Fessler v. Porcelana Corona

Case: 20-40357 Document: 00516161128 Page: 1 Date Filed: 01/10/2022
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
January 10, 2022
No. 20-40357 Lyle W. Cayce
Clerk
Mark Fessler, on Behalf of Themselves and Those
Similarly Situated; Amber Fessler, on Behalf of
Themselves and Those Similarly Situated; Andrew
Hocker, on Behalf of Themselves and Those Similarly
Situated; Kevin Reuss, on Behalf of Themselves and
Those Similarly Situated; Matthew Carreras, on
Behalf of Themselves and Those Similarly Situated;
Charles Handly, on Behalf of Themselves and Those
Similarly Situated; Michelle Handly, on Behalf of
Themselves and Those Similarly Situated; Aaron
Stone, on Behalf of Themselves and Those Similarly
Situated; Stacey Stone, on Behalf of Themselves and
Those Similarly Situated; Daniel Sousa, on Behalf of
Themselves and Those Similarly Situated; Sharon
Sousa, on Behalf of Themselves and Those Similarly
Situated,
Plaintiffs—Appellees,
versus
Porcelana Corona De Mexico, S.A. DE C.V., formerly
known as Sanitarios Lamosa S.A. DE C.V., also known as
Vortens,
Defendant—Appellant,
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Steven Cone, on Behalf of Themselves and Those
Similarly Situated; Joanna Cone, on Behalf of
Themselves and Those Similarly Situated; Mark
Fessler, on Behalf of Themselves and Those Similarly
Situated; Amber Fessler, on Behalf of Themselves and
Those Similarly Situated; Andrew Hocker, on Behalf
of Themselves and Those Similarly Situated; Matthew
Carreras, on Behalf of Themselves and Those
Similarly Situated; Aaron Stone; Stacey Stone; Daniel
Sousa; Sharon Sousa,
Plaintiffs—Appellees,
versus
Porcelana Corona De Mexico, S.A. DE C.V., formerly
known as Sanitarios Lamosa S.A. DE C.V., also known as
Vortens,
Defendant—Appellant.
Appeals from the United States District Court
for the Eastern District of Texas
USDC Nos. 4:19-CV-248 & 4:17-CV-1
Before Jones, Clement, and Graves, Circuit Judges.
Edith H. Jones, Circuit Judge:
A proposed consumer class who purchased toilet tanks brought claims
for injunctive relief and monetary damages against the manufacturer. The
alleged Class claimed, at different times, that seven models produced over
the span of nine years suffered defects. After extended litigation, the Class,
as reconstituted and limited, settled for damages for a single year involving
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two toilet tank models and injunctive relief for four more years. This appeal
concerns the district court’s award exceeding $4.3 million in fees to Class
Counsel. Because the district court failed to account for counsel’s time spent
on unsuccessful claims and failed to compare the relief sought to that actually
awarded, we VACATE and REMAND.
I. BACKGROUND
In January 2017, following a well-publicized product recall by the
manufacturer, Steven and Joanna Cone filed suit against Vortens, Inc. and
Sanitarios Lamosa S.A. de C.V. (“Sanitarios”). On behalf of themselves and
purchasers similarly situated, they sought damages for defective toilet tanks
manufactured by Vortens and Sanitarios. Specifically, they identified as
defective “toilet tank models #3464, #3412, #3425, #3408, and #3571
manufactured, produced, designed, marketed, or distributed . . . between
2004-2012.” The proposed class amended the complaint in March, adding
several plaintiffs and an additional defendant—Porcelana Corona de Mexico,
S.A. de C.V. (“Porcelana”). After the Cones, along with several other
named plaintiffs, settled and were dismissed, a second amended complaint
was filed in January 2018. This complaint, the operative pleading, identified
Porcelana as the only defendant. 1
The complaint stated claims for strict products liability, breach of
implied warranty, negligence, and violations of the Texas Deceptive Trade
Practices Act. It defined the proposed class as “[a]ll owners of Vortens toilet
tank models #3464, #3412, #3404, #3425, and #3436
1
The complaint explains that Sanitarios changed its name to Porcelana and “is the
corporate entity exercising authority and control over Vortens’ products.”
