The opinion of the court was delivered by: Lifland, District Judge
On November 8, 2006, the Court ruled that the 25 California-citizen Plaintiffs in this action are entitled to attorneys' fees under California Code of Civil Procedure § 1021.5 from Defendant DaimlerChrysler Corporation ("Chrysler"). See Chin v. Daimler Chrysler Corp., No. 95-5569, slip op. at 7, 43-44 (D.N.J. Nov. 8, 2006). The factual and procedural history of the case is detailed in that opinion, and will not be recounted here. See id. at 1-7.
Now before the Court is Plaintiffs' application for fees under section 1021.5. Plaintiffs, represented by the law firms of Lite DePalma Greenberg & Rivas, LLC ("Lite DePalma"), Pomerantz Haudek Block Grossman & Gross, LLP ("Pomerantz"), the Law Offices of James V. Bashian, PC ("Bashian"), and Gruhin & Gruhin, PA ("Gruhin"), seek $11,465,020.26 in fees and expenses. Plaintiffs arrive at that number as follows:
Requested Attorneys' Fees
FirmHours BilledAve. Hourly RateLodestar
Proposed Multiplier: x 3.5
Total Attorney Fee Request: $11,289,008.50
Lite DePalma $38,517.20
Total Expenses: $176,011.76
Grand Total Fee & Expense Request: $11,465,020.26
Chrysler replies that this figure is unreasonably excessive, and asserts that $95,389.23 would be a proper award of fees and expenses. For the reasons that follow, the Court will grant Plaintiffs attorneys' fees and expenses in the total amount of $4,654,433.14.*fn1
To determine the proper amount of a statutory fee award under section 1021.5, California courts apply the so-called "lodestar adjustment method." See Ketchum v. Moses, 17 P.3d 735, 741-42 (Cal. 2001) (citing Serrano v. Unruh, 652 P.2d 985, 987-88 (Cal. 1982) ("Serrano IV")). Under this method, the Court must first set a lodestar figure that represents the product of the "'time spent and reasonable hourly compensation of each attorney . . . involved in the presentation of the case.'" Id. at 741 (quoting Serrano v. Priest, 569 P.2d 1303, 1316 (Cal. 1977) ("Serrano III")). Then, the lodestar figure may be adjusted with a multiplier based on certain factors in order to fix the basic "fee at the fair market value for the particular action." Id.
The lodestar adjustment method serves to "'anchor the trial court's analysis to an objective determination of the value of the attorney's services, ensuring that the amount awarded is not arbitrary.'" Id. at 743 (quoting PLCM Group, Inc. v. Drexler, 997 P.2d 511, 518 (Cal. 2000)). The goal of the method is to arrive at a fee award that is "fully compensatory." Id. at 742.
The lodestar equals (1) "the reasonable hours spent," (2) "multiplied by the hourly prevailing rate for private attorneys in the community conducting non-contingent litigation of the same type." Id. (citing Serrano IV, 17 P.3d at 986-87). The verified time records submitted by Plaintiffs' attorneys will provide the starting point for the Court's lodestar determination. See Horsford v. Bd. of Trustees, 33 Cal. Rptr. 3d 644, 673 (Cal. Ct. App. 2005). The "verified time statements of the attorneys, as officers of the court, are entitled to credence in the absence of a clear indication the records are erroneous." Id.
a. Reasonable Hours Spent
The California Supreme Court has explained that "absent circumstances rendering the award unjust, fees recoverable under section 1021.5 ordinarily include compensation for all hours reasonably spent, including those necessary to establish and defend the fee claim." Serrano IV, 652 P.2d at 997 (emphasis added). Lite DePalma, Pomerantz, Bashian, and Gruhin have submitted affidavits and a declaration detailing the 6,352.40 hours they allege were spent representing Plaintiffs from October 8, 1995 to the present.*fn2 Chrysler contends that, for numerous reasons, a large number of these hours were not reasonably spent. These objections can be categorized into two groups. First, Chrysler argues that hours spent on activities that did not specifically help achieve the recalls are not compensable. Second, Chrysler contends that a number of claimed hours are "not subject to compensation" because they represent "'padding' in the form of inefficient or duplicative efforts." See Ketchum, 17 P.3d at 741.
