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In re Tobacco Cases

In re Tobacco Cases
05:28:2013






In re Tobacco Cases










In re Tobacco Cases

















Filed 4/26/13 In re Tobacco Cases CA4/1













>NOT TO BE PUBLISHED IN OFFICIAL REPORTS

>



California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115>.







COURT
OF APPEAL, FOURTH APPELLATE DISTRICT



DIVISION
ONE



STATE
OF CALIFORNIA






>






In re TOBACCO CASES I


D061077, D061676



(Super. Ct.
No. JCCP 4041)






CONSOLIDATED
APPEALS from orders of the Superior Court
of San Diego
County, Ronald S. Prager,
Judge. Affirmed.



R.J.
Reynolds Tobacco Company (Reynolds) challenges href="http://www.fearnotlaw.com/">trial court orders issued after remand in
the last appeal in this matter, which award the People of the State of California
$2,943,920.63 in contractual attorney fees as the prevailing parties in an
action to enforce a consent decree and final judgment (Consent Decree) entered
on a master settlement agreement (MSA).
Reynolds contends the court erred in its prevailing party determination
because the People did not achieve "greater relief" on the contract
as required by Civil Code section 1717 (section 1717), subdivision
(b)(1)). Alternatively, Reynolds
contends the court erred by applying market rates for San Francisco Bay Area
attorneys when determining the lodestar amount of fees, instead of local href="http://www.mcmillanlaw.us/">San Diego market rates, and by not
further reducing the lodestar amount in consideration of the People's partial
success. We affirm the orders.

FACTUAL AND
PROCEDURAL BACKGROUNDhref="#_ftn1"
name="_ftnref1" title="">[1]

In November
1998 Reynolds and several other tobacco manufacturers entered into the MSA with
most states, including California, to
resolve government claims pertaining to public health concerns about smoking
and the marketing of tobacco products to minors. In December 1998 the State and Reynolds
signed the Consent Decree, under which the San Diego County Superior Court
approved the MSA and retained exclusive jurisdiction over its implementation
and enforcement.

One aspect
of the Consent Decree permanently enjoins participating tobacco manufacturers
from "using or causing to be used" any "cartoon" in the
advertising, promoting, labeling or packaging of tobacco products. The Consent Decree incorporates the MSA's
definition of "cartoon," which is "any drawing or other
depiction of an object, person, animal, creature or any similar caricature that
satisfies any of the following criteria:
[¶] (1) the use of comically exaggerated features;
[¶] (2) the attribution of human
characteristics to animals, plants or other objects, or the similar use of
anthropomorphic technique; or [¶] (3)
the attribution of unnatural or extrahuman abilities, such as href="http://www.fearnotlaw.com/">imperviousness to pain or href="http://www.mcmillanlaw.us/">injury, X-ray vision, tunneling at very
high speeds or transformation."

In 2006
Reynolds launched an advertising campaign called "Farm Rocks" to
promote the sale of Camel cigarettes to adult smokers who enjoy rock music
performed by artists on independent labels.href="#_ftn2" name="_ftnref2" title="">[2] Reynolds used the campaign in various media,
including special advertisements in publications, a promotional compact disc
and a Web site. As part of the campaign,
Reynolds placed a four-page "gatefold" advertisement in the November 15, 2007 >Rolling Stone magazine, which was its
40th anniversary edition. The gatefold
advertisement consisted of photographic collages, or photomontages, of various
fanciful objects. It was placed adjacent
to five pages of the magazine's editorial content, which indisputably included
cartoons under any definition of the term.

In December
2007 the People moved to enforce the Consent Decree, which embodies the
MSA. The People sought injunctive
relief, a declaration Reynolds violated the cartoon ban "thousands of
times in 2006 and 2007 as part of its Farm Rocks campaign advertisements of
Camel cigarettes," and sanctions based on the number of violations. The People's theory was that Reynolds
violated the cartoon ban in two ways, by including cartoons in its own
advertising, and by having its gatefold advertisement in Rolling Stone adjacent to the magazine's editorial pages, which
were covered with cartoons (adjacency issue).
Pending resolution of the action, Reynolds voluntarily suspended the
Farm Rocks campaign and instituted "new [media] insertion guidelines to
avoid future adjacency of its ads to cartoons."

Trial began
in January 2009, and during opening statement Reynolds represented to the court
that it had permanently ceased the Farm Rocks advertising campaign, and thus
injunctive relief was unwarranted. After
a lengthy trial, the court agreed with that assessment. The court issued a declaration that "a
relatively small portion" of Reynolds's images in the Farm Rocks campaign
violated the cartoon prohibition. The
objectionable images included "jet-powered tractors which fly,"
"radios flying by means of attached helicopter rotors,"
"televisions that grow on plant stems," and tractors "with
wheels made of film reels able to defy gravity." The court rejected the People's theory on the
adjacency issue. The court determined
the Consent Decree gives it jurisdiction to assess sanctions against Reynolds,
but it declined to do so because its violation of the cartoon ban was
unintentional and a relatively small part of the advertisements, the State
stipulated there was no proof of the amount of actual damage on which to base a
sanctions award, and it would be difficult to quantify the number of persons
exposed to the Farm Rocks campaign. In
the first appeal in this matter, we affirmed the court's order on the
merits. (In re Tobacco Cases I, supra,> 186 Cal.App.4th at pp. 44, 48-52.)

