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Plaintiffs' Lawyers Petition Ninth Circuit to Restore Fee Award

August 7, 2012 | Posted in : Fee Award

A recent NLJ story, “Prius Plaintiffs Attorneys ask Ninth Circuit to Rescue Their Fee Award,” reports that five plaintiffs firms that obtained a class action settlement over alleged headlight defects in the Toyota Prius have petitioned a federal appeals court to overturn a trial judge’s rejection of $4.7 million in attorney fees as “highly unreasonable.”  Girard Gibbs, which took the lead in the case, told the U.S. Court of Appeals for the Ninth Circuit in a brief that U.S. District Judge Manuel Real had abused his discretion in arbitrarily cutting the fees in the case, resolved claims by consumers against Toyota Motor Corp.

Real approved the Prius settlement on Oct. 17.  In determining attorney fees, however, he repeatedly noted the simplicity of the case, concluding that the legal work amounted to “just a few short months of discovery, settlement negotiations, and a one day mediation.”  He noted that the National Highway Traffic Safety Administration has dropped its investigation into potential headlight defects in Prius automobiles, giving Toyota a distinct advantage in the case, and that the records of that investigation were public.

Real, in determining that the fee request should be reduced, referred to the plaintiffs attorneys as “negotiation agents,” who typically takes a 20 percent cut for their work.  As a result, he calculated the fees at about $760,000, or 20 percent of the total value of the settlement, which he estimated at $3.8 million.  He awarded 65 percent of that amount to Girard Gibbs, which was to distribute the remaining 35 percent to the other firms.

In his brief, partner Eric Gibbs argued the value of the settlement was “hypothetical” and that, at any rate, Real should have at least considered the lodestar amount in double checking his fee calculation.  Gibbs noted that his firm spent 2,900 hours on the case for a lodestar of $1.25 million.  Furthermore, Gibbs wrote, because the case involved the California Consumer Legal Remedies Act and the state’s private attorney general statute, Real should have relied on more than a percentage analysis of the fees.

He disagreed with Real’s valuation of the settlement and the percentage assessed against the fees.  “The percentage paid to sports and entertainment agents is not an appropriate consideration for an award of attorney fees in a class action case,” he wrote.  He also took issue with Real’s characterization of the case as a “simple breach of warranty” action based on “boilerplate class action complaint” that relied on NHTSA’s investigation.  “Where NHTSA was unable or unwilling to act, Plaintiffs achieved a settlement that addressed a problem that had bemused and alarmed thousands of Prius owners,” Gibbs wrote.