Thursday, April 23, 2020
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Court of Appeal:
Attorney-Fee Award in ‘Lemon Law’ Case Need Not Be Pared
Justices Reject Contention by Ford Motor Company That Award Under Song-Beverly Act Must Be Cut by Amount Received Pursuant to Contingency-Fee Agreement
By a MetNews Staff Writer
The First District Court of Appeal has affirmed a $201,891 award under the state’s “lemon law,” rejecting Ford Motor Company’s contention that the amount—based on the lawyers’ hourly rate times number of hours, plus a multiplier—should be pared by the amount the plaintiff’s counsel will receive in the form of a contingency fee.
Tuesday’s opinion by Justice Ioana Petrou of Div. Three quotes, with approval, from the trial court decision. Sonoma Superior Court Judge Nancy Shaffer said:
“Many statutory fee-award provisions begin with the lodestar method but are governed by the specific statutory requirement that the final fee award be ‘reasonable’ in nature. No such requirement is found in the Song-Beverly Act. The fee award must be based on the court’s calculation of the ‘actual time expended...determined by the court to have been reasonabl[y] incurred.’…The legislature did not include a requirement that the court also determine [whether] the fees are reasonable in amount. Had the legislature intended such a requirement, it could easily have so stated. In this case, the court determines that the actual time expended for legal...representation of plaintiff was reasonably incurred under the circumstances prevailing at the time the services were provided.
“The court’s review of the overall reasonableness of the attorney fees is, thus, restricted by the specific language in the fee award provision of the Song-Beverly Act. The court does not have the discretion to consider whether plaintiffs attorney received additional compensation by...way of a separate retaine[r] agreement.”
$277,500 Settlement
Under a settlement, Ford agreed to pay plaintiff Peter Reynolds $277,500, with the court setting the attorney fees and costs. His attorneys, the car company asserted, should receive an amount set by the court to reflect what they earned, but only after subtracting what they garner under the contingency fee agreement to avoid double payment.
Petrou wrote:
“Ford’s argument concerning the potential for a windfall if Reynolds’s counsel were to receive both a contingency fee and statutory fee is based on the premise that a statutory fee award under the Song-Beverly Act will ‘fully compensate’ an attorney for legal services rendered in the case. This is not necessarily so.”
Mosk’s Opinion
She cited the California Supreme Court’s 2001 decision in Ketchum v. Moses in which Justice Stanley Mosk (since deceased) said, quoting a Yale Law Review article:
“A lawyer who both bears the risk of not being paid and provides legal services is not receiving the fair market value of his work if he is paid only for the second of these functions. If he is paid no more, competent counsel will be reluctant to accept fee award cases.”
Petrou also drew attention to the 1989 decision by Div. One of the Fourth District Court of Appeal in Cazares v. Saenz. Acting Presiding Justice Howard Wiener (now retired) wrote:
“It has been repeatedly recognized that a contingent fee ‘may properly provide for a larger compensation than would otherwise be reasonable.’…This is because a contingent fee involves economic considerations separate and apart from the attorney’s work on the case.
“In addition to compensation for the legal services rendered, there is the raison d’etre for the contingent fee: the contingency. The lawyer on a contingent fee contract receives nothing unless the plaintiff obtains a recovery. Thus, in theory, a contingent fee in a case with a 50 percent chance of success should be twice the amount of a noncontingent fee for the same case.”
Contingent-Risk Factor
Ford protested that unless its view prevailed, the lawyers will be receiving an enhancement based on the contingent-risk factor, plus a percentage which will yield recompense at a rate higher than an hourly rate in light of that same factor. Petrou responded:
“ This argument is not supported by the record, which reflects the court rejected Reynolds’s request for a 1.5 multiplier and determined a 1.2 multiplier was appropriate based on the following factors: the complexity of the factual issues, counsel’s extensive experience in this type of litigation, and ‘[i]n litigating these types of cases with a large corporate defendant such as Ford Motor Company, many attorneys may decline to represent plaintiffs due to the financial resources of defendant and the prospect of long and hard fought litigation.’ We see no evidence the court considered the contingency nature of the case as part of its decision to apply a multiplier.”
The case is Reynolds v. Ford Motor Company, 2020 S.O.S. 1857.
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