Consumer Class Action Fee Request Slashed By Judge

by Hinshaw & Culbertson LLP
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A Northern California federal judge has significantly slashed attorney fees and hourly rates sought by plaintiffs’ lawyers in a consumer class action. His final order reduced fees down from the requested $2.5 million to $943,000.

In explaining his significant cuts, U.S. District Judge Jeffrey White of the Northern District of California found that three firms representing consumers in a suit against computer maker Acer America Corp. had billed too many hours, charged too much and overstated the complexity of the class action case.

The court finds that the amount Plaintiffs seek in attorneys' fees is not well supported," wrote White. "Upon review of the attorneys' declarations, the court finds that the attorneys were not efficient and that they spent excessive amounts of time on the various tasks listed. Moreover it appears as though there was significant duplication of work between the three firms."

Lawyers at those firms—Pearson, Simon & Warshaw; Hausfeld; and Gary, Naegele & Theado—had sought fees based on 4,633 hours of work in the case of  Wolph v. Acer. Noting the three firms had claimed credit for work on the same tasks, White concluded that 1,750 hours—or 38 % of the hours sought­—would have been reasonable.

Judge White noted the three firms spent an "exorbitant" 547 hours on attorney meetings and 184 hours on court appearances, "despite the fact that the court vacated all hearings" except for the hearing on final settlement approval and attorney fees.

The plaintiff consumers had accused Acer America of selling defective laptops in violation of California and federal consumer laws, including the Magnuson-Moss Warranty Act.

In their $2.5 million fee request, plaintiffs lawyers highlighted the technical complexity of the case, which alleged that Acer's notebook computers didn't contain enough memory to run a pre-installed operating system, Microsoft Vista Home Premium. As a result, Acer's notebooks ran slowly, crashed often and froze frequently, the suit alleged.

The lawyers for the law firms argued that the case was very complex and that it was difficult to prevail against Acer and its in-house team of lawyers, experts and engineers. Judge White disagreed. He stated: "The Court notes that while the facts underlying the plaintiff's claims were technically complicated, the legal analysis regarding their warranty and misrepresentation claims was not complex,"

Judge White also discounted the hourly billing rates requested by the firms. He noted that the supporting affidavits of the moving parties addressed the billing rates of lawyers in Los Angeles, Ohio, Washington D.C. and elsewhere. He stated that none of the lawyers provided a declaration from a lawyer in Northern California regarding the relevant market rates. The Judge then set rates agreeing to pay $175 per hour for paralegals, $350 for associates, $500 for partners and up to $550 for senior partners.

The law firms fared better on their request for costs. They recouped $171,769 of $172,753 in costs they had sought. Claimants had also sought $5,000 in incentive payments for two named plaintiffs, Lora and Clay Wolf. White awarded each $2,000, citing a lack of evidence they undertook "any great risk to either their finances or their reputation in bringing this action."

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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