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Flores v. FCA U.S. LLC

United States District Court, E.D. California

November 21, 2019

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



         Julian III Flores and Alejandra Flores asserted in their complaint that FCA U.S. LLC violated of the Song-Beverly act and committed fraudulent inducement under California law. The parties settled the underlying claims, and Plaintiffs now seek an award of attorney fees and costs. (Doc. 84) For the reasons set forth below, Plaintiffs' motion is GRANTED in part, in the modified amount of $23, 220.55.

         I. Background

         Plaintiffs purchased a Dodge Ram 1500 on September 4, 2011. (Doc. 1-1 at 5, ¶ 9; see also Id. at 36) Plaintiffs assert this vehicle “was delivered to [them] with serious defects and nonconformities to warranty and developed other serious defects and nonconformities to warranty including, but not limited to[, ] transmission, electrical, suspension, and engine defects.” (Id. at 27, ¶ 142)

         Plaintiffs report their vehicle “was factory-equipped” by Defendant with a 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 5, ¶¶ 12-13) According to Plaintiffs, “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)

         Plaintiffs contend the TIPM installed in their vehicle was defective 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, irregular engine noises, and leaks. (Doc. 1-1 at 6, ¶ 16) In addition, Plaintiffs allege 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., ¶ 17)

         According to Plaintiffs, “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 Plaintiffs before [they] purchased or leased the Subject Vehicle.” (Doc. 1-1 at 6, ¶ 20) Plaintiffs report: “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. at 7, ¶ 21) Further, Plaintiffs assert 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., ¶ 23) They allege FCA UC LLC dealers and auto-technicians were “advising many drivers to not drive their vehicles until the TIPM [was] replaced, due to safety risks.” (Id.) However, Defendant did not disclose the defect to Plaintiffs “prior to the sale of the vehicle (Id. at 21, ¶ 108)

         In August 2015, Plaintiffs “became aware of a class action settlement involving the [TIPM].” (Doc. 1-1 at 20, ¶ 108) Plaintiffs report they “researched the class action and its allegations that the TIPM is defective and poses a safety hazard.” (Id.) According to Plaintiffs, they “gave timely notice [their] claims against FCA U.S. LLC in the present action as a putative class member in … Velasco, et al v. Chrysler Group LLC, United States District Court, Central District of California, Case No. 2:13- cv-08080-DDP-VBK, which was filed on November 1, 2013.” (Id. at 22, ¶ 113)

         In the initial complaint filed in Velasco, the allegations were “based on the same subject matter and similar evidence” as those presented in this action. (Doc. 1-1 at 24, ¶ 125) Plaintiffs were putative class members in Velasco, but “were ultimately defined out of the final settlement class.” (Id. at 25, ¶ 130) Plaintiffs explain the class definition identified in the complaint “included Plaintiffs' 2012 Dodge Ram 1500.” (Id., ¶ 132) However, the final settlement class was defined as including: “All persons who purchased or leased a model- year 2011, 2012, and/or 2013 Dodge Durango or Jeep Grand Cherokee vehicle in the United States.” (Id. at 26, ¶ 134) Thus, Plaintiffs' vehicle was “not included in the final class definition.” (Id., ¶ 138)

         On October 21, 2016, Plaintiffs filed their complaint in Tulare County Superior Court, Case No. 267317. (See Doc. 1-1 at 3) Plaintiffs identified the following causes of action in their 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- concealment. (Id. at 3, 26-31) Plaintiffs' 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 twice their actual damages; and reasonable attorney fees and costs. (Id. at 31-32) Defendant filed its answer on November 17, 2016, asserting in part that “Plaintiffs' entire Complaint is moot based upon the fact that FCA U.S. LLC offered to repurchase Plaintiffs' vehicle, ” which would “provide[] Plaintiffs with full recompense for any alleged harm.” (Doc. 1-4 at 7, ¶ 22)

         On March 23, 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. 11) The Court determined it had diversity jurisdiction over the action and denied the motion to remand on August 30, 2017. (Doc. 17)

