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 July 30 brief that U.S. District Judge Manuel Real had abused his discretion in arbitrarily cutting the fees in the case, which resolved claims by consumers against Toyota Motor Corp.
In particular, partner Eric Gibbs wrote, Real failed to take into account the lodestar calculation, which is the actual amount billed.
“We think our papers convey our views that the district court erred, and look forward to having the Ninth Circuit hear our appeal,” Gibbs said in an e-mailed statement. “In the end, we simply seek a process that weighs the evidence and ultimately pays us a reasonable fee for the legal services we delivered to the class members.”
Three additional plaintiffs firms joined the appeal. A fifth firm, Initiative Legal Group of Los Angeles, filed a separate appeal.
The case represents the latest attempt by plaintiffs attorneys to persuade the Ninth Circuit of the reasonableness of a class action fee award. On Aug. 19, the appeals court tossed out a class action settlement involving Motorola Bluetooth headsets after finding that U.S. District Judge Dale Fischer had failed to double check the lodestar amount against what plaintiffs attorneys would have received as a percentage of the deal’s value. That In re Bluetooth Headset Products Liability Litigation ruling has been cited multiple times since then.
The Prius class alleged that the model’s high-intensity discharge, or HID, headlights were prone to intermittently turning on and off. The settlement, which resolved the claims of about 300,000 customers who bought or leased 2006 through 2009 model year Priuses, provides cash reimbursements for bulb replacements made in the past five years or 50,000 miles, and extended the warranties for those who had yet to repair their cars.
The cases, which were coordinated as multidistrict litigation, were unrelated to the 300 lawsuits pending against Toyota over defects associated with sudden acceleration.
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 had 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 take 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, 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 amount of $1.25 million. The other four firms — Wasserman, Comden, Casselman & Esensten of Tarzana, Calif.; Cohen Milstein Sellers & Toll in Washington; Initiative Legal Group; and Los Angeles-based Arias Ozzello & Gignac — reported $1.85 million in billings.
Defense attorney Michael Mallow of Loeb & Loeb had argued that the plaintiffs attorneys should have been awarded between $1 million and $1.4 million — less than the $1.5 million Toyota spent to defend the litigation.
Furthermore, Gibbs wrote, because the case involved the California Consumers Legal Remedies Act and the state’s private attorney general statute, Real should have relied on more than a percentage analysis of the fees.
“The District Court’s decision to award a percentage-based fee rather than a lodestar-based fee undermines the state policy behind California’s fee-shifting statutes, which is to incentivize attorneys to take on consumer protection and other public interest litigation even where the total expected recovery is relatively small,” Gibbs wrote.
He disagreed with Real’s valuation of the settlement and the percentage assessed against it for 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 took issue with Real’s characterization of the case as a “simple breach of warranty” action based on a “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.
In a separate brief, also filed on July 30, Glenn Danas of Initiative Legal Group characterized the litigation as complex, noting that the case had been transferred to New York at one point and involved contentious discovery. Settlement negotiations occurred over several weeks, not one day, he added.
He also insisted that Real should not have left the Girard Gibbs firm in charge of dispersing the award. “By doing so, the district court abdicated its responsibility to supervise and ensure the fairness of all aspects of this class action settlement,” Danas wrote.
In his order, Real specifically pointed to the Initiative Legal Group and two other firms whose work had “very little to do with the litigation of this matter.” But Danas defended his firm’s work. In all, it spent more than 1,600 hours on the case, with more than 20 attorneys billing $815,876, Danas wrote. He asked that the Ninth Circuit strike portions of Real’s order that attacked Initiative Legal Group’s “competence and veracity.”
In the Girard Gibbs brief, Gibbs indicated there was some dispute over Initiative Legal Group’s fee request. He noted that while the firm prepared numerous briefs, almost none were used in the case.
Danas did not return a call for comment.
Contact Amanda Bronstad at email@example.com.