(1) Hours Allegedly Not Spent to Obtain the Sought After Relief
"Attorney time spent on services which produce no tangible benefit for the client is not time 'reasonably spent.'" Meister v. The Regents of the Univ. of Cal., 78 Cal. Rptr. 2d 913, 923 (Cal. Ct. App. 1998). The Court has the discretion to "'reduce the amount of the attorney fees to be awarded where a prevailing party plaintiff is actually unsuccessful with regard to certain objectives of its lawsuit.'" Olson v. Auto. Club of So. Cal., 44 Cal. Rptr. 3d 1, 7 (Cal. Ct. App. 2006) (quoting Sokolow v. County of San Mateo, 261 Cal. Rptr. 520, 530 (Cal. Ct. App. 1989)).
In doing so, the "'court may attempt to identify specific hours that should be eliminated, or it may simply reduce the award to account for the limited success.'" Id. (quoting Sokolow, 261 Cal. Rptr. at 530).
(a) Plaintiffs' Opposition to Chrysler's Notice of Recall
Chrysler argues that Plaintiffs' attorneys spent 188.01 hours seeking to "prevent the notice of the recall" Chrysler initiated for its vehicles with the Bendix 10 Anti-Lock Breaking System ("ABS"), and that Plaintiffs should not receive fees for these hours. Chrysler contends that this work "was arguably antagonistic" to Plaintiffs' interests insofar as the relief sought included a recall, and consequently produced no tangible benefit. (Chrysler's Mem. of Law in Opp'n to Pls.' Pet. for Award of Attys' Fees ("Def.'s Br."), 15-17; Decl. of John L. Trunko ("Trunko Decl."), Ex. F.)
Chrysler's characterization of Plaintiffs' work relating to Chrysler's notice of recall is misleading. Plaintiffs' attorneys did not seek to prevent Chrysler from executing the Bendix 10 recall. Nor did Plaintiffs' attorneys seek to prevent beneficiaries of the recall, including their own clients, from being notified. Plaintiffs sought, pursuant to Federal Rule of Civil Procedure 23(d)(2), a Court order adding language to Chrysler's recall notice making clear that recipients could take advantage of the recall without waiving any rights or remedies they may be entitled to as potential class members of the Chin litigation. (See Supp. Reply Decl. of D. Brian Hufford ("Hufford Reply Decl."), Ex. C, at 6-9, 11.) Far from being "antagonistic" to the proposed class, Plaintiffs' attorneys sought to protect their clients' interests.
However, Plaintiffs efforts were unsuccessful. On August 30, 1996, the Court issued an order denying Plaintiffs' motion. Therefore, even if not antagonistic to Plaintiffs' interests, Chrysler argues that this work did not contribute to any relief, and should not be compensated.
California courts have explained that the kind of limited litigation success that justifies a reduction in fees is best measured in terms of a party's failure to achieve ultimate litigation objectives, as opposed to mere unsuccessfully advanced legal theories in support of litigation objectives that were nevertheless achieved on other grounds. See Sokolow, 261 Cal Rptr. at 530-31; Sundance v. Municipal Court, 237 Cal. Rptr. 269, 272-73 (Cal. Ct. App. 1987); Olson, 44 Cal. Rptr. 3d at 7-8. Where "'a lawsuit consists of related claims, and the plaintiff has won substantial relief, a trial court has discretion to award all or substantially all of the plaintiff's fees even if the court did not adopt each contention raised.'" Olson, 44 Cal. Rptr. 3d at 7 (quoting Downey Cares v. Downey Comm'y Development Com., 242 Cal. Rptr. 272, 280 (Cal. Ct. App. 1987)); see also Sokolow, 261 Cal. Rptr. at 531 ("Where plaintiffs are entirely successful on all their claims for relief, it is not important that some of the legal theories used to support those claims were not found meritorious, so long as the plaintiffs did prevail."). The California Court of Appeal has recognized that
[c]ompensation should not be strictly limited to efforts that were demonstrably productive. "Lawyers for plaintiffs . . . must evaluate, accept and prosecute suits on the basis of the entire spectrum of theories that show early promise of vindicating their clients' rights. Every lawyer, indeed every judge, has pursued blind alleys that initially seemed reasonable or even professionally obligatory. To reward only the pursuit of a successful theory in cases such as this undercompensates the inevitable exploratory phases of litigation, and may also invite overly conservative tactics or even prohibit some high-risk but deserving actions entirely."
