Does Anderson v. Nextel presage assault on percentage-of-fund fee awards?

United States District Court Judge Stephen V. Wilson refused to award a percentage-of-fund fee award, choosing, instead, to apply a lodestar approach with no multiplier and refused to award an incentive payment to the plaintiffs, as part of an Order granting in part and denying in part a final award of attorneys' fees, costs and incentive payments.  Anderson, et al. v. Nextel Retail Stores LLC (June 30, 2010).

The opinion includes an incredibly thorough analysis of hourly rates and fee billing entries (it is helpful reading in that regard), among other things, as part of the Court's decision to examine the lodestar and then cross-check against the requested 25% of the available fund in the wage & hour class action settlement.  After determining that the lodestar would need to multiplied by all of 1.64 to arrive at the percentage-of-fund request at the 25% level, the Court offers this surprising analysis:

In the present case, the Court is unable to conclude that counsel is entitled to a multiplier over the lodestar amount. The lodestar amounts provide perfectly adequate compensation, see generally Perdue, 130 S.Ct. 1662, 1674-75, and none of the relevant considerations justify an upward increase in the amount of compensation. For example, the considerations raised in Vizcaino – the complexity of the case, the duration of the litigation, the risk of nonpayment – are inapplicable. This case was little more than a run-of-the-mill wage-and-hour dispute.

Slip op., at 17.  I find this statement astounding.  No wage & hour class action is "run-of-the-mill" in federal court.  A survey of outcomes in the last few years would, I submit, confirm that.

If a trend favoring lodestar awards over percentage of the fund awards develops, plaintiffs' firms will face an asymmetrical result when compared to firms paid on an hourly basis.  The contingent award (the percentage of the fund in class actions) offsets to some degree the fact that a good percentage of cases generate no recovery to speak of.  This mitigation of risk allows plaintiffs with no resources to challenge unlawful practices causing comparatively smaller amounts of harm on a per capita basis.  An increase in lodestar awards won't cause children to starve, but it will likely result in decisions to decline difficult cases and induce some unscrupulous members of the bar to inflate billing entries.  Courts will then view all fee bills with even more skepticism, further punishing the ethical billers in the plaintiffs' bar.

"See, with those plaintiffs' lawyers, it's all about the fees."  Come closer so I can do that Moe thing to your eyes.  "Why I oughta..."  You don't like working for free any more than I do or anyone else does.  If I won the lottery, I'd be willing to work for a trifling.  Then it would be just about the ability to help others and the intellectual reward.  But I digress.  Taking percentage of the fund awards off the table means that a good portion of the work done by plaintiffs' attorneys in class actions will be done for free.  I hear that at some defense firms, partners don't get paid their shares unless they collect their clients' accounts receivable.  Who's all about the fees again?

In another fairly uncommon move, the Court declined to award any incentive payment to the plaintiffs that obtained the recovery for the class.  So much for rewarding the plaintiffs that accept the stigma associated with suing their employer.

You can view the embedded opinion in the acrobat.com flash viewer below:

If the viewer isn't working for you (say, if you are viewing this on an iPad or iPhone), you can download the opinion here.  Thanks to the (other) reader that alerted me to this decision.

Mundy v. Neal confirms that pre-filing settlement attempt necessary for catalyst theory fees sought via Civil Code section 55

The plaintiff sued to force a land owner to install a van-accessible handicap parking space.  The landowner installed the space.  Plaintiff filed a dismissal with prejudice.  Plaintiff then sought his attorney fees under a catalyst theory because his lawsuit motivated corrective action that inures to the public benefit.  The trial court denied the motion for fees. The Court of Appeal, in Mundy v. Neal (June 30, 2010) (Second Appellate District, Division Two) affirmed, holding that the plaintiff did not attempt to settle prior to filing suit and was not the prevailing party under Graham v. DaimlerChrysler Corp., 34 Cal. 4th 553, 577 (2004).  Simple as that.

