Palmer v. Gentek Building Products, Inc. ( 2019 )

Filed 12/20/19 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2019 ND 306
Richard Palmer and Angela Palmer, Plaintiffs and Appellees
v.
Gentek Building Products, Inc., Defendant and Appellant
No. 20180450
Appeal from the District Court of Williams County, Northwest Judicial
District, the Honorable Paul W. Jacobson, Judge.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Opinion of the Court by VandeWalle, Chief Justice.
Lisa M. Six (argued) and Garth H. Sjue (on brief), Williston, ND, for plaintiffs
and appellees.
Brian D. Schmidt (argued) and Scott K. Porsborg (on brief), Bismarck, ND,
for defendant and appellant.
Palmer v. Gentek Building Products, Inc.
No. 20180450
VandeWalle, Chief Justice.
[¶1] Gentek Building Products, Inc. (“Gentek”) appealed a judgment entered after
a jury awarded Richard and Angela Palmer damages of $10,791, plus interest. Gentek
also appealed an order awarding attorney fees of $80,379 to the Palmers, and taxation
of costs and disbursements. We conclude the district court did not err in holding the
Palmers were not bound by the federal district court’s final order and judgment
approving a class action settlement in Eliason v. Gentek Bldg. Prods., Inc., No.
1:10cv2093, 2013 WL 12284495 (N.D. Ohio Aug. 1, 2013) (“Eliason”). We further
conclude, however, that the court erred in its award of attorney fees and in not ruling
on Gentek’s objection to costs and disbursements. We affirm the judgment, but we
reverse the order awarding attorney fees and taxation of costs and disbursements, and
remand for further proceedings.
I
[¶2] In 2003, the Palmers purchased and installed “Driftwood” steel siding from
Gentek on their home in Williston. Gentek provided a lifetime limited warranty for
the siding. In September 2011, the paint began to peel on the siding installed on the
south side of the home. In January 2012, the Palmers submitted a warranty claim to
Gentek. On January 23, 2012, Gentek offered the Palmers the option of either a cash
settlement or replacement with a substitute siding under the warranty, since Gentek
had discontinued producing the type of siding originally installed. While the Palmers
opted to have their siding replaced with a substitute, Gentek had difficulty finding a
contractor willing to perform the warranty work due to the oil boom in the area.
[¶3] The Palmers were not alone in their claims of paint defects in Gentek’s siding,
in that thousands of others also experienced delaminated paint and filed warranty
claims with Gentek, resulting in a class action lawsuit being filed in the United States
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District Court for the Northern District of Ohio. See Eliason, No. 1:10cv2093, 2013
WL 12284495 (N.D. Ohio Aug. 1, 2013). In August 2013, the federal district court
in Eliason entered a final order and judgment approving a class action settlement. Id.
[¶4] In October 2014, the Palmers commenced this action against Gentek, alleging
Gentek breached their warranty by failing to replace the Palmers’ defective steel
siding and seeking costs, disbursements, and attorney fees under the Magnuson-Moss
Warranty Act, 15 U.S.C. § 2310(d). Gentek moved the district court for summary
judgment before trial, asserting that the Eliason final order and judgment approving
a class-action settlement barred the Palmers’ claim as a matter of law. The court
denied Gentek’s initial summary judgment motion in July 2015 and denied its
renewed motion in July 2017. The court essentially held the Palmers were not bound
by the Eliason judgment because the federal court in Eliason did not acquire personal
jurisdiction over the Palmers to make them parties. The court held that while the
Palmers were known to Gentek, no evidence showed they had been given “individual
2
notice” under Fed.R.Civ.P. 23(c)(2)(B)1 for reasonably identifiable class members in
class actions under Fed.R.Civ.P. 23(b)(3).
[¶5] The Palmers moved for partial summary judgment on liability, which the
district court granted, and the case proceeded to trial on damages. In September 2018,
the court held a two-day trial on the Palmers claim for damages. The jury
subsequently entered a verdict in the Palmers’ favor and awarded $10,791 in damages
plus six percent interest, accruing from February 20, 2012. The court awarded the
Palmers $80,379 in attorney fees, in addition to their costs for procuring an appraisal
expert and disbursements.
II
[¶6] Gentek argues that in denying their summary judgment motions, the district
court erred in ruling the Palmers were not class members and their claim was not
barred and in holding the court had jurisdiction over the dispute. Gentek argues the
1
Rule 23(c)(2)(B), Fed.R.Civ.P. (effective December 1, 2009), provided:
(2) Notice.
