From the don't-try-this-at-home files, what happens when a group of bright lawyers for a defense firm wades into plaintiff's litigation once in a while? In some instances, they make bad law for the plaintiff's lawyers. In Nichols v City of Taft, the Fifth District Court of Appeal holds that the use of a fee multiplier to compensate for the higher hourly rates of out-of-town counsel requires a sufficient showing -- which the Nichols failed to make -- that hiring local counsel was "impracticable." Here's the opening paragraph:
While employed as a dispatcher for the City of Taft Police Department, plaintiff Aimee Nichols was allegedly subjected to physical and verbal sexual harassment on the job. She filed suit alleging claims of intentional tort and violation of the Fair Employment and Housing Act (FEHA). On the eve of trial, the parties settled. It was agreed in the settlement that defendant, City of Taft, would pay plaintiff $175,000 plus an award of attorney fees in an amount to be determined by the trial court. At the motion to fix attorney fees, plaintiff presented evidence of the reasonableness of her attorneys' customary rates of compensation. Her attorneys were members of a large out-of-town law firm with offices in Los Angeles and San Francisco, and their usual fees were considerably higher than would be charged in the local Kern County area. Defendant insisted that the fee award must be limited to the reasonable rate for comparable legal services in the local community. In an apparent compromise, the trial court applied local (Kern County) rates for purposes of reaching an initial lodestar figure, and then enhanced the lodestar by a multiplier of 1.33. When the math was done, plaintiff was awarded $471,374.24 in attorney fees. The court explained it was obligated to apply the multiplier based on its reading of this court's decision in Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359 (Horsford). Defendant appeals, contending the trial court applied the incorrect legal standard or otherwise abused its discretion when it (1) mistakenly presupposed it was required to apply a fee multiplier in this case, and (2) improperly considered out-of-town counsel's higher rates as the basis for a fee multiplier without an adequate evidentiary showing. We agree, and will remand to allow the trial court to exercise its discretion whether or not to apply a multiplier based on consideration of all the appropriate factors.
Some further details:
The 2005 hourly rates of the particular Morrison & Foerster attorneys that worked on plaintiff’s case were listed as follows: (1) Arturo Gonzalez (partner) -- $550 per hour; (2) Eric Tate (partner) -- $475 per hour; (3) Samantha Goodman (associate) -- $415 per hour; (4) Erika Drous (associate) -- $225 per hour; (5) Dara Tabesh (associate) -- $275 per hour; and (6) Steven Tang (associate) -- $275 per hour. ... In opposition to the motion, defendant presented declarations showing that the prevailing hourly rates for comparable attorney services in the local community, i.e., Kern County, would be at most $250 per hour for partners, and $160 per hour for associates. By plugging in these hourly rates, and making comparable reductions in the rates for paralegal services, the opposition argued that “[p]laintiff’s request should be reduced to $302,281.25, less any additional subtractions for excessive work performed.” Preliminarily, the court stated that plaintiff had failed to demonstrate, pursuant to Horsford, the impracticability of retaining local counsel to handle her case. Therefore, the court did not directly apply the rates from the higher fee market, but used the local rate of $250 per hour. However, based on its reading of the remainder of the Horsford case addressing “multiplier[s],” the trial court decided it was necessary to enhance the local rates by applying a multiplier of 33⅓ percent. Defense counsel objected that plaintiff had never requested a multiplier. In explaining its decision, the trial court specifically stated: “I’m still obligated, as I read the law, I would have to apply some kind of multiplier to the out-of-town lawyer that’s in a higher fee market.” Oral argument concluded on this issue with the judge’s stating he was “still of the opinion [he was] going to adopt the tentative.”
The Court of Appeal held that the trial court abused its discretion. Use of a fee multiplier to compensate for the higher rates of out-of-town counsel requires a sufficient showing that hiring local counsel was impracticable (Horsford 132 Cal.App.4th at pp. 398-399); otherwise, the rule tethering the lodestar to local rates would be effectively bypassed, since a trial court could always account for out-of-town rates through the “backdoor” by means of a multiplier, even when there was no showing that local attorneys were unavailable.
On remand, the trial court will have to reconsider the fee application, using its discretion to impose a multiplier, or not, based upon a consideration of the relevant lodestar adjustment factors, but without consideration of the out-of-town attorneys’ higher rates.We feel for them. Litigating in a small county from outside that small county is hard; litigating against a public entity is harder; trying to get a multiplier under those circumstances is practically impossible.
You can download the full text of Nichols v City of Taft here in pdf or word format.
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