Braun, M v. Walmart Stores, Inc. ( 2018 )

J-A01033-18
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
MICHELLE BRAUN, ON BEHALF OF : IN THE SUPERIOR COURT OF
HERSELF AND ALL OTHERS : PENNSYLVANIA
SIMILARLY SITUATED :
:
:
v. :
:
:
WAL-MART STORES, INC., A : No. 3361 EDA 2016
DELAWARE CORPORATION, AND :
SAM'S CLUB, AN OPERATING :
SEGMENT OF WAL-MART STORES, :
INC. :
:
Appellants :
:
---------------------------------------- :
---------------------------------------- :
------------------------------- :
DOLORES HUMMEL, ON BEHALF OF :
HERSELF AND ALL OTHERS :
SIMILARLY SITUATED :
v. :
:
:
WAL-MART STORES, INC., A :
DELAWARE CORPORATION, AND :
SAM'S CLUB, AN OPERATING :
SEGMENT OF WAL-MART STORES, :
INC. :
:
Appellants :
Appeal from the Judgment Entered November 14, 2007
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): August Term, 2004, No. 3757,
March Term, 2002, No. 3127
MICHELLE BRAUN, ON BEHALF OF : IN THE SUPERIOR COURT OF
HERSELF AND ALL OTHERS : PENNSYLVANIA
SIMILARLY SITUATED :
:
Appellant :
J-A01033-18
:
:
v. :
: No. 3633 EDA 2016
:
WAL-MART STORES, INC., A :
DELAWARE CORPORATION AND :
SAM'S CLUB, AN OPERATING :
SEGMENT OF WAL-MART STORES, :
INC. ----------------------------------- :
---------------------------------------- :
----------- DOLORES HUMMEL, ON :
BEHALF OF HERSELF AND ALL :
OTHERS SIMILARLY SITUATED :
:
Appellant :
:
:
v. :
:
:
WAL-MART STORES, INC., A :
DELAWARE CORPORATION, AND :
SAM'S CLUB, AN OPERATING :
SEGMENT OF WAL-MART STORES, :
INC. :
Appeal from the Order Entered September 29, 2016
In the Court of Common Pleas of Philadelphia County
Civil Division at No(s): No. 3127 March Term, 2002,
No. 3757 August Term, 2004
BEFORE: LAZARUS, J., OTT, J., and PLATT, J.
MEMORANDUM BY OTT, J.: FILED APRIL 27, 2018
These cases are consolidated appeals from the judgment and order
entered in the Court of Common Pleas of Philadelphia County that awarded
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 Retired Senior Judge assigned to the Superior Court.
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attorneys’ fees in this class action lawsuit. That order was a product of a 2011
remand ordered by a prior panel of our Court. That remand directed the trial
court to explain its reasoning in awarding both the lodestar1 and a 3.7
contingency multiplier. See Braun v. Wal-Mart, 24 A.3d 875 (Pa. Super.
2011). In this timely appeal, Plaintiffs’ Class Counsel (Class Counsel) argues
the trial court erred in failing to apply a 33% contingency fee rather than the
lodestar method.2 Wal-Mart raises two issues. First, it claims Class Counsel’s
argument regarding use of a contingency award was not before the trial court
on remand, and is therefore waived. Second, it argues that the trial court
failed to explain its reasoning in applying a 3.7 contingency multiplier, and
that no multiplier is required under the facts of the case. After a thorough
review of the certified record, relevant law and the submissions by the parties,
we agree with Wal-Mart that Class Counsel is not entitled to a contingency
fee. We also agree with Wal-Mart that the trial court did not follow the
instructions issued on remand, and failed to explain its reasoning for applying
a 3.7 contingency multiplier. Accordingly, we reverse the award of counsel
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1 “A “lodestar” is “the product of reasonable hours times a reasonable rate.”
City of Burlington v. Dague, 505 U.S. 557, 559, 112 S.Ct. 2638, 2640, 120
L.Ed.2d 449, 454-55 (1992) (citation omitted).” Braun v. Wal-Mart, 24 A.3d
at 975.
2 In its statement of questions involved, Class Counsel also claimed the trial
court erred in applying historic fee rates to calculate the lodestar rather than
2016 fee rates. However, this issue was not argued or otherwise developed
in the brief and so is waived.
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fees and remand for a detailed explanation regarding the application of the
contingency multiplier.
Before we begin our analysis, we relate our standard of review for an
award of counsel fees. “We note that appellate review of an order of a tribunal
awarding counsel fees to a litigant is limited solely to determining whether the
tribunal palpably abused its discretion in making the fee award.” Lucchino
v. Commonwealth, 809 A.2d 264, 268-69 (Pa. 2002) (citation omitted).
