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Fourth District Affirms Reduction of Fee Award to 12% of Fees Requested Under Labor Code Section 218.5

In Attorney's Fees, Lodestar on September 23, 2010 at 5:58 pm
El Cajon Classic Car & Hot Rod Cruise 062508 -32
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The Fourth District Court of Appeal affirmed a fee award of $7,475 (about 12% of requested fees) under Labor Code section 218.5, where plaintiff recovered only $3,290 in statutory waiting time penalties and the damages sought in his complaint and ultimately obtained at trial were substantially less than the jurisdictional maximum for a limited civil case.  Cochran v. El Cajon Motors, No. D055390, 2010 WL 3637540 (Cal. Ct. App. 4th Dist. Sept. 21, 2010).

Background

Defendant El Cajon Motors employed Cochran as a sales manager at its El Cajon Ford dealership until it terminated his employment in mid-January 2007. Id. *1. On his termination, Cochran claimed he was owed $3,360 in commissions earned between January 1 and January 11, 2007, which he did not receive under February 22, 2007. Id. Cochran sued in March 2007 for “unpaid waiting time penalties, fees, costs and interest”, and he filed his complaint as an unlimited civil action, despite seeking relief of less than $25,000 as follows.  Id. The case was tried to the court in a 2-hour bench trial.  Id. Inter alia, the Court finds a willful failure to pay plaintiff’s wage and thus a statutory waiting period penalty pursuant to Labor Code Section 203 is awarded in the amount of $3,289.90. Id.

The day after trial concluded, but before the court had issued its decision, “Cochran (confusingly) filed a ‘trial brief’ setting out the amount of attorney fees and costs he incurred in the case.” Id. Plaintiff initially sought an award of $56,183.05: $53,370 in attorney fees, based on an hourly rate of $325 per hour with 169.60 hours billed; and costs of $2,813.05.  Id.

Cochran filed a memorandum of costs to recover his fees, claiming he was entitled to $56,183.05 in attorney fees but did not list any other costs on the memorandum of costs. Id. *2. El Cajon Motors moved to strike and tax Cochran’s request for attorney fees in his memorandum of costs.  Id. The trial court denied the motion to strike but granted the motion to tax costs and awarded Cochran $7,475 in attorney fees.  Id. The court found that 23 hours of attorney time at the rate of $325 per hour was reasonable in light of the fact the trial in this case took only two hours and the court was “well aware” of the time it took to “put on” such a case. Id. Judgment was entered on May 1, 2009, for $10,764.90, which sum included $3,289.90 for “damages” and $7,475.00 for attorney fees.  Id. Cochran sent a letter to the Court seeking  “clarification” regarding the judgment and asking whether it included an award of costs of $2,857.25.  Id. On June 1, 2009, the court issued a minute order granting Cochran’s request for $2,857.25 in costs. Id. *3.  On June 19, 2009, Cochran appealed the May 1, 2009 order.

Attorneys Fees

Cochran argued the trial court erred and abused its discretion when it found he was entitled only to 23 hours of attorney time at $325 per hour and awarded him attorney fees of only $7,475 instead of the $56,183.05 he sought in his memorandum of costs, or the revised amount of $58,570 he sought in his opposition to the motion to strike and tax costs of El Cajon Motors. Id.

Labor Code section 218.5 provides in part:

In any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, the court shall award reasonable attorney’s fees and costs to the prevailing party if any party to the action requests attorney’s fees and costs upon the initiation of the action.

The Court of Appeal noted that the determination of fees under  Labor Code section 218.5 is determined under the Lodestar adjustment method.  Id. (citing Ketchum v. Moses, 24 Cal. 4th at 1133-36 and  Serrano v. Priest, 20 Cal. 3d at 48-49.)

The court described the Lodestar approach as follows:

[T]he trial court first determines the reasonable hourly rate of compensation for counsel, which it multiplies by the number of hours the court finds were reasonably spent preparing the case. (Ketchum v. Moses, supra, 24 Cal.4th at p. 1132.) Next, the court determines whether this figure should be augmented or diminished by one or more factors, including the novelty and complexity of the action, the skill displayed in presenting the case, the results obtained, the contingent nature of the award, the extent to which the litigation precluded counsel from accepting other employment, and the delay in receiving payment of the fees.

Id.

The Court of Appeal reviewed the trial court’s Lodestar analysis:

Here, the trial court found 23 hours of attorney time was reasonable based on the fact the trial of this case lasted about two hours. In addition, the trial court recognized the case was straightforward, as evidenced by the court’s statement that it was “well aware” of the time it took to “put on” such a case.

Id. *4.

The Court of Appeal also noted that the “record shows that, excluding attorney fees, interest and costs . . . Cochran sought $13,089 in waiting time penalties in his prayer for relief, an amount substantially less than the $25,000 maximum for a limited civil case.” Id. The Court noted the policy to “discourage exaggerated claims a trial court has broad discretion to deny costs to a party, such as Cochran here, who could have brought an action as a limited civil case but instead brought it as an unlimited civil case and recovered less than $25,000.” Id. (citing Cal. Code Civ. Proc., § 1033(a) (“Costs or any portion of claimed costs shall be as determined by the court in its discretion … where the prevailing party recovers a judgment that could have been rendered in a limited civil case”)).

The court affirmed the attorneys fees award, holding that in “view of the court’s ruling, we are not persuaded the trial court ignored the pertinent lodestar factors and abused its discretion in awarding Cochran attorney fees of $7,475, especially when Cochran’s attorney fees award was more than twice the amount of Cochran’s recovery at trial and the ‘damages’ he sought in his complaint and ultimately obtained at trial were substantially less than the jurisdictional maximum for a limited civil case.” Id.

Judges and Attorneys

Justice Patricia D. Benke wrote the opinion for the court.  Administrative Presiding Justice Judith McConnell and Associate Justice James A. McIntyre concurred.

Audrey Powers Thornton, Encinitas, CA, Ronald James Cozad, Carlsbad, CA, for Plaintiff and Appellant.

David Meir Stotland, Carrie Lynn Mitchell, McDougal Love Eckis Boehmer & Foley, La Mesa, CA, for Defendant and Respondent.

By CHARLES JUNG

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