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Ninth Circuit Tosses Fee Award in Prius Litigation

December 31, 2013 | Posted in : Contingency Fees / POF, Fee Award, Fee Issues on Appeal, Fee Jurisprudence, Fee Request, Legislation / Politics

A recent NLJ story, “Circuit Tosses Attorney Fee Award in Prius Litigation,” reports that the U.S. Court of Appeals for the Ninth Circuit has again struck down an award of attorney fees in a class action settlement, this time over allegedly defective headlights in Toyota Prius vehicles.  Plaintiffs firms had petitioned the court to reverse a federal district judge’s rejection of their proposed $4.7 million in attorney fees.

U.S. District Judge Manuel Real had called the fee request “highly unreasonable” for such a simple case and awarded $760,000 which he said represented 20 percent of the settlement’s estimated $3.8 million value.  The Ninth Circuit panel found that Real had abused his discretion in calculating fees based on a percentage of the settlement, rather than the lodestar method, which is the actual amount billed.

In its Ninth Circuit brief Eric Gibbs, a partner at San Francisco’s Girard Gibbs had argued that Real should not have applied the percentage method in the cases brought under California law.  Real also failed to take into account the lodestar calculation, wrote Gibbs, who estimated the firm billed $1.25 million.  Three additional plaintiffs firm—Wasserman, Comden, Casselman & Esensten of Tarzana, Calif.; Cohen Milstein Sellers & Toll in Washington; and Los Angeles-based Arias Ozzello & Gignac—joined in the appeal.  A fifth firm, Initiative Legal Group of Los Angeles, filed a separate brief.

The case draws parallels to the In re Bluetooth Headset Products Liability Litigation opinion in 2011, in which the Ninth Circuit found that U.S. District Judge Dale Fischer had failed to cross-check the lodestar amount against what plaintiffs attorneys would have received on a percentage basis when determining the fairness of a $800,000 fee request in a class settlement.

But in the Prius litigation, the Ninth Circuit grappled with whether California statutes—rather than federal case law—defined the fees calculation.  “To some degree what CAFA has done has introduced some uncertainly into where the state law applies and where it doesn’t,” Gibbs said, referring to the U.S. Class Action Fairness Act.  “Here, the Ninth Circuit clarified that in this instance it’s the underlying state law that governs rather than the federal standard.”

NALFA also reported on this case in, “Plaintiffs’ Lawyers Petition Ninth Circuit to Restore Fee Award”