Cigarette ad, Times Square. Feb. 1943. John Vachon, photographer. LOC.
Although this case has quite a storied history, In re Tobacco Cases I, Case Nos. D061077/D061676 (4th Dist., Div. 1 Apr. 26, 2013) (unpublished) looks like it may be finally finished, thanks to this decision.
What happened is this, in brief. People, pursuant to a consent decree with a fees clause, prevailed in a very contentious battle with R.J. Reynolds Tobacco Company to prevent use of cartoons in advertisement of tobacco products, with an “adjacency” advertising issue not being resolved in favor of the People. However, the People did get Reynolds to withdraw some cartoons, with the lower court finding the People did prevail under the consent decree, entitling the state to contractual fees as the prevailing parties to the tune of $2,943,920.63. Well, Reynolds mounted a vigorous appeal, but ultimately lost in an unpublished decision that does have some interesting points for us practitioners interested in fee recovery law.
Here is what we have distilled from the decision:
1. Prevailing Party. Lots of discretion to a trial court that presided over this case for a long time, who concluded that People did get the cartoons withdrawn against a defendant engaging in “scorched earth” litigation with ad nauseum procedural motions, motions which the People prevailed ultimately against.
2. Amount of Fees–Using Bay Area Versus San Diego Attorneys. This venue-based argument for fees in the local community depends on the facts and circumstances. Bay Area rates of $500-625 per hour were approved, but Reynolds said San Diego rates should be used. Not so, because proof was presented that the local San Diego tobacco prosecution unit had relatively inexperienced attorneys as contrasted with veterans in the Bay Area office. No problem using Bay Area lawyers.
3. Use of Opposition Fees to Demonstrate Reasonableness of Winner’s Fees. Although we have posted on this before (see our June 8, 2008 post), the appellate court actually unsealed opposition fee records to show that Reynold’s fees were substantially more than the People’s fees. The appellate court found this information probative, citing Stastny v. Southern Bell Tel. & Tel. Co., 77 F.R.D. 662, 663-664 (W.D.N.C. 1978); Blowers v. Lawyers Co-op. Pub. Co., Inc., 526 F.Supp. 1324, 1327 (D.C.N.Y. 1981); Dupont Plaza Hotel Fire Litig., 56 F.3d 295, 301 (1st Cir. 1995).
4. Apportionment. Although finding a lot of the claims were intertwined, the People did a smart thing, they did do some apportioning so as to discount time by 15% for the lost “adjacency” advertising claim. The trial and appellate courts accepted this discounted analysis, which shows that some type of similar analysis is always a good thing to do in many fee petition contests.
5. Application of Civil Rights Cases to Section 1717 Situations. Reynolds tried to apply federal civil rights fee cases to section 1717 state fee-shifting situations. The appellate court rejected this generic leap in logic, noting that “Reynolds, however, cites no California opinion applying Hensley v. Eckerhart, 461 U.S. 424 (1983)’s two-step apportionment standard to contractual attorney fees under section 1717.” (Slip Opn., p. 26 n. 8.)