....
(B) For (b)(3) Classes. For any class certified under Rule
23(b)(3), the court must direct to class members the best notice
that is practicable under the circumstances, including individual
notice to all members who can be identified through reasonable
effort. The notice must clearly and concisely state in plain,
easily understood language:
(i) the nature of the action;
(ii) the definition of the class certified;
(iii) the class claims, issues, or defenses;
(iv) that a class member may enter an appearance
through an attorney if the member so desires;
(v) that the court will exclude from the class any member
who requests exclusion;
(vi) the time and manner for requesting exclusion; and
(vii) the binding effect of a class judgment on members
under Rule 23(c)(3).
(Emphasis added.)
3
court lacked jurisdiction over the Palmers’ state court action because it was barred by
the final order and judgment in Eliason.
[¶7] Rather than the district court's jurisdiction, however, the dispositive issue in
this case is the extent to which the Palmers may collaterally attack the final class
action judgment entered by the federal court in Eliason. Put another way, what is the
scope of our review for the Palmers’ challenge on due process grounds to the binding
effect of the federal district court’s final order and judgment in Eliason.
[¶8] In discussing collateral attack of a final judgment in a class action, one noted
treatise explained:
A final judgment in a class action can bind absent class members
only if it was rendered consistent with the requirements of due process.
If an individual class member seeks to re-litigate the claims or issues
resolved by a class action in later litigation and is met with the
affirmative defense that her claims are precluded by the class judgment,
she may therefore attempt to escape the binding effect of the class
judgment by arguing that the judgment was rendered without due
process. This is referred to as a “collateral attack” on the judgment, as
distinguished from an appeal, which is a “direct attack” on the
judgment.
The forum entertaining a challenge to the binding effect of the
class action judgment must initially determine the extent to which it
will examine the judgment for one of these alleged constitutional
defects. The question is a perplexing one because the class action court
itself will have necessarily made findings as to each of the due process
concerns (notice, opportunity to be heard, opportunity to opt out, and
adequate representation). The party collaterally attacking the judgment
is therefore asking for a re-evaluation of one or more of those issues.
...
Most often the class member who wishes to collaterally attack the
judgment never herself appeared in the class action court to press her
due process concerns. . . . [W]hat is unique to the class action, . . . is
that even if the new litigant did not herself contest these issues in the
class action forum, that court nonetheless necessarily made findings on
the relevant due process issues as part of the class action process. The
collateral forum is therefore always in the position of re-examining
something the class action court has already examined, although the
class action court undertook that prior examination after presentation
by different adversaries or without adversarial presentation.
6 Newberg on Class Actions § 18:37 (5th ed. June 2019 Update) (footnotes omitted).
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[¶9] Generally, it is well established that “a party seeking to avoid the binding
effect of a prior judgment is entitled to collaterally attack the judgment on the grounds
that the rendering court had no personal jurisdiction over him or her at the time the
judgment was rendered.” Lamarque v. Fairbanks Capital Corp., 927 A.2d 753, 760
(R.I. 2007); see also Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 805 (1985) (“[A]
judgment issued without proper personal jurisdiction over an absent party is not
entitled to full faith and credit elsewhere and thus has no res judicata effect as to that
party.”); Kremer v. Chem. Constr. Corp., 456 U.S. 461, 482 (1982) (“A State may not
grant preclusive effect in its own courts to a constitutionally infirm judgment, and
other state and federal courts are not required to accord full faith and credit to such
a judgment.”). The court in Lamarque further explained why collateral attacks on
class action judgments present a “distinct problem from attacks on other types of
judgments”:
This is so because the process due absent members of a class action
suit—necessary to bind them to the judgment—has been a somewhat
elusive concept. See Hansberry v. Lee, 311 U.S. 32, 41, 61 S. Ct. 115,
85 L. Ed. 22 (1940) (“[T]o an extent not precisely defined by judicial
opinion, the judgment in a ‘class' or ‘representative’ suit, to which some
members of the class are parties, may bind members of the class or
those represented who were not made parties to it.”). However, in
Shutts, the United States Supreme Court set forth some rather clear
criteria with respect to one particular type of class action—the type at
issue in this case: class actions specifically certified under Rule
23(b)(3) of the Federal Rules of Civil Procedure. Shutts involved a
class action brought in Kansas state court in which the plaintiff class
sought to collect interest on royalty payments that they alleged had
been illegally delayed by the defendant, a Delaware corporation.