In a
subsequent proceeding, the trial court awarded the People $707,882.50 in
attorney fees, and $32,673 in other costs, under a provision in the Consent
Decree. The court rejected Reynolds's
argument that section 1717 applies to the Consent Decree, and alternatively
determined that even if the statute is applicable, the People prevailed because
they won on the "significant issue" of whether Reynolds violated the
Consent Decree by using banned cartoons in its Farm Rocks campaign. The court denied Reynolds's request to
apportion fees based on the People's lack of success on the adjacency issue on
the ground the People had already reduced their fee request by 15 percent.

Reynolds
appealed, and we reversed the order. We
agreed with Reynolds that section 1717 is applicable to the Consent
Decree. We directed the court to
determine on remand whether the People were the prevailing parties under
section 1717, meaning they obtained the "greater relief" on the
contract. (§ 1717, subd.
(b)(1).) (In re Tobacco Cases I, supra,
193 Cal.App.4th at p. 1598.)

The People
cross-appealed, contending the court erred by denying them prevailing market
rates on the ground the Consent Decree provides for an award of fees
"incurred" by the People, rather than for an award of reasonable
fees. For the court's convenience on
remand, we addressed the contention, explaining that when section 1717 applies,
as here, the prevailing party is entitled to "reasonable" fees
(§ 1717, subd. (a)), meaning the rates prevailing in the community for
similar work. (In re Tobacco Cases I, supra,> 193 Cal.App.4th at p. 1596.)

On remand,
both parties moved for designation as the prevailing party under section
1717. In an October 5, 2011 order, the court found in favor of the
People. The order explains that while
the People "did not achieve a simple, unqualified win, it is the
prevailing party since it achieved its main litigation objective of >stopping said campaign [Farm Rocks] >in >California>. Before
this action was instituted, [Reynolds] had been engaging in a multistate
advertising campaign which involved the use of certain cartoons that this Court
found to be prohibited by the MSA."
The order also granted the People's request for an award of $32,673.02
in litigation costs. The People then
moved for attorney fees, and in a March
22, 2012 order the court awarded $2,943,920.63 in fees based on Bay
Area market rates, as their attorneys were from Oakland. These consolidated appeals of the orders
followed.

DISCUSSION

I

Prevailing Party Determination

A

Reynolds
contends the trial court abused its discretion by finding the People were the
prevailing parties under section 1717.
Reynolds asserts that given the People's limited success, the court
should have found that either Reynolds prevailed or no party prevailed. We are unpersuaded.

Section
1717, subdivision (a) provides for an award of attorney fees to "the party
prevailing on the contract." Under
section 1717, subdivision (b)(1), the prevailing party is the party "who
recovered a greater relief in the
action on the contract." (Italics
added.) Section 1717 allows "those
parties whose litigation success is not fairly disputable to claim attorney
fees as a matter of right." (>Hsu v. Abbara (1995) 9 Cal.4th 863,
876.)

"If
neither party achieves a complete victory on all the contract claims, it is
within the discretion of the trial court to determine which party prevailed on
the contract or whether, on balance, neither party prevailed sufficiently to
justify an award of attorney fees."
(Scott Co. v. Blount, Inc. (1999)
20 Cal.4th 1103, 1109; § 1717, subd. (b)(1).)

"[I]n deciding whether there is a 'party prevailing on
the contract,' the trial court is to compare the relief awarded on the contract
claim or claims with the parties' demands on those same claims and their
litigation objectives as disclosed by the pleadings, trial briefs, opening
statements, and similar sources. The
prevailing party determination is to be made only upon final resolution of the
contract claims and only by 'a comparison of the extent to which each party
[had] succeeded and failed to succeed in its contentions.' "

(Hsu v. Abbara,> supra, 9 Cal.4th at p. 876.)

"[I]n
determining litigation success, courts should respect substance rather than
form, and to this extent should be guided by 'equitable considerations.' For example, a party who is denied direct
relief on a claim may nonetheless be found to be a prevailing party if it is
clear that the party has otherwise achieved its main litigation
objective." (Hsu v. Abbara, supra,> 9 Cal.4th at p. 877, italics
omitted.) The court may "examin[e]
the results of the action in relative terms: the general term 'greater'
includes '[l]arger in size than others of the same kind' as well as 'principal'
and '[s]uperior in quality.' " (>Sears v. Baccaglio (1998) 60 Cal.App.4th
1136, 1151.)

A trial
court has broad discretion in determining which party has obtained greater
relief on the contract, and we will not disturb such a determination on appeal
absent a clear abuse of discretion. (>Ajaxo Inc. v. E*Trade Group, Inc. (2005)
135 Cal.App.4th 21, 58.) " '
"Discretion is abused when a court exceeds the bounds of reason or
contravenes uncontradicted evidence." ' " (Take
Me Home Rescue v. Luri
(2012) 208 Cal.App.4th 1342, 1351.) We are required to uphold a reasonable ruling
even if we may not have ruled the same way and a contrary ruling would also be
sustainable. (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478-479; >Ross v. Ross (1941) 48 Cal.App.2d 72, 76
["there are cases in which an order either way will be sustained on the
ground that no abuse of discretion appears"].)

