Barboza v. West Coast Digital Gsm Inc, B227692

JESUS BARBOZA, et al., Plaintiffs and Appellants,

v. WEST COAST DIGITAL GSM, INC., et al., Defendants and Respondents.

B227692

No. BC325051

COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

Filed: March 24, 2011

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

APPEAL from an order of the Superior Court for Los Angeles County, William F. Fahey, Judge. Reversed.

Barritt Smith, Douglas A. Barritt and Perry G. Smith for Plaintiffs and Appellants.

No appearance for Defendants and Respondents.

Plaintiffs and their counsel appeal from an order appointing attorney Donald Brigham as "Class Judgment Enforcement Counsel" under terms and conditions to which he did not agree, and allocating an award of attorney fees between Brigham and class counsel Barritt Smith based upon factual conclusions that are contrary to the record. We reverse the order and remand for further proceedings.

BACKGROUND

This is the fourth appeal in this case--a class action against West Coast Digital GSM, Inc. (WCD), brought by employees alleging wage and hour claims. Our brief summary of the facts leading up to the third appeal is based in large part on our prior opinions.

The class action complaint was filed in November 2004 against WCD and Victor Chapron, a director, officer, and managing agent of WCD.¹ Plaintiffs moved for class certification in August 2005. WCD opposed the motion. The trial court denied certification, and plaintiffs appealed.

Plaintiffs and WCD jointly requested a stay of the trial on the individual named plaintiffs' claims pending resolution of the appeal from the denial of certification, but the trial court denied that request and the trial went forward. The named plaintiffs prevailed on all but one of their claims.

Plaintiffs moved for attorney fees under Labor Code sections 218.5 and 1194, subdivision (a), for fees related to prosecution of their individual claims; they did not seek fees for work that related solely to class action issues, including time devoted to the class certification motion. The trial court disallowed certaincategories of the fees requested, including $16,807 in fees for trial preparation and trial, and awarded plaintiffs attorney fees in the amount of $49,393. The basis for the court's disallowance of fees for trial and trial preparation was the court's conclusion that two of the plaintiffs had rejected an informal settlement offer that exceeded their recovery at trial. Plaintiffs appealed from the portion of the court's order that disallowed fees for trial and trial preparation.

Shortly after plaintiffs filed their second notice of appeal (from the attorney fee order) we issued our decision in the first appeal (case No. B188151, filed Nov. 15, 2006), in which we reversed the trial court's denial of class certification. Several months later, in June 2007, plaintiffs filed another motion for class certification. The hearing on the motion, which was set for June 29, 2007, was continued to September 13, 2007, at WCD's request. On August 30, 2007, WCD filed an opposition to the certification motion, challenging the adequacy of the named plaintiffs and their attorneys to represent the class. On September 13, 2007, the trial court granted plaintiffs' motion, certified the class, and appointed plaintiffs' counsel, Perry G. Smith and Douglas A. Barritt of Barritt Smith LLP, to represent the class.

In the meantime, we issued our decision in the second appeal, case No. B193619, on June 25, 2007. We concluded that the trial court erred in disallowing fees for trial and trial preparation. Plaintiffs moved for their attorney fees for work on the appeal; the trial court awarded them $13,328.75 on November 29, 2007.

A few days later, Chapron filed a declaration in his capacity as an officer of WCD, regarding WCD's production of a class list. Chapron stated in the declaration that WCD "sold its assets to a third party and ceased its operations" on August 3, 2007.

In February 2008, upon stipulation by plaintiffs and WCD and approval by the trial court, plaintiffs filed a first amended complaint that did not change thecauses of action but simply added specifics to the prayer for damages; WCD waived its right to answer the amended complaint, allowing plaintiffs to take a default against WCD. Plaintiffs submitted evidence of damages sustained by the class, and the trial court entered judgment in favor of the class and against WCD in September 2008. The court awarded aggregate damages in the amount of $4,105,262 and prejudgment interest in the amount of $1,669,955, plus class representative enhancements to each of the three named plaintiffs. The court also awarded "reasonable attorneys' fees... pursuant to statute," to be determined upon the timely filing of a motion for fees.