         The trial in the action was set for August 12, 2019. (Doc. 42) The parties prepared for the trial, and filed a joint pre-trial statement on June 12, 2019. (Doc. 46) Thereafter, the parties filed motions in limine, which were addressed by the Court on July 18, 2019. (Doc. 73) On August 1, 2019, the parties informed the Court that they “reached a settlement in principle, ” and requested the trial date be vacated “while settlement [was] pending.” (Doc. 76 at 2) Accordingly, the Court vacated the trial and ordered the parties to file a stipulation to dismiss the action no later than September 13, 2019. (Doc. 77) After the parties reported they had not come to an agreement on the amount of fees, Court granted the parties an extension of time, and directed Plaintiffs to either file a motion for attorney fees or dismissal documents no later than December 2, 2019. (Doc. 82)

         Plaintiffs filed a bill of costs on October 23, 2019. (Doc. 83) The same date, Plaintiffs filed their motion for attorney fees, costs, and expenses now pending before the Court. (Doc. 84) Defendant filed its objections to the bill of costs on October 30, 2019 (Doc. 86) and its opposition to the motion for fees on November 7, 2019 (Doc. 87) Plaintiffs filed their reply on November 14, 2019. (Doc. 88)

         II. Legal Standard

         “In a diversity case, 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. 87-3; Doc. 88-1) The Court has read and considered each objection made by Defendant and Plaintiffs, 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 prevailing buyers, Plaintiffs are entitled to fees and costs under the Song-Beverly Act. See Cal. Civ. Code § 1794(d); see also Goglin, 4 Cal.App.5th at 470. Plaintiffs seek: (1) an award of attorneys' fees pursuant to the Song-Beverly Act in the amount of $45, 951.25; (2) a lodestar multiplier of 0.5, in the amount of $22, 975.63; and (3) actual costs and expenses of $13, 182.90. (Doc. 83 at 1; Doc. 84 at 2) Thus, Plaintiffs request a total award of $82, 109.78. (Doc. 84 at 2)

         Defendant acknowledges that “Plaintiffs are entitled to recover attorney's fees, costs, and expenses, ” but argues the Song-Beverly Act “does not authorize a blank check” and the amount requested is unreasonable. (See Doc. 87 at 6) Defendant proposes the fee award to Plaintiffs reflect the following: (1) reduction of fees incurred for duplicative, unnecessary, and clerical tasks; (2) a deduction of 20 percent due to the practice of quarter-hour billing practice of Hackler, Daghighian, Martino & Novak; (3) and a reduction in the hourly rate to reflect rates reasonable in Fresno Division of the Eastern District. ( 6-13) In addition, Defendant contends a multiplier award is not appropriate in this action. (Id. at 14-17)

         A. Fee Request

         Plaintiffs seek lodestars in the amount of $29, 457.50 for the work completed by Knight Law Group and $16, 493.75 for work completed by Hackler Daghighian Martino & Novak, P.C., which “work[ed] with Knight Law on this case to prepare the case for trial.” (Doc. 84-1 at 11, 13; Doc. 84-2, Mikhov Decl. ¶ 2)

         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 by Plaintiffs' counsel, asserting “Plaintiffs fail to offer any explanation ... for why it took two firms who claim to be experts in their field to handle this routine case.” (Doc. 87 at 7) According to Defendant, “[t]here is inherent duplication of effort in [this] management style.” (Id.) Defendant asserts the submitted the invoices include duplicative tasks between the attorneys and firms; improper block billing; and attorneys billing for administrative or clerical tasks, which should be omitted from the lodestar calculation. (Id. at 8-10)

         a. Work completed by Knight Law Group

         The billing records submitted by Knight Law Group indicate the attorneys expended 79.8 hours on this action, through the preparation of the motion for fees and costs. (See Doc. 84-2 at 19-24) Defendant objects to the hours reported contends “most of the work was formulaic.” (See Doc. 87 at 14) According to Defendant, the invoice from Knight Law Group includes excessive time and unnecessary time related to document preparation and review, including duplicative efforts and clerical tasks. (Id. at 7-9)

         i. Work related to the motion to remand

         According to Defendant, Plaintiffs should not recover fees related to the motion to remand, which challenged this Court's diversity jurisdiction on the grounds that the parties were not diverse and the amount in controversy requirement of $75, 000.00 was not satisfied. The Court rejected both arguments and denied the motion on August 30, 2017. (Doc. 17) Defendant argues that “[b]ecause this motion was denied, it is unreasonable to pass these fees onto Defendant.” (Doc. 87 at 7-8)

