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Celestine v. FCA U.S. LLC

United States District Court, E.D. California

September 10, 2019

FCA U.S. LLC, et al., Defendants.



         Larry Celestine asserts that FCA U.S. LLC is liable for violations of the Song-Beverly act and fraudulent inducement under California law. The parties settled the underlying claims, and Plaintiff now seeks an award of attorney fees and costs. (Doc. 101) For the reasons set forth below, Plaintiff's motion is GRANTED in part, in the modified amount of $22, 585.35.

         I. Background

         Plaintiff purchased a new 2012 Dodge Durango on April 12, 2012. (Doc. 1-1 at 4, ¶ 9) According to Plaintiff, the vehicle “was delivered to [him] with serious defects and nonconformities to warranty[, ] and developed other serious defects and nonconformities to warrant including, but not limited to a defective [Totally Integrated Power Module].” (Id. at 23, ¶ 130)

         Plaintiff reports his vehicle “was factory-equipped” by Defendant with the Totally Integrated Power Module (“TIPM”), which “is the chief component in the … power distribution systems and consists of a computer, relays, fuses, and controls.” (Doc. 1-1 at 4, ¶¶ 12-13) According to Plaintiff, “The TIPM provides the primary means of voltage distribution and protection for the entire vehicle...” (Id., ¶ 13) Electrical systems receiving power from the TIPM included the vehicle's “safety systems, security system, ignition system, fuel system, electrical powertrain, and … comfort and convenience systems.” (Id., ¶ 14)

         Plaintiff contends the TIPM installed in his vehicle was faulty and failed “to reliably control and distribute power to various vehicle electrical systems and component parts, ” which caused the “check engine line [to] come[] on frequently” and “[i]rregular coolant loss.” (Doc. 1-1 at 4-5, ¶¶ 15-16) In addition, Plaintiff alleges the TIPM “is likely to cause a variety of electrical issues such as a loss of headlight function, and unexpected distractions, such as the vehicle's horn or alarm sounding while on a roadway, which may increase the risk of injury for the driver, passengers, or others on the roadway.” (Id. at 5, ¶ 17)

         According to Plaintiff, “FCA U.S. LLC had superior and exclusive knowledge of the TIPM defects, and knew or should have known that the defects were not known by or reasonably discovered by Plaintiff before [he] purchased or leased the Vehicle.” (Doc. 1-1 at 5, ¶ 19) Plaintiff reports: “FCA U.S. LLC vehicles have been plagued with severe TIPM problems for the last decade. As a result, FCA U.S. LLC has initiated multiple TIPM-related recalls to address safety or emissions concerns.” (Id., ¶ 21) Further, Plaintiff asserts the TIPM “defect is so widespread that… replacement parts have often been on national backorder, with drivers reporting from 2011 to 2014 that they had to wait weeks or months of have their TIPMs replaced.” (Id. at 6, ¶ 23) She alleges FCA UC LLC dealers and auto-technicians “advis[ed] many drivers to not drive their vehicles until the TIPM [was] replaced, due to safety risks.” (Id.) However, Defendant did not disclose the defect “prior to the sale of the Subject Vehicle to Plaintiff.” (Id. at 19, ¶ 106)

         In October 2015, “Plaintiff received a letter in the mail from the settlement administrator in a class action lawsuit informing Plaintiff that [he] was a member of a class of individuals for which a ‘class action settlement involving the Totally Integrated Power Module (TIPM)' had been reached.” (Doc. 1-1 at 18, ¶ 106) The letter informed him that the plaintiff in Velasco, et al. v. Chrysler Group LLC, Case No. 2:13-cv-08080-DDP-VBK (C.D. Cal) claimed the TIPM “installed in model-years 2011, 2012, and 2013 Dodge Durango and Jeep Grand Cherokee vehicles is defective and poses a safety hazard.” (Id. at 18-19, ¶ 106) Plaintiff contends “[t]his was the earliest date that FCA U.S. LLC made any attempt to notify [him] of any of the known defects in the TIPM7.” (Id. at 19, ¶ 106) Plaintiff “opted out of the class action settlement in Velasco and filed the instant action to pursue his individual rights.” (Id. at 22, ¶ 125)

