All About the Lodestar

Warren v. Kia Motors Am., Inc., No. E068348 (D4d2 Dec. 12, 2018)

Plaintiff won a jury verdict for about $17 grand on a Song-Beverly Act claim over a defective Kia Forte. That gave her a statutory right to attorneys’ fees under the Act. She submitted a fee motion for $350k in lodestar from 16 different lawyers, requesting a 1.5 multiple. The trial court ultimately awarded only $115k citing a “disconnect” between the damages and the billed time, giving an effective lodestar multiple of .33.

The fee provision in Song-Beverly, Civil Code § 1794(d), specifically says that the fee award should be “based on actual time expended,” so long as it is reasonably incurred. The statute thus rejects tying a fee award to the amount of the ultimate recovery. The Legislature was well aware that lemon law cases aren’t feasible to litigate on an hourly or contingency basis. But it wanted nonetheless to encourage consumers to seek redress. So although the statute doesn’t prohibit a positive or negative multiplier on the lodestar, reasonable hours times reasonable rates should always be the starting point for the calculation.

A court can, of course, find that rates or hours are unreasonable, and either work that into the lodestar or take it into account in applying (within reason) a negative multiplier. But when a plaintiff files a detailed fee application, appellate courts tend to closely scrutinize an across-the-board reduction like the court applied here, especially a substantial one.

To some degree, the the trial court did give some valid, specific reasons to justify the reduction. It noted that that although the case wasn’t particularly complex, plaintiff employed three different law firms who staffed her case heavily. Unfortunately, it also improperly relied on a disproportionality between the jury award and the lodestar. Because the court didn’t provide any means to disaggregate the proper grounds from the improper ones, it gets to re-do the fee app on remand.

The court also erred in taxing $6k in trial transcript costs. Those are recoverable. 

But it did not err in denying prejudgment interest under Civil Code § 3287(a) or (b). Interest under (a), which provides a mandatory award of prejudgment interest from the date of breach when damages are not for a sum certain, was not appropriate because the jury had calculate damages based on disputed facts. And as to (b), which permits a discretionary award from the date of filing, Plaintiff doesn’t offer any explanation for how the court abused its discretion, so that’s not a basis to reverse.

Reversed in part.