Concepcion v. Amscan Holdings, Inc.

223 Cal.App.4th 1309

168 Cal.Rptr.3d 40

Stefani CONCEPCION et al., Plaintiffs and Respondents,

v.AMSCAN HOLDINGS, INC. et al., Defendants and Appellants.

B247832

Court of Appeal, Second District, Division 7, California.

Filed February 18, 2014

See 1 Witkin, Cal. Procedure (5th ed. 2008) Attorneys, § 153 et seq.

APPEAL from an order of the Superior Court of Los Angeles County, Kenneth R. Freeman, Judge. Reversed and remanded. (Los Angeles County Super. Ct. No. BC454990)

Fox Rothschild, David F. Faustman, Cristina K. Armstrong and Tyreen G. Torner, San Francisco, for Defendants and Appellants, Amscan Holdings, Inc., Party City Corporation and P.A. Acquisition Corporation.

Stonebarger Law, Gene J. Stonebarger, Richard D. Lambert, Elaine W. Yan, Folsom; Patterson Law Group, and James R. Patterson, for Plaintiffs and Respondents, Stefani Concepcion et al.

PERLUSS, P.J.

Amscan Holdings, Inc., Party City Corporation and P.A. Acquisition Corporation (collectively Party City) appeal from the trial court's order awarding $350,000 in attorney fees and costs to class counsel after approving a settlement of coordinated cases alleging Party City had violated the Song–Beverly Credit Card Act of 1971 (Civ.Code, § 1747 et seq.). The settlement provided for distribution of $300,000 in merchandise certificates to individuals who had used a credit card to purchase any item from a Party City store in California between February 10, 2010 and March 11, 2010 and whose ZIP Code was requested and recorded as part of the transaction.

Party City contends class counsel failed to submit sufficient evidence to justify the fee award and, in particular, did not demonstrate the time expended by the six law firms involved was reasonably necessary and nonduplicative. Party City also argues the trial court's in camera review of class counsel's billing records to support the award was fundamentally unfair and denied it due process. We agree it was improper for the court to rely upon billing information not provided to Party City and which Party City had no opportunity to challenge. We reverse the fee and cost award and remand the matter for a new fee hearing at which class counsel presents, and the trial court considers, only evidence made available to Party City.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Class Action Complaints, Mediation and Settlement

Civil Code section 1747.08 (section 1747.08) prohibits retailers from requesting or requiring as a condition of accepting a credit card as payment that the cardholder provide “personal identification information” that is then recorded on the credit card form or otherwise. In Pineda v. Williams–Sonoma Stores, Inc. (2011) 51 Cal.4th 524, 527–528, 120 Cal.Rptr.3d 531, 246 P.3d 612, the Supreme Court held a ZIP Code constitutes “personal identification information” as that phrase is used in section 1747.08 and requesting and recording a cardholder's ZIP Code during a credit card transaction is unlawful even if no other information is provided.

The opinion in Pineda v. Williams–Sonoma Stores, Inc. was issued on February 10, 2011. On the following court day an eight-page, single-cause-of-action complaint was filed in Los Angeles Superior Court initiating Montion–Garcia v. Party City Corporation (Super. Ct. L.A. County, BC454990), a putative class action alleging Party City had violated section 1747.08 by routinely requiring customers to provide ZIP Code information to complete credit card purchases. The proposed class consisted of all individuals in California who had used a credit card for the payment of goods purchased from Party City during the one-year period prior to the filing of the complaint.

Two days later Hernandez v. Party City Corporation was filed in San Diego County Superior Court with substantially similar allegations in a 10–page, single-cause-of-action complaint on behalf of a similarly defined statewide class. The following week Concepcion v. Amscan Holdings, Inc. was filed in Placer County Superior Court containing the same basic allegations, class definition and single cause of action for violation of section 1747.08. ¹ A parallel federal class action lawsuit was filed the same week in the United States District Court for the Central District of California, Landeros v. Party City Corporation, CV11–01636 DMG (FFMx). The final complaint, Shughrou v. Amscan Holdings, Inc., was filed several months later, also in Placer County.

Party City demurred in both Hernandez and Concepcion, seeking to abate the actions on the ground another, earlier filed action ( Montion–Garcia ) was pending and also sought to dismiss or stay the federal action. On June 2, 2011 the district court ruled the federal case should proceed. On June 11, 2011 the initial three state court cases were coordinated in Los Angeles County Superior Court (JCCP 4678), and Party City withdrew its demurrers. On December 13, 2011 Shughrou v. Amscan Holdings, Inc. was joined as an add-on case to the coordinated action.