District Court de-CAFA-nates Hollinghurst v. Lacoste USA

United States District Court Judge Christina A. Snyder granted a motion to remand an action removed pursuant to the Class Action Fairness Act ("CAFA").  Hollinghurst v. Lacoste USA (C.D.Cal. June 28, 2010).  That part isn't so interesting.  The interesting part is that the Court found that the face of the initial complaint had enough information from which the defendant could have extrapolated an amount in controversy over $5 million.  The defendant argued that it was not until discovery responses were received that the calculation was possible.  The Court disagreed:

The only new information from plaintiff’s supplemental responses that defendant cites to in its notice was the frequency by which plaintiff was denied her meal breaks and rest periods (two to fifteen meal and/or rest breaks per week) and the amount of time plaintiff was made to work off-the-clock (twenty minutes to one hour per week). The frequency by which plaintiff was denied her meal breaks and rest periods was not a critical discovery because plaintiff has always sought unpaid wages and penalties based on the claim that all class members “were also prevented from taking all daily meal periods . . . and also prevented from taking any and all rest breaks.” See Compl. ¶ 5.  Therefore, from the outset defendant could have calculated the amount in controversy under the assumption that all rest breaks and meal periods had been denied to class members.

Slip op., at 8, fn. 5.  The Court briefly noted a second ground supporting remand:

Additionally, the Court finds that defendant waived its right to remove when it demurred to dismiss the class allegations, a substantial affirmative action in which defendant submitted issues for determination in state court. By doing so, defendant indicated its willingness to litigate in state court before it filed its notice of removal to federal court.

Slip op., at 9.  It's a one-two punch:  a strict standard applied to the timing of first awareness of the right to remove under CAFA and a definitive finding that a demurrer to class action allegations is a submission to the jurisdiction of the superior court.

You can view the embedded opinion in the acrobat.com flash viewer below:

If the viewer isn't working for you (say, if you are viewing this on an iPad or iPhone), you can download the opinion here.  Thanks to the reader that alerted me to this decision.

In Faulkinbury v. Boyd & Assoc., Court confirms the broad discretion given to trial courts considering certification

After weeks in the doldrums, a California Court of Appeal finally got around to issuing an opinion related to class actions.  Unfortunately, it isn't very exciting.  In Faulkinbury v. Boyd & Associates, Inc. (June 24, 2010), the Court of Appeal (Fourth Appellate District, Division Three) reviewed an order denying class certification of meal period, rest break and overtime (regular rate calculation) claims.

The Court confirmed what is, by now, a fairly well-established set of standards for appellate review of certification rulings:

Trial courts have discretion in granting or denying motions for class certification because they are well situated to evaluate the efficiencies and practicalities of permitting a class action. (Sav-On, supra, 34 Cal.4th at p. 326.) Despite this grant of discretion, appellate review of orders denying class certification differs from ordinary appellate review. Under ordinary appellate review, we do not address the trial court's reasoning and consider only whether the result was correct. (Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 843.) But when denying class certification, the trial court must state its reasons, and we must review those reasons for correctness. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435-436 (Linder).) We may only consider the reasons stated by the trial court and must ignore any unexpressed reason that might support the ruling. (Id.; see also Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1204-1205 (Bufil).)

Slip op., at 7.  The majority of the opinion simply confirms that, in the face of evidence apparently in conflict, the determination of which evidence to credit is left to the trial court.

The Court did reverse the trial court as to the overtime claim.  The Court found that the issue of whether certain payments should be included in the calculation of the regular rate is an issue well-suited to class-wide determination.

Get back to work.

How-to: iOS4 installation tips for the iPhone 3GS and Windows systems

After installing iOS4 on my iPhone 3GS and using it for a day, I can confirm that it is snappy and seems stable.  The new email format and folder icon features are immediately useful.

But before installing, I suggest that you do the following:

1. Sync your phone with iTunes.
2. If iTunes prompts you with the new operating system, decline at this time.
3. Reboot  your system.
4. Temporarily disable your antivirus and firewall (this is much safer if you are behind a home router that provides its own basic firewall services)
5. Start iTunes.
6. If you don't get a prompt to download once you connect your iPhone, click on the phone name in the left-side panel and then choose the check for updates option.
7. Download and install.
8. If the installation generates an error, disconnect the phone, close iTunes, restart it and follow the prompt to restore the phone.  This should result in a restore and upgrade.
9. Don't run other applications while the OS is downloading.  It is a big download; just let it finish.

In my case, I had to recheck all the applications in iTunes to get them to sync with the phone, but that was likely due to the fact that my installation generated an error and required a restore before upgrading the OS.

If an arbitration agreement allows the arbitrator to determine if the agreement is enforceable, the arbitrator can, unless that agreement is challenged...huh?