3
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manufactured . . . during the years 2004–2012.” 2 The plaintiff class sought
injunctive relief and damages, including punitive and treble damages.
The case settled in two stages. In the first, the parties entered a partial
class settlement in November 2018, and then moved to sever the settlement
class in March 2019. The district court severed the class in April. 3 This
settlement, for all owners of Vortens toilet tank models #3464 and #3412
manufactured in 2011, awarded replacement costs of $150 or $300
(depending on claim materials) and damage reimbursement up to $4000 of
out-of-pocket expenses. 4 The named plaintiffs were awarded $7500 each for
“pursuing litigation on behalf of the Settlement Class.” The agreement
required attorneys’ fees to be determined by the court. Class Counsel
requested $12 million in fees—a lodestar of $3.9 million and a 2.9x upward
adjustment—and $372,105.77 in expenses. The court approved the
settlement and set a briefing schedule for attorneys’ fees after Porcelana
vigorously contested the amount.
At the court’s order, the plaintiff class also moved to certify the class
of non-settled claims. That motion proposed two separate classes: (1) “All
Texas owners of a Vortens toilet tank model #3464, #3412, #3425, or #3436
with a manufacturing date 2007-2012 that experienced property damage after
spontaneous tank fracture”; and (2) “All owners of a Vortens toilet tank
model #3464, #3412, #3425, or #3436 with a manufacturing date 2007-
2
This new class omitted previously included tank models #3408 and #3571. It also
proposed a subclass of owners of 2011-2012 variants of models #3464 and #3412.
3
The proceedings for the severed settlement class continued under a new case
number, 4:19-CV-248, while the remaining claims progressed under case number 4:17-CV-
1. This court consolidated the cases on appeal.
4
Monetary awards were limited to those claims that Porcelana had not already paid
through internal procedures.
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2012.” Porcelana opposed the motion, arguing, inter alia, that commonality
and typicality were absent because the #3425 and #3436 models had been
produced in a different plant from the #3464 and #3412 tanks, and the #3425
model was part of a different product line. Responding to Porcelana’s
complaint, the district court limited this certified class to “[a]ll Texas owners
of a Vortens toilet tank models #3464 and #3412 manufactured at the Benito
Juarez plant, with a manufacturing date 2007-2010.”
In December 2019, the parties sought approval of a settlement for this
second class. The settlement provided equitable relief, such as warranty
eligibility that provided reimbursement of replacement costs for fractured
tanks. Porcelana also agreed to pay just under $7000 to the named plaintiffs.
As in the previous settlement, this one required class members to relinquish
all claims against Porcelana. The district court approved the settlement in
March 2020.
Shortly thereafter, Class Counsel filed a motion seeking attorneys’
fees and expenses from the two cases. They requested $12,726,376.00 in
fees—a lodestar of $4,388,405.50 and the same 2.9 multiplier—and
$373,476.05 in expenses. 5 Porcelana challenged the request, disputing the
number of hours expended on the claims. It argued that the hours used for
the lodestar calculation should “be limited to the hours worked for successful
class members, and not every putative class member.” Porcelana also sought
a downward adjustment because of the limited results achieved, asserting
that the “successful class members’ claims were largely those for which
5
According to Class Counsel’s own submissions, the second settlement only added
$500,000 in hourly fees and $1400 in expenses.
5
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Porcelana already had a replacement program in place,” 6 and that the
“projected value for the 2011 class is less than $500,000 and for the Texas
class is at most $75,000.”
The district court granted in part and denied in part Class Counsel’s
motion. The court found it “difficult—if not practically impossible—to
attempt to identify specific hours that should be eliminated in a case like this,
where all claims shared a common core of facts and were based on related
legal theories.” 7 It therefore decided at the outset not to address this dispute
in the computation of the lodestar itself, but instead opted to weigh a possible
reduction from the lodestar under the Johnson factors. 8
However, the court slightly reduced Class Counsel’s proposed
lodestar by omitting duplicative billing entries. And after considering the
Johnson factors, the court rejected both Porcelana’s request for a downward
adjustment and Class Counsel’s 2.9 multiplier. The court found that “this
case d[id] not present an ‘extraordinary circumstance’ requiring
enhancement.” But a downward adjustment under the “results obtained”
factor was also not warranted because “the work done did not prove
fruitless—it resulted in two settled classes receiving a host of monetary and
non-monetary benefits they would not have received but for Class Counsel’s
6
In July 2016, Porcelana established a product return protocol program, which
authorized its distributors to contact Porcelana to arrange the return and replacement of
certain model #3464 and #3412 toilet tanks.