B

Reynolds
asserts the People did not obtain greater relief within the meaning of section
1717, subdivision (b)(1), because the court denied them injunctive relief and
sanctions, and only issued a declaration that "a relatively small
portion" of images in the Farm Rocks advertising campaign violated the
MSA's cartoon ban. Reynolds submits, as
unassailable fact, that success on the adjacency issue was the People's main
litigation objective, and their position on Reynolds's own use of cartoons in
the Farm Rocks campaign was merely incidental.

On this
record, however, we cannot say the trial judge, Ronald Prager, who has handled
this litigation from its commencement, abused his broad discretion. As he explained in rejecting Reynolds's
argument as to the primacy of the adjacency issue, "I was here. I sat through all the motions. I heard all the arguments."href="#_ftn3" name="_ftnref3" title="">[3]

Reviewing
the Hsu v. Abarra, >supra, 9 Cal.4th at pp. 876-877 factors, we reject the notion the court's
ruling contravenes uncontradicted evidence.
In December 2007 the People applied for an order to show cause "why
[Reynolds] should not be immediately restrained from using cartoons in its
advertising in Rolling Stone,> its web site or any other
venue." The application
stated: "A central provision of the
Consent Decree and the MSA, intended to further the MSA's goals of reducing
underage tobacco use and promoting public health, is the prohibition against
taking any action, either directly or indirectly, to target youth in the
advertising of tobacco products.
Cartoons in cigarette advertising are specifically prohibited in the MSA
and the Consent Decree. . . . Reynolds
has violated these prohibitions by its cartoon laden Farm Rocks promotions in
its nine page advertisement spread in the November 15, 2007 Rolling
Stone
magazine, its web site www.thefarmrocks.com and other
promotional events."

In February
2008 the People filed an amended motion to enforce the Consent Decree, which
alleged: "Reynolds has used
cartoons as defined in and prohibited by the Consent Decree thousands of times
in 2006 and 2007 as part of its Farm Rocks campaign advertisements of Camel
cigarettes." The motion went on to
describe Reynolds's own Farm Rocks
images, including "flying tractors with movie reels for wheels, flying
radios, [and] stereo speakers growing from plant stalks out of the
ground," and to complain that Reynolds used the images "in California
on the Reynolds-sponsored Farm Rocks web site, in newspaper and magazine
advertisements, in mailings and on other items distributed by mail or at
various Reynolds sponsored musical events, or projected on walls at these
events. Reynolds also advertised Camels
in a nine-page advertising spread in the 40th edition, November 15, 2007, issue of the >Rolling Stone magazine, which contains
hundreds of prohibited cartoon images."
Both the application and the motion allege Reynolds's own use of
cartoons in its advertising, not only in the Rolling Stone, but also in other media. Neither the application nor the motion
expressly refers to the adjacency issue.
The pleadings refer only opaquely to the adjacency issue by citing a
nine-page advertisement in Rolling Stone,
when Reynolds's own advertisement was four pages,href="#_ftn4" name="_ftnref4" title="">[4] and by
referring to "hundreds of prohibited cartoon images," which
presumably includes cartoons provided both by Reynolds and Rolling Stone.

The
People's trial brief devoted roughly nine pages to the issue of Reynolds's own
images in various media and roughly three pages to the adjacency issue. Further, in opening statement, the People's
counsel spent somewhat more time on the issue of Reynolds's own cartoons than
on the adjacency issue.

Reynolds
asserts that during the lengthy trial, Judge Prager "repeatedly
observed" that the adjacency issue "was the central merits
issue." Reynolds, however, gives
only two supporting citations to the
reporter's transcript. During the
People's opening statement, Judge Prager questioned whether they would have
brought the action based exclusively on Reynolds's own use of cartoons, and
their counsel responded affirmatively.
At the end of trial, Judge Prager stated: "What happened in this case, I think we
all know what happened in this case, when [the People] saw . . . the
anniversary issue of Rolling Stone and
they saw what was seemingly . . . [a Reynolds] ad, blatant violation of the
cartoon proscription of the MSA, that they reacted."

Reynolds
also points out that in his final statement of decision, Judge Prager wrote
that the People's enforcement action was "based not only on the contents
of the [Rolling Stone] ad itself but
especially based on the fact that it was adjacent to and intertwined with
cartoons contained in the Rolling Stone editorial." Reynolds seizes on the word
"especially."

Judge
Prager's limited comments, however, are an insufficient ground for us to second
guess his own unequivocal finding that the People's main litigation objective
was stopping Reynolds's use of its own cartoons in advertising in California in
a variety of venues, and by achieving that objective they were the prevailing
parties. As Judge Prager noted, the
People argued the definition of "cartoons" in the MSA was not
"the popular definition of cartoons," and the People "pushed the
envelope on that and they won on that."
He found the People believe in the importance of the MSA, and insisted
on a construction of the term "cartoon" "according to the strict
letter of the law."

Indeed, as
we observed in In re Tobacco Cases I,
supra, 186 Cal.App.4th at p. 50, the Farm Rocks "campaign's fanciful
imagery would appeal to youth," and "Reynolds and other tobacco
companies have a history of targeting youth in their advertising while
professing ignorance of wrongdoing."
(Citing United States v. Philip
Morris USA, Inc.
(D.D.C. 2006) 449 F.Supp.2d 1, affirmed in relevant part
in United States v. Philip Morris USA,
Inc.
(D.C.Cir. 2009) 566 F.3d 1095, 1106-1106.) The litigation advanced the State's
significant interest in protecting youth from the perils of smoking, a
principal purpose of the MSA.