         On November 22, 2016, Plaintiff filed a complaint in San Joaquin County Superior Court, Case Number STR-CV-IBC-2016-11864. (See Doc. 1-1 at 2) Plaintiff identified the following causes of action in his complaint: (1) breach of an express warranty pursuant to the Song-Beverly Act, (2) breach of an implied warranty pursuant to the Song-Beverly Act, and (3) fraudulent inducement. (Id. at 2, 23-28) Plaintiff's prayer for relief included, but was not limited to: general, special and actual damages; “recession of the purchase contract and restitution of all monies expended;” diminution in value; civil penalties totaling two times his actual damages, and reasonable attorney fees and costs. (See Id. at 28) Defendant filed its answer on December 29, 2016. (Doc. 1-4)

         On March 30, 2017, Defendant filed a Notice of Removal pursuant to 28 U.S.C. §§ 1332, 1441(a) and 1446(a), thereby initiating the matter with this court. (Doc. 1) Plaintiff filed a motion to remand the action to the state court on June 5, 2017. (Doc. 5) The Court determined it had diversity jurisdiction over the action and denied the motion to remand on August 4, 2017. (Doc. 15)

         The Court held a status conference to set a trial date with the parties on December 11, 2018. (Doc. 48) The pretrial conference was set for May 28, 2019, and the jury trial was set for July 15, 2019. (Doc. 49)

         On May 28, 2019, the Court held the pretrial conference. (Doc. 54) The Court ordered the parties to file any motions in limine no later than June 14, 2019; and to submit any trial exhibits no later than July 12, 2019. (Id. at 1) In addition, the jury trial was confirmed for July 15, 2019. (Id.) Pursuant to the deadlines ordered, the parties filed motions in limine on June 14, 2019, which the Court addressed by written order on June 26, 2019. (Doc. 78) On July 2, 2019, the Court issued an order on courtroom decorum while in trial. (Doc. 79)

         On July 15, 2019, the parties failed to appear for the scheduled jury trial. Only after the Court placed a phone call to Plaintiff's counsel was the Court advised for the first time that the case settled on July 1, 2019. Therefore, the Court thanked and discharged the entire panel of potential jurors that had appeared for service. The same date, the Court issued an order to all counsel of record and the parties to appear and show cause why sanctions should not be imposed “for the fees and expenses of summoning a jury, for the costs and expenses of extra court staff being on hand for the jury trial of this action, for the waste of judicial resources this conduct imposed and for their failure to comply with the Court's Local Rules.” (Doc. 81 at 2)

         The parties filed a response to the order to show cause on July 19, 2019, again indicating the action had settled on July 1, 2019.[1] (Doc. 83 at 2) According to the parties, “Plaintiff emailed a draft joint notice of settlement for Defendant's review and signature prior to filing with the Court” on July 12, 2019, but “[t]rial counsels for Defendants, Jeanette C. Suarez and Jeffery Fadeff, were not included in the July 12, 2019 email.” (Id.)

         The Court held its hearing to show cause on August 2, 2019. (Doc. 96) Plaintiff's counsel Larry Castruita, Daniel Kalinowski and Maite Colon appeared. Defendant's counsel Jeanette Suarez, Kristi Livedalen, Jeffery Fadeff, Scott Shepardson, and Jennifer Kuenster and Tina Dietrich were also present. Plaintiff and several of his attorneys of record, including Steve Mikhov, Russell Higgins, Sepehr Daghighian and Erik Schmitt, failed to appear. A civil contempt hearing has been set for September 16, 2019. (Doc. 99)

         On August 12, 2019, Plaintiff filed a motion for attorney fees and a bill of costs. (Docs. 100, 101) Defendant filed its objections to the bill of costs on August 19, 2019 (Doc. 102) and its opposition to the motion for fees on August 27, 2019 (Doc. 105). Plaintiff filed his brief in reply on September 3, 2019. (Doc. 106)

