply to attorney fees that the
holder incurs.” (, p. 3 [as of January

                               25
26, 2021], archived at .) The
National Consumer Law Center agreed, stating that the FTC
should “[c]larify that the Rule’s cap on recovery does not apply to
attorney fees for which the holder is liable because of the holder’s
own litigation conduct.” (, p.8 [as
January 26, 2021], archived at .)
The National Consumer Law Center argued that “[c]larification
of this point is necessary because while many courts allow fees
above the cap, others do not.” (Ibid., fns. omitted.) Footnotes
collected cases on both sides of the issue. (Ibid., fns. 29 & 30.) Its
comment offered policy reasons for why fees should not be
encompassed by the Holder Rule’s cap. (Id. at pp. 8-9.)
       Two others wanted the Holder Rule’s cap eliminated
entirely, in language which appears to have assumed the cap
presently applied to attorney fees. MFY Legal Services, Inc.
sought elimination of the cap to ensure that “consumers are made
whole, as many of their damages for fraud and breach of contract
exceed payments made (e.g., cash deposits, cash payments for
add-on products, out-of-pocket losses for repairs, attorney’s fees,
and lost wages) and could have been avoided had the lender
heeded their complaints.” (, p. 6 [as
of January 26, 2021], archived at .) Another individual similarly requested the Holder Rule
be modified “to expressly provide that the holder is liable to the
consumer for all actual damages proximately caused by the prior
holders and original seller, including consequential and
incidental damages, as well as attorney fees incurred by the
consumer, so long as those remedies would be available to the
consumer against prior holders and/or the original seller.”
( [as of January 27, 2021], archived at
.)
       On the other side of the issue, the American Financial
Services Association asked that the FTC “confirm that under the
Holder Rule’s plain language, any court-awarded sum, under the
Rule, must be ‘limited to amounts paid by the debtor hereunder.’
This limitation includes interest, costs and attorney fees.”
(, p. 3 [as of January 27, 2021], archived
at https://perma.cc/YLF2-ETHW>.) The association offered case
law, including Lafferty. (Id. at p. 7, fn. 30, p. 8, fn. 33.)
       Taking a position in the middle was CU Direct Corporation,
the “nation’s largest point-of-sale auto financing and indirect
lending network for credit unions . . . .” (, p. 1 [as of January 27, 2021], archived at
.) Although CU Direct cited no
cases, it appeared to be writing from experience that attorney
fees were not subject to the cap. CU Direct also offered a
solution. It expressed a concern about excessive attorney’s fees
“routinely claimed by plaintiff’s counsel as part of the damages
that the holder is ultimately responsible to pay under the law.”
(Id. at p. 2.) It stated, “While it may be reasonable for a lender,
as holder of the contract, to be liable for some of the consumer’s
attorneys’ fees, it is far less reasonable to hold a lender liable for
excessive or abusive levels of attorneys’ fees, especially in cases
where they are essentially unable to fight or contest the claim.”
(Id. at p. 3.) To resolve the problem it perceived, CU Direct
sought “a fair and reasonable schedule” of attorney’s fees. (Ibid.)
              (ii) The FTC’s Rule Confirmation
       After reviewing the comments, the FTC “determined to
retain” the Holder Rule “in its present form.” (84 FR 18711.) The

                                 27
FTC issued a Confirmation of Rule that rejected all proposed
modifications to the rule, specifically noting that “none of the
comments that proposed changing the Rule provided the
Commission with specific evidence of the potential costs and
benefits of such modifications.” (84 FR 18712.)
         When it came to the issue of attorney’s fees, the FTC
explained that “Six comments addressed whether the Rule’s
limitation on recovery to ‘amounts paid by the debtor’ allows or
should allow consumers to recover attorneys’ fees above the cap
. . . .”12 (84 FR 18713.) After itemizing the six comments, the
FTC stated, “We conclude that if a federal or state law separately
provides for recovery of attorneys’ fees independent of claims or
defenses arising from the seller’s misconduct, nothing in the Rule
limits such recovery. Conversely, if the holder’s liability for fees
is based on claims against the seller that are preserved by the
Holder Rule Notice, the payment that the consumer may recover
from the holder—including any recovery based on attorneys’
fees—cannot exceed the amount the consumer paid under the
contract. Claims against the seller for attorneys’ fees or other
recovery may also provide a basis for set off against the holder
that reduces or eliminates the consumer’s obligation. The
Commission does not believe that the record supports modifying
the Rule to authorize recovery of attorneys’ fees from the holder,
based on the seller’s conduct, if that recovery exceeds the amount
paid by the consumer.” (84 FR 18713.)