Shutts, 472 U.S. at 799, 105 S. Ct. 2965. The trial court entered
judgment for the plaintiff class, and the Supreme Court of Kansas
affirmed, casting aside the defendant’s argument that the certifying
state court could not adjudicate the claims of absent members of the
plaintiff class because there were not sufficient minimum contacts
between the state and each of those plaintiffs to meet the criteria for
personal jurisdiction under International Shoe Co. v. Washington, 326
U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). The Supreme Court agreed
with the Supreme Court of Kansas and held that the Due Process
Clause protects an absent class plaintiff “even though that plaintiff may
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not possess the minimum contacts with the forum which would support
personal jurisdiction over a defendant.” Shutts, 472 U.S. at 811, 105
S. Ct. 2965. Minimal due process, the Court held, requires that absent
class plaintiffs:
“must receive notice plus an opportunity to be heard and
participate in the litigation, whether in person or through
counsel. The notice must be the best practicable,
‘reasonably calculated, under all the circumstances, to
apprise interested parties of the pendency of the action
and afford them an opportunity to present their
objections.’ * * * The notice should describe the action
and the plaintiffs’ rights in it. Additionally, we hold that
due process requires at a minimum that an absent
plaintiff be provided with an opportunity to remove
himself from the class by executing and returning an ‘opt
out’ or ‘request for exclusion’ form to the court. Finally,
the Due Process Clause of course requires that the named
plaintiff at all times adequately represent the interests of
the absent class members.” Id. at 812, 105 S. Ct. 2965[.]
Thus, with its decision in Shutts, the Court effectively hewed a path
with respect to the requirements for asserting personal jurisdiction over
absent members of a class action suit certified under Rule 23(b)(3). In
a nutshell, once the Shutts due process requirements are met, all absent
members who do not opt out are bound by the judgment in that suit.
Significantly, however, the Court’s holding in Shutts did not directly
resolve the narrow issue presented in this case; the extent to which
reviewing courts can entertain a collateral attack on a judgment on the
grounds that the Shutts due process requirements were not satisfied by
the certifying court in the prior class action.
Lamarque, 927 A.2d at 761-62 (footnotes omitted).
[¶10] “[T]he scope of collateral due process review has become part of an open, and
hotly litigated question among courts and scholars.” Gooch v. Life Inv’rs Ins. Co.,
672 F.3d 402, 420 (6th Cir. 2012) (quotation marks omitted); see also Hospitality
Mgmt. Assocs., Inc. v. Shell Oil Co., 591 S.E.2d 611, 618-19 n.11-12 (S.C. 2004).
Courts differ on the “scope of collateral review of a foreign court’s conclusions
regarding due process issues, such as sufficiency of notice and adequacy of
representation in class-action lawsuits.” Moody v. Sears Roebuck & Co., 664 S.E.2d
569, 580 (N.C. Ct. App. 2008). “Courts and commentators often state that there are
two general approaches to this procedural question—sometimes labeled ‘limited
6
review’ and ‘substantive review.’” 6 Newberg on Class Actions § 18:37 (additionally
suggesting a third approach labeled the “one bite by anyone approach”).
[¶11] In a “limited review,” some courts hold “the reviewing court may not
‘reconsider [ ] . . . the merits of the claim or issue,’ but rather may only consider
whether absent class members’ due process rights were ‘protected by the adoption of
the appropriate procedures by the certifying court,’ in which case the original
judgment is entitled to full faith and credit.” Moody, 664 S.E.2d at 580 (quoting
Epstein v. MCA, Inc., 179 F.3d 641, 648-49 (9th Cir.1999)); see also Fine v. Am.
Online, Inc., 743 N.E.2d 416, 420-24 (Ohio Ct. App. 2000); Lamarque, 927 A.2d 753,
760-65 (R.I. 2007); Hospitality Mgmt., 591 S.E.2d at 619. In a “substantive review,”
however, courts allow broader collateral review of the merits of the rendering court’s
due process determinations. See Gooch, 672 F.3d at 420; Stephenson v. Dow Chem.
Co., 273 F.3d 249, 257-59 (2d Cir.2001), aff’d in pertinent part by equally divided
Court, 539 U.S. 111 (2003) (per curiam) (Stevens, J., not participating); State v.