Today, the United States Supreme Court added to its recent spate of arbitration-related decisions.  In Rent-A-Center, West, Inc. v. Jackson (June 21, 2010), the Supreme Court considered one aspect of when a court determines arbitration agreement enforceability and when that determination must be left to the arbitrator.  In short, the Court held that, under the FAA, where an agreement to arbitrate includes anagreement that the arbitrator will determine the enforceability of that agreement, if a party specifically challenges the enforceability of the specific agreement to give the arbitrator the power to determine enforceability, the trial court considers that specific challenge.  But if a party challenges the enforceability of the agreement as a whole, the challenge is reserved for the arbitrator because of the delegation of that power to the arbitrator.

The dissent is rightly perplexed by this strange outcome:

In other words, when a party raises a good-faith validity challenge to the arbitration agreement itself, that issue must be resolved before a court can say that he clearly and unmistakably intended to arbitrate that very validity question. This case well illustrates the point: If respondent’s unconscionability claim is correct—i.e., if the terms of the agreement are so one-sided and the process of its making so unfair—it would contravene the existence of clear and unmistakable assent to arbitrate the very question petitioner now seeks to arbitrate. Accordingly, it is necessary for the court to resolve the merits of respondent’s unconscionability claim in order to decide whether the parties have a valid arbitration agreement under §2.  Otherwise, that section’s preservation of revocation issues for the Court would be meaningless.

Dissent, at 7.  In light of the current Court's view on arbitration agreements, it will likely take legislation to protect consumers and employees from adhesive arbitration agreements.

Will grant of certiorari in Laster v. AT&T Mobility LLC affect other cases? Not so far.

The Ninth Circuit's decision in Laster v. AT & T Mobility LLC, 584 F.3d 849 (9th Cir.2009) will be reviewed by the Supreme Court in AT & T Mobility LLC v. Concepcion, --- S.Ct. ----, 2010 WL 303962, 78 USLW 3454, 78 USLW 3677, 78 USLW 3687 (U.S. May 24, 2010) (NO. 09-893).  The issue presented in Concepcion has been framed by some as calling for a determination of whether the Federal Arbitration Act (“FAA”) preempts the State of California from conditioning the enforcement of an arbitration agreement on the availability of class-wide arbitration.  Others have more aggressively described the issue more broadly.  In either event, the question of concern to litigants now is the effect, if any, of that decision to grant review in other cases.  In at least one case, there was no evident effect.

United States District Court Judge Jeremy Fogel (Northern District of California) denied a motion to stay that was predicated upon the Supreme Court's decision to grant certiorari in Concepcion.  Kaltwasser v. Cingular Wireless LLC, 2010 WL 2348642 (June 8, 2010) (unpublished).

Mazza, et al. v. American Honda Motor Company was argued before the Ninth Circuit today

In the matter of Mazza, et al. v. American Honda Motor Company, the Ninth Circuit heard oral argument today.  Defendant's Rule 23 Petition was granted after the District Court certified UCL and CLRA claims on a nationwide basis.  The District Court's choice-of-law analysis was the primary focus.  If reports are accurate, The Ninth Circuit may very well send the matter back to the trial court for some adjustment to the choice of law analysis and further consideration of whether any other state's interests outweigh California's strong interests in regulating the conduct of its corporate citizens and ensuring that they deal appropriately with all consumers, wherever situated.  Or the Court might decide that, in this particular case, the comparison of interests was not shown to require the application of other laws.  You can listen and decide for yourself here.

California Supreme Court activity for the week of June 7, 2010

After two weeks with no conferences, the California Supreme Court held its (usually) weekly conference today.  The only marginally notable result I see is:

• A non-substantive correction to the opinion in Martinez v. Combs (June 9, 2010) (expansive definition of "employee" for certain labor code violations) was issued.  The decision was mentioned on this blog here.

Update on 2010-06-12 01:46 by The Complex Litigator

A reader alerts me to the fact that I missed one key petition grant:

• Coito v. Superior Court will be reviewed by the Supreme Court.  See post for discussion about this interesting work product decision.  At least we may finally get some guidance about the reach of Nacht & Lewis Architects, Inc. v. Superior Court, 47 Cal.App.4th 214 (1996).

RSS feeds on The Complex Litigator

If you subscribe to the RSS feed provided by Feedburner (now Google Feedburner, actually), something seems to have gone wrong with it in the last week.  I suggest changing over to the RSS feed provided by SquareSpace:  http://www.thecomplexlitigator.com/post-data/rss.xml

I may need to abandon the FeedBurner feed if it doesn't correct itself soon, but I didn't want to cut off subscribers without warning about the possibility of this change.