By Hon. Socrates Peter Manoukian
I have been a sitting judge for 28 years. I am still on the bench,still active, and with no plans to retire to undertake private judging. Or, put another way, I have not had reason to generate a bill for my services in a long time. Although I have vestiges of memories of computing fees from my own experience, most of what I now know is from reviewing applications for attorneys fees.
Just about every discovery motion has a request for monetary sanctions in the way of reimbursement of attorneys fees. It also is very common in certain types of litigation for the parties to agree on a settlement amount and leave the issue of attorneys fees for a judicial determination on proper motion.
Succinctly stated, motions that are well-written, supported by good research and good declarations, and which do not claim reimbursement for duplicative or unnecessary work have the best chance of receiving generous reimbursement of attorneys fees.
Since judges are supposed to include words of wisdom, I offer the following. On my tentative ruling webpage, I provide two quotes. The first one is: “The opposing counsel on the second-biggest case of your life will be the trial judge on the biggest case of your life – common wisdom.” The second is: “[A]s Shakespeare observed, it is not uncommon for legal adversaries to ‘strive mightily, but eat and drink as friends.’ (Shakespeare, The Taming of the Shrew, Act I, scene ii).” Being prudent and straightforward and honest in attorneys fees requests may have benefits down the road.
A. Attorneys Fees Motions in General
1. The Judge’s Obligation to “Do the Work”
As a general proposition, it is the Court’s obligation to review the supporting documents and the basis for challenges to the claimed fees. 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. See Goglin v. BMW of North America, LLC, 4 Cal. App. 5th 462, 470-471 (2016).
“[T]rial courts have a duty to determine whether a cost is reasonable in need and amount. However, absent an explicit statement by the trial court to the contrary, it is presumed the court properly exercised its legal duty.” Ross v. Superior Court, 9 Cal. 3d 899, 913 (1977); Thon v. Thompson, 29 Cal. App. 4th 1546, 1548-1549 (1994).
In Acosta v. SI Corp., 129 Cal. App. 4th 1370 (2005), there was a statement by the trial court to the contrary and the denial of fees was reversed by the Court of Appeal: “At oral argument, the trial court referred to the motion to tax and stated ‘What I don’t want to do, . . . . . is go through this individually. I have done that too many times, and it’s just as tedious as can be. I will do it if I have to, but I don’t want to.’ The matter was taken under submission. The trial court later denied the motion to tax costs in its entirety and did not specifically address the costs challenged by plaintiffs. Under these circumstances, we cannot say that the court fulfilled its obligation to determine whether SI was entitled to the disputed cost items. We remand for that determination.”
2. The Entitlement to Fees
On occasion, I do happen to see a request for fees without reference to the enabling authority. Counsel should always refer to the authorization for attorneys fees and quote the language of the case as much as possible when making the request. As with any other motion, counsel should also refer to the applicable burden of proof.
3. The “Prevailing Party”
A prevailing party is entitled to recover costs in any action or proceeding, except as otherwise expressly provided by statute. California Code of Civil Procedure §§ 1021, 1032(b), 1033.5. These costs, however, do not include the attorney fees the prevailing party has incurred in the litigation unless (1) an agreement between the parties provides for the recovery of those fees, or (2) a statute creates a right of recovery. de la Carriere v. Greene, 39 Cal. App. 5th 270, 275 (2019).
It is surprising how often a party claiming an entitlement to attorneys fees spends little effort establishing that it is the prevailing party. Even if the claim of fees is based on a provision in a promissory note, fees may be disallowed unless there is a final judgment on the merits. Further, amendments to statutes and changes of case law might create ambiguities concerning the entitlement to attorneys fees. For example, in Samuels v. Sabih, 62 Cal. App. 3d 335 (1976), dismissal was based on the failure of the plaintiff to bring the matter to trial within five years. Therefore, there was an entitlement to fees under California Code of Civil Procedure §1717. But that statute was later amended and subsequent case law tweaked the definition of “prevailing party.” Whether or not the tweak affected the right to attorneys fees may still be unclear. See Hsu v. Abbara, 234 Cal. App. 4th 863, 872 (1995).
Additionally, a party seeking fees might be in for disappointment if a jury awards $10,000 where the pretrial demand was $1 million and the offer was $100,000. If fees are not outright denied, the judge may be inclined to slash the claimed fees mightily.
B. Calculation of Fees
Many fee-shifting statutes have a formula for the calculation of damages. However, many others do not specify how attorneys fees should be calculated.
1. Lodestars and Multipliers
California courts determine fee enhancements under the rule stated in Ketchum v. Moses, 24 Cal. 4th 1122 (2001). Under the “lodestar” or “touchstone” approach, the court calculates base amounts from a combination of time spent and reasonable hourly compensation of each attorney and then adjusts the base amounts by a multiplier in light of various factors. Serrano v. Priest, 20 Cal. 3d 25, 48-49 (1977). I will look at the lodestar as the basic fee for comparable legal services in the community, and then adjust it 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 v. Moses, 24 Cal. 4th 1122, 1132 (2001).