Homeside Lending, Inc., 826 A.2d 997, 1016-17 (Vt. 2003).
[¶12] On the basis of our review of other courts’ precedent on the issue of the scope
of review, we adopt the “limited review” approach. This approach entails “an
examination of procedural due process and nothing more. . . . More specifically, we
must determine (1) whether there were safeguards in place to guarantee sufficient
notice and adequate representation; and (2) whether such safeguards were, in fact,
applied.” Lamarque, 927 A.2d at 765 (quotation marks omitted) (quoting Hospitality
Mgmt., 591 S.E.2d at 619). We therefore limit our review to this two-prong test.
III
[¶13] Gentek argues that under Eliason’s definitions the Palmers are class members
because they purchased and installed Gentek steel siding on their home in 2003, the
siding was covered by the Gentek warranty, and their claim in 2012 arose from paint
peeling. Gentek argues their remedy was established in Eliason. Gentek contends
the district court impermissibly reviewed Eliason and decided the Palmers were not
7
class members and the court had no power to overrule Eliason’s determination
regarding the constitutionality and adequacy of the provided notice. Gentek contends
that the Palmers’ failure to receive “individual notice” does not disqualify the Palmers
as class members. Gentek further asserts the Palmers knew about Eliason before
filing this action.
[¶14] The Palmers respond that the district court did not err in concluding it had
jurisdiction in this case because Eliason was not binding on the Palmers and had no
preclusive effect on this case. They argue the court properly held that the Palmers
could challenge the jurisdiction of the Eliason court over them; that the Eliason court
did not acquire personal jurisdiction over them because they were not afforded the
mandatory due process to which they were entitled; that without personal jurisdiction
the Eliason decision was void as to the Palmers; that the decision did not have
preclusive effect as to the Palmers in this case; and that without preclusive effect, res
judicata does not apply. The Palmers assert they should have been given “individual
notice” to be bound because they were known claimants to Gentek.
[¶15] In Eliason, No. 1:10cv2093, 2013 WL 12284495, *1 (N.D. Ohio Aug. 1,
2013), the final order and judgment approving class action settlement defined class
members as “all persons, organizations, municipalities, corporations and entities that
own property, whether commercial or residential, on which Gentek Steel Siding was
applied during the period January 1, 1991 through March 15, 2013, that are covered
by a Gentek Steel Siding warranty and which siding experienced Steel Peel.” The
final judgment stated that the court had “personal jurisdiction over all Settlement
Class Members because adequate notice has been provided to them and because they
have been provided the opportunity to exclude themselves from the Litigation[, and
had] subject matter jurisdiction over this Litigation, including, without limitation,
jurisdiction to approve the Settlement Agreement and to dismiss the Litigation on the
merits and with prejudice.” Id.
[¶16] Regarding the satisfaction of due process, the Eliason judgment stated:
The Court finds that the mailing of the Class Notice to known Class
Members and the publishing of the Class Notice as provided for by, and
8
undertaken pursuant to, the Preliminary Approval Order (i) constituted
the best practicable notice to members of the Settlement Class under the
circumstances, (ii) constituted notice that was reasonably calculated,
under the circumstances, to apprise members of the Settlement Class of
the pendency of the Litigation and of the terms of the Settlement
Agreement and their rights thereunder, including their rights to object
to those terms or to exclude themselves from the proposed Settlement
and to appear at the Fairness Hearing, (iii) was reasonable and
constituted due, adequate and sufficient notice to all persons entitled to
be provided with notice, and (iv) fully complied with the requirements
of the United States Constitution, the Federal Rules of Civil Procedure
and the Rules of the Court.
Id. at *3. The judgment states that the settlement class counsel and the class
representatives had adequately represented the settlement class throughout this
litigation. Id. The judgment further provides, “The terms and provisions of the
Settlement Agreement have been entered into in good faith and are hereby fully and
finally approved as fair, reasonable and adequate as to, and in the best interests of
Defendants and Settlement Class Members and in full compliance with all applicable
requirements of law, including constitutional due process.” Id.