The instructions from this Court upon remand were as follows:
Upon remand, the court should explain thoroughly its rationale in
approving the lodestar, including the factors set forth by Pa.R.C.P.
1716[3] and the Logan Court. See Pa.R.C.P. 1716; Logan, 704
A.2d at 674. We note, however, that in reviewing the court's
opinion, we also find its justifications for applying a multiplier
insufficient, particularly in light of its application of a 3.7
multiplier, compared to the Third Circuit's prediction that 1.5
would be the outer limit of acceptable multipliers in this
Commonwealth. See Polselli, 126 F.3d at 536. Accordingly, if
the court concludes an enhancement is warranted, then the court
shall discuss comprehensively the factors it finds would justify an
enhancement. See, e.g., Krebs, 893 A.2d at 790; Birth Ctr., 727
A.2d at 1161; Logan, 704 A.2d at 674; see also Delaware
Valley, 478 U.S. at 568, 106 S.Ct. at 3099, 92 L.Ed.2d at 458
(noting, inter alia, that “absence of detailed findings” warranted
reversal of fee enhancement for superior performance).
Braun v. Wal-Mart, 24 A.3d at 981.
Class Counsel argues that the trial court erred in denying their request
for a 33% contingency fee rather than a fee award based upon a lodestar
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3 Now Pa.R.C.P. 1717.
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calculation. We agree with Wal-Mart that this issue was not encompassed in
the remand.
“It is well-settled that a trial court must strictly comply with the
mandate of the appellate court.” Nigro v. Remington Arms Co.,
Inc., 432 Pa. Super. 60, 637 A.2d 983, 988 (1993), abrogated
on other grounds, Aldridge v. Edmunds, 561 Pa. 323, 750
A.2d 292 (2000); see also Gocek v. Gocek, 417 Pa.Super. 406,
612 A.2d 1004, 1009 n. 7 (1992) (stating “on remand, the scope
of inquiry should not exceed the perimeters set forth herein”).
Agostinelli v. Edwards, 98 A.3d 695, 706 (Pa. Super. 2014).
Furthermore, in its most recent Pa.R.A.P. 1925(a) Opinion, the trial
court noted, “In its initial sworn affidavits the Plaintiffs opted for a lodestar
rather than a percentage of the recovery. This Court will not reconsider the
method of fee allocation.” Trial Court Opinion, 9/22/2016 at 7 n. 5. Even if
we considered Class Counsels’ question, we cannot ignore the fact that the
trial court determined it was Class Counsels’ original choice to seek lodestar
remuneration, not contingency. Accordingly, Class Counsel is not entitled to
relief on this issue.
In its cross-appeal, Wal-Mart argues the trial court erred in applying a
multiplier to the lodestar and that the trial court failed, upon remand, to follow
the instructions of the prior panel. We agree. Therefore, we have no basis
upon which we can properly analyze the trial court’s fee award. Accordingly,
we must vacate the award as it regards the application of the contingency
multiplier and remand for further action.
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Relevant to this appeal, upon prior remand, the trial court was instructed
to provide a thorough explanation of its decision to employ a contingency
multiplier. Additionally, the trial court was instructed to provide a thorough
explanation of the amount of the any multiplier applied, in light of the federal
appellate court’s prediction in Polselli v. Nationwide Mut. Fire Ins. Co.,
126 F.3d 524 (3d Cir. 1997), that the Pennsylvania Supreme Court would
approve a 1.5 contingency multiplier as an outer limit.
We understand that Class Counsel believes Polselli is irrelevant as
Polselli addresses bad faith litigation, not a class action lawsuit. However,
the prior panel of our Court determined that the reasoning found in Polselli
most closely approximated the situation herein. Accordingly, the trial court
was obligated to follow that instruction. Unfortunately, the trial court
reimposed the 3.7 contingency multiplier without adequately explaining its
reasoning for doing so.
The instructions from this Court upon remand were as follows:
Upon remand, the court should explain thoroughly its rationale in
approving the lodestar, including the factors set forth by Pa.R.C.P.
1716[4] and the Logan Court. See Pa.R.C.P. 1716; Logan [v.
Marks] 704 A.2d [671] at 674 [(Pa. Super. 1997)]. We note,
however, that in reviewing the court's opinion, we also find its
justifications for applying a multiplier insufficient, particularly in
light of its application of a 3.7 multiplier, compared to the Third
Circuit's prediction that 1.5 would be the outer limit of acceptable
multipliers in this Commonwealth. See Polselli [v. Nationwide
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4 Now Pa.R.C.P. 1717.