12   The FTC’s use of “allows or should allow” suggests that the
agency itself was unclear whether the Holder Rule actually
addressed the issue of attorney’s fees at all.

                                 28
            (iii)     The Rule Confirmation Is Not Entitled to
                      Dispositive Deference
        In Kisor v. Wilkie (2019) 139 S.Ct. 2400, 2408 (Kisor), the
Supreme Court reaffirmed the doctrine of deference to an
agency’s reading of its own, genuinely ambiguous regulations.
However, the court also reaffirmed the limitations of that
doctrine. Particularly, in considering deference, “a court must
make an independent inquiry into whether the character and
context of the agency interpretation entitles it to controlling
weight. [Citations.]” (Id. at p. 2416.) “The inquiry on this
dimension does not reduce to any exhaustive test.” (Ibid.)
However, the court has identified certain markers for identifying
when regulatory deference is and is not appropriate. (Ibid.)
        The four markers the court identified were: First, the
“regulatory interpretation must be one actually made by the
agency. In other words, it must be the agency’s ‘authoritative’ or
‘official position,’ rather than any more ad hoc statement not
reflecting the agency’s views. [Citation.]” (Kisor, supra,
139 S.Ct. at p. 2416.) “Next, the agency’s interpretation must in
some way implicate its substantive expertise.” (Id. at p. 2417.)
“Finally, an agency’s reading of a rule must reflect ‘fair and
considered judgment’ to receive . . . deference. [Citation.]” (Ibid.)
A court should decline to defer to a convenient litigation position
or post hoc rationalization. (Ibid.) Moreover, a court may not
“defer to a new interpretation, whether or not introduced in
litigation, that creates ‘unfair surprise’ to regulated parties.
[Citation.] That disruption of expectations may occur when an
agency substitutes one view of a rule for another.” (Id. at
pp. 2417-2418.) Such an upending of reliance may occur without
an explicit interpretive change; we will not defer to an
interpretation that would impose retroactive liability on parties

                                 29
for longstanding conduct the agency never before addressed. (Id.
at p. 2418.)
       We consider each of the four factors the Supreme Court
identified in Kisor and conclude the FTC’s Rule Confirmation is
not entitled to conclusive deference under the Court’s flexible
standard.
       First, we assume that the FTC’s “regulatory interpretation
[is] one actually made by the agency,” although even that
assumption is somewhat challenged by our consideration of the
third factor below.
       Second, we do not believe resolution of the issue is easily
within the FTC’s substantive expertise. This is so for two
reasons. (1) Resolution of the issue may turn on the particular
state statute providing for attorney’s fee recovery at issue, and
whether that statute is intended to be punitive against the payor
or simply to make the payee whole. (2) As illustrated by the
FTC’s request for comments which led to the Rule Confirmation,
the FTC sought to exercise its judgment based on data regarding
the effect of the rule (or any proposed rule change) on consumers
and businesses. No commenter provided the FTC with data on
the costs and benefits to consumers or businesses in different
jurisdictions based on the availability of attorney’s fees or any
limitations placed on them. Thus, the FTC’s statement regarding
attorney’s fees in its Rule Confirmation was not an exercise of its
substantive expertise, but simply a position taken after limited
arguments were made on each side.13

13     The FTC had not sought comments on this specific issue;
its received input was therefore limited to those six comments
which had volunteered the information even though not asked
expressly. Presumably, if the FTC formally and affirmatively
sought comments on whether the Holder Rule’s cap should apply

