Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from orders and the judgment of the Superior Court of Los Angeles CountySuper. Ct. Nos. BC278713 and BC247889, Victoria G. Chaney, Judge. Affirmed in part and reversed in part and remanded.
Howard Rice Nemerovski Canady Falk & Rabkin, Jerome B. Falk, Jr., Barbara A. Winters, Robert T. Cruzen; Jones, Bell, Abbott, Fleming & Fitzgerald L.L.P., Michael J. Abbott, Frederick A. Rafeedie, and William M. Turner, for Defendant and Appellant.
The Rossbacher Firm, Henry H. Rossbacher, James S. Cahill, Talin K. Tenley; Cuneo, Gilbert & LaDuca, LLP, Jon A. Tostrud, Michael G. Lenet; Blecher & Collins, P.C. and Maxwell M. Blecher, for Plaintiffs and Respondents.
MOSK, J.
INTRODUCTION
In Colgan v. Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663 (Colgan I), we affirmed the trial court’s award of injunctive relief, in part, and a statutory penalty against defendant and appellant Leatherman Tool Group, Inc. (Leatherman), but reversed the trial court’s $13 million restitution award in favor of the class and against Leatherman, as well as the injunctive relief related to restitution. We also reversed the trial court’s aggregate award of $5.7 million in attorney fees to class counsel, and remanded the matter to the trial court “to determine the appropriate amount of such award” in light of our opinion in Colgan I. On remand, the trial court ordered class counsel to produce their time records to Leatherman and, after briefing and a hearing, entered a new order based on a reduced lodestar that awarded class counsel a total of $4,630,309.73 in attorney fees, which order was incorporated into a new judgment.
Leatherman appeals from the order awarding attorney fees and interest thereon, contending that (i) the trial court erred when it allowed interest on the new attorney fees award to run from the date of the original judgment, as opposed to the date of the new award; (ii) the trial court abused its discretion when it applied a 2.0 multiplier to the reduced lodestar amount; (iii) the trial court abused its discretion by calculating the reduced lodestar without eliminating unnecessary or duplicative attorney hours; and (iv) the trial court abused its discretion by applying a 1.5 multiplier to hours spent on the appeal in Colgan I.
In both the original judgment and in the new judgment, the trial court made separate fee awards to each of the three law firms that represented plaintiffs. We will refer to the aggregate amount of those awards in the singular—attorney fees award.
We hold that the trial court erred when it awarded interest on the new attorney fees award from the date of the original judgment; (ii) the trial court did not abuse its discretion in applying the same 2.0 multiplier to the reduced lodestar that it had applied in the original judgment; (iii) the trial court did not abuse its discretion in calculating the reduced lodestar for hours spent through the original judgment; and (iv) the trial court did not abuse its discretion in applying a 1.5 multiplier to the hours spent in connection with the appeal of Colgan I.
We therefore reverse that portion of the judgment awarding interest on the attorney fees award from the date of the original judgment and remand the matter to the trial court with directions to modify the judgment to reflect that interest on the attorney fees award shall run from the date the new award was entered, December 5, 2006. With the exception of the foregoing, the remainder of the judgment is affirmed.
PROCEDURAL BACKGROUND
A. Proceedings Through Original Judgment
This appeal arises from two consolidated class actions. (AA1, AA2) In those actions, plaintiffs alleged that the “Made in U.S.A.” representation on Leatherman’s packaging was false and misleading and violated the Unfair Competition Law (UCL), California’s false advertising statute (false advertising law), and the Consumers Legal Remedies Act (CLRA).
Civil Code section 1750, et seq.
The trial court certified the consolidated cases as class actions on February 4, 2003, and granted summary adjudication as to liability in favor of plaintiffs on all causes of action. The case then proceeded to a court trial on remedies, after which the trial court awarded restitution under the UCL and false advertising law in the amount of $13,012,255.50 and under the CLRA in the amount of $11,709,667.50, the latter award being subsumed under the former. In addition, the trial court entered mandatory and prohibitory injunctions that required Leatherman to cease using the “Made in the U.S.A.” representation in its packing and advertising and to publish, inter alia, notice to the class advising members about the claims procedure under the restitution award. The trial court also granted plaintiffs’ motions for attorney fees in the total amount of $5,713,538, consisting of the entire lodestar amount requested by plaintiffs―$2,856,769―increased by a multiplier of 2.0.