7
The court did exclude $1000 in expenses related to one deposition because that
work “went towards the broader, potential classes put forward by Plaintiffs’ complaints
that Class Counsel never secured settlement for.”
8
See Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717–19 (5th Cir. 1974)
(listing twelve factors to evaluate a fee award).
6
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diligent work.” Accordingly, the court awarded $4,333,949.50 in attorneys’
fees and $371,354.98 in expenses. Porcelana timely appealed.
II. STANDARD OF REVIEW
A district court’s award of attorneys’ fees is reviewed for abuse of
discretion. Torres v. SGE Mgmt., LLC, 945 F.3d 347, 352 (5th Cir. 2019). “A
district court abuses its discretion if it (1) relies on clearly erroneous factual
findings; (2) relies on erroneous conclusions of law; or (3) misapplies the law
to the facts.” Combs v. City of Huntington, 829 F.3d 388, 391 (5th Cir. 2016)
(internal quotation marks and citation omitted).
III. DISCUSSION
Reasonable attorneys’ fees are determined through a two-step
process. 9 Id. The district court must first calculate the lodestar—“‘the
number of hours reasonably expended multiplied by the prevailing hourly
rate in the community for similar work.’” Id. at 392 (quoting Jimenez v. Wood
Cty., 621 F.3d 372, 379 (5th Cir. 2010), revised on other grounds, 660 F.3d 841(5th Cir. 2011) (en banc)). The lodestar is presumed reasonable, 10 but the
court may then enhance or decrease it after considering the twelve Johnson
factors. Id. “‘[T]he most critical factor’ in determining a reasonable fee ‘is
the degree of success obtained.’” Id. at 394 (quoting Hensley v. Eckerhart,
461 U.S. 424, 436, 103 S. Ct. 1933, 1941 (1983)).
9
The Combs panel reaffirmed this two-step process in light of the Supreme Court’s
most recent consideration of the reasonable fee analysis. See Perdue v. Kenny A. ex rel.
Winn, 559 U.S. 542, 130 S. Ct. 1662 (2010).
10
This presumption only carries if the lodestar is correctly calculated in the first
instance. See Saizan v. Delta Concrete Prods. Co., 448 F.3d 795, 799–800 (5th Cir. 2006)
(per curiam).
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“[T]he fee applicant bears the burden of establishing entitlement to
an award and documenting the appropriate hours expended and hourly
rates.” Hensley, 461 U.S. at 437, 103 S. Ct. at 1941. But once calculated, the
party seeking modification of the lodestar under the Johnson factors bears the
burden. Louisiana Power & Light Co. v. Kellstrom, 50 F.3d 319, 329 (5th Cir.
1995) (citing U.S. Football League v. Nat’l Football League, 887 F.2d 408, 413
(2d Cir. 1989)) (“We note that a party advocating the reduction of the
lodestar amount bears the burden of establishing that a reduction is
justified.”). Porcelana argues that the district court erred in calculating the
lodestar and in refusing to decrease it. We agree.
A. Calculation of the Lodestar
It is axiomatic that “work on an unsuccessful claim cannot be deemed
to have been ‘expended in pursuit of the ultimate result achieved’ . . . and
therefore no fee may be awarded for services on [an] unsuccessful claim.”