         II. Legal Standard

         In a diversity case, such as the matter before the Court, “the law of the state in which the district court sits determines whether a party is entitled to attorney fees, and the procedure for requesting an award of attorney fees is governed by federal law. Carnes v. Zamani, 488 F.3d 1057, 1059 (9th Cir. 2007); see also Mangold v. Cal. Public Utilities Comm'n, 67 F.3d 1470, 1478 (9th Cir. 1995) (noting that in a diversity action, the Ninth Circuit “applied state law in determining not only the right to fees, but also in the method of calculating the fees”).

         As explained by the Supreme Court, “[u]nder the American Rule, ‘the prevailing litigant ordinarily is not entitled to collect a reasonable attorneys' fee from the loser.'” Travelers Casualty & Surety Co. of Am. v. Pacific Gas & Electric Co., 549 U.S. 443, 448 (2007) (quoting Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247 (1975)). However, a statute allocating fees to a prevailing party can overcome this general rule. Id. (citing Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 717 (1967)). Under California's Song-Beverly Act, a prevailing buyer is entitled “to recover as part of the judgment a sum equal to the aggregate amount of costs and expenses, including attorney's fees based on actual time expended, determined by the court to have been reasonably incurred by the buyer in connection with the commencement and prosecution of such action.” Cal. Civ. Code § 1794(d).

         The Song-Beverly Act “requires the trial court to make an initial determination of the actual time expended; and then to ascertain whether under all the circumstances of the case the amount of actual time expended and the monetary charge being made for the time expended are reasonable.” Nightingale v. Hyundai Motor America, 31 Cal.App.4th 99, 104 (1994). The court may consider “factors such as the complexity of the case and procedural demands, the skill exhibited and the results achieved.” Id. If the court finds the time expended or fee request “is not reasonable under all the circumstances, then the court must take this into account and award attorney fees in a lesser amount.” Id. “A prevailing buyer has the burden of showing that the fees incurred were ‘allowable,' were ‘reasonably necessary to the conduct of the litigation,' and were ‘reasonable in amount.'” Id. (quoting Levy v. Toyota Motor Sales, U.S.A., Inc., 4 Cal.App.4th 807, 816 (1992)); see also Goglin v. BMW of North America, LLC, 4 Cal.App. 5th 462, 470 (2016) (same).

         If a fee request is opposed, “[g]eneral arguments that fees claimed are excessive, duplicative, or unrelated do not suffice.” Premier Med. Mgmt. Sys. v. Cal. Ins. Guarantee Assoc., 163 Cal.App.4th at 550, 564 (2008). Rather, the opposing party has the burden to demonstrate the hours spent are duplicative or excessive. Id. at 562, 564; see also Gorman v. Tassajara Dev. Corp., 178 Cal.App.4th 44, 101 (2009) (“[t]he party opposing the fee award can be expected to identify the particular charges it considers objectionable”).

         III. Evidentiary Objections

         Both parties object to evidence presented in support of and in opposition to the motion for fees and costs. (Doc. 105-1; Doc. 106-2) The Court has read and considered each objection made by Defendant and Plaintiff, and to the extent the Court considers any evidence to which there was an objection in its analysis, the objection is overruled.

         IV. Discussion and Analysis

         As a prevailing buyer, Plaintiff is entitled to an award of fees and costs under the Song-Beverly Act. See Cal. Civ. Code § 1794(d); see also Goglin, 4 Cal.App.5th at 470. Plaintiff seeks: (1) an award of attorneys' fees pursuant to the Song-Beverly Act in the amount of $58, 103.75; (2) a lodestar multiplier of 0.5, in the amount of $29, 051.88; and (3) actual costs and expenses of $9, 946.67. (Doc. 101 at 2) Thus, Plaintiff seeks a total award of $97, 102.30. (Id.) Defendant acknowledges that “Plaintiff is entitled to recover attorney's fees, costs, and expenses ... as the prevailing party, ” but argues the fee request “should be denied as unreasonably incurred.” (See Doc. 105 at 6)