B. First Appeal
Leatherman appealed the judgment as to the trial court’s finding of liability, the remedies awarded, and the attorney fees award. In Colgan I, we upheld the trial court’s finding of liability on summary adjudication; reversed the award of restitution; reversed the injunctive relief to the extent it was based on the award of restitution; and reversed the attorney fees award with directions to redetermine the amount of attorney fees in light of the reversal of the restitution award.
C. Proceedings on Remand
On remand, plaintiffs moved the trial court for a new award of attorney fees comprised of three components: (i) the amount of fees incurred litigating the actions through the original judgment; (ii) the amount of fees incurred in the first appeal; and (iii) the amount of fees incurred on remand. After allowing Leatherman discovery—the production of class counsels’ time records—and reviewing further briefing, the trial court made the following fee awards: for fees incurred litigating the matter through the original judgment, a total of $4,285,153.50, based on a 25% reduction in the original lodestar amounts awarded to plaintiffs and a multiplier of 2.0; for fees incurred on the first appeal, a total of $345,212.43, based on 75% of the requested lodestar amounts and a multiplier of 1.5; and for fees incurred on remand, $236,232.45, based on the requested lodestar amounts without any multiplier. The trial court also awarded postjudgment interest on that portion of the new attorney fees award for services rendered through the original judgment, running from the date of the original judgment—August 12, 2004.
DISCUSSION
A. Standards of Review
As explained below, Leatherman’s argument about when postjudgment interest on the new attorney fees award begins to run depends upon whether Colgan I reversed or merely modified the original attorney fees award. Because the facts necessary to the determination of that issue are not disputed, we review the issue as a matter of law under a de novo standard of review. (Topanga and Victory Partners v. Toghia (2002) 103 Cal.App.4th 775, 780.) “When the decisive facts are undisputed, we are confronted with a question of law and are not bound by the findings of the trial court.” (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799.)
Leatherman’s challenge to the new attorney fees award does not question plaintiffs’ entitlement to an award, but rather only attacks the amount of the award. It is therefore reviewed under an abuse of discretion standard. “The amount of an attorney fee to be awarded is a matter within the sound discretion of the trial court. (Contractors Labor Pool, Inc. v. Westway Contractors, Inc. (1997) 53 Cal.App.4th 152, 169 [61 Cal.Rptr.2d 715].) The trial court is the best judge of the value of professional services rendered in its court, and while its judgment is subject to our review, we will not disturb that determination unless we are convinced that it is clearly wrong. (Serrano v. Priest (1977) 20 Cal.3d 25, 49 [141 Cal.Rptr. 315, 569 P.2d 1303]; Reveles v. Toyota by the Bay (1997) 57 Cal.App.4th 1139, 1153 [67 Cal.Rptr.2d 543].) The only proper basis of reversal of the amount of an attorney fees award is if the amount awarded is so large or small that it shocks the conscience and suggests that passion and prejudice influenced the determination. (Reveles v. Toyota by the Bay, supra, [57 Cal.App.4th] at p. 1153.)” (Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, 1134.)
B. Postjudgment Interest
Leatherman contends that interest on the new attorney fees award should run from the date of the ruling on plaintiffs’ renewed motion for attorney fees, December 5, 2006. According to Leatherman, our decision in Colgan I was a complete reversal of the original attorney fees award, not a modification of it, that required the trial court to redetermine the attorney fees issue and enter a new and different award. Plaintiffs counter that Colgan I merely modified the award by ordering a reduction in the amount due based on the reversal of the restitution award. Plaintiffs therefore maintain that the trial court correctly concluded that interest on the new award should run from the date of the original judgment, August 12, 2004.
The well-settled law governing this issue was succinctly summarized by the Supreme Court in Stockton Theatres, Inc. v. Palermo (1961) 55 Cal.2d 439, 442: “A judgment bears legal interest from the date of its entry in the trial court even though it is still subject to direct attack. (Bellflower City School Dist. v. Skaggs [(1959)] 52 Cal.2d 278, 280 [339 P.2d 848].) When a judgment is modified upon appeal, whether upward or downward, the new sum draws interest from the date of entry of the original order, not from the date of the new judgment. (Beeler v. American Trust Co. [(1946)] 28 Cal.2d 435, 438 [170 P.2d 439]; Barnhart v. Edwards [(1900]) 128 Cal. 572, 575 [61 P. 176]; 1 A.L.R.2d 479, 510-512, 520-521.) On the other hand, when a judgment is reversed on appeal the new award subsequently entered by the trial court can bear interest only from the date of entry of such new judgment. (Cowdery v. London etc. Bank [(1903)] 139 Cal. 298, 303 [73 P. 196, 96 Am.St.Rep. 115].)”