Hensley, 461 U.S. at 435, 103 S. Ct. at 1940. If unrelated to the successful
claims, the unsuccessful ones must “be treated as if they had been raised in
separate lawsuits” and excluded from the fee award. Id. at 435–36, 103 S. Ct.
at 1940–41 (noting that “[t]he district court may attempt to identify specific
hours that should be eliminated”). “But when claims . . . share a ‘common
core of facts’ or ‘related legal theories,’ a fee applicant may claim all hours
reasonably necessary to litigate those issues.” Louisiana Power, 50 F.3d at
327 (quoting Hensley, 461 U.S. at 434–35, 103 S. Ct. at 1940). “When a
plaintiff’s claims cannot be disentangled, the district court’s focus should
shift to the results obtained and adjust the lodestar accordingly.” Id. at 327
n.13.
The Class here prevailed on only a fraction of its original claims. The
original complaint, filed on January 1, 2017, defined the putative class as
“[a]ny and all consumers of toilet tank models #3464, #3412, #3404, #3425,
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#3408, and #3571 manufactured . . . between 2004-2012.” 11 It sought
injunctive relief and monetary damages (compensatory, punitive, and treble
under the Texas Deceptive Trade Practices Act 12). The Class’s second
amended complaint was filed on January 19, 2018. 13 That complaint’s
proposed class dropped owners of models #3408 and #3571 while adding
owners of model #3436 to the remaining models, still covering 2004-2012.
Thus, at various stages, the Class sought injunctive relief and compensatory,
punitive, and treble damages for all owners of seven different tank models
manufactured over nine years.
The suit resulted in two, much narrower, settlements. The first
covered owners of tank models #3464 and #3412 manufactured in 2011 and
included replacement and installation reimbursements up to $300 and
damages reimbursements up to $4000. 14 It also allowed for a warranty
extension. The second settlement covered only Texas owners of models
#3464 and #3412 manufactured in 2007–2010. Notably, this class was
significantly narrowed after the magistrate judge expressed doubt on
certifying a broader class that also covered #3425 and #3436 (both
manufactured at a different plant). This settlement provided replacement
costs of up to $300 in the event of a cracked tank (if the entire toilet must be
replaced, otherwise reimbursement is limited to $35).
11
Porcelana put forth uncontradicted evidence that #3571 is not a legitimate tank
model.
12
The DTPA claims were brought only by a subclass of Texas owners.
13
During the intervening time, Class Counsel deposed several Porcelana
representatives in Mexico, inspected the manufacturing plant in Monterrey, and attempted
to depose several home builders, plumbing companies, and plumbing supply distributors—
all activities directed toward the benefit of the class defined in the original and first
amended complaint (six models over nine years).
14
Both amounts were limited to claims that Porcelana had not previously paid.
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In sum, recovery was ultimately restricted to two tank models with
limited compensatory damages for one year and limited replacement costs
for five years (and four of those five years only include Texas owners). For
three of the models, there was no recovery. And even for the two models in
which the original Class achieved some success, they came up empty-handed
on four of the nine model years (2004-2006 and 2012). Thus, according to
Hensley’s instruction, Class Counsel is not entitled to any fee recovery for
hours expended on these unsuccessful claims unless the district court finds a
“common core of facts” or “related legal theories.” See Hensley, 461 U.S. at
434–35, 103 S. Ct. at 1940.
Here, the district court’s “findings” are limited to two statements
made in passing. First: “When faced with an argument like Defendant makes
here—that Class Counsel’s requested fee is inflated by work done to further
unsuccessful but intertwined claims . . . .” And shortly after: “As
demonstrated by Defendant’s suggested percentage reductions to the
lodestar, it is difficult—if not practically impossible—to attempt to identify
specific hours that should be eliminated in a case like this, where all the claims
shared a common core of facts and were based on related legal theories.”
This conclusory language fails to pass muster. Jointly, Rules 23(h) and 52(a)
require a district court to “find the facts specifically and state its conclusions
of law separately” when awarding reasonable attorneys’ fees in a certified
class action. Fed. R. Civ. P. 23(h), 52(a). The district court’s failure to
make any factual findings regarding the nature of the Class’s unsuccessful
claims is an abuse of discretion. An unsupported assertion is insufficient to
permit the district court to bypass the proper lodestar calculation and only
consider the unsuccessful claims under the eighth Johnson factor.
Nor is this a case where the record supports such a conclusion in the
absence of an explicit finding by the district court. Cf. United States v.
