Thursday, December 13, 2018

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Court of Appeal:

Tying Attorney-Fee Award to Lemon Law Recovery Is Improper

Low Verdict Does Not Justify Applying Negative Multiplier to Lodestar Figure In Consumer Action Where Fee Award Is Mandatory, Opinion Declares

By a MetNews Staff Writer

The judge in a lemon law case erred by applying a negative multiplier to the plaintiff’s requested $500,000 attorney fees, the Fourth District Court of Appeal said yesterday, because he did so in part to bring the award into proportionality with the $17,000 recovery.

The opinion by Div. Two Justice Richard T. Fields reverses the award by San Bernardino Superior Court Judge John M. Pacheco and remands the case for reconsideration of the fee request.

The plaintiff, Shirlean Warren, brought the suit under the Song-Beverly Act, California’s lemon law, after a request to Kia Motors America, Inc. to buy back her 2010 Kia Forte was unsuccessful. The trial in the case resulted in the damages award described by Fields as “modest.”

It also resulted in a fee award of $115,000, representing a 33-percent reduction of the $350,000 lodestar figure claimed by Warren; her request had been for that amount multiplied by one and a half.

Pacheco’s Take

At the attorney fees hearing, Pacheco declared:

“Well, I guess in the back of my head I’m thinking, okay. The verdict is $17,000. The attorney fee request[] is $500,000. So somehow there’s a disconnect, in the back of my head, that a 17,000-dollar case results in a 500,000-dollar request in attorney fees....That seems like an exorbitant amount of money.”

He added:

“I thought I was generous at 115.”

In his written ruling, he said:

“The three firms billed a total of $351,055.26. This is an excessive amount for a non-complex case. The court will exercise its discretion and reduce this amount to 33%, or $115,848.24, of the original requested amount. This amount, while still much more than the $17,455.57 award, more accurately reflects the reasonable amount of attorneys fees in a case which was not particularly complex and which was handled by counsel experienced in this area of law.”

Inappropriate Tying

Fields declared:

“[I]t is inappropriate and an abuse of a trial court’s 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, or pursuant to another consumer protection statute with a mandatory fee-shifting provision….Thus, when a trial court applies a substantial negative multiplier to a presumptively accurate lodestar attorney fee amount, the court must clearly explain its case-specific reasons for the percentage reduction….If, as occurred here, the reasons for the reduction include tying the fee award to some proportion of the buyer’s damages recovery, the court abuses its discretion.”

He added that the trial court did act “within its discretion to the extent it selected the multiplier to arrive at a reasonable fee based on the factors specific to the case, including the excessive time spent on the ‘not so complex case’ by Warren’s attorneys in the aggregate.” It was not possible, however, to discern the relative weight placed on an improper criterion and that placed on an appropriate one, requiring a remand.

Field found that that Pacheco erred in excluding $5,882 in trial transcript costs from the award. Although this is not a “cost” allowed by Code of Civil Procedure §1033.5 unless court-ordered, the Song-Beverly Act more broadly allows awards of “costs and expenses” that were “reasonably incurred by the buyer in connection with the commencement and prosecution” of the action.

“As a practical matter, Warren would have been unable to defend the jury award without the trial transcripts,” he wrote. “At the very least, Warren would have incurred additional expenses and great difficulty in defending the award without the trial transcripts, in the event Kia challenged the jury award in posttrial proceedings or on appeal.”

The case is Warren v. Kia Motors America, Inc., 2018 S.O.S. 5895.