Thayer v. Wells Fargo Bank, N.A., 112 Cal. Rptr. 2d 284, 289 (Cal. Ct. App. 2001) (applying section 1021.5) (quoting Seigal v. Merrick, 619 F.2d 160, 164-65 (2d Cir. 1980)); see also Olsen, 44 Cal. Rptr. 3d at 7 (acknowledging "that litigants should be accorded breathing room to raise alternative legal grounds without fear that merely raising an alternative theory will threaten the subsequent request for attorney compensation"); Sokolow, 261 Cal. Rptr. at 531 ("Attorneys generally must pursue all available legal avenues and theories in pursuit of their clients' objectives; it is impossible, as a practical matter, for an attorney to know in advance whether or not his or her work on a potentially meritorious legal theory will ultimately prevail.").
For example, in Sundance, the plaintiffs' class-action lawsuit against the city of Los Angeles successfully "resulted in a court order significantly changing the procedures for the incarceration and treatment of public inebriates" arrested under California's public intoxication statute. 237 Cal. Rptr. at 271. The trial court awarded the plaintiffs attorneys' fees under section 1021.5, but in doing so excluded 458 hours of time spent unsuccessfully arguing that the statute was invalid as a waste of taxpayer money, and a violation of equal protection. Id. at 272. The California Court of Appeal reversed the exclusion of the 458 hours, noting that under section 1021.5, hours spent by a successful party on unsuccessful legal theories are not unreasonable per se. Id. "To reduce the attorneys' fees of a successful party because he did not prevail on all his arguments, makes it the attorney, and not the defendant, who pays the cost of enforcing that public right." Id. The court remanded so the trial court could exercise its discretion and determine whether the hours were reasonably spent. Id. at 273.
Here, as explained in the Court's November 8, 2006 opinion, Plaintiffs were successful parties under section 1021.5 by catalyzing the relief sought in their suit: free inspection, free replacement of malfunctioning ABSs, reimbursement for previous repairs, warranty extension, and notification of owners of affected vehicles. See, e.g., Chin v. Chrysler, No. 95-5569, slip op. at 14-15, 43-44 (D.N.J. Nov. 8, 2006). Chrysler estimated that the Bendix 9 and 10 recalls combined would affect approximately 403,000 vehicles, and would cost Chrysler approximately $30 million. (See Affidavit of D. Brian Hufford, dated Feb. 28, 2001 ("Hufford Aff."), Exs. 16, 20, 45.) Plaintiffs estimate that the inspections and repairs alone cost Chrysler upwards of $54 million. (See Supp. Reply Decl. of D. Brian Hufford ("Hufford Reply. Decl."), ¶ 8.) This is substantial relief. There is no evidence that Plaintiffs' attorneys' failed attempt to add language to the Bendix 10 recall notice in order to protect their clients' rights was a major litigation objective in and of itself; instead, it was an attempt to improve a positive result already obtained.*fn3 Therefore, the Court concludes that this failure does not constitute limited success with regard to the objectives of Plaintiffs' lawsuit, which would justify a reduction of fees. Instead, it was time reasonably spent in pursuit of an achieved litigation objective: notice to their clients informing them of the terms of the Bendix 10 recall.
(b) Plaintiffs' Post-Recall Announcement Merits Work
Chrysler argues that the 1,548.47 hours Plaintiffs spent litigating the merits of the case after the Bendix 9 recall announcement should be excluded from the lodestar award. (See Trunko Decl. ¶ 11 & Ex. E-2.) After Chrysler's April 17, 1997 announcement of the Bendix 9 recall, the litigation continued. Both parties continued to seek discovery from one another, the action was consolidated with another action against Chrysler on June 6, 1997, Plaintiffs filed a third amended complaint on April 16, 1998, and Plaintiffs continued to pursue their July 26, 1996 motion for class certification. On September 11, 1998, the Court denied Plaintiffs' motion under Rule 23(b)(3), effectively ending the merits phase of the action. See Chin v. Chrysler Corp., 182 F.R.D. 448, 451, 465 (D.N.J. Sept. 11, 1998). Chrysler contends that these efforts provided no benefit to Plaintiffs since they were unsuccessful and came after Plaintiffs had already secured their major litigation objectives with the announcement of the two Bendix recall campaigns.