[¶17] The Eliason judgment dismissed all the class members’ claims with prejudice
and released Gentek “from any and all claims . . . liabilities . . . costs, expenses,
attorneys’ fees, damages, . . . of any basis or source . . . arising out of, or related in
any way whatsoever to any of the facts . . . occurrences . . . omissions or failures to
act which were or could have or might have been alleged . . . or which relate to the
subject matter of the Class Action, regardless of upon what legal theory based, . . .
including . . . breach of warranty . . . or of any state or federal statutes, rules or
regulations.” Id. Regarding its binding effect, the judgment stated:
The terms of the Settlement Agreement and of this Final Order and
Judgment, including all exhibits thereto, shall be forever binding on the
Class Representatives, Settlement Class Members, and Defendants, as
well as the Released Parties and their heirs, executors and
administrators, successors and assigns, and those terms shall have res
judicata and other preclusive effect in all pending and future claims,
lawsuits or other proceedings that assert claims that are encompassed
within the Released Claims set forth in . . . the Settlement Agreement.
9
Id. at *4. In the judgment, the court retained continuing and exclusive jurisdiction
over all parties, including the settlement class members, for purpose of enforcing and
administering the settlement agreement and the mutual releases executed in
connection with the settlement agreement. Id. The judgment also enjoined class
members from filing any other lawsuit in any jurisdiction based on or relating to the
claims and causes of actions in that litigation or the release. Id. at *5.
[¶18] On our review, the class action judgment contains provisions demonstrating
the federal district court in Eliason had adequate safeguards in place to guarantee
sufficient notice to the class members. Moreover, in the class action judgment the
federal district court specifically found that due process had been satisfied. We
conclude the issue of the propriety of the notice procedures was addressed in the
federal district court. Under our limited review, therefore, we conclude the first prong
has been met because safeguards were in place to guarantee sufficient notice and
adequate representation. We next turn our attention to the second prong: whether
those safeguards were in fact applied.
[¶19] “The interpretation of a court rule, like the interpretation of a statute, is a
question of law.” In re N.A., 2016 ND 91, ¶ 7, 879 N.W.2d 82 (quoting State v.
Ebertz, 2010 ND 79, ¶ 8, 782 N.W.2d 350). “When we interpret a rule or a statute,
we apply the rules of statutory construction and look at the language of the rule or
statute to determine its meaning.” Id. “We give words their plain, ordinary, and
commonly understood meaning and construe the statute or rule as a whole.” Id.
[¶20] The plain language of Fed.R.Civ.P. 23(c)(2)(B) states that “the court must
direct to class members the best notice that is practicable under the circumstances,
including individual notice to all members who can be identified through reasonable
effort.” We have said the word “must” in a statute or rule normally indicates a
mandatory duty. See Brock v. Price, 2019 ND 240, ¶ 19; James Valley Grain, LLC
v. David, 2011 ND 160, ¶ 12, 802 N.W.2d 158. There is no dispute that the Palmers
either were known to or could be reasonably identified as class members by Gentek.
The Palmers submitted a warranty claim to Gentek in January 2012; Gentek offered
10
the Palmers the option of either a cash settlement or replacement with a substitute
siding under the warranty on January 23, 2012; and the final order and judgment
approving the class action settlement in Eliason was entered on August 1, 2013.
[¶21] The Palmers have maintained throughout these proceedings that they did not
receive any “individual notice” of the class action required under Fed.R.Civ.P.
23(c)(2)(B). We acknowledge Gentek’s argument that the mere fact the Palmers did
not “receive” the “individual notice” may alone be insufficient to establish the class
action judgment safeguards were not applied for purposes of the second prong in our
limited review. However, during oral argument to this Court, Gentek also conceded
that the required “individual notice” was not provided to the Palmers.
[¶22] Under our limited review, we conclude the second prong has not been met in
this case because the safeguards in place to guarantee sufficient notice and adequate
representation were in fact not applied with regard to the Palmers. Under these
narrow facts and circumstances, therefore, we hold the district court did not err in
concluding the Palmers were not bound by the Eliason class action judgment, albeit
for a different reason, and in allowing the case to proceed to trial. See Myers v. State,
2017 ND 66, ¶ 10, 891 N.W.2d 724 (stating this Court on appeal may affirm a district
court’s decision that reached the right result under the wrong reasoning). We affirm
the judgment awarding the Palmers damages of $10,791, plus interest.
IV
[¶23] Gentek argues the district court abused its discretion by awarding the Palmers
$80,379 in attorney fees when the jury awarded the Palmers $10,791 in damages.
[¶24] In Fode v. Capital RV Ctr., Inc., 1998 ND 65, ¶¶ 34-35, 575 N.W.2d 682, this
Court specifically addressed awarding attorney fees under the Magnuson-Moss
Warranty Act’s fee shifting provisions:
Absent statutory authority, the “American Rule” requires each
party to a lawsuit to bear its own attorney fees. Duchscherer v. W.W.