                                30
       Third, given the informal nature of the FTC’s consideration
of the issue– one that followed a request for comments that did
not mention attorneys’ fees – we are not convinced that the
confirmation truly represented the “ ‘fair and considered
judgment’ [necessary] to receive . . . deference.” (Kisor, supra,
139 S.Ct. at p. 2416.) Fourth, although we cannot say the
position taken in the Rule Confirmation was a change in
interpretation – as the FTC had not previously interpreted the
rule at all – it did, in fact, address an issue never previously
addressed, and undermined the existing practice in those
jurisdictions in which attorney fees in excess of the cap had been,
and were being, imposed as a matter of course.
              (iv) We Disagree With Spikener
       The Spikener court reached the opposite conclusion.
Purporting to apply the Kisor test, the Spikener court concluded
the FTC’s Rule Confirmation was entitled to dispositive
deference. The court’s analysis on this point, in its entirety, is:
“The Rule Confirmation was issued by the FTC and published in
the Federal Register, and was indisputably the FTC’s official
position. Interpretation of the Holder Rule, which provides that
taking a consumer credit contract without the prescribed
language is an unfair or deceptive act or practice, falls within the
expertise of the FTC. [Citation.] The Rule Confirmation issued
after the FTC solicited and reviewed public comments and
reflects the agency’s considered judgment. The FTC’s
interpretation is entitled to deference. [Citation.]” (Spikener,
supra, 50 Cal.App.5th at p. 159.)
       We are not persuaded. In Kisor, the U.S. Supreme Court
retained the doctrine of deference to agency interpretations, but

to attorney’s fees, it would have received a great deal more
relevant input on which to make its determination.

                                 31
“reinforce[d] its limits.” (Kisor, supra, 139 S.Ct. at p. 2408.) The
high court emphasized that an agency interpretation is not
entitled to deference when it “does not reflect an agency’s
authoritative, expertise-based, ‘fair[, or] considered judgment.’
[Citations.]” (Id. at p. 2414.) As we have discussed, this requires
courts considering the preclusive effect of agency determinations
to make “independent inquiry into whether the character and
context of the agency interpretation entitles it to controlling
weight. [Citations.]” (Id. at p. 2416.) We do not believe the
Spikener court’s brief discussion of the issue satisfies this
requirement.
       Our inquiry into the context of the agency’s interpretation,
convinces us that Spikener’s analysis is incorrect. In particular,
we find significant that the agency initially had not previously
spoken on the issue, and chose to express its opinion without
seeking formal input on it. Instead, the FTC had requested
comments on the Holder Rule in general terms, seeking
arguments on modifying the rule only if supported by data
setting forth the impact of any proposed modifications on
consumers and businesses. It did not receive that data. Had the
FTC issued a modification based on an analysis of submitted
data, or after consideration of arguments submitted in response
to an express notice, it would have made a stronger case for
deference. Instead, the agency, based on no data and limited
argument, spoke on an issue on which it had previously remained
silent for decades, and had not given notice of an intent to speak.
This falls short of the type of considered analysis entitled to
dispositive deference. “[W]hether a court should give such
deference depends in significant part upon the interpretive
method used and the nature of the question at issue.” (Barnhart
v. Walton (2002) 535 U.S. 212, 221-222.) This is particularly so
when the issue involved is not exclusively one of federal law, but

                                32
rather an issue of the intersection of federal law and state law of
remedies. (Cf. Kisor, supra, 139 S.Ct. at p. 2417 [“Some
interpretive issues may fall more naturally into a judge’s
bailiwick. Take one requiring the elucidation of a simple
common-law property term, see Jicarilla Apache Tribe v. Federal
Energy Regulatory Com. (10th Cir.) 578 F.2d 289, 292–293, or one
concerning the award of an attorney’s fee, see W. Va. Highlands
Conservancy, Inc. v. Norton (4th Cir. 2003) 343 F.3d 239”].)
      Because we conclude the Holder Rule cap does not include
attorney’s fees within its limit on recovery and that the FTC’s
interpretation to the contrary is not entitled to deference, the
Holder Rule is consistent with section 1459.5, and we need not
address whether section 1459.5 independently applies.
                          DISPOSITION
      We affirm the attorney’s fees awarded by the trial court.
Plaintiff Tania Pulliam is awarded her costs on appeal.

                                     RUBIN, P.J.
WE CONCUR:

            BAKER, J.

            KIM, J.

                                33