         In reply, Plaintiffs argue that “contrary to FCA's position, the standard is not whether a motion was granted or denied, it is whether this work was reasonable.” (Doc. 88 at 8) Plaintiffs assert, “Whether the lawsuit was heard in state or federal court could have serious implications for Plaintiffs, such as the standard regarding a unanimous jury verdict in federal court to achieve a victory for Plaintiffs.” (Id.) Therefore, Plaintiffs contend “attempting to remand the case was reasonably necessary, despite the outcome of the motion.” (Id.)

         Notably, however, Plaintiffs fail to address the reasonableness of the time expended by each of the attorneys related to the motion for remand. Plaintiffs' counsel reports Alastair Hamblin spent 3.0 hours reviewing the file, drafting the motion to remand and related documents, and Plaintiffs' objection to the declaration of Kris Grueger filed in support of the removal. (Doc. 84-2 at 20) Mr. Hamblin also indicates he spent 0.5 hours to prepare for and attend the hearing on the motion to remand, and “[d]raft results” on the hearing for multiple cases. (Id. at 21) Once Defendant filed its opposition, Mr. Hamblin spent 1.3 hours reviewing the documents “in anticipation of drafting [a] Reply, ” which was never filed. (Id. at 21) Finally, Kristina Stephenson-Cheang billed for 0.1 hour for her review of the Court's order denying the motion to remand. (Id.)

         Significantly, as the billing records acknowledge, Plaintiffs' counsel filed motions to remand in “multiple cases” before this Court. (See Doc. 84-2 at 21) Similar arguments were presented to the Court in each motion challenging diversity jurisdiction.[1] The Court is unable to find the time related to drafting the motion, attending the hearing, or reviewing the opposition-particularly where no reply was filed- was reasonably expended by counsel. In addition, it appears the time reported by counsel was excessive, where Mr. Hamblin reports 0.2 hour to prepare a proposed order that less than half a page of text and identical in form to proposed orders for remand in other cases before the Court. Because Plaintiffs fail to establish the time was reasonably expended in this action, the Court will award only 1.5 hours related to the motion work by Mr. Hamblin, and the lodestar calculation below will be reduced by 3.3 hours for Mr. Hamblin. (See Doc. 84-2 at 20-21)

         ii. 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 … 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).

         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, as Defendant argues, a 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.

         Alastair Hamblin attended the scheduling conference on May 17, 2017, and then drafted the “results” of the conference, which were reviewed by Steve Mikhov. (Doc. 84-2 at 20) Mr. Mikhov also bills for his review of the “results” of other Court conferences and hearings attended by co-counsel, including the case management conference on February 9, 2017; the motion to remand on August 2, 2017; and the pre-trial conference on June 18, 2019. (Id. at 19, 21, 23)

         Attorneys also prepared and reviewed memorandums regarding the depositions of Plaintiffs, Stanley Gozzi, Thomas Lepper, and Barbara Luna. (Doc. 84-2 at 22-23) For example, after defending Plaintiffs' depositions and attending the vehicle inspection, Diane Hernandez drafted memorandums regarding the depositions and inspection. (Id. at 22) Amy Morse then billed 0.2 for her review of these documents. (Id.) Further, summaries of depositions followed memorandums prepared by others. Michael Morris-Nussbaum attended the depositions of Thomas Lepper and Barbara Luna and drafted memorandums regarding the depositions, which were then reviewed by Ms. Morse, who billed 0.2 hour for her review. (Id. at 23) Despite the prior memorandum regarding the depositions of Mr. Leeper and Ms. Luna, Kristina Stephenson-Cheang then reviewed the transcripts and drafted her own summaries, for which she reported 4.1 hours of work. (Id.)

         Because the preparation and review of these documents were clearly internal communications and duplicative in nature, the Court will reduce the lodestar by a total of 5.0 hours. See Gauchat-Hargis, 2013 WL 4828594 at *3; In re Durosette, 2012 WL 9123382 at *3 (E.D. Cal. Aug. 23, 2012) (finding a reduction of time appropriate in part due to the amount of time reported for “preparing memos to the lead partner on the case”). ...

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