In re Tobacco Cases I
Filed 5/8/13 In re Tobacco Cases I 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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)
ORDER MODIFYING OPINION
[NO CHANGE IN JUDGMENT]
THE COURT:
It is ordered that the opinion filed
herein on April 26, 2013 be modified
as follows:
1. On page 18, the first full
sentence of the first full paragraph, the name "Daniel M. Pearl" is
changed to "Richard M. Pearl" so the sentence reads:
The
people's expert on attorney fees, Richard 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."
There
is no change in the judgment.
McCONNELL, P. J.
Copies to: All parties
Filed 4/26/13 (unmodified
version)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.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 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.
FACTUAL AND PROCEDURAL BACKGROUND
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 imperviousness to
pain or 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.
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,
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,
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
[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
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." (
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,
"[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,
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.' " (
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." ' " (
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."
Reviewing the
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
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
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,
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
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 [
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,
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.
address Reynolds's argument the People are not entitled to costs because they were
not the prevailing parties.
II
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.' " (
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." (
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,
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
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,
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.
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
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 (
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 (
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,
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. (
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,
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.
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,
"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." ' " (
Reynolds cites the
trial court's initial order on attorney fees, which states: "The second issue is whether the fees
should be apportioned. In
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
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,
1294), which Reynolds did not make.
Thus, to any extent the
particular two-step Hensley apportionment
standard may be applicable to section 1717,
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.,
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.
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.
name="_ftn2" title="">[2] The campaign was also sometimes called
Camel Farm, but for consistency we use Farm Rocks throughout the opinion.