Caravayo, 809 F.3d 269, 275 (5th Cir. 2015) (explaining that “[i]n the
10
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absence of a factual finding, a court of appeals may nevertheless affirm a
special condition ‘where the [district] court’s reasoning can be inferred after
an examination of the record’”). Two of the models for which the Class
received no recovery (#3425 and #3436) are manufactured at an entirely
separate plant from the two models that the Class actually recovered for. And
model #3425 is from a distinct product line.
Class Counsel cannot obscure these factual distinctions with overly
broad theories of liability. 15 The gist of the claims here was that Porcelana’s
manufacturing process was defective, in part because it relied on aged and
faulty production molds and contained errors in the firing and cooling
process. But a manufacturing defect is limited to the location of manufacture.
The Class had no success proving that the process defects extended beyond
models #3464 and #3412 manufactured at the Benito Juarez plant. The
separate legal theories that different product lines and plants also
experienced similar manufacturing problems were unsupported by the relief
secured. To allow recovery on these unsuccessful claims would incentivize
fishing expeditions into every tangentially related product after the discovery
of a singular defective item. Instead, Class Counsel must shoulder the
burden of proving that the hours submitted are for claims sharing a common
core of facts. See Saizan v. Delta Concrete Prods. Co., 448 F.3d 795, 799 (5th
Cir. 2006) (per curiam).
On remand, the district court must address the “common core of
facts” and “common legal theories” sufficiently so that no fees are awarded
on unsuccessful theories. This may require a pro rata reduction in the overall
15
The Class’s legal theories are equally troubling because they impermissibly
attempt to secure a nationwide class based on individual state law violations. See Castano
v. Am. Tobacco Co., 84 F.3d 734, 740 (5th Cir. 1996) (noting that variations in state law may
swamp any common issues and defeat predominance).
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fee request, like that granted in Gurule v. Land Guardian, Inc., 912 F.3d 252,
259 (5th Cir. 2018). 16 The district court emphasized counsel’s “good faith,”
but that misses the mark. As the Court stated in Hensley, “[i]f . . . a plaintiff
has achieved only partial or limited success, the product of hours reasonably
expended on the litigation as a whole times a reasonable hourly rate may be
an excessive amount. This will be true even where the plaintiff’s claims were
interrelated, nonfrivolous, and raised in good faith.” Hensley, 461 U.S. at 436,
103 S. Ct. at 1941 (emphasis added). In reducing the fee award, the proper
approach is “a reduction of ‘the hours awarded by a percentage intended to
substitute for the exercise of billing judgment.’” Walker v. City of Mesquite,
313 F.3d 246, 251 (5th Cir. 2002) (quoting Walker v. HUD, 99 F.3d 761, 770
5th Cir. 1996)). 17
B. Reduction under the Johnson Factors: “Results Obtained”
Even assuming the district court had adequately supported its
conclusion that unsuccessful claims were intertwined with those that proved
successful, the court still failed to properly analyze the award in relation to
the results obtained. “Under the abuse of discretion standard, this Court
‘inspect[s] the district court’s lodestar analysis only to determine if the court
sufficiently considered the appropriate criteria.’” Black v. SettlePou, P.C.,
16
The district court seemed to place great weight Judge Ho’s concurrence in
Gurule while not mentioning the 60% fee discount applied by the court for claims that had
been unsuccessful. Indeed, in quoting Judge Ho, the district court turns Hensley upside
down by asserting that a plaintiff’s attorney ought to be compensated for all claims litigated
in good faith. Judge Ho actually wrote that “where attorney time exceeds client value to a
significant degree, courts should be suspicious.” Gurule v. Land Guardian, Inc., 912 F.3d
252, 262 (5th Cir. 2018) (Ho, J., concurring). And he wrote that “consistent with Johnson,
the district court could have (and perhaps should have) gone further [than a reduction of
60%].” Id. at 263.
17
Of course, the district court need not feel bound by Porcelana’s proffered
calculations of the appropriate reduction.
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732 F.3d 492, 502 (5th Cir. 2013) (emphasis in original) (quoting Louisiana
Power, 50 F.3d at 329). But here, the district court failed to consider the
amount awarded in relation to the amount sought.
