- Much of our firm’s contract litigation involves contracts providing that fees go to the prevailing party. Under Civil Code section 1717, even if the contractual provision only goes in one direction (e.g., the contract provides for fees to the company if it successfully defends suit), California law makes the provision reciprocal, allowing fees to the prevailing party on either side.
- Much of our firm’s consumer litigation is brought under the Consumer Legal Remedies Act or Song Beverly Consumer Warranty Act, both of which specifically provide for attorneys’ fees for a successful plaintiff.
- In our dealership work, the Automobile Sales Finance Act provides for fees for the successful plaintiff, while the Automobile Leasing Act provides for fees for the prevailing party, plaintiff or defendant.
- And then there is California’s private attorney general act, Code of Civil Procedure section 1021.5, which provides for attorneys’ fees for a successful party in a case which “has resulted in the enforcement of an important right affecting the public interest” under certain circumstances. This statute is just about always in play in Proposition 65 matters and Unfair Competition Law cases.
All of this means that, in many cases, the attorney fee award is like the bomb that gets dropped at the end of the case: the plaintiff or plaintiff class is awarded (or settles for) a modest amount of money. Then comes the attorneys’ fee petition, seeking for the attorneys many multiples of what the plaintiff (or the plaintiff class) received. And, on top of everything else, the plaintiff attorneys are likely entitled to their fees incurred in obtaining fees.
Under California’s leading case of Ketchum v. Moses (2001) 24 Cal. 4th 1122, an attorneys’ fee award is to be based, in part, on the hours reasonably spent times the prevailing hourly rates for attorneys in the same community conducting noncontingent work of the same type. The resulting figure (the “lodestar”) may then be adjusted upward or, occasionally, downward, based on a variety of factors which have been developed by the courts. Serrano v. Priest (1977) 20 Cal.3d 25; Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128.
What happens, though, when a firm charging big city rates comes to the small town? Under Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, the out of town firm may receive the out of town rate if it demonstrates that the plaintiff could not have received adequate representation using local counsel.
Now a new case fleshes out the limit of this rule. In Nichols v. City of Taft (October 2, 2007), ___ Cal.App.4th ___, F051477, Morrison & Foerster (a San Francisco based AmLaw 100 firm universally known as “MoFo”) brought a case in Kern County under California’s Fair Employment and Housing Act, which provides for attorneys’ fees for successful plaintiffs. On the eve of trial, the parties settled the case for $175,000, reserving to MoFo the right to move for attorneys’ fees.
And move MoFo did, claiming some $507,000 at hourly rates as high as $550 (again demonstrating that CalBizLit and his partners are woefully underpaid). The City challenged the rates, demonstrating that the highest hourly rate charged in the community was $250.
The trial court agreed, reducing the hourly rates accordingly. But what the trial court took away with one hand, it gave with the other. It concluded that it was required to use a “multiplier,” (i.e., an upward enhancement) to compensate MoFo for the fee reduction. It then applied a multiplier of 33 1/3%, bouncing the fee award back up to more than $470,000.
No dice, said the court of appeal. The trial court was right in using local rates. But it was wrong in using the multiplier (which MoFo had not even requested) to repair the damage. Not only was the trial court not required to use a multiplier to compensate for a rate reduction, it was prohibited from using the multiplier for this purpose. So the case was remanded to see if there was any other basis for applying a multiplier, or if MoFo would have to just struggle along with an award based on local rates – a mere $302,000.
As a side note, the defendant also argued that the $302,000 was too high because it was out of proportion to the result obtained. But that argument fell flat. The court added to the legion of other opinions holding that the defendant can’t drive the plaintiff’s hours off the chart with an aggressive defense and then argue that the lawyers spent too much time on the case. A similar holding is in a case issued just yesterday, Cruz v. Ayromloo (October 3, 2007) ___ Cal.App.4th ___ (B190159), in which the court also stated clearly (albeit in dictum) that the lodestar should not be reduced just because the attorneys took the case “pro bono.”