         A. Fee Request

         Plaintiff seeks lodestar amounts of $25, 375.00 for the work completed by Knight Law Group and $32, 728.75 for work completed by Hackler Daghighian Martino & Novak, P.C., which was associated into the case as trial counsel. (Doc. 101-1 at 11-12)

         1. Hours worked by counsel

         A fee applicant must provide time records documenting the tasks completed and the amount of time spent. Hensley v. Eckerhart, 461 U.S. 424, 424 (1983); Welch v. Metropolitan Life Ins. Co., 480 F.3d 942, 945-46 (9th Cir. 2007). Under California law, a court “must carefully review attorney documentation of hours expended” to determine whether the time reported was reasonable. Ketchum v. Moses, 24 Cal.4th 1122, 1132 (2001) (quoting Serrano v. Priest, 20 Cal.3d 25, 48 (1977)). Thus, evidence provided by the fee applicant “should allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended.” Christian Research Inst. v. Alnor, 165 Cal.App.4th 1315, 1320 (2008). The court must exclude “duplicative or excessive” time from its fee award. Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4th 140, 161 (2006); see also Ketchum, 24 Cal.4th at 1132 (“inefficient or duplicative efforts [are] not subject to compensation”).

         Defendant objects to the hours reported, asserting “Plaintiff failed to offer any explanation ... for why it took two firms who claim to be experts in their field to handle this routine case.” (Doc. 105 at 7) According to Defendant, much of Knight Law Group's ... collective knowledge was wasted when it handed the case off to Hackler Daghighian Martino & Novak (“HDMN”) for trial purposes.” (Id. at 8) Further, Defendant objects to many “billing entries that reflect excessive rates and/or time” by Knight Law Group and HDMN. (Id. at 8; see also Id. at 8-13)

         a. Work completed by Knight Law Group

         The billing records submitted by Knight Law Group indicate the attorneys have expended 70.7 hours on this action, through the preparation of the motion for fees and costs. (Doc. 101-2 at 18-26) Defendant objects to the hours reported by Knight Law Group and contends there are “numerous… examples of billing entries that reflect excessive rates and/or time.” (Doc. 105 at 8)

         i. Initial case communications

         Defendant objects to the first three entries in the billing records, for “[i]nitial communication with client and evaluation of client's claims, ” analyzing the vehicle documentation, and communication with [Plaintiff]” by Mr. Mikhov, who reported a total of 2.2 hours for these tasks. (Doc. 101-2 at 19) Defendant argues: “These entries are undated, making their validity questionable. There is no evidence that a fee agreement was even in place when these tasks occurred.” (Doc. 105 at 8)

         Significantly, the challenged entries are the only entries related to the initial contact with Plaintiff and review of her documentation. (See Doc. 101-2 at 19) Presumably, such contact and review had to occur or there would be no case. Because counsel identified the tasks performed and the time to do so was reasonable, the Court declines to reduce the fee award based upon the failure to identify the date the tasks were performed.

         ii. Clerical tasks

         The Supreme Court determined that “purely clerical or secretarial tasks should not be billed at a paralegal or [lawyer's] rate, regardless of who performs them.” Missouri v. Jenkins, 491 U.S. 274, 288 n.10 (1989). As a result, courts have eliminated clerical tasks from fee awards. See, e.g., Nadarajah v. Holder, 569 F.3d 906, 921 (9th Cir. 2009); see also Harris v. L & L Wings, Inc., 132 F.3d 978, 985 (4th Cir. 1997) (approving the court's elimination of hours spent on secretarial tasks from the lodestar calculation).