In Snapp v. State Farm Fire & Cas. Co. (1964) 60 Cal.2d 816, 818-819, the Supreme Court explained that “[i]t is not the form of the order on the first appeal that controls [the issue of when interest accrues on a judgment], but the substance of that order.” If the order on appeal effectively modifies the original judgment, such that no further proceedings in the trial court are required, it is treated as a modification, regardless of whether the order is phrased in terms of a reversal. “Obviously, since the appellate court on the first appeal decided that not $ 8,168.25 but $ 25,000 was due as a matter of law, and no further proceedings were required, it could and perhaps should have formally modified the first judgment, . . . instead of reversing it. The important question as to when interest commences should not depend on mere formalism, but on the substance of the order. The Stockton Theatres case holds that a ‘reversal’ that practically and legally is a ‘modification,’ should be treated for purposes of the accrual of interest as a modification.” (Ibid.,italics added.)
In this case, we reversed the $13 million restitution award in its entirety and, in doing so, reversed the original attorney fees award because it was based, in part, on services performed in pursuit of the failed restitution claim. Because there was nothing in the record before us upon which we could have modified the amount of the original attorney fees award so that it reflected the reversal of the restitution award, we remanded the matter to the trial court for further proceedings.
Consistent with our directions on remand, the trial court, by necessity, conducted further proceedings including discovery, further briefing, and a hearing on the issue of the appropriate amount of attorney fees in light of our opinion in Colgan I. Among other things, the trial court reevaluated and reduced the amount of the lodestar for services performed through the original judgment and, as discussed below, reevaluated the appropriate multiplier to be applied to the reduced lodestar. Only after all of these further proceedings did the trial court enter a new attorney fees award for services rendered through the original judgment. Therefore, under the rule set forth in Stockton Theaters v. Palermo, supra, 55 Cal.2d 439 and explained in Snapp v. State Farm Fire and Casualty Co., supra, 60 Cal.2d 816, our order on appeal in Colgan I was a reversal of the original attorney fees award that contemplated further proceedings in the trial court and, ultimately, the entry of a new award. As such, interest runs from the date of entry of the new award, not the date of the original judgment.
C. New Attorney Fees Award
Leatherman challenges the trial court’s new attorney fees award, both as to the reasonableness of the revised lodestar amount and the multipliers used to enhance that award. We therefore review the new award under the rules governing the so-called lodestar adjustment method.
“Under Serrano III, a court assessing attorney fees begins with a touchstone or lodestar figure, based on the ‘careful compilation of the time spent and reasonable hourly compensation of each attorney . . . involved in the presentation of the case.’ ([Serrano III v. Priest (1977)] 20 Cal.3d [25,] 48 [(Serrano III)].) We expressly approved the use of prevailing hourly rates as a basis for the lodestar, noting that anchoring the calculation of attorney fees to the lodestar adjustment method ‘“is the only way of approaching the problem that can claim objectivity, a claim which is obviously vital to the prestige of the bar and the courts.’” (Id. at p. 48, fn. 23.) In referring to ‘reasonable’ compensation, we indicated that trial courts must carefully review attorney documentation of hours expended; ‘padding’ in the form of inefficient or duplicative efforts is not subject to compensation. (See id. at p. 48.)” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131-1132 (Ketchum).)
“Under Serrano III,the lodestar is the basic fee for comparable legal services in the community; it may be adjusted by the court based on factors including, as relevant herein, (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award. (Serrano III, supra, 20 Cal.3d at p. 49.) The purpose of such adjustment is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services.” (Ketchum, supra, 24 Cal.4th at p. 1132.)