Further,
Judge Prager expressly rejected Reynolds's argument that the lack of injunctive
relief or sanctions precluded him from designating the People as prevailing
parties. The People sought injunctive
relief "to restrain Reynolds from using cartoons in this [Farm Rocks]
campaign or in any other campaign in the future." Judge Prager withheld injunctive relief
because during opening statement at trial, Reynolds's counsel represented it
had decided to permanently cease the
campaign, "[s]o there's nothing to really enjoin." Likewise, Judge Prager denied sanctions, in
part, to essentially reward Reynolds for voluntarily ceasing the campaign. From the case's inception, and continuing
throughout trial, Reynolds vigorously denied that any of its own images were cartoons within the meaning of the
MSA. Reynolds's attempt to now
characterize its use of cartoons as trivial is not well taken. We are satisfied that Judge Prager's ruling
constitutes a proper exercise of discretion.href="#_ftn5" name="_ftnref5" title="">[5] Given our holding, we are not required to
address Reynolds's argument the People are not entitled to costs because they
were not the prevailing parties.

II

Amount of Attorney Fees

A

1

In >In re Tobacco Cases I,> supra, 193 Cal.App.4th 1591, 1604-1605,
we held that if the trial court determined on remand that the People prevailed
under section 1717, they were entitled to attorney fees measured by market
rates rather than the governmental rates of in-house counsel actually
incurred. The People, who were
represented principally by two assistant attorneys general from the Oakland
office of the State's Tobacco Litigation and Enforcement Section (Tobacco
Section), requested and were awarded market rates for the San Francisco Bay
Area of between $500 and $625 per hour.
Reynolds contends that even assuming the People prevailed under section
1717, the court erred by not calculating the lodestar amount with local San
Diego market rates.
Again, we disagree.

"[T]he
fee setting inquiry in California
ordinarily begins with the 'lodestar,' i.e., the number of hours reasonably
expended multiplied by the reasonable hourly rate. 'California
courts have consistently held that a computation of time spent on a case and
the reasonable value of that time is fundamental to a determination of an
appropriate attorneys' fee award.' "
(PLCM Group, Inc. v. Drexler (2000)
22 Cal.4th 1084, 1095.) "Generally,
the reasonable hourly rate used for the lodestar calculation 'is that
prevailing in the community for similar work.' " (Center
for Biological Diversity v. County of


San
Bernardino
(2010)
188 Cal.App.4th 603, 616 (Center for
Biological Diversity
); Ketchum v.
Moses
(2001) 24 Cal.4th 1122, 1132 ["the lodestar is the basic fee for
comparable legal services in the community"].)

The court
has the discretion to make an exception, however, when the prevailing party
shows it was impracticable to use local counsel. As explained in Horsford v. Board of Trustees of California State University (2005)
132 Cal.App.4th 395, 399 (Horsford),
the California Supreme Court "has never hinted that, in the unusual
circumstance that local counsel is unavailable, the trial court is limited to
the use of local hourly rates." The
court may use out-of-area "rates either in calculating the initial
lodestar figure or in evaluating whether to award a multiplier to a lodestar
initially based on local hourly rates."
(Environmental >Protection> Information
Center> v. >California> Dept. of Forestry and Fire Protection (2010)
190 Cal.App.4th 217, 248 (EPIC).) Horsford,
supra, at

p. 399, explains, "we doubt a plaintiff needs to make
anything more than 'a good-faith effort to find local counsel' [citation] in
order to justify the fees of out-of-town counsel." (Accord, Center
for Biological Diversity
, supra,> 188 Cal.App.4th at p. 603.)

Reynolds
asserts the People failed to establish it was impracticable to use assistant
attorneys general from the Tobacco Section's San Diego
office. The evidence, however, amply
supports the court's finding to the contrary.
The People submitted the declaration of Dennis Eckhart, a former senior
assistant attorney general who was head of the Tobacco Section when this
litigation began in 2007. The
declaration states Eckhart assigned and supervised Jeanne Finberg and Shari
Posner, from the Tobacco Section in Oakland. The declaration describes Finberg as "a
very experienced litigator," and states she "had the most knowledge
of Reynolds's then-current advertising campaigns . . . and she was immediately
available to seek an order to show cause on an expedited basis to halt the . .
. Farm Rocks campaign." It also
states Posner is "also an experienced litigator, whose skills . . . would
complement . . . Finberg's."

Additionally,
the declaration states there were only two attorneys in the Tobacco Section's San
Diego office when the litigation began, they
"were the least experienced litigators in the section, and both were
heavily committed to other cases."
Further, in past litigation under the MSA the State had assigned Sacramento
or Oakland attorneys.

The People
also submitted the declaration of Karen Leaf, a senior assistant attorney general
who succeeded Eckhart in heading the Tobacco Section. The declaration states, "It is not
possible to assign all of the MSA enforcement work to

San Diego
attorneys, nor would it be advisable for the office to attempt to do so. Therefore, case assignments for the Section
are made based on a variety of factors which include the complexity of the
case, [and] the experience and work load of the attorney." Leaf kept Finberg assigned to the case
because she "is a highly experienced litigator and the attorney in the
Section with the most experience in litigating attorneys' fees." The court's ruling was well within its
discretion.