Wallwork, Inc., 534 N.W.2d 13, 16 (N.D. 1995). Fodes sought attorney
fees under the fee-shifting provisions of the Magnuson-Moss Federal
Trade Commission Improvement Act. See 15 U.S.C.A. § 2310(d). See
11
also Troutman[v. Pierce, Inc., 402 N.W.2d 920, 925 (N.D. 1987)].
Setting the amount of reasonable attorney fees under a federal
fee-shifting statute is largely within the discretion of the trial court.
Duchscherer at 16; see Troutman at 925. An award of attorney fees
will not be set aside on appeal absent an abuse of discretion.
Duchscherer at 16. A trial court abuses its discretion if it acts in an
arbitrary, unconscionable, or unreasonable manner, or if it misinterprets
or misapplies the law. Duchscherer at 16.
When calculating attorney fees for prevailing parties under a
federal fee-shifting statute, the trial court must first calculate a
presumptively correct “lodestar” figure based upon the number of hours
reasonably expended on the litigation multiplied by a reasonable hourly
rate. Duchscherer at 16-17. The calculation of the lodestar figure does
not end the analysis, and the presumptively reasonable amount may be
varied depending upon other considerations. See Duchscherer at 17-20.
[¶25] Gentek initially argues that Magnuson-Moss does not control damages for
breach of a “limited” written warranty. Courts have held, however, that 15 U.S.C. §
2310 does not limit its application to either full or limited warranties, so as to preclude
an award of attorney fees to a prevailing party. See Milicevic v. Fletcher Jones Imps.,
Ltd., 402 F.3d 912, 917-19 (9th Cir. 2005); Pierce v. Catalina Yachts, Inc., 2 P.3d
618, 625-26 (Alaska 2000); see also Leavitt v. Monaco Coach Corp., 616 N.W.2d
175, 185-87 (Mich. Ct. App. 2000); Dee Pridgen & Richard M. Alderman, Consumer
Protection and the Law § 14:21 (November 2018 Update) (“Contractual provisions
excluding consequential damages do not preclude the recovery of attorney’s fees
under the Magnuson-Moss [Act], even though such fees might be characterized as
incidental or consequential damages under state law.”). Moreover, we note this Court
authorized an award of attorney fees in Fode, 1998 ND 65, ¶¶ 34-36, 575 N.W.2d
682, which also involved a limited warranty. We reject Gentek’s argument the district
court did not have authority to award attorney fees in this case.
[¶26] Gentek further argues, however, that the district court abused its discretion by
awarding an unreasonable amount of attorney fees. Gentek essentially contends the
court made conclusory statements to support its attorney fee award in response to
Gentek’s assertions that the submitted billings for Palmers’ attorneys contained
12
entries reflecting duplicative or unnecessary work and that the Palmers had not
prevailed on all of their issues. We agree.
[¶27] Here, the district court sufficiently explained that the Palmers had in fact
prevailed on their claim under the Magnuson-Moss Warranty Act and that, while the
Palmers did not recover on all of their issues concerning damages, their damages
issues were intertwined so as to preclude a reduction on those grounds. The court,
however, did not adequately explain the purported duplicative or unnecessary work
by multiple attorneys. This Court has said that a party “‘cannot litigate tenaciously
and then be heard to complain about the time necessarily spent’ overcoming its
vigorous defense.” Thompson v. Schmitz, 2011 ND 70, ¶ 21, 795 N.W.2d 913
(quoting Duchscherer, 534 N.W.2d at 19 (citation omitted)). But, we have also
emphasized that it is “essential that the prevailing party, and the court, if need be,
exclude any hours that are excessive, redundant, or otherwise unnecessary.” City of
Medora v. Golberg, 1997 ND 190, ¶ 22, 569 N.W.2d 257 (citing Duchscherer, at 19).
[¶28] In addressing Gentek’s assertions of duplicative or unnecessary work, the
district court merely adopted the Palmers’ argument, stating it is not unexpected that
multiple members of the firm would contribute to the representation and “courtesy
reductions” were also factored into the billings. Rather than first calculating a
presumptively reasonable amount, the court appears to have begun its analysis in
considering the submitted billings as a starting point and deemed the fees reasonable.