“The economic rationale for fee enhancement in contingency cases has been explained as follows: ‘A contingent fee must be higher than a fee for the same legal services paid as they are performed. The contingent fee compensates the lawyer not only for the legal services he renders but for the loan of those services. The implicit interest rate on such a loan is higher because the risk of default (the loss of the case, which cancels the debt of the client to the lawyer) is much higher than that of conventional loans.’ (Posner, Economic Analysis of Law (4th ed. 1992) pp. 534, 567.) ‘A lawyer who both bears the risk of not being paid and provides legal services is not receiving the fair market value of his work if he is paid only for the second of these functions. If he is paid no more, competent counsel will be reluctant to accept fee award cases.’ (Leubsdorf, The Contingency Factor in Attorney Fee Awards (1981) 90 Yale L.J. 473, 480; see also Rules Prof. Conduct, rule 4-200(B)(9) [recognizing the contingent nature of attorney representation as an appropriate component in considering whether a fee is reasonable]; ABA Model Code Prof. Responsibility, DR 2-106(B)(8) [same]; ABA Model Rules Prof. Conduct, rule 1.5(a)(8).)” (Ketchum, supra, 24 Cal.4th at pp. 1132-1133.)
“[T]he lodestar adjustment method, including discretion to award fee enhancements, is well established under California law. In the more than 20 years since Serrano III . . . our courts have applied the lodestar adjustment method and our Legislature has enacted numerous fee-shifting statutes . . . presumptively acquiescing in the long-standing use of the lodestar adjustment method by courts determining the amount of fee awards.” (Ketchum, supra, 24 Cal.4th at p. 1137.)
1 . Multiplier on Fees Incurred Through Original Judgment
Leatherman contends that the trial court abused its discretion by awarding a 2.0 multiplier to the reduced lodestar for services performed through the original judgment. Leatherman focuses on the trial court’s use of the same 2.0 multiplier to enhance the original fee award and argues that the use of a 2.0 multiplier in the new award ignored the reversal of the restitution award in Colgan I and the significant change in the result obtained on behalf of the class. According to Leatherman, the trial court was required, but failed, to consider the effect of the reversal of the restitution award on its evaluation of the result obtained and the quality of services performed by plaintiffs’ counsel.
The trial court’s use of the same 2.0 multiplier in both the original and new fee award may appear anomalous. But the record reflects that the trial court did not arbitrarily or without consideration apply the 2.0 multiplier to the new award. Rather, it is apparent that the trial court reconsidered the multiplier in light of the reversal of the restitution award, but concluded that the benefit conferred on the public by the injunctions and the risks and difficulties involved in litigating the cases through judgment nevertheless justified a 2.0 multiplier.
Although reasonable minds may differ as to the appropriate multiplier after the reversal, the ultimate determination of that issue was vested in the sound discretion of the trial court. Under the authorities cited above, we will not disturb the trial court’s exercise of that discretion, unless we are convinced it is “clearly wrong.” (Akins v. Enterprise Rent-A-Car Co., supra, 79 Cal.App.4th at p. 1134.) Based on the record of the proceedings below, we are not convinced that the application of a 2.0 multiplier to the lodestar for services rendered through trial was clearly wrong.
The trial judge, who presided over all of the proceedings below through the original judgment, was in the best position to reevaluate the multiplier following reversal, and there is nothing in the record to indicate that the court abused its discretion in doing so. Plaintiffs successfully obtained injunctive relief after a fully litigated trial. Plaintiffs’ attorneys took the risk of not receiving any compensation, and any compensation has been delayed significantly. Also, the issues were sufficiently novel so as to warrant a published opinion. Thus, the trial court could reasonably conclude that even absent the lack of a significant monetary recovery, “the litigation involved a contingent risk or required extraordinary legal skill.” (Ketchum, supra, 24 Cal.4th at p. 1132.) And the amount of the new award is not so large as to “shock the conscience” or suggest that “passion and prejudice” influenced the trial court’s determination. (Akins v. Enterprise Rent-A-Car Co., supra, 79 Cal.App.4th at p. 1134.) To the contrary, the record does not contain any suggestion that passion or prejudice influenced the trial court’s determination, and Leatherman does not contend otherwise.
2 . Fees Based on Duplicative/Unnecessary Services
Leatherman also challenges the reduced lodestar that the trial court used to calculate the new fee award for services rendered through the original judgment, arguing that certain of the attorney hours included in that lodestar were unreasonable. Specifically, Leatherman argues that the hours spent on “infighting,” the hours spent duplicating the work of other plaintiffs’ counsel, and the hours attributable to multiple attorneys attending hearings, depositions, or conferences were unnecessary and, therefore, unreasonable.