Plaintiffs timely filed their motion for fees in November 2008. They sought statutory fees under Labor Code sections 218.5 and 1194, subdivision (a), in the amount of $136,152. The motion stated that this amount did not include the fees they had already been awarded following the trial of the individual named plaintiffs' claims and the second appeal.² They argued that the court should apply the "common fund" doctrine, by adding the statutory fees to the judgment and awarding plaintiffs' counsel a percentage of the total amount awarded to the class. Plaintiffs asserted that counsel should be awarded 20 percent of the common fund, for a total of $1,182,273.80. In the alternative, if the court declined to apply the common fund doctrine, plaintiffs argued that the trial court should apply a 4 multiplier to the lodestar of fees incurred on behalf of the class, and award attorney fees in the amount of $735,708.³

Shortly before the scheduled hearing on the attorney fee motion, plaintiffs asked the trial court to continue the hearing until the class members were notified of both the judgment and the motion, to give them an opportunity to be heard. The court granted plaintiffs' request and continued the hearing to April 8, 2009.

In February 2009, plaintiffs submitted a proposed notice to the class for approval by the trial court. The proposed notice informed the class of the judgment, but noted that WCD had sold its assets, ceased operations, and claimed it would eventually declare bankruptcy. The proposed notice also gave notice of the motion for attorney fees, noting that the motion seeks a fee of 20 percent of the total judgment, and stated that class counsel no longer had any obligation to pursue the matter (including enforcement of the judgment) on behalf of the class.

The trial court rejected the proposed notice based upon the statement that class counsel had no further obligation to pursue the matter. The court concluded "that by assuming the responsibility of pursuing claims on behalf of the class, class counsel assumed the obligation to pursue it until the end (i.e., enforcement of the judgment) and not just until judgment."

Plaintiffs and class counsel filed a notice of appeal from the trial court's order (the third appeal). That same day, plaintiffs filed a motion seeking approval of a new proposed notice to the class. The new proposed notice, like the original, informed the class of the judgment, WCD's sale of assets and financial position, and the motion for attorney fees. The section regarding class counsel's further obligations was modified, however, to reflect the trial court's ruling that class counsel has continuing obligations and plaintiffs' appeal from that ruling.

Plaintiffs filed an ex parte application to advance the hearing date on their motion to approve the new proposed notice, and to continue the hearing date on the attorney fee motion. The trial court did not rule on the application, but instead ordered plaintiffs' counsel to brief whether the action should be stayed pending the appeal from the court's earlier ruling on class counsel's continuing obligations. In their brief, counsel argued that the proceedings at issue--hearing the motion for attorney fees and providing notice to the class of the judgment and the hearing on the attorney fee motion--would not impact the effectiveness of the pending appeal, and therefore they should not be stayed. The trial court disagreed, finding that "[t]he issues raised [in the appeal] will necessarily affect all remaining issues before the court." Therefore, the court stayed all proceedings pending resolution of the appeal.

In November 2009, we issued our decision in the third appeal (case No. B215454, published at 179 Cal.App.4th 540). We affirmed the trial court's order, finding that "class counsel's job to represent the class in resolving class issues is not yet done" in light of the unusual circumstances of this case, in which the defendant/judgment debtor may not have sufficient recoverable assets to pay all or even part of the judgment and fees. We acknowledged that class counsel may need to associate in counsel with expertise in enforcing judgments due to the complexity of this matter, but we noted that "the cost of that association can be paid by the class from any recovery achieved."

After our decision was issued, class counsel endeavored to find an attorney with sufficient knowledge and experience to handle the complex enforcement issues that are likely to arise, who would be willing to associate into the case. Class counsel interviewed four attorneys, only one of whom was willing to take on the enforcement matter on a contingency basis. Because that attorney--Donald Brigham--anticipated that enforcement would require significantly more workand attention than would be required in an ordinary enforcement action, he required a 40 percent contingency fee. Class co...