The Supreme Court has twice stated that “degree of success
obtained” is “the most critical factor” in determining the reasonableness of
attorneys’ fees. Farrar v. Hobby, 506 U.S. 103, 114, 113 S. Ct. 566, 574 (1992)
(quoting Hensley, 461 U.S. at 436, 103 S. Ct. at 1941). And when the suit is
for damages, “a district court, in fixing fees, is obligated to give primary
consideration to the amount of damages awarded as compared to the amount
sought.” Id. at 114, 113S. Ct. at 575. This court has dutifully applied that
rule. See, e.g., Combs, 829 F.3d at 397; Black, 732 F.3d at 503; Migis v. Pearle
Vision, Inc., 135 F.3d 1041, 1048 (5th Cir. 1998). But the district court here
made no such comparison.
Instead, the court stated simply that “the work done did not prove
fruitless—it resulted in two settled classes receiving a host of monetary and
non-monetary benefits they would not have received but for the Class
Counsel’s diligent work.” In other words, not receiving every bit of relief
requested is no reason to reduce the lodestar. But this misconstrues Fifth
Circuit precedent. The court was required to consider what was sought—
compensatory, punitive, and treble damages for five tank models
manufactured across nine years. 18 Yet, the Class members only received a
maximum of $4000 in damages for two tank models manufactured in one
year. The court’s mere uncertainty about the actual monetary value obtained
by the Class is no reason to duck the required inquiry. If the projections of
future benefit to the Class are too fluid, the district court is capable of staying
18
The five tank models here refer to the five included in the second amended
complaint.
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its determination of attorneys’ fees until the comparison can be properly
made. Failure to “consider[] the appropriate criteria” is a reversible abuse
of discretion. Black, 732 F.3d at 502.
Factually, it appears that Class Counsel achieved little beyond
Porcelana’s self-imposed replacement program, which the defendant
instituted following its admission in 2016 that there were problems in the
2011 manufacturing runs for two tank models, #3464 and #3612. 19 In the end,
members of the two settlement classes got somewhat more than the company
had already offered consumers before this suit was filed. How much more
was a subject of debate and, on remand, will be amenable to even clearer
resolution.
The district court further erred in justifying the award by comparing
the proportion of the fee award to the class benefit with that of other cases.
While this court upheld a thirty-three times award in Gurule, the district
court there had already reduced the lodestar by 60% and the size of the fee
award ($25,000) was tiny compared to what is at stake here. Gurule, 912 F.3d
at 259. And there, the court noted that Migis had rejected as unreasonable an
award six and half times larger than the damages award. Id. (discussing Migis,
135 F.3d at 1048). Further, Gurule did not arise in the context of a class action
where courts must be wary of strike suits intended to line attorneys’ pockets
while providing minimal benefit to the class. See Strong v. BellSouth
Telecomms., Inc., 137 F.3d 844, 849 (5th Cir. 1998). The district court’s
justification here of an 8.67x award based on an inapt comparison to Gurule
further illustrates how the court’s analysis missed the mark. Instead, the fee
award should approximate what a client would be expected to pay in a
19
This is further illustrated by the fact that both settlements exclude claims that
Porcelana had already covered.
14
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comparable case. Perdue, 559 U.S. 542, 551, 130 S. Ct. 1662, 1672 (2010); see
also Hensley, 461 U.S. at 434, 103 S. Ct. at 1940 (quotation and emphasis
omitted) (“Hours that are not properly billed to one’s client also are not
properly billed to one’s adversary.”).
On remand, the court must consider the amount of damages and non-
monetary relief sought compared to what was actually received by the Class.
But in doing so, the court’s scrutiny should “guard[] against the public
perception that attorneys exploit the class action device to obtain large fees
at the expense of the class.” Strong, 137 F.3d at 849.
IV. CONCLUSION
For the foregoing reasons, the district court’s judgment is
VACATED and REMANDED for further proceedings consistent with
this opinion.