For reasons similar to those that support our disposition of the 2.0 multiplier issue, we hold that the trial court did not abuse its discretion in calculating the reduced lodestar for services rendered through the original judgment. The trial court was familiar with the services rendered by plaintiffs’ counsel that related to the infighting, duplication of effort, and multiple attorney appearances or “padding” issues. In connection with the original attorney fees award, it ruled in favor of plaintiffs as to each of those issues, finding that the hours expended as to each were reasonable, particularly in light of the vigorous defense mounted by Leatherman. The trial court had firsthand knowledge as to each of those matters and made a determination based on that knowledge. The trial court was uniquely positioned to determine the validity of Leatherman’s challenges to the reasonableness of the lodestar amounts, and it considered and rejected each such challenge in ruling on the original attorney fees motions. Although Leatherman’s contentions about the amount of time expended on infighting or in duplicating other time may have some merit, these arguments were submitted to the trial court in both the original and renewed motions for attorney fees and thus taken into account by it on both occasions. Although some of the time expended seems excessive, we cannot say the award of fees shocks the conscience or is based on passion or prejudice.
Leatherman points out that the trial court did not state its reasons for rejecting Leatherman’s challenges to the reasonableness of the revised lodestar calculation at the time it entered the new award. Leatherman, however, provides no satisfactory explanation as to why the trial court should have changed its view of the reasonableness issue in connection with its calculation of the revised lodestar. We therefore presume that, on remand, the trial court rejected Leatherman’s challenges to the reasonableness of the lodestar for the same reasons that it rejected them in connection with the original attorney fees award. The trial court was not required to provide a “reasoned explanation” for rejecting Leatherman’s challenges to the reasonableness of the lodestar amounts. (Ketchum, supra, 24 Cal.4th at pp. 1140-1141.) The burden was on Leatherman to obtain a detailed statement of decision reflecting the trial court’s reasoning, if such a statement was necessary to Leatherman’s arguments on appeal. (Ibid.)
Leatherman emphasizes that in connection with the attorney fees motions on remand, the trial court was presented with class counsels’ time records which were not available for the original motions. But the record on appeal reflects that the trial court reviewed those records in connection with its ruling, albeit without changing its original view of Leatherman’s reasonableness challenges. We therefore presume that the availability of that more detailed evidence with respect to the attorney fees motions on remand served to reinforce the trial court’s original view of the issues.
3. Multiplier on Fees Incurred on Appeal
Leatherman’s final challenge to the new attorney fees award contests the 1.5 multiplier used by the trial court to enhance the lodestar amount for services rendered on the first appeal in Colgan I. According to Leatherman, no multiplier was warranted because Leatherman “prevailed” on three of the four issues on appeal.
Although Leatherman couches its challenge on appeal in “prevailing party” terms, it is clear that Leatherman is not questioning plaintiffs’ entitlement to fees incurred on the appeal, but rather only the application of a multiplier to those fees. As discussed above, the trial court’s determination of whether and to what extent a lodestar should be enhanced is a matter of discretion. Plaintiffs successfully opposed on appeal all of Leatherman’s challenges to the trial court’s liability findings. Plaintiffs were also successful in having the injunctive relief affirmed on appeal, except as to that portion dealing with restitution. Therefore, it was not clearly wrong for the trial court to conclude that those successes warranted a modest enhancement to the lodestar amount on appeal. That plaintiffs were unsuccessful on appeal with respect to the restitution award did not, by itself, prevent the trial court from considering and awarding a multiplier based on the ultimate result and risk incurred in litigating the appeal to disposition. The appeal resulted in a published opinion on issues that were novel and were of significant public interest. As the new fee award for services rendered through the original judgment, the amount of the new fee award for services rendered on the Colgan I appeal is not so large as to shock the conscience or suggest that passion and prejudice influenced the determination.
DISPOSITION
The new judgment regarding attorney fees is reversed, but only as to the award of postjudgment interest, and remanded to the trial court with instructions to modify the new judgment regarding attorney fees to reflect that interest on the attorney fees award for services rendered up to the original judgment shall run from December 5, 2006. In all other respects, the new judgment regarding attorney fees is affirmed. Plaintiffs are awarded their costs on appeal.
We concur: TURNER, P. J., KRIEGLER, J.