Kerkeles v. City of San Jose

243 Cal.App.4th 88

196 Cal.Rptr.3d 252

Michael KERKELES, Plaintiff and Appellant,

v.CITY OF SAN JOSE, et al., Defendants and Respondents.

H040919

Court of Appeal, Sixth District, California.

Filed December 18, 2015

Counsel for Plaintiff/Appellant: Michael Kerkeles, Timothy D. McMahon, Jeffry W. Lochner, Corsiglia, McMahon & Allard, Matthew David Davis, Walkup, Melodia, Kelly, & Schoenberger

Counsel for Defendant/Respondent: City of San Jose et al., Clifford S. Greenberg, Deputy City Attorney

ELIA, J.

Plaintiff Michael Kerkeles appeals from an order awarding him a small fraction of the attorney fees he requested after settling his civil rights lawsuit against the City of San Jose (the City) and Matthew Christian, a police officer for the City. Plaintiff contends that the reduction of his fee claim was legally unsupportable because the court (1) arbitrarily awarded the fees at less than half the market rate without articulating a basis for its ruling, (2) erroneously determined that fees were unavailable under Code of Civil Procedure section 1021.5, (3) failed to address enhancement of the award under 42 United States Code section 1988 (section 1988 ), and (4) erroneously ruled that contingent risk could not be considered as an enhancement factor under state law. We find the court's reasoning to be inadequate and must therefore return this matter for reconsideration under the law governing analysis of section 1988 fee claims.

Background

The facts underlying this lawsuit are related in a previous opinion, Kerkeles v. City of San Jose (2011) 199 Cal.App.4th 1001, 132 Cal.Rptr.3d 143 (Kerkeles I ). Briefly summarized, defendants accused plaintiff in a criminal complaint of oral copulation with a developmentally disabled 22–year–old woman. At the preliminary hearing Christian testified based on a fabricated lab report, which led to plaintiff's being held to answer. After the false evidence was revealed, the district attorney dismissed the charges against plaintiff.

Plaintiff brought suit in 2008, naming both Christian and the City. In his complaint he alleged violation of his civil rights under 42 United States Code section 1983 (section 1983 ) and Civil Code section 52.1, abuse of process, malicious prosecution, false imprisonment, intentional and negligent infliction of emotional distress, negligence, and (against the City) negligent hiring, retention, training, supervision, and discipline. The superior court granted defendants' motion for summary adjudication of the civil rights claims and those of malicious prosecution and false imprisonment, and it granted judgment on the pleadings on the causes of action for negligent infliction of emotional distress, negligence, and negligent hiring and supervision. Plaintiff dismissed the remaining claims without prejudice, and judgment was entered for defendants.

In Kerkeles I this court reversed the judgment, based on defendants' failure to meet their initial burden to show entitlement to adjudication of the civil rights claims as a matter of law. We further found error in the court's refusal to permit plaintiff to amend his complaint to add a conspiracy claim. We therefore remanded the case "for reconsideration of plaintiff's amendment request and for trial or other disposition of the first two causes of action."

The parties thereafter prepared for trial, which, according to defendants, was set for March 25, 2013.¹ The day before trial, the parties settled the dispute. In exchange for plaintiff's release of the City and its employees (including Christian), the City agreed to pay plaintiff $150,000 and promised not to oppose any motion plaintiff might bring for a declaration of factual innocence of the criminal charges brought against him. Pertinent to the issues now on appeal was the following additional provision: "2. The parties agree that Plaintiff's counsel may seek an award of the costs incurred and reasonable attorney's fees pursuant to the Civil Rights Attorney's Fees Award Act of 1976, 42 U.S.C. section 1988. While defendants neither admit liability nor a [sic ] statutory violation under Section 1983, for the purposes of the fee application only, defendants agree that the court has jurisdiction to consider and rule on such fee application, that the fee application is properly before the court and that the court has the power to render an award. Defendants will not argue or contend that Plaintiff is not the prevailing party, nor will they imply that the nature of the settlement or its terms prevents Plaintiff from recovering attorney's fees under the statute. Any costs and fees so awarded shall be in addition to the compensation paid to Plaintiff pursuant to paragraph 1, above [specifying the damages payment]. The court retains jurisdiction to render an award of attorney's fees and costs. Following adjudication by the court of awardable fees and costs, the court shall issue judgment thereon, limited only to the issue of costs and fees."