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Mut. Fire Ins. Co.], 126 F.3d [524] at 536 [(3d Cir. 1997)].
Accordingly, if the court concludes an enhancement is warranted,
then the court shall discuss comprehensively the factors it finds
would justify an enhancement. See, e.g., Krebs [v. United
Ref.Co. of Pa.], 893 A.2d [776] at 790 [(Pa. Super. 2006)]; Birth
Ctr. [v. St. Paul Cos.], 727 A.2d [1144] at 1161 [(Pa. Super.
1999)]; Logan [v. Marks], 704 A.2d [671] at 674 [(Pa. Super.
1997)]; see also [Pennsylvania v.] Delaware Valley
[Citizens’ Council of Clean Air], 478 U.S. [546] at 568, 106
S.Ct. [3088] at 3099, 92 L.Ed.2d [439] at 458 (noting, inter alia,
that “absence of detailed findings” warranted reversal of fee
enhancement for superior performance). In considering whether
to apply an enhancement, the court should not reconsider factors
“subsumed in the lodestar amount[, e.g.,]” “a difficult case
[requiring] a high number of hours dedicated to research or
discovery [or] the skills of someone who ordinarily bills at a high
hourly rate.” Polselli, 126 F.3d at 535; Birth Ctr., 727 A.2d at
1161. The court may wish to apply a second method of calculation
as a cross-check. See In re GM Truck, 55 F.3d [768] at 820 [(3d
Cir. 1995)].
Braun, 24 A.3d at 981.
Expanding on the above, we highlight certain relevant factors iterated
in this Court’s prior decision.
[A] difficult case may require a high number of hours dedicated to
research or discovery. Or, it might require the skills of someone
who ordinarily bills at a high hourly rate. Both of these factors
are considered in the lodestar amount, that they should not be
reconsidered in enhancing the lodestar.
***
Thus, when a trial court is faced with a request to enhance a fee
based on contingent risk arising from the magnitude, complexity
and uniqueness of the litigation, the court should exercise caution
so as not to skew the calculation of a reasonable rate by double
counting. For example, if the complexity of a case is reflected in
the high number of hours researching the complex issues or in the
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relatively high regular hourly rate of the attorney, complexity does
not justify a contingency enhancement.
The court should also consider whether the attorney was able to
mitigate the risk of nonpayment. For example, an attorney who
has entered into a contingency-fee contract in a suit seeking
substantial damages has significantly mitigated the contingent
risk; in exchange for accepting the risk of nonpayment,[5] the
attorney obtains the prospect of compensation under the
agreement substantially in excess of the lodestar amount.
Likewise, “attorneys who are paid a portion of their reasonable
hourly fee irrespective of result have partially mitigated the risk
of nonpayment.” Rendine v. Pantzer, 141 N.J. 292, 661 A.2d
1202, 1229 (1995).
We emphasize that the determination of a reasonable fee is an
inherently case-specific endeavor. Just as every case is unique,
so too are the particularized risks faced by attorneys accepting
contingency-fee cases. We are therefore reluctant to provide
courts with a specific list of factors to consider in determining
whether and to what extent a contingency enhancement is
appropriate in any given case. When applying Rule 1716, courts
must consider whether the receipt of a fee was contingent on
success. Courts must not, however, deviate from their ultimate
responsibility—the calculation of a “reasonable” fee. To the extent
that the factors creating a contingent risk in a particular case are
mitigated or are already taken into account when calculating the
lodestar amount, a contingency enhancement is not “reasonable”
and should not be applied.
Id. at 977-78 (emphasis in original).
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5 Regarding the risk of non-payment – the trial court in this case cited In re
Rite Aid Corp. Sec. Litig., 146 F.Supp. 706, 736 n. 44 (E.D.Pa. 2001) stating
multipliers between 4.5 to 8.5 were acceptable. However, this case is not
persuasive. Federal fee awards are governed by statute while Pennsylvania
cases are not. See Braun, 24 A.3d at 977, quoting Polselli. Further, there
was a specific risk in Rite Aid of non-payment, considering the finances of
both Rite Aid and the natural persons determined to have been liable. There
is no similar concern of financial instability that we are aware of involving Wal-
Mart.
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Simply put, the trial court must explain its actions and decision making
process. Regarding the application of a multiplier, the trial court is to consider
the factors mentioned above, including those found in Rule 1717. Additionally,
the trial court is directed to consider the application of a contingency multiplier
in light of the Polselli decision. While we regret the inevitable delay this
second remand produces, without the proper and thorough explanation, we
cannot provide a reasoned analysis of the issues.
Judgment reversed. This matter is remanded for action consistent with
this decision. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/27/18
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