2

According
to Reynolds, the People did not need experienced litigators from the Tobacco
Section's Oakland office who were more familiar with the MSA and Consent Decree
than the attorneys with the San Diego office, because in In re Tobacco Cases I, supra,
186 Cal.App.4th 42, this court held as a matter of law that the MSA's
definition of "cartoon" is unambiguous. Reynolds submits that given our finding of
lack of ambiguity, the case was not complex and the People's attorneys
"required no expertise about the
MSA." According to Reynolds, the
People are not entitled to rates higher than Reynolds paid its local law firm,
Wright & L'Estrange.

This theory
strikes us as absurd. In addition to
retaining Wright & L'Estrange, Reynolds assembled a team of attorneys from
the Jones Day law offices in Washington D.C.
and Ohio, who, according to the
trial court, "had the laboring oar," and from the national law firm
of Womble Carlyle Sandridge & Rice, LLP.

Reynolds
then engaged in the type of litigation tactics pejoratively referred to as
"scorched earth," presumably to cause delay and increase the People's
(and the trial court's) financial burden.
Instead of responding in good faith to the merits, Reynolds raised a
variety of unmeritorious procedural roadblocks under various provisions of the
MSA and Consent Decree. In its final
statement of decision, Judge Prager determined "there is no procedural bar
to this action because of the State's alleged failure to give good faith
consideration to whether [Reynolds] had taken appropriate and reasonable steps
to cause the claimed [cartoon] violation to be cured because of the futility of
further discussions in light of Reynolds' categorical denial its ads violated
the cartoon prohibition in the MSA/Consent Decree and because Reynolds has been
accused many times of violating the cartoon prohibition of the MSA/Consent
Decree and has been held responsible for many violations of the public health
provisions of the MSA regarding advertising." In the attorney fee proceedings, Judge Prager
observed the People "had to defend, they had to fight every step of the
way. They had to fight all these
procedural motions. Every step of the
way was very hotly contested."

Moreover,
Reynolds vigorously argued the definition of "cartoon" in the MSA >was ambiguous, and thus its meaning was
subject to proof by parol evidence, and the term must be narrowly construed to
protect its First Amendment free speech rights.
Judge Prager noted, "Even the definition of cartoon . . . was very
hard fought in this case."

Reynolds
called numerous witnesses to give their opinions on the meaning of the term
"cartoon," including its own employees, representatives from its
advertising agency, and a designated expert witness. Reynolds actually designated two expert
witnesses, both of whom the People were required to depose. The People argued expert testimony on the
interpretation of the Consent Decree was improper, to no avail. In In
re Tobacco Cases I
, supra,> 186 Cal.App.4th at p. 50, we found the
MSA's definition of "cartoon" to be unambiguous as a matter of law,
but hindsight does not affect the People's need for experienced litigators.

The
People's expert on attorney fees, Daniel M. Pearl, stated in a declaration that
Reynolds is "one of the wealthiest, most intransigent and unrelenting
defendants that any litigant can face," and Reynolds's "attorneys
fought this case tooth and nail, contesting almost every issue." Given this climate, the People could not
reasonably be expected to use the Tobacco Section's least experienced
attorneys. As Eckhart stated in his
declaration, "Looking back over the four-year course of this action, I
believe the special knowledge about the MSA and Consent Decree possessed by Ms.
Finberg, Ms. Posner and their Tobacco Section colleagues was essential to the
State's success, both in the ultimate result and in several procedural rulings
along the way." Reynolds's
assertion that "if the State had limited its case to the winning claim
concerning the [Farm Rocks] program, the case obviously would have been
resolved quickly and cheaply," is ludicrous.

Notably, the People presented
evidence that Reynolds's attorneys billed it substantially more in attorney
fees than the $2,943,920.63 the People sought and were awarded, and we presume
the court considered it.href="#_ftn6"
name="_ftnref6" title="">[6] "In a contest over what time was
reasonably and necessarily spent in the preparation of a case, it is obvious
that the time that the opposition found necessary to prepare its case would be
probative. Each party must prepare to
question the same witnesses, must review the same documents and other evidence,
and must anticipate a presentation by the opposition of a complexity related to
the facts in issue. Similarly, work on
pretrial motions would reflect what volume of work opposing attorneys deemed
reasonable." (Stastny v. Southern
Bell
Telephone and
Telegraph Company
(W.D. N.C.
1978) 77 F.R.D. 662, 663-664; Blowers v.
Lawyers Co-op. Pub. Co., Inc.
(D.C.N.Y. 1981) 526 F.Supp. 1324, 1327
["The amount of time spent by defendants' attorneys on a particular matter
may have significant bearing on the question whether plaintiff's attorney
expended a reasonable time on the same matter."]; Dupont Plaza Hotel Fire Litigation (1st Cir. 1995) 56 F.3d 295, 301
[decision whether to allow discovery of information regarding fees and expenses
of opposing counsel is generally within trial court's discretion].)

B

1

Lastly, Reynolds
contends the trial court abused its discretion by not sufficiently reducing the
lodestar amount of attorney fees under section 1717 to reflect the People's
limited success. Reynolds asserts the
People's voluntary reduction of fees by 15 percent was insufficient, and the
court should have reduced fees between 33 and 50 percent. We conclude Reynolds's position lacks merit.