Plaintiffs first counterargument asserts that the California Supreme Court's decision in Graham v. DaimlerChrylser Corp., 34 Cal. 4th 553 (2004) (Graham I), dictates that post-recall announcement merits work is compensable under California law. It does appear that the Graham trial court granted fees for post-recall announcement merits work, and that this grant was affirmed by the California Court of Appeal, and left undisturbed by the California Supreme Court. As explained in Graham I, the plaintiffs filed their class action on August 23, 1999, and Chrysler thereafter offered the relief the plaintiffs sought on September 10, 1999. Id. at 563. On September 27, 1999, Chrysler filed a demurrer. Id.; Graham v. DaimlerChrysler Corp., No. B189259 x-ref. B152928, 2007 Cal. App. Unpub. LEXIS 906, at *14 (Cal. Ct. App. Feb. 5, 2007) (Graham III). On November 1, 1999, the plaintiffs amended their complaint to reflect Chrysler's offer of relief. On January 27, 2000, the trial court granted Chrysler's demurrer and dismissed the complaint, ruling that Chrysler's agreement to "offer all purchasers the relief plaintiffs sought" mooted the case. Graham I, 34 Cal. 4th at 563; Graham III, 2007 Cal. App. Unpub. LEXIS 906, at *14. The Graham plaintiffs' November 1, 1999 amendment of the complaint, of course, came after Chrysler's offer of relief. Thus, like the post-recall announcement merits work at issue here, the attorneys' work on the merits came after the announcement of relief, but before the trial court's termination of the case.*fn4
The Graham trial court granted a lodestar of $329,620 for all work ($34,779 for merits litigation; $294,841 for fee litigation) performed from the filing of the complaint to October 18, 2000. This encompasses the September 10, 1999 to November 1, 1999 time period in which the amended complaint must have been worked on and was filed. See Graham I, 34 Cal 4th at 564; Graham v. DaimlerChrysler Corp., No. BC215624, slip op. at 14-15 (Cal. Sup. Ct. Dec. 23, 2005) (Graham II). Neither the California Supreme Court on appeal, nor the trial court on remand, made any mention that the lodestar was discounted for the work plaintiffs' attorneys performed in order to amend the complaint. The entire fee award was affirmed by the California Court of Appeal, see Graham I, 34 Cal 4th at 565, and the lodestar amount was left untouched by the California Supreme Court, which reversed on the issue of the proper multiplier to apply to the portion of the lodestar attributable to fee litigation, see id. at 578-84.
Nevertheless, the Court does not agree with Plaintiffs that Graham dictates that "[u]nder California law . . . there is no difference between the pre-campaign and post-campaign periods for purposes of a fee award or a fee multiplier." (Pls.' Mem. of Law in Supp't of Their Pet. for Award of Attys' Fees ("Pls.' Br."), 17.) As far as can be told from the Graham opinions, the issue of whether post-recall announcement merits litigation work is compensable was never raised by the parties, and thus, was not squarely presented to any of the California courts hearing Graham. In the absence of a state supreme court ruling on the issue, the Court must predict how the California Supreme Court would rule, while considering the decisions of lower state courts and district court cases interpreting California law. See, e.g., State Farm Mut. Auto. Ins. Co. v. Coviello, 233 F.3d 710, 713 (3d Cir. 2000).
Chrysler seeks to draw a parallel between this case and Meister v. The Regents of the University of California, 78 Cal. Rptr. 2d 913 (Cal. Ct. App. 1998). In that case, the California Court of Appeal found that a trial court did not abuse its discretion when it subtracted hours from a lodestar attributable to the plaintiff's attorneys' merits work performed subsequent to rejecting a settlement offer that would have provided greater relief than that later obtained from the court. Id. at 921, 925. The court reasoned that "[i]n a case where a rejected settlement offer exceeds the ultimate recovery, the plaintiff--although technically the prevailing party--has not received any monetary benefits from the postoffer services of his attorney," and thus, the postoffer hours were not "reasonably spent" because they "produce[d] no tangible benefit for the client." Id. at 923 (internal quotations and citations omitted). Chrysler argues that the same logic applies here since Plaintiffs' counsel procured no additional benefits for their clients with their worked performed from the April 17, 1997 Bendix 9 recall announcement to the September 11, 1998 denial of class certification.