         Defendant objects to the 0.2 hour reported by Russell Higgins to draft “Notice[s] of Change of Counsel” on January 13, 2017, and December 5, 2017. (Doc. 105 at 8-9; see also Doc. 101-2 at 19, 21) Defendant argues the drafting of such a document “is a clerical task and should be disallowed.” (Doc. 105 at 9) However, the preparation of the “Notice of Change of Counsel” was not a purely clerical task because counsel has an obligation to inform the Court when there are changes in the attorneys of record and the designations of counsel for service. See Local Rule 182. Further, Mr. Russell billed minimal time for the documents' preparation at 0.1 hour each. (Doc. 101-2 at 19, 21) Thus, the Court declines to reduce the fee award for Mr. Higgins on these grounds.

         In addition, Defendant objects to the 0.1 hour reported by Kristina Stephenson-Cheang “for reviewing the Notice of Appearance of ‘Kristi Levitan” on July 3, 2017. (Doc. 105 at 9) According to Defendant, “No attorney by that name has appeared in this case” and “this is at best an administrative task that should not have taken more than ten seconds.” (Id.) A review of the Court's docket indicates Plaintiff's counsel merely made a typographical error in the billing records, as Kristi Livedalen filed the “Notice of Appearance” on behalf of FCA U.S. LLC on July 3, 2017. (Doc. 11) Because counsel should stay informed as to the attorneys of record in an action and Ms. Stephenson-Cheang billed minimal time for her review of the document, the Court declines to reduce the fee award on these grounds.

         Finally, Defendant objects to the 0.6 hour billed by Steve Mikhov to “[r]eview and audit billing” on August 7, 2019, asserting it was “administrative time that should not be passed on [to] Defendant.” (Doc. 105 at 10; Doc. 101-2 at 24) As Defendant observes, this task is clerical in nature, and the Court will deduct the 0.6 hour from the lodestar calculation for Mr. Mikhov.

         iii. Internal communications and review

         As noted above, a fee applicant “should make a good-faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary.” Hensley, 461 U.S. at 434. The Ninth Circuit has “recognized that ‘the participation of more than one attorney does not necessarily constitute an unnecessary duplication of effort.'” McGrath v. County of Nevada, 67 F.3d 248, 256 (1995) (quoting Kim v. Fujikawa, 871 F.2d 1427, 1435 n.9 (9th Cir. 1989)). However, in general, counsel should not bill for internal communications and communicating with each other, as such time is unnecessary. See, e.g., In re Mullins, 84 F.3d 459, 467 (D.C. Cir. 1996); Robinson v. Plourde, 717 F.Supp.2d 1092, 1099 (D. Haw. 2010).

         As this Court previously observed, “many courts have ... reduced fee awards for time spent in ‘interoffice conferences' or other internal communications.” Gauchat-Hargis v. Forest River, Inc., 2013 WL 4828594 at *3 (E.D. Cal. Sept. 9, 2013) (citing, e.g., Mogck v. Unum Life Ins. Co. of Am., 289 F.Supp.2d 1181, 1194 (S.D. Cal. 2003) [reducing selected time entries because attorneys “billed an inordinate amount of time for interoffice conferences”]; Coles v. City of Oakland, 2007 WL 39304, at *10 (N.D. Cal. Jan.4, 2007) [“communication between attorneys may indicate unreasonable overstaffing such that a reduction in hours is appropriate”]) Notably, the Court's review of the billing records from Knight Law Group reveals a significant amount of time spent on the preparation of internal memorandums and summaries for co-counsel.

         For example, Alistair Hamblin attended the hearing on the motion to remand and then drafted the “results” of the hearing on August 1, 2017-prior to the Court issuing its written ruling on August 4, 2017-and his summary of the “results” was then reviewed by Steve Mikhov. (Doc. 101-2 at 20) Mr. Mikhov also billed for reviewing the “results” summarized and prepared by other attorneys at Knight Law Group following the initial scheduling conference and the settlement conference. (Id. at 20, 22) Likewise attorneys prepared, and reviewed, memorandums and summaries regarding the depositions of Plaintiff, Richard Schmidt, Barbara Luna, and Darrell Blasjo. (Doc. 101-2 at 22-23) Notably, summaries of the deposition frequently followed memorandums prepared by others. For example, after attending Plaintiff's deposition, Diane Hernandez prepared a ...

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