In their
fee request, the People argued the fees incurred on the two issues pertaining
to the Consent Decree's cartoon ban—Reynolds's own use of cartoons in the Farm
Rocks campaign and the adjacency issue—were largely inextricably intertwined,
and thus no apportionment was warranted.
The People nonetheless voluntarily reduced their fee request to reflect
their lack of success on the adjacency issue.

The People
submitted a declaration by lead attorney Finberg, which states: "Although
most of the time in the case is not severable, the People have identified some
time that can be attributed almost exclusively to the [adjacency issue]
claim. These hours are primarily time
spent preparing, attending and taking the depositions of Rolling Stone employees.
Shari Posner identified this time on her billing records as time that
was attributable to the [adjacency issue] claim, . . . and
we have completely excluded those hours
from our fee claim
." (Italics
added.)

The Finberg
declaration also explains, "Although other time was spent prosecuting this
claim, it is not possible to tell from the billing records time that is
specifically attributable to this claim.
Consequently, the People have applied a percentage discount so as to
exclude time spent solely on this claim.
The People believe that 10 to 15% of the time is reasonably attributable
to the unsuccessful claim. Consequently,
the People have discounted all of our
time
by 15%." (Italics added.)

The People
also submitted a supplemental declaration by Finberg, which explains she
arrived at the 15 percent figure by reviewing the parties' joint exhibit list
for trial, and identifying exhibits that (1) pertained either solely to the
prevailing claim on Reynolds's own Farm Rocks images, or jointly to that issue
and the adjacency issue, and (2) solely to the adjacency issue. Only four of the People's 150 exhibits that
were admitted pertained solely to the adjacency issue. Finberg also determined that only one of the
parties' 37 stipulations of fact pertained solely to the adjacency issue.

Additionally,
the People presented a declaration by Posner, who was principally responsible
for handling discovery. The declaration
states that 88 percent of the People's discovery requests and 86 percent of
Reynolds's discovery requests were related directly to or inextricably linked
to Reynolds's own use of cartoons.

"Where
a cause of action based on the contract providing for attorney's fees is joined
with other causes of action beyond the contract, the prevailing party may
recover attorney's fees under section 1717 only as they relate to the contract
action." (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129 (>Reynolds).) "Attorney's fees need not be apportioned
when incurred on an issue common to both a cause of action in which fees are
proper and one in which they are not allowed." (Id. at
pp. 129-130.) Depending on the
particular circumstances, however, a court may "apportion fees even where
the issues are connected, related or intertwined." (El
Escorial Owners' Assn. v. DLC Plastering, Inc.
(2007) 154 Cal.App.4th 1337,
1365; accord, Zintel Holdings, LLC v.
McLean
(2012) 209 Cal.App.4th 431, 443; Shadoan
v. World Savings & Loan Assn.
(1990) 219 Cal.App.3d 97, 108.)

Here, the
People's sole claim against Reynolds was contractual, to enforce the Consent
Decree. While the People had two >theories on how Reynolds violated the
cartoon ban, no apportionment of fees between contract and non-contract claims
is at issue. Acree v. General Motors Acceptance Corp. (2001) 92 Cal.App.4th 385
(Acree), held the trial court
properly exercised its discretion by not apportioning attorney fees under
section 1717 when the plaintiff's successful and unsuccessful claims were all
based on the same contract and the same contractual relationship. (Acree,> supra, at p. 405, citing Reynolds,> supra, 25 Cal.3d at pp. 129-130.)

Here,
likewise, the People's successful and unsuccessful contract theories are based
on the Consent Decree and the same contractual relationship. To any extent no apportionment was required,
however, the People voluntarily excluded fees attributable solely to the
adjacency issue and reduced their remaining fees by 15 percent.

"The
amount of an attorney fee to be awarded is a matter within the sound discretion
of the trial court. [Citation.] The trial court is the best judge of the
value of professional services rendered in its court, and while its judgment is
subject to our review, we will not disturb that determination unless we are
convinced that it is clearly wrong.
[Citations.] The only proper
basis of reversal of the amount of an attorney fees award is if the amount
awarded is so large or small that is shocks the conscience and suggests that
passion and prejudice influenced the determination." (Akins
v. Enterprise Rent-A-Car Co.
(2000) 79 Cal.App.4th 1127, 1134.)

Given the
People's evidence, we cannot say the court abused its broad discretion under
section 1717 by not further reducing the lodestar amount. While Reynolds disagrees with the People's
showing on the 15 percent figure, by arguing, for example, that Finberg falsely
claimed some of the trial exhibits were related to the People's successful
claim on the cartoon issue, we are not at liberty to reweigh the evidence or
reappraise witness credibility. (>Tesoro Del Valle Master Homeowners Assn. v. >Griffin> (2011) 200 Cal.App.4th 619, 634.) Rather, " ' "[a]ll intendments and
presumptions are indulged to support [the judgment] on matters as to which the
record is silent, and error must be affirmatively shown." ' " (Ketchum
v. Moses
, supra,> 24 Cal.4th at p. 1140.) Judge Prager noted, "[R]arely do I see
records as complete as the [Attorney General] has submitted in this case."