Plaintiffs respond that their post-recall announcement merits work did provide a benefit: it allegedly "helped induce Chrysler to follow through on the recalls." (Pls.' Br. 18.) Without its suit's continued existence acting as a "watchdog," Plaintiffs claim, Chrysler could have ceased or delayed its voluntarily initiated recall programs. Chrysler replies that its Bendix recalls were not voluntary because NHTSA had the power to enforce the recalls, and thus, NHTSA was the true "watchdog."
The Court agrees with Plaintiffs. Meister is inapposite because had the plaintiff there accepted the settlement offer, the terms of the agreement would have been judicially enforceable pursuant to California Code of Civil Procedure § 664.6. See Assemi v. Assemi, 872 P.2d 1190, 1194-95 (Cal. 1994). As a result, the plaintiff would have been assured of receiving its promised relief, with the trial court acting as the "watchdog." Because the plaintiffs' attorneys turned down this relief, the only tangible benefit the attorneys' post-offer efforts could possibly have provided would have been greater relief. Since the attorneys failed to accomplish this, the attorneys' time was unreasonably spent.
In contrast here, the Bendix 9 and 10 recall announcements were not settlement offers; they were merely announcements. Plaintiffs could not "accept" these announcements in order to form a binding agreement, and thus, this Court could not force Chrysler to follow through with its announced recalls. Therefore, it is inaccurate to call the work Plaintiffs' attorneys performed after the April 17, 1997 Bendix 9 recall announcement, "post-relief" work, as Chrysler does. On April 17, 1997, despite Chrysler's announcement, Plaintiffs received no relief, and were guaranteed no relief. It is entirely reasonable, therefore, that Plaintiffs' attorneys continued to prosecute the merits of the case, and sought class certification in hopes of either convincing Chrysler to settle, procuring a Court order enforcing the terms of the Bendix recall campaigns, or simply ensuring that Chrysler followed through with its promised recalls. The tangible benefit Plaintiffs received is that the post-April 17, 1997 work helped ensure that they actually received relief, in addition to the mere promise of relief in the future.*fn5
Chrysler contends that NHTSA was the true "watchdog" ensuring the execution of the Bendix recall actions, not Plaintiffs. Chrysler correctly points out that despite voluntarily initiating the Bendix recalls, once it reported the existence of a safety-related defect to NHTSA, it was no longer "voluntary" for Chrysler to carry out the recalls. Under the Motor Vehicle Safety Act ("Safety Act"), 49 U.S.C. §§ 30118(a) and (b)(1), NHTSA may determine, pursuant to its own investigation, that a motor vehicle contains a safety-related defect. Once that decision is made, NHTSA must notify the manufacturer, and must order it to notify owners of the subject vehicles, and to remedy the defect. Id. § 30118(b)(2). Alternatively, if a manufacturer identifies a safety defect on its own, as Chrysler did here, it must notify NHTSA and owners, purchasers and dealers of the defect. Id. § 30118(c). Regardless of whether the safety-related defect is identified by NHTSA or by the manufacturer, the manufacturer is required to remedy the defect free of charge by either repairing it, replacing it, or by refunding the purchase price. Id. § 30120(a)(1). The Safety Act requires the manufacturer to file a copy of its program for remedying the defect with NHTSA, id. § 30120(d), and the Safety Act gives NHTSA the authority to "order the manufacturer to take specified action" to remedy the safety-related defect, id. § 30120(e).
To this extent, NHTSA did indeed act as a watchdog over Chrysler's execution of its Bendix recalls. However, Plaintiffs' attorneys' continued prosecution of the merits of the case after the Bendix 9 announcement provided their clients two tangible benefits over and above the recall oversight provided by NHTSA.
