AB 1505 Dies in Committee
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Graham v. DaimlerChrysler Corporation Goes Back To Trial Court

Graham v. DaimlerChrysler Corporation and its catalyst theory issues continue to work their way up and down the California courts. The latest appellate case is now done, and the case is headed back to Superior Court for a third time.

Robert Graham, Truman Trekell, and Daniel Hawkins, on behalf of a nationwide class, sued DaimlerChrysler Corporation for breach of warranty on trucks which Chrysler represented could tow 6,400 pounds but which actually could tow only 2,000 pounds. Shortly after the suit was filed, Chrysler offered plaintiffs and all other similarly situated buyers various remedies, including repurchase or replacement of the trucks without any reduction for usage. Because plaintiffs had obtained full remedies, the trial court dismissed the case as moot, but, under the “catalyst theory,” awarded plaintiffs $762,830 in private attorney general attorney fees pursuant to Code of Civil Procedure section 1021.5, using a multiplier of 2.25.

The Court of Appeal affirmed the judgment, but on review, the Supreme Court reversed (Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553), holding that in order to recover attorneys fees, in addition to demonstrating that the lawsuit was a “catalyst” for the defendant’s changed conduct, plaintiffs must show that they made a reasonable attempt to settle the dispute before litigation, and that their lawsuit has merit. The Supreme Court also clarified that any multiplier for fees incurred in litigating attorney fees ("fees on fees") generally should be lower than that applied to fees for the underlying litigation, and held that the trial court had erred in partially basing its multiplier for fees on fees on the “results obtained” factor. The case was then remanded for a hearing on the two new elements of the catalyst theory, and if plaintiffs succeeded, for the trial court to make a new fee award based on the criteria discussed in the opinion.

On remand, the trial court found that the plaintiffs had proven both of the new elements of the catalyst theory and awarded them fees on fees by applying a multiplier of 2.0 for the work done before appeal and applying no multiplier for the work done after remand. The trial court award no fees for work on the appeals. Plaintiffs appealed and Chrysler cross-appealed.

On appeal, the award of fees was upheld, except that the trial court was ordered to reconsider whether to enhance some of the fees, and award fees for appellate work.

Those portions of the order enhancing plaintiffs’ attorney fees on fees for the first trial court proceeding by a 2.0 multiplier and denying plaintiffs appellate attorney fees are reversed. The case is remanded for the court to reconsider whether to enhance any of plaintiffs’ fees on fees for the first trial court proceeding, and if so by what multiplier, in accord with the views expressed in section III, and further to determine plaintiffs’ entitlement to and the amount of appellate attorney fees for the three appeals, including this one. In all other respects (plaintiffs’ entitlement to attorney fees in both trial court proceedings, the related lodestar amounts, and the decision not to multiply the fees for the second trial court proceeding) the judgment is affirmed. The parties shall bear their own costs on this appeal.

The defendant sought review. The Supreme Court has denied DaimlerChrysler's petition for review. Justices Chin and Baxter voted in favor of review. The appellate decision was unpublished, but interesting reading for any attorney dealing with catalyst theory issues. You can get a copy of the unpublished opinion on Westlaw or Lexis, and Google has a copy of the opinion cached at this webpage.

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