Further,
the $2,943,920.63 attorney fees award does not shock our conscience or suggest
any passion or prejudice. Under section
1717, the "major factors the trial court must consider in determining an
attorneys' fee award include: the nature of the litigation and its difficulty;
the amount of money involved in the litigation; the skill required and employed
in handling the litigation; the attention given to the case; the attorney's
success, learning, age and experience in the particular type of work demanded;
the intricacy and importance of the litigation; the labor and necessity for
skilled legal training and ability in trying the case; and the amount of time
spent on the case. [Citations.] When apprised of the pertinent facts, the
trial court may rely on its own experience and knowledge in determining the
reasonable value of the attorney's services." (Niederer
v. Ferreira
(1987) 189 Cal.App.3d 1485, 1507; Acree v. General Motors Acceptance Corp., supra, 92 Cal.App.4th at p. 404.)

Judge
Prager reasonably determined the fees were proper in light of the above
factors.href="#_ftn7" name="_ftnref7" title="">[7] "The basis of the broad discretion
afforded to the trial judge in ruling on an attorney fee motion is the judge's
familiarity with the proceedings and the work performed by the
attorneys." (Mann v. Quality Old Time Service, Inc. (2006) 139 Cal.App.4th 328,
346.)

2

Reynolds
relies heavily on Hensley v. Eckerhart (1983)
461 U.S. 424 (Hensley), in which the
United States Supreme Court articulated a two-step standard governing an award
of attorney fees to a prevailing party under
a federal civil rights statute,
42 United States Code section 1988 (section 1988), in cases of limited
success. (Hensley, supra, 461 U.S.
at p. 426.) Hensley, however, does not affect our holding.

"The
first step [of Hensley] asks whether
'the plaintiff fail[ed] to prevail on claims that were unrelated to the claims
on which he succeeded[.]'
[Citation.] In the first step of
the Hensley inquiry, charges included
in the initial lodestar calculation are 'subject to challenge . . . as being
unrelated to the plaintiff's successful claims.' [Citation.]
Thus, this step requires a court to examine whether the prevailing
party's unsuccessful claims are related to its successful ones." (EPIC,
supra, 190 Cal.App.4th at pp. 238-239>, citing Hensley, supra,> 461 U.S. at pp. 434-435.) "If successful and unsuccessful claims
are related, the court proceeds to the second step of [the] >Hensley inquiry, which asks whether 'the
plaintiff achieve[d] a level of success that makes the hours reasonably
expended a satisfactory basis for making a fee award.' [Citation.]
In this step, the court will 'evaluate the "significance of the
overall relief obtained by the plaintiff in relation to the hours reasonably
expended on the litigation." '
[Citations.] Full compensation
may be appropriate where the plaintiff has obtained 'excellent results,' but
may be excessive if 'a plaintiff has achieved only partial or limited
success.' [Citation.] 'The court may appropriately reduce the
lodestar calculation "if the relief, however, significant, is limited in
comparison to the scope of the litigation as a whole." ' " (EPIC,
supra, at p. 239.)

Reynolds
cites the trial court's initial order on attorney fees, which states: "The second issue is whether the fees
should be apportioned. In >Hensley . . . , the U.S. Supreme Court
held that courts should deduct from a lodestar amount for an unsuccessful claim
only if the claim is distinct in all
respects
. Here, the parties provided
conflicting evidence regarding the amount of time spent on each issue. . .
. Notably, Plaintiff informed the Court
that it has already applied a 15 percent deduction to its fees it incurred for
the unsuccessful claim. . . . After
reviewing the evidence provided by both parties, the Court finds that the 15
percent deduction by the Plaintiff was sufficient." (Italics added.)

Reynolds
asserts the italicized language shows the court refused or neglected to
undertake the second step of Hensley,
under which it could reduce the lodestar amount even if it found the People's
two contract theories were related,
based on the insignificance of the People's success in comparison to the
overall litigation. The initial fee
order, however, is not under review here.
The subsequent fee order, which is under review, states, "As to
Defendant's partial success argument, the Court reiterates its previous
determination that the 15 percent deduction by the Plaintiff was
sufficient." This order does not
mention Hensley, it merely reapproved
the People's 15 voluntary percent reduction.
The court was not required to explain its rationale for the final fee
award absent a request for a statement of decision (Ketchum v. Moses, supra,> 24 Cal.4th at p. 1140; >Maria P. v. Riles (1987) 43 Cal.3d 1281,
1294), which Reynolds did not make.

Thus, to
any extent the particular two-step Hensley
apportionment standard may be applicable to section 1717,href="#_ftn8" name="_ftnref8" title="">[8] we infer
the court complied with the standard or its equivalent. We are confident the court knew it could
further reduce the lodestar amount for related contract claims, as again, California
law similarly gives the court discretion to "apportion fees even where the
issues are connected, related or intertwined." (El
Escorial Owners' Assn. v. DLC Plastering, Inc.
, supra, 154 Cal.App.4th at p. 1365.)

We have
considered each of the numerous points Reynolds has raised within its main
contentions, and while we may not address every one of them (see >Linhart v. Nelson (1976) 18 Cal.3d 641,
645; People v. Rojas (1981) 118
Cal.App.3d 278, 289-290), we are satisfied the awards of attorney fees and
costs comport with the court's broad discretion.





DISPOSITION

The orders are
affirmed. The People are entitled to
costs on appeal.



McCONNELL, P. J.



I CONCUR:





McINTYRE, J.