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James E. Graves, Jr., Circuit Judge, dissenting:
Because I disagree with the view that the district court erred at both
steps of determining the fee award, I respectfully dissent. This Court reviews
the “award of attorney’s fees for abuse of discretion and its factual findings
for clear error, assessing the initial determination of reasonable hours and
rates for clear error and its application of the Johnson factors for abuse of
discretion.” Saizan v. Delta Concrete Prods. Co., 448 F.3d 795, 800 (5th Cir.
2006) (citations omitted). “A district court abuses its discretion if it: (1)
relies on clearly erroneous factual findings; (2) relies on erroneous
conclusions of law; or (3) misapplies the law to the facts.” Allen v. C & H
Distribs., L.L.C., 813 F.3d 566, 572 (5th Cir. 2015) (citation omitted). Thus,
we must afford deference to the district court’s findings unless they were
clearly erroneous.
I. First Step-Lodestar
In determining the number of hours reasonably expended, the district
court found that “it is difficult—if not practically impossible—to attempt to
identify specific hours that should be eliminated in a case like this, where all
claims shared a common core of facts and were based on related legal
theories.” This finding is sufficiently supported by the record. Though the
successful claims involved only two models of toilet tanks (#3464 and #3412)
and the unsuccessful ones involved other models of tanks (#3404, #3425,
#3408, and #3571 based on the Original and First Amended Complaint; and
#3404, #3425, and #3436 based on the Second Amended Complaint), all the
claims were based on the theory that Porcelana is liable for flawed toilet tanks
arising from its defective manufacturing process, which relied on aged and
faulty production molds during the casting process and errors in the firing
and cooling process. In other words, the claims all relied on the same legal
16
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theory of product liability; that is, Porcelana’s defective manufacturing
process caused the tanks to spontaneously fracture.
The majority misses a key part of the percentage reduction analysis—
hours awarded may be reduced “to substitute for the exercise of billing
judgment” where the court has determined that “there is no evidence of billing
judgment.” Walker v. City of Mesquite, 313 F.3d 246, 251 (5th Cir. 2002)
(quoting Walker v. HUD, 99 F.3d 761, 770 5th Cir. 1996) (emphasis added).
The majority fails to address whether Class Counsel actually lacked billing
judgment or whether any evidence supports a percentage reduction for a
failure to exercise billing judgment. The sole indication of potential failure to
exercise billing judgment stems from the 79.6 hours that the district court
already accounted for and reduced the award by. The majority improperly
expands the conditions where a court may use a percentage reduction to
substitute for billing judgment.
Again, we must defer to a district court’s fact findings unless they are
clearly erroneous. “Clear error exists when although there may be evidence
to support it, the reviewing court on the entire record is left with the definite
and firm conviction that a mistake has been committed.” Black v. SettlePou,
P.C., 732 F.3d 492, 496 (5th Cir. 2013) (quoting Hollinger v. Home State Mut.
Ins. Co., 654 F.3d 564, 569 (5th Cir. 2011)). Because the claims could
reasonably be viewed as relying on the same legal theory, I am not convinced
the district court made a mistake in its finding that the successful and
unsuccessful claims were related.
II. Second Step-Johnson Factors
The question of whether the district court abused its discretion in
declining to reduce the award in relation to the results obtained is indeed a
closer call. Once a court has determined that a plaintiff’s different claims are
based on the same factual scenario or the same legal theory, it should
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determine fees by evaluating “the significance of the overall relief obtained .
. . in relation to the hours reasonably expended on the litigation.” Hensley v.
Eckerhart, 461 U.S. 424, 435 (1983). “Under the abuse of discretion standard,
this Court ‘inspect[s] the district court’s lodestar analysis only to determine
if the court sufficiently considered the appropriate criteria.’” Black, 732 F.3d
at 502 (quoting La. Power & Light Co. v. Kellstrom, 50 F.3d 319, 329 (5th Cir.
1995)) (emphasis in original). Where the suit is for damages, “a district court,
in fixing fees, is obligated to give primary consideration to the amount of
damages awarded as compared to the amount sought.” Farrar v. Hobby, 506
U.S. 103, 114 (1992) (internal quotation marks and citation omitted).
However, the amount of damages is “only one of the many factors that a
court should consider in calculating an award of attorney’s fees.” City of
Riverside v. Rivera, 477 U.S. 561, 574 (1986).