This does not comport with our case law, and the court has failed to show its
calculation of a presumptively reasonable amount for this Court to review on appeal.
[¶29] We therefore conclude the district court abused its discretion by failing to first
calculate a presumptively correct “lodestar” figure, based upon the number of hours
reasonably expended on the litigation multiplied by a reasonable hourly rate, and
abused its discretion in failing to sufficiently address the excessive, redundant, or
unnecessary hours as asserted by Gentek. See Fode, 1998 ND 65, ¶¶ 34-36, 575
N.W.2d 682; Duchscherer, 534 N.W.2d at 16-20. As discussed, while the lodestar
figure calculation does not end the analysis, the presumptively reasonable amount
13
may be varied based on other considerations. Duchscherer, at 16-20. We reverse the
order awarding attorney fees and remand for reconsideration of the amount of
attorney fees under the procedure outlined in Fode and Duchscherer.
V
[¶30] Gentek argues the district court abused its discretion in awarding costs for an
expert who was never used. Gentek asserts the court allowed for taxation of costs and
disbursements, including expert fees, with no explanation as to why the fees were
reasonable, merely signing off on the Palmers’ statement of costs and disbursements.
While Gentek objected to the award, the court provided no explanation explaining its
rationale for awarding the fees for procuring an expert appraisal that Gentek contends
added “nothing to the case.”
[¶31] Rule 54(e)(2), N.D.R.Civ.P., provides that if objections to costs are filed, “the
clerk must promptly submit them to the judge who ordered the judgment. The court
by ex parte order must fix a time for hearing the objections.” See, e.g., Brock, 2019
ND 240, ¶¶ 19-20 (reversing costs and disbursements award and remanding for a
hearing on objections). However, “[u]nless otherwise directed by the court, the
parties may waive the right to a hearing and submit written argument instead within
a time specified by the court.” N.D.R.Civ.P. 54(e)(2).
[¶32] In its objection to the taxation of costs and disbursements, Gentek specifically
stated that it “d[id] not request a hearing.” The district court does not appear to have
ruled on the objection. Nevertheless, because we are remanding to the district court
for a reconsideration of its award of attorney fees, we also reverse the court’s award
of costs and disbursements for the court to address Gentek’s objection to the taxation
of costs and disbursements.
VI
[¶33] We have considered Gentek’s remaining arguments and conclude they are
either unnecessary to our decision or without merit. The judgment is affirmed, the
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order awarding attorney fees and taxation of costs and disbursements are reversed,
and the case is remanded for reconsideration of attorney fees and to address Gentek’s
objection to costs and disbursements.
[¶34] Gerald W. VandeWalle, C.J.
Daniel J. Crothers
Bradley A. Cruff, D.J.
[¶35] The Honorable Bradley A. Cruff, D.J., sitting in place of McEvers, J.,
disqualified.
Tufte, Justice, dissenting in part.
[¶36] I agree with the thorough opinion of the Chief Justice except as to its
application of the second prong of the limited review test it adopts. As to that portion,
I respectfully dissent.
[¶37] I agree the federal district court in the Eliason class action adopted adequate
procedures to safeguard due process for absent class members. Majority, at ¶ 18. The
procedures adopted in Eliason included mailing to known class members and
publishing of the class notice to apprise class members of the litigation, the terms of
the settlement agreement, and their rights to object or opt out. The issue of whether
these safeguards were applied was also addressed in the federal district court.
Majority, at ¶ 16. Although the Palmers assert they were known class members who
did not receive individual notice of the class action, and Gentek conceded at oral
argument that individual notice was not provided to the Palmers, our review of the
Eliason judgment is strictly limited to a search for procedural error. The procedures
in place fairly protect the interests of both participating and absent class members.
Lamarque v. Fairbanks Capital Corp., 927 A.2d 753, 762 (R.I. 2007). “[T]here has
been a failure of due process only in those cases where it cannot be said that the
procedure adopted, fairly insures the protection of the interests of absent parties who
are to be bound by it.” Hansberry v. Lee, 311 U.S. 32, 42 (1940) (emphasis added).
To address the Palmers’ specific due process argument goes beyond the properly
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narrow scope of review for a North Dakota court reviewing a foreign class action
judgment. The Palmers’ argument is best addressed to the federal district court that
rendered the judgment. Lamarque, 927 A.2d at 766-67.
[¶38] Jerod E. Tufte
Jon J. Jensen
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