I CONCUR IN THE RESULT:





HUFFMAN, J.





id=ftn1>

href="#_ftnref1"
name="_ftn1" title="">[1] For convenience we recite some facts
from our prior opinions in this matter, In
re Tobacco Cases I
(2010) 186 Cal.App.4th 42, and In re Tobacco Cases I (2011) 193 Cal.App.4th 1591.





id=ftn2>

href="#_ftnref2"
name="_ftn2" title="">[2] The campaign was also sometimes called
Camel Farm, but for consistency we use Farm Rocks throughout the opinion.

id=ftn3>

href="#_ftnref3"
name="_ftn3" title="">[3] Judge Prager signed the Consent Decree
in 1998, and his rulings were under review in In re Tobacco Cases I, JCCP 4041 (2004) 124 Cal.App.4th 1095; >People ex rel. Lockyer v. R.J. Reynolds
Tobacco Co. (2004) 116 Cal.App.4th 1253; In re Tobacco Cases I, supra,
186 Cal.App.4th 42; and In re Tobacco
Cases I
, supra, 193 Cal.App.4th
1591, as well as the instant appeals.

id=ftn4>

href="#_ftnref4"
name="_ftn4" title="">[4] As we noted in In re Tobacco Cases I, supra,
186 Cal.App.4th at p. 45, Reynolds's "four advertisement pages essentially
bracketed five pages of Rolling Stone's editorial
content, titled 'Indie Rock Universe.'
(Some capitalization omitted.)
Rolling Stone created the
editorial pages, which consisted of hand-drawn illustrations of such things as
a 'rocket-powered guitar, a guitar-playing robot, [and] a planet with a human
mouth containing human-life teeth.'
There is no dispute that the images on the editorial pages were cartoons
under any definition."

id=ftn5>

href="#_ftnref5"
name="_ftn5" title="">[5] In designating the People as the
prevailing party, even though injunctive relief was unavailable because of
Reynolds's announcement at trial that it had ceased the Farm Rocks campaign,
the court relied on De La Cuesta v.
Benham
(2011) 193 Cal.App.4th 1287 (De
La Cuesta
), an unlawful detainer action.
De La Cuesta held the landlord
prevailed under section 1717 even though the tenant vacated the premises the
day before trial, and thus no injunctive or declaratory relief was available, as
the landlord recovered 70 percent of the back rent he sought. (De La
Cuesta
, at p. 1296.) The opinion
explains, "And then there is the reality of litigation, almost universally
recognized: Attorneys tend to err on the
side of overstating the extent of the claims being presented on their client's
behalves. If anything short of 'complete
victory' allows the trial court unrestricted freedom to ignore the >substance of a result, then trial courts
have the freedom to nullify the normal expectations of parties who enter into
contracts with prevailing party attorney fee clauses." (Id. at
p. 1295.) Reynolds asserts >De La Cuesta is factually inapposite,
but with or without the opinion our conclusion is the same.

id=ftn6>

href="#_ftnref6"
name="_ftn6" title="">[6] Over the People's objection, the trial
court granted Reynolds's motion to seal all information pertaining to the
hourly rates of its attorneys and the amount of fees it incurred. On our own motion, we ordered the records
unsealed after giving the parties notice and the opportunity to brief the matter. (Cal. Rules of Court, rule 8.46(f)(3).)

id=ftn7>

href="#_ftnref7"
name="_ftn7" title="">[7] An additional factor here is that
Reynolds's numerous unsuccessful pretrial motions on procedural issues, which
were unrelated to the merits of the unsuccessful Rolling Stone adjacency issue, naturally increased the People's
fees.

id=ftn8>

href="#_ftnref8" name="_ftn8" title="">[8] California
courts have applied Hensley to
section 1988 cases (Harman v. City and
County of San Francisco
(2007) 158 Cal.App.4th 407, 418 (>Harman)), and to state statutes found to
be analogous to section 1988. (See,
e.g., Mann v. Quality Old Time Service,
Inc.
, supra, 139 Cal.App.4th at
pp. 343-344 [Code Civ. Proc., § 425.16]; EPIC, supra, 190
Cal.App.4th 217 [Code Civ. Proc., § 1021.5].) Reynolds, however, cites no California
opinion applying Hensley's two-step
apportionment standard to contractual
attorney fees under section 1717. In
dicta, Harmon, supra, 158 Cal.App.4th
at p. 416, footnote 6, states the Hensley
standard "or the equivalent" has been applied to awards made
under section 1717. As authority, >Harmon cites Wood v. Santa Monica Escrow Co. (2007) 151 Cal.App.4th 1186, and
this court's opinion in Del Cerro Mobile
Estates v. Proffer
(2001) 87 Cal.App.4th 943, neither of which mentions >Hensley or an equivalent two-step
apportionment standard.








Description R.J. Reynolds Tobacco Company (Reynolds) challenges trial court orders issued after remand in the last appeal in this matter, which award the People of the State of California $2,943,920.63 in contractual attorney fees as the prevailing parties in an action to enforce a consent decree and final judgment (Consent Decree) entered on a master settlement agreement (MSA). Reynolds contends the court erred in its prevailing party determination because the People did not achieve "greater relief" on the contract as required by Civil Code section 1717 (section 1717), subdivision (b)(1)). Alternatively, Reynolds contends the court erred by applying market rates for San Francisco Bay Area attorneys when determining the lodestar amount of fees, instead of local San Diego market rates, and by not further reducing the lodestar amount in consideration of the People's partial success. We affirm the orders.
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