First District, Division 5 Determines Trial Court Properly Applied Serrano III Factors.
Even under fee-shifting, public interest statutes, our California Supreme Court in Serrano v. Priest, 20 Cal.3d 255, 49 (1977) (Serrano III) mandated that multiple factors be used to increase or decrease a lodestar figure requested by victorious litigants. In the next case we discuss, the lodestar was decreased based on various factors. The disgruntled plaintiffs, who requested an award of $1.49 million plus a 2.0 multiplier after winning a publicized high school student editorial battle with a school district, were only awarded $336,350 in attorney’s fees under Code of Civil Procedure section 1021.5, with no one contesting student’s entitlement to fees. (Plaintiffs were represented by Pacific Legal Foundation, an entity receiving private support for purposes of bringing public interest lawsuits.) Plaintiffs appealed the trial court’s lodestar decreases under Serrano III. How did they do?
Plaintiffs overall lost in Smith v. Novato Unified School District, Case No. A122105 (1st Dist., Div. 5 May 28, 2009) (unpublished). The appellate panel found the lower court did not commit error in reducing the lodestar ($672,700) for (1) time spent on successful claims, (2) various Serrano III factors, and (3) substantial padding in the form of inefficient or duplicative efforts by multiple attorneys involved on plaintiffs’ behalf.
The lower court properly reduced the lodestar based on these factors: (1) plaintiffs’ limited success on only a portion of their claims (Harman v. City and County of San Francisco, 158 Cal.App.4th 407, 426 (2007); Sokolow v. County of San Mateo, 213 Cal.App.3d 231, 250 (1989); Californians for Responsible Toxics Management v. Kizer, 211 Cal.App.3d 961, 974-975 (1989)); (2) the case was not unduly complex (“[t]he mere fact that a case vindicates an important right or presents an issue of first impression does not, by itself, establish complexity”); (3) plaintiffs’ counsel—Pacific Legal Foundation—received private support (Serrano v. Unruh, 32 Cal.3d 621, 643-644 n. 40 (1982) (Serrano IV) [relevant factor to size of the award]); and (4) the school district assessed with the fee award would ultimately translate into a burden borne by taxpayers (San Diego Police Officers Assn. v. San Diego Police Dept., 76 Cal.App.4th 19, 24 (1999)).
It also properly reduced for “padding.” (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn., 163 Cal.App.4th 550, 556 (2008) [reviewed in our June 2, 2008 post].) Taking 237 hours to draft a complaint, 46 hours to draft an amended complaint, 195 hours to oppose a demurrer, 112 hours to prepare a demurrer to the answer, 100 hours to prepare a request for stay, and 6 hours to prepare a case management conference statement was seen as excessive. In fact, plaintiffs’ own authorities did not help them in this area. They cited Federation of Fly Fishers v. Daley, 200 F.Supp.2d 1181 (N.D. Cal. 2002), but this case found that 322.55 hours to prepare a summary judgment motion was unreasonable; funny thing to cite because plaintiffs in the case before the California appellate court had spent 565.5 hours in preparing their summary judgment motion—over twice as long as the time condemned in Daley!
The appellate panel could not locate any decision in which a lodestar was decreased solely based on charitable funding received by counsel. However, it found no abuse of discretion based on the other factors that amply supported a lodestar decrease.
No error was committed in not awarding a multiplier, although the Court of Appeal did find that plaintiffs were entitled to postjudgment interest accrual on the unpaid fee award. (Gregory v. State Bd. of Control, 73 Cal.App.4th 584, 599 (1999).) Otherwise, the $336,350 fee award, sans multiplier, was sustained on appeal.