First, counsels' efforts served to ensure that Chrysler followed through on two aspects of its Bendix 9 and 10 repair campaigns that NHTSA had no authority to enforce: its promise to reimburse owners for previous repairs of the Bendix ABSs, and its promise to extend the warranty on Bendix ABS components. See Chin, No. 95-5569, slip op. at 15, 28, 33, (D.N.J. Nov. 8, 2006). NHTSA can only require a manufacturer to repair or replace a defective vehicle, or to refund the defective vehicle's purchase price. 49 U.S.C. § 30120(a)(1)(A). Indeed, this fact was key in the Court's decision finding that Plaintiffs' suit was a catalyst for the relief provided by Chrysler despite Chrysler's obvious desire to also end NHTSA's investigations into the Bendix 9 and 10. Chin, No. 95-5569, slip op. at 27-30, 38 (D.N.J. Nov. 8, 2006).
Second, as to the aspects of the Bendix repair campaigns that NHTSA could enforce, a settlement or Court order mandating such relief would be far more valuable to Plaintiffs than Chrysler's NHTSA-supervised promise to deliver such relief. Chrysler has so argued. In Hanlon v. Chrysler Corp., 150 F.3d 1011, 1018 (9th Cir. 1998), Chrysler voluntarily initiated a service action to replace rear liftgate latches on a number of its minivans, ending a NHTSA preliminary investigation into the safety of the latches. Nevertheless, several months later Chrysler negotiated a settlement with the plaintiffs of a class action suit filed against Chrysler over the latches, effectively agreeing to provide the same relief that Chrysler had already informed NHTSA that it would voluntarily carry out. Id. at 1018, 1027 ("The settlement presented to the district court obligates Chrysler to make the minivans safe."); see also Joint Decl. of Hufford and Lite ("Joint Decl."), Ex. M, at 7 (Chrysler's reply memorandum in support of the Hanlon settlement, stating that "[t]he class benefits under the [Settlement] Agreement include: Chrysler enters into a binding contract to perform its previously-announced Service Action"]. The Hanlon parties submitted the settlement agreement to the District Court for approval. Id. at 1018. In arguing that the settlement was fundamentally fair, adequate, and reasonable under Fed. R. Civ. P. 23(e) against various objectors, Chrysler explained why the plaintiff class would benefit from the settlement despite the fact that its NHTSA-supervised recall action had already started:
In short, under the [Settlement] Agreement, Class Plaintiffs and Chrysler entered into an enforceable contract to replace the liftgate latch on every 1984-95 Minivan. Further, and upon approval of the Agreement, this contractual commitment is transformed, as contemplated, into an enforceable, final judgment of this Court. . . . Moreover, through the Agreement, Chrysler committed to all of the above. Yet prior to signing this contract, Chrysler's Service Action was a voluntary effort.
Therefore, while the Service Action alone constituted a sincere pronouncement by Chrysler, there was no legally-enforceable agreement, order of NHTSA, or judgment. However, this will certainly not be the case if this Court approves the Agreement and enters its judgment. . . . As a result, through the Agreement, all class members can receive a legally-enforceable contractual commitment that Chrysler will provide NHTSA-approved replacement latches free of charge. This precludes any delay of the Service Action [resulting from disputes between Chrysler and NHTSA] and precludes Chrysler from litigating the issue of the design of the replacement latch.
(Joint Decl., Ex. M, p. 13-14) (emphasis in original).
Chrysler's argument lucidly demonstrates the advantage of having a settlement agreement or Court order enforcing relief, over mere-NHTSA supervised, voluntarily provided relief. The District Court approved the Hanlon settlement, and the Ninth Circuit affirmed, observing that the settlement permitted Plaintiffs to return to court if Chrysler failed to meet its service action obligations. See Hanlon, 150 F.3d at 1027. Chrysler's protest that Hanlon is inapposite because it agreed to pay attorneys' fees in that case is beside the point. Chrysler's argument in Hanlon reinforces the Court's conclusion that Plaintiffs' attorneys' hours spent litigating the merits after the Bendix 10 and 9 recall announcements were reasonably spent because the announcements provided Plaintiffs no assurance that they would receive their relief in a timely manner, or at all. In the event Chrysler did renege on its ...