One Reversal Involved A Non-Class Action Percentage Of Recovery Methodology Found Flawed By The Appellate Court, So Apportionment Re-Do On One Issue Was Ordered.
Paletz v. Adaya, Case No. B247184 (2d Dist., Div. 3 Dec. 29, 2014) (unpublished) involved bad facts, resulting in a substantial jury verdict and substantial fees, most of which were affirmed on appeal.
Briefly told, this was an anti-Semitic case where a hotel owner was found to have excluded Jewish patrons at a Santa Monica hotel pool party specifically designed by an outside promoter to benefit fallen Israeli soldiers. The facts are not good, with the hotel owner allegedly barring the Jewish patrons from the event based on a fear that her parents would shut off funding had they known of the event. Needless to say, the jury was not impressed with this behavior, awarding various patron plaintiffs both compensatory and punitive damages in certain ranges as well as compensatory and punitive damages to the promoter of the event which did not receive full compensation from hotel owner. All told, patrons and promoter plaintiffs were awarded $1,654,250. Later, the lower court awarded the patron Plaintiffs $2,009,785.50 in fees on the Unruh Act claims after making some apportionments for work done on various tasks and work done on the recovery on behalf of the promoter, given that the same set of attorneys represented both the patron and promoter plaintiffs.
Despite numerous challenges by the losing defense, the $2.1 million fee award got sustained on appeal, except for a remand on a narrow apportionment issue. (The merits challenges also were unsuccessful.)
Initially, the $200-675 hourly rate fee range for the attorneys involved was found to be reasonable for a West Los Angeles-venued case.
The lower court’s conclusion that work on the Unruh Act and tort claims were interrelated was found to be correct under the circumstances.
Block billing was rampant in the fee petition, but was found not to present a problem given the interrelatedness of the work on various claims.
That leads us to the one apportionment issue which the appellate court found to be troublesome. The lower court deducted out work relating to promoter, when it came to the overall fee recovery by patron plaintiffs, based on a “percentage of total recovery” proxy—namely, the percentage of recovery by promoter out of all plaintiffs’ recovery was apportioned out for promoter work for fee award purposes. Here is the appellate court’s criticism of this methodology: “The court’s reliance on the percentage of recovery attributable to Platinum’s claims is particularly arbitrary, as under this theory, a defense attorney could effectively cause their client to pay more in attorneys’ fees by successfully defeating causes of action that are separate and not intertwined with Unruh causes of action. This method of apportionment could effectively penalize Defendants for their successes in litigating Platinum’s causes of action. The unreasonableness of the court’s apportionment methodology becomes even more evident on appeal, when the percentage of recovery is subject to alteration: Plaintiffs’ attorney fees award could fluctuate based on Defendants’ success on appeal in obtaining reversal of damages awards. To prevent duplicative recovery, we reversed the intentional infliction of emotional distress punitive damages award in this opinion. This ruling reduces Plaintiffs’ total recovery by 24.5%. If we were to affirm this methodology, the trial court would have to recalculate apportionment of fees associated with Platinum based on the new total damages figure. This would effectively reduce Plaintiffs’ attorney fees for entirely arbitrary reasons, as the evidence supporting the fees award has not changed. There has been no new showing that Plaintiffs’ counsel worked any less on Unruh claims or any more on Platinum’s contract based causes of action.” (Slip Opn., pp. 38-39.)