Gonzalez v. Southern Wine & Spirits of America, Inc. , 555 F. App'x 704 ( 2014 )

FILED
NOT FOR PUBLICATION FEB 19 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
NICOLAS GONZALEZ, individually and No. 12-55808
on behalf of all others similarly situated,
D.C. No. 2:11-cv-05849-ODW-
Plaintiff - Appellant, PLA
v.
MEMORANDUM*
SOUTHERN WINE & SPIRITS OF
AMERICA, INC., a Florida Corporation,
Defendant - Appellee.
Appeal from the United States District Court
for the Central District of California
Otis D. Wright, II, District Judge, Presiding
Submitted December 5, 2013**
Pasadena, California
Before: D.W. NELSON, WARDLAW, and RAWLINSON, Circuit Judges.
Nicolas Gonzalez appeals the district court’s award of $99,395.11 in
attorney’s fees, arguing that the district court abused its discretion by reducing
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
class counsel’s hourly rate by 24.4%, the lodestar hours by 55%, and failing to
apply a multiplier. We agree, and we reverse and remand for recalculation of the
attorney’s fee amount.
The district court abused its discretion in applying federal law instead of
California substantive law to the calculation of attorney’s fees. Because the district
court exercised diversity jurisdiction over this case, California substantive law
applies to the calculation of the attorney fee award. Mangold v. Cal. Pub. Utils.
Comm’n, 67 F.3d 1470, 1478 (9th Cir. 1995).
California law requires that “an attorney fee award should ordinarily include
compensation for all the hours reasonably spent, including those relating solely to
the fee.” Ketchum v. Moses, 24 Cal. 4th 1122, 1133 (2001). Thus, on remand, the
district court should include in the recalculated fee award all the hours counsel
reasonably spent on attorney’s fees.
California courts also continue to use the contingent risk factor in their
multiplier analysis. See, e.g., Cates v. Chiang, 153 Cal. Rptr. 3d 285, 312 (Cal. Ct.
App. 2013) (quoting Graham v. DaimlerChrysler Corp., 34 Cal. 4th 553, 579–80
(2004)). On remand, the district court should consider the fact that the case was
taken on a contingency fee basis as a factor when determining the appropriate
lodestar multiplier.
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The district court abused its discretion when it reduced class counsel’s rates
by 24.4% across the board. It did so based solely on a single comparison to the
rate class co-counsel charges and in contravention of the other evidence submitted
relating to the prevailing hourly rates for comparable legal services in the
community. See Ketchum, 24 Cal. 4th at 1132. The district court also did not
“make a finding as to the reasonable hourly rate for each of Plaintiffs’ attorneys,
who varied in [skill, experience, and reputation].” Gonzalez v. City of Maywood,
729 F.3d 1196, 1206 (9th Cir. 2013) (emphasis added). It also abused its
discretion by slashing counsel’s hours by 55% without careful review of the
attorney documentation of hours expended. See Ketchum, 24 Cal. 4th at 1132. In
sum, there was no “careful compilation of the time spent and reasonable hourly
compensation of each attorney . . . involved in the presentation of the case,”
required by California law. Serrano v. Priest, 20 Cal. 3d 25, 48 (1977).
Finally, the district court’s failure to “explain why it chose to cut the number
of hours or the lodestar by the specific percentage it did,” Maywood, 729 F.3d at
1203, also requires us to reverse and remand. The court’s failure to “justify the
specific percentages it chose,” id. at 1204 (emphasis added), forces us to conclude,
based on the district court’s limited explanation, that the 55% reduction in the
lodestar was selected arbitrarily. See id.
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We therefore reverse the district court’s determination of the amount of
attorney’s fees awarded in this case, and we affirm its decisions to award attorney’s
fees and incentive fees, which the parties do not appeal.
AFFIRMED in part, REVERSED in part, and REMANDED. Each
party shall bear its own costs on appeal.
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FILED
Gonzalez v. Southern Wine & Spirits, No. 12-55808 FEB 19 2014
Rawlinson, Circuit Judge, concurring in the result: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I agree that this case should be remanded for the district court judge to more
adequately explain the reasoning underlying his reduction of the attorney fees
awarded to Plaintiff’s counsel. I write separately to emphasize that I do not
consider the Laffey matrix to be evidence of hourly rates in the local community.
See Prison Legal News v. Schwarzenegger, 608 F.3d 446, 454 (9th Cir. 2010)
(“[J]ust because the Laffey matrix has been accepted in the District of Columbia
does not mean that it is a sound basis for determining rates elsewhere, let alone in a
legal market 3,000 miles away. . . .”). Neither is counsel’s affidavit sufficient, in
and of itself, to establish prevailing rates in the community. See Grove v. Wells
Fargo, 606 F.3d 577, 583 (9th Cir. 2010). The same is true of reliance on fees
awarded in other cases. See Graham-Sult v. Clainos, 738 F.3d 1131, 1158 (9th
Cir. 2013) (criticizing the practice of “[d]efining what is [a reasonable fee] by
reference to other cases”).
In sum, although I agree with the remand for the purpose of allowing the
district court judge to further explain the reasoning behind his reduction of the
requested attorney fees, in my view that explanation does not have to account for
the Laffey matrix, counsel’s affidavit regarding prevailing hourly rates, or fees
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awarded in other cases.
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