In the second week of November 2013 plaintiff filed his motion for $1,448,397 in attorney fees and $75,255 in costs, under both section 1988 and Code of Civil Procedure section 1021.5. Plaintiff stated that the requested amount of fees was based on "2,419.9 compensable attorney hours spent on this matter for all meritorious work, utilizing reasonable hourly billing rates roughly 20% below established market rates[,] i.e[.,] ranging from $425 to $650 per hour." Plaintiff also requested a 1.5 multiplier to the lodestar amount "to account for the significant risk counsel has taken in litigating this hotly[ ]contested matter on a wholly contingent basis, with little prospect of settlement until the eve of trial, bringing the total requested fee to $2,172,595." With the enhancement and costs, the total amount plaintiff requested was $2,247,850. Subsequently, $102,998.75 was added for "fees-on-fees work," for a final request of $2,350,848.

Timothy D. McMahon, one of the two principal attorneys representing plaintiff, submitted multiple declarations in support of the motion. McMahon related his professional experience and described the expertise of all attorneys who had participated in the case on plaintiff's behalf. He reviewed the detailed history of the current litigation, including the summary judgment motion, the appeal, and trial preparation efforts. He noted that plaintiff's counsel had received no compensation for their work on this six-year-old case, and that their involvement had caused his firm to decline potentially lucrative new opportunities. Having analyzed the prevailing "non-contingent market rate" for the San Francisco Bay Area, McMahon calculated $795 per hour as appropriate based on several assumptions, including his "experience, reputation and success in civil litigation and trial work." He was, however, requesting only $650 per hour as a reasonable billing rate. Likewise, he estimated the market rate at $550 per hour for two other attorneys who had assisted in the case, but requested only $420 per hour for each of those attorneys. Based on counsel's "reduced hourly rates" and 2419.9 hours of work on the case, McMahon calculated the breakdown of the fee request as follows: McMahon, 996.4 hours ($647,660); co-lead counsel Matthew D. Davis, 870 hours ($565,500); Jeffry W. Lochner, 113.2 hours ($48,110); and Samuel Miller, 440.3 hours ($187,127). McMahon urged the court to recognize the "substantial impact on the public" following the dismissal of plaintiff's criminal case.²

Co-lead counsel Davis also submitted a declaration with the motion. He related his own litigation experience and that of Miller, whom Davis had hired to assist him with the case. Davis stated that he and McMahon had omitted dozens of hours that would otherwise have been compensable, and he had reduced or eliminated charges for time spent on arguably duplicative or administrative work or for tasks that did not require his "level of experience or expertise." Miller himself provided a declaration attesting to the substantial amount of "no-charged" time spent on the case.

In their opposition defendants maintained that this was "an ordinary case," which did not necessitate the expenditure of the number of hours claimed by plaintiff's counsel. Defendants asked the court to reduce the claimed hours by at least half and to reduce significantly the billing rate of all counsel involved. They also disputed plaintiff's entitlement to fees under Code of Civil Procedure section 1021.5, because (1) the settlement agreement provided for fees under only the federal statute, (2) the case did not involve issues of state law, and (3) the factual foundation of fees under Code of Civil Procedure section 1021.5 had not been met—particularly the criterion that the lawsuit confer a significant benefit on the public.

Defendants did not, however, object to specific billing entries with the exception of 23.85 hours they considered examples of "outrageous overbilling." Their suggested cut in hours for each stage of the litigation culminated in a calculation of all the hours claimed by plaintiff's attorneys, less only those 23.85 hours. What they actually recommended to the court was a reduction in each attorney's billing rate and a 50–percent reduction of the total lodestar amount.

The matter was extensively briefed and orally argued before the Honorable William J. Elfving, who had not presided over any of the preceding litigation. Both sides offered declarations not only from counsel but also from other practicing attorneys. Plaintiff submitted a declaration from Richard M. Pearl, 90 percent of whose law practice was "devoted to issues involving court-awarded attorney's fees," and one from Michael J. Haddad, a civil rights trial lawyer for 22 years with experience litigating civil rights cases, including cases against the City. In his declaration Pearl extensively catalogued former public interest cases, listing the hourly rates accorded by the court based on the number of years of each...