A recent law.com story, “Court Vacates $99,000 Fee to Counsel for Plaintiff Who Won $650” reports that a New Jersey appeals court overturned a $99,252 fee award in a consumer fraud case, finding the trial court’s measurement scales askew.  The appeals panel said Superior Court Judge Alexander Waugh Jr. improperly used his own personal experience to gauge the hourly rate of the plaintiffs’ lawyer in Walker v. Gluffre.  The judge also failed to provide a sufficient analysis for his decision to enhance the plaintiffs counsel’s lodestar by 45 percent – he only stated his impression that the case “can hardly be classified as ‘typical’”.

In the underlying litigation, plaintiff Mary Walker purchased a new car at Route 22 Nissan.  The sales contract included a $140 vehicle registration fee that was $51.50 more than the Motor Vehicle Commission charges.  The dealer kept the difference.  Judge Waugh sided with the plaintiff and awarded damages of $654.50.  When plaintiffs’ attorney requested fees, Nissan argued that the lawyers were also plaintiffs counsel in Cerbo v. Ford of Englewood, Inc., a class action over the same alleged practices that named virtually all auto dealers in New Jersey.  Walker’s lawyers were awarded $119,862 in fees as part of the Cerbo settlement in 2006.  Nissan argued the Cerbo fee award “covered the same work, rendering the application moot, or alternatively, substantially duplicative.”

The $99,252 fee award included the credit for the Cerbo fee award as well as a 45 percent enhancement, based on a “contingency fee” arrangement between Walker and her lawyers.  Waugh also awarded $5,431 in costs.  The Appellate Division reversed the fee award.  “The personal opinion of a trial judge predicated solely on his or her own professional experiences does not satisfy the analysis required by the Court…to determine a reasonable hourly rate,” Judge Jose Fuentes wrote citing Rendine v. Pantzer, the Supreme Court’s seminal case on computing fee awards.

In a Rendine analysis, the court must determine the lodestar – a reasonable hourly rate multiplied by the work hours contributed – and must compare the attorney’s hourly rate with that of others attorneys doing similar work in the same community.  The rates must be “fair, realistic, and accurate.”  Next, the court must determine the number of hours reasonably spent on the case, reducing the lodestar if it finds “the prevailing party achieved modest success in relation to the relief sought,” Fuentes wrote, though “there need not be a direct proportionality between the fee and the damages recovered.”  Last, the court must determine whether to enhance that fee, if the attorney worked on a contingency-fee basis, considering the case outcome, financial risk absorbed by the attorney, and “the relative likelihood of success for the undertaking,” Fuentes wrote.