In a consumer class action settlement involving allegedly sluggish Acer notebook computers, a Northern California federal judge sua sponte slashed the attorneys' fees award sought by plaintiffs' lawyers from the requested $2,542,246 to $943,217. Wolph v. Acer Am. Corp., Case No. 3:09-cv-0-1314-JSW (N.D. Cal. Oct. 21, 2013).
The named plaintiffs accused Acer of selling notebook computers that ran slowly and crashed often because they lacked enough memory to support the pre-loaded operating system.
In cutting the attorneys' fees, Judge Jeffrey White found that the three firms representing the plaintiffs were not efficient and spent excessive amounts of time on the tasks listed. He noted that the firms spent an "exorbitant" 547 hours on attorney meetings and 184 hours on court appearances, "despite the fact that the court vacated all hearings," except for the hearing on final settlement approval and attorney fees. He also noted that there was significant duplication of work between the three firms in concluding that only 1,750 hours of the 4,633 hours tallied by plaintiffs' attorneys—a reduction of 62 percent— was reasonable under the circumstances.
Judge White also discounted the hourly billing rates sought by the three firms. He found that while the supporting affidavits submitted by the firms provided hourly billing rates of lawyers in Los Angeles, Ohio, Washington D.C. and elsewhere, none provided relevant market rates in Northern California. Consequently, he set the rates for paralegals, associates, partners and senior partners at $175, $350, $500 and $550, respectively.
Judge White then further reduced the fees sought by employing a negative multiplier of 0.75 to ensure "the fee awarded [was] within the range of fees freely negotiated in the legal marketplace in comparable litigation."
Lawyers from the three firms argued the fees sought were justified because of the technical complexity of the case. Judge White disagreed. He explained: "The Court notes that while the facts underlying the plaintiffs' claims were technically complicated, the legal analysis regarding their warranty and misrepresentation claims was not complex."
The court did grant $171,769 of the $172,753 in costs sought by the three firms, but decreased the incentive payments for the named plaintiffs from the requested $5,000 to $2,000 each. Judge White cited a lack of evidence that the named plaintiffs undertook "any great risk to either their finances or their reputation in bringing this action."
Even though it was the judge's own skepticism that lead to the fee slash in this case, it serves as a good reminder for the defense to consider taking every opportunity, even after the settlement agreement is finalized, to reduce the overall cost of settlement to their clients by challenging any fees and costs sought by the plaintiffs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