No formal discovery was conducted in the state actions prior to their settlement. However, Party City made available to class counsel the written discovery produced in the federal action pursuant to rule 26 of the Federal Rules of Civil Procedure. No class certification motions were filed.

A one-day mediation was conducted on January 23, 2012. One mediation brief was submitted on behalf of all plaintiffs in the four coordinated state actions and the related federal case. With the assistance of the mediator the parties reached a tentative class-wide settlement.

Party City provided an initial draft of the settlement agreement; the parties negotiated revised language; and plaintiffs filed an unopposed motion for preliminary approval of class settlement on May 11, 2012. The agreement defined the settlement class as all persons who had purchased merchandise from Party City stores in California using a credit card between February 14, 2010 and March 11, 2010 and whose personal information, including but not limited to a ZIP Code, was requested and recorded in connection with the credit card transaction. During this period Party City engaged in approximately 68,135 credit card transactions. (The agreement explained that Party City discontinued collection of ZIP Codes in early 2010, did not combine the ZIP Codes with any other information about the customer and did not use the ZIP Codes to obtain additional information about the customer.) The agreement provided that settlement class members who submitted a valid claim would receive a merchandise certificate (not a gift card) for up to $20.00 off a single purchase with no minimum purchase required. Party City agreed to issue a total of $300,000 in certificates ² and to bear all costs of providing class notice, as well as all costs associated with the administration of the settlement agreement. (The parties subsequently clarified that administration fees, attorney fees and costs are separate and independent of the $300,000 award to the class.)

The parties agreed the court could make an incentive award to each of the class representatives of $3,500. However, no agreement was reached as to the amount of attorney fees and costs to be recovered by class counsel. The settlement agreement provided, “The parties have met and conferred through arms-length negotiations and agreed that Class Counsel shall be entitled to an award of attorneys' fees and that Class Counsel shall file a motion with the JCCP Court for attorneys' fees, and Defendant will have the opportunity to oppose the motion as to the amount of attorneys' fees sought.”

The trial court preliminarily approved the class settlement on October 19, 2012. The order set a final approval hearing for January 22, 2013.

2. The Motion for Attorney Fees, Costs and Incentive Awards

On December 21, 2012 class counsel filed a motion for attorney fees and costs, as well as incentive awards to the representative plaintiffs of $3,500, with a hearing date of January 22, 2013. The motion sought fees under both the terms of the settlement agreement and the private attorney general doctrine codified in Code of Civil Procedure section 1021.5.³

Class counsel requested an aggregate award of attorney fees and costs of $350,000. Their moving papers, including declarations from attorneys at each of the law firms representing plaintiffs in the five lawsuits that had been filed, reflected a total of 720 hours in prosecuting the action to date. The amount of the award was based on the lodestar method—the time spent multiplied by the reasonable hourly compensation for the attorney involved—without an additional multiplier. The hourly rates claimed ranged from $700 per hour for one of the most experienced partners to $350 per hour for several associates. (An hourly rate was included for each lawyer.) Costs incurred through the date of the motion totaled $20,735.66.

In his declaration Gene J. Stonebarger of Stonebarger Law, APC, counsel for Concepcion, used nine general categories to organize and describe the total 159.1 hours of work performed by him and two associates. Mr. Stonebarger stated he had personally spent 131.4 hours at the rate of $650 per hour; one associate had spent 15.8 hours at the rate of $500 per hour; and a second associate had spent 11.9 hours at the rate of $350 per hour.⁴

Mark Van Buskirk on behalf of Westrup Klick, LLP, counsel for Montion–Garcia, testified his firm had spent a total of 109.7 hours on the cases, which he summarized in 12 categories. No per-lawyer breakdown was provided by Mr. Van Buskirk. H. Tim Hoffman of Hoffman & Lazear, counsel for Landeros, used nine categories and specified the total time billed by each of the four firm lawyers who had worked on the matter (more than 66 hours for the firm). Elaine A. Ryan of Bonnett, Fairbourn, Friedman & Balint, counsel for Hernandez, reported a total of 206.6 hours in six categories. The total time billed by each of the four firm lawyers was provided. Ms....