But lodestars are not the only focus. “[W]e are not mandating a blanket ‘lodestar only’ approach; every fee-shifting statute must be construed on its own merits and nothing in Serrano jurisprudence suggests otherwise.” Laffitte v. Robert Half Internat. Inc., 1 Cal. 5th 480, 500 (2016) (internal citations omitted).
There are several services such as the Laffey Matrix which purport to compute average rates charged by attorneys in a particular geographic area. Seeing between 25 and 30 law and motion matters a week also gives me a good idea as to what is reasonably charged.
In Weeks v. Baker & McKenzie, 63 Cal. App. 4th 1128, 1171 (1998), it was held that the trial court’s use of a multiplier of 1.7 to enhance fees awarded in an action under the Fair Housing and Employment Act was not justified. The action did not involve novel or complex issues, the attorneys did not have to demonstrate extraordinary skills, and both plaintiff and her attorneys were fully compensated for their efforts. But nothing in Weeks forecloses an enhancement for risk contingency. See Ketchum, 24 Cal. 4th at 1131-32; Leuzinger v. County of Lake, 2009 U.S. Dist. LEXIS 29843.
A court may actually decrease the lodestar amount in a proper case. “The Bank’s argument is that the amount of time Kassof spent on the case was unreasonable in the circumstances and unproductive, and that even before it was enhanced by the application of a multiplier, the lodestar calculation produced a manifestly unjustified award. In effect, the Bank claims not only that the factors justifying use of a multiplier to enhance the lodestar figures are wholly missing, but that the unjustified duplication of work that took place requires a negative multiplier decreasing the lodestar. We agree.” Thayer v. Wells Fargo Bank, 92 Cal. App. 4th 819, 834 (2001).
“The reasonable market value of the attorney’s services is the measure of a reasonable hourly rate. This standard applies regardless of whether the attorneys claiming fees charge nothing for their services, charge at below-market or discounted rates, represent the client on a straight contingency fee basis, or are in-house counsel.” See Nemecek & Cole v. Horn, 208 Cal. App. 4th 641, 651 (2012). “There is no requirement that the reasonable market rate mirror the actual rate billed.” See Syers Properties III, Inc. v. Rankin, 266 Cal. App. 4th691, 701-702 (2014) (finding the trial court did not abuse discretion by adopting reasonable hourly rate that was more than “the actual rates billed the insurance company footing the bill for the defense.”).
Multipliers have their place and purpose in certain types of high risk litigation where there has been little precedent. Most of the time, however, explanations for unreasonable multipliers wind up being a distraction where there was nothing unique about the litigation.
2. Doing the Math
A veriﬁed fee bill is prima facie evidence the costs, expenses, and services listed were necessarily incurred. Hadley v. Krepel, 167 Cal. App. 3d 677, 682 (1985). A declaration attesting to the accuracy of the fee bill is entitled to a presumption of credibility. Horsford v. Board of Trustees of California State University, 132 Cal. App .4th 359, 396 (2005).
But a presumption is just that, a presumption. “In the rebuttal of a presumption it is not necessary to produce preponderant evidence to overcome it. A presumption is overcome if sufficient evidence is introduced to balance the presumption.” Odden v. County Foresters, Firewardens and County Fire Protection District Firemen’s Retirement Board of Los Angeles County, 108 Cal. App. 2d 48, 50 (1951).
3. Thoughts on the Reasonableness of the Claimed Fees
“However, while meager fee awards to successful counsel may discourage able counsel from engaging in many forms of public interest litigation that should be encouraged, the unquestioning award of generous fees may encourage duplicative and superfluous litigation and other conduct deserving no such favor.” See Thayer v. Wells Fargo Bank, 92 Cal. App. 4th 819, 839 (2001); Donahue v. Donahue, 182 Cal. App. 4th 259, 271 (2010) (“[r]easonable compensation does not include compensation for ‘padding’ in the form of inefficient or duplicative efforts” (citing Ketchum v. Moses, 24 Cal. 4th 1122, 1131-1132 (2001)). Counsel should not be encouraged to over-litigate claims for the purpose of driving up the settlement, believing their tactics will be rewarded with a fee award. See Cowan v. Superior Court, 14 Cal. 4th 367, 392 (1996) (“A rule that creates a perverse set of incentives is untenable.”).
I look at the litigation history and consider the amount of work undertaken prior to the resolution of the lawsuit. On the one hand, a party “cannot litigate tenaciously and then be heard to complain about the time necessarily spent by the plaintiff in response.” Serrano v. Priest, 32 Cal. 3d 621, 638 (1982); City of Riverside v. Rivera, 477 U.S. 561, 580 fn.11 (1986). “Obviously, the more stubborn the opposition the more time would be required . . . .” Wolf v. Frank, 555 F.2d 1213, 1217 (5th Cir. 1977). “Those who elect a militant defense … [are responsible for] the time and effort they exact from their opponents.” Perkins v. New Orleans Athletic Club, 429 F. Supp. 661, 667 (E.D.La.1976); see Weeks v. Baker McKenzie, 63 Cal. App. 4th 1128, 1175-1176 (1998).
A fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether. See Chavez v. City of Los Angeles, 47 Cal. 4th 970, 989-991 (2010); Serrano v. Unruh, 32 Cal. 3d 621, 635 (1982); Guillory v. Hill, 36 Cal. App. 5th 802, 806 (2019). In such an evaluation, this Court may consider “factors such as the complexity of the case and procedural demands, the skill exhibited and the results achieved.” Goglin v. BMW of North America, LLC, 4 Cal. App. 5th 462, 470 (2016).
In Chavez, the California Supreme Court unanimously affirmed that, “[a] fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.” 47 Cal. 4th at 989-91. That holding broke no new ground. Chavez relied upon Serrano v. Unruh, 32 Cal. 3d 621, 635 fn.21 (1982) (citing federal cases holding that, under the “unreasonably inflated” rule, fees can be denied where, among other circumstances, (1) the “initial claim is ‘exorbitant’ and time unreasonable”; (2) the fee claim is “overreaching”; or (3) the request was “unreasonable” and the documentation “inadequate.” Chavez also relied on Ketchum v. Moses,24 Cal. 4th 1122, 1137 (2001). Chavez was the first time the high court applied that rule to entirely deny fees. The California Supreme Court held the trial court correctly awarded zero to the prevailing party because plaintiff had succeeded only on a “single claim,” and that “the amount of time an attorney might reasonably expect to spend in litigating such a claim” was low, given “the amount of damages awarded.” Chavez v. City of Los Angeles, 47 Cal. 4th at 990-91.
The case of Morris v. Hyundai Motor America, 41 Cal. App. 5th 24 (2019), is instructive. In that automobile lemon law matter, the Court of Appeal upheld the trial court’s reduction of an attorney fee award based on size of settlement. Further, the trial court’s refusal to award fees for six of the eleven attorneys working on case was an appropriate remedy for overstaffing. Finally, the plaintiff failed to establish that the trial court lacked a reasonable basis for reducing hourly rates.
Yet “proportionality,” or computing the attorneys fees award based on the net recovery, has been disfavored. For example, it has been held to be inappropriate and an abuse discretion to tie an attorney fee award to the amount of the prevailing buyer/plaintiff’s damages or recovery in a Song-Beverly Act action. A rule of proportionality would make it difficult for individuals with meritorious consumer rights claims to obtain redress from the courts when they cannot expect a large damages award. See Morris v. Hyundai Motor America, 41 Cal. App. 5th 24, 35 (2019); City of Riverside v. Rivera, supra, 477 U.S. 561 (the Court sustained a fee award of $245,456.25, even though the plaintiffs had received a total award of only $33,350 in compensatory and punitive damages; the Court rejected the argument of the petitioners, and the United States as amicus curiae, that attorneys fees in civil rights cases should be analogized to fees in tort cases and should be proportionate to the amount of recovery).
Many years ago, I heard a claim by the plaintiff’s attorney for attorneys fees and costs in the amount of $18,028.20 where the settlement was for $8,000.00. The defense attorney showed that the complaint and all of the discovery for which the attorney claimed authorship was in fact copied verbatim from an attorney in another part of the state in an unrelated case. I agreed with the defense that there was little evidence to justify the claimed fees. I used a variant of a theme of proportionality and awarded 1/3 of the $8,000 settlement or the sum of $2,666.66, plus any costs recognized by the California Code of Civil Procedure. The Court of Appeal reversed my decision without any reference to the factual determination of duplication of effort from another attorney in another case.
I do not see how an attorney can justify more than an hour to review a file and send out a set of form interrogatories. I have seen bills where a lawyer claimed three hours for doing just that. Additionally, I am always suspicious of extensive time billed for attorneys in the firm to confer with each other, or multiple attorneys billing substantial time at different rates (junior associate, senior associate, junior partner and senior partner) for garden-variety motions. Billing for multiple attorneys appearing at law and motion matters as well as case management conferences will be frowned upon. And, yes, I have seen bills where attorneys claimed fees for appearances in court when the courts were closed.
I am more comfortable looking at number of hours times hourly rate. Flat rate or “value” billing is problematic but I have allowed it where there was a reasonable explanation for that method of billing and the bill itself was not shocking. Again, salesmanship is key.
As noted in Ketchum v. Moses, 24 Cal. 4th 1122 (2001), awarding statutory fees in the case, while allowing a contingency fee as a civil penalty enhancement, clearly rewards and incentivizes Plaintiff’s counsel to over-litigate and to continue to employ intentional stalling and delay tactics, including ignoring good faith settlement offers, in pursuit of enhanced and unwarranted damages.
In the end, I try to keep an open mind to recognize the value and effort that attorneys put into their cases. At the end of the day, good documentation and well-written papers are key to a good outcome.
Hon. Socrates Peter Manoukian has been a judge of the Santa Clara County Superior Court for 28 years and is currently serving as a Case Manager in the Court’s Civil Division. He is a member of the Board of Governors of the ABTL Northern California Chapter.