Further, this court has “consistently emphasized that there is no per
se requirement of proportionality in an award of attorney fees,” though
“proportionality remains an appropriate consideration in the typical case.”
Combs v. City of Huntington, 829 F.3d 388, 396 (5th Cir. 2016) (internal
quotation marks and citations omitted). In Migis v. Pearle Vision, Inc., the
court reversed the award of attorney’s fees where the award ($81,000) was
over 6.5 times the amount of damages awarded ($12,233.32), and the
damages sought ($325,000) was 26 times the damages awarded. 135 F.3d
1041, 1048 (5th Cir. 1998). But in Combs, the fee award was vacated because
the district court relied on an erroneous interpretation of Migis and
improperly reduced the lodestar to “something less than 6.5 the actual
awarded damages.” 829 F.3d at 397 (holding that lodestar of $38,722.80 was
improperly reduced to $25,000, even though plaintiff obtained $5,000 in
damages). Lastly, in Gurule v. Land Guardian, Inc., the fee award of
$25,089.30 was affirmed despite the plaintiff’s net recovery of $745.21 (a 33:1
ratio), as the district court already reduced the lodestar by 60% and provided
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a “concise but clear explanation of its reasons for the fee award.” 912 F.3d
252, 257–58 (5th Cir. 2018) (quoting Hensley, 461 U.S. at 437).
The district court did in fact recognize that class counsel achieved
success only for owners of two toilet tank models (#3464, #3412)
manufactured in 2007–2011, and not for owners of seven models (#3464,
#3412, #3404, #3425, #3408, #3571, #3436) manufactured in 2004–2012, and
that Plaintiffs did not obtain punitive or treble damages. Nevertheless, it also
recognized that class counsel’s work “resulted in two settled classes
receiving a host of monetary and non-monetary benefits they would not have
received but for Class Counsel’s diligent work.” The district court fully
considered all relevant factors when comparing the overall relief obtained to
the relief originally sought.
The majority concludes that the district court failed to justify the fee
award when comparing the proportion of the award to the class benefit. But,
again, the district court did in fact note that “even accepting as true
Defendant’s assertion that the settled classes received around $500,000.00
in benefits—Class Counsel’s fees are only 8.67 times the class’s monetary
benefit. This is far less startling than the fee award affirmed by this court in
Gurule, which was thirty-three times the successful plaintiff’s net recovery.”
Of course, to Porcelana’s credit, while the fee award ($4.3 million) might not
be excessively disproportionate to the class award ($500,000), these award
amounts are much higher than those in Migis, Combs, and Gurule. In other
words, there is more at stake for Porcelana than for the defendants in those
cases. Thus, whether to affirm or reverse the fee award boils down to whether
the ratios of the amount of damages obtained to the fee award & the amount
of damages sought to the amount of damages obtained are “simply too large
to allow the fee award to stand.” Migis, 135 F.3d at 1048.
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The district court considered all the relevant factors in awarding the
fee. And I do not find the proportionality of the award in comparison to the
relief obtained, nor the ratio of the relief obtained to the relief originally
sought, so excessive as to merit reversal. Absent clear error, it remains the
trial court’s discretion to determine the extent to which the fees expended in
a case are justified. See La. Power & Light Co., 50 F.3d at 331 (“We find
important the fact that degree of success is but one of 12 Johnson factors, and
that in our deferential testing of the discretion of the court we look only to
consideration of that factor without requiring that a reduction in lodestar
necessarily follow. We, therefore, affirm the district court’s handling of
limited success and its effect—or lack thereof—on the lodestar factor in this
case.”).
Lastly, the majority misstates the impact and function of the lodestar
method—“the lodestar method produces an award that roughly
approximates the fee that the prevailing attorney would have received if he
or she had been representing a paying client who was billed by the hour in a
comparable case.” Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551 (2010)
(emphasis in original). In other words, if Class Counsel represented a paying
client, they could reasonably be expected to recover for the hours they
expended working for that client. The district court appropriately used its
discretion in awarding fees that roughly approximate the fees a prevailing
attorney would have received in a similar situation.
For these reasons, I respectfully dissent.
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