Brian Wilson v. Tesla, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 23, 2020
• Docket: 19-16998
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS OCT 23 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

BRIAN WILSON; CARRIE HUGHES; No. 19-16998 KATIA SEGAL, on behalf of themselves and all others similarly situated, D.C. No. 3:17-cv-03763-JSC

Plaintiffs-Appellants, MEMORANDUM* v.

TESLA, INC., DBA Tesla Motors, Inc., a corporation; TESLA MOTORS, INC., a corporation,

Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California Jacqueline Scott Corley, Magistrate Judge, Presiding

Submitted October 14, 2020** San Francisco, California

Before: McKEOWN and NGUYEN, Circuit Judges, and WHALEY, *** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Robert H. Whaley, United States District Judge for the Eastern District of Washington, sitting by designation. Plaintiffs appeal the district court’s award of attorney’s fees, costs, and class

representative incentive awards pursuant to their settlement with Tesla, Inc.1 We

have jurisdiction pursuant to 28 U.S.C. § 1291. Reviewing for abuse of discretion,

see In re Optical Disk Drive Prods. Antitrust Litig., 959 F.3d 922, 929 (9th Cir.

2020) (attorney’s fees and costs); Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 958

(9th Cir. 2009) (incentive awards), we affirm.

1. In common fund cases, “[t]he choice of a fee calculation method is

generally one within the discretion of the trial court.” Laffitte v. Robert Half Int’l

Inc., 376 P.3d 672, 687 (Cal. 2016). Here, the district court was well within its

discretion in calculating attorney’s fees based on a lodestar rather than a

percentage of recovery. The district court’s stated reason, class counsel’s

“carelessness in the presentation of the settlement,” is amply supported by the

record.

2. A district court “is not required to include a fee enhancement to the

basic lodestar figure for contingent risk, exceptional skill, or other factors,

although it retains discretion to do so in the appropriate case,” and “the party

seeking a fee enhancement bears the burden of proof.” Ketchum v. Moses, 17 P.3d

735, 746 (Cal. 2001). The district court here did not abuse its discretion in

1 In accordance with the parties’ settlement agreement, Tesla takes no position on the merits of plaintiffs’ appeal.

2 declining to enhance the lodestar amount due to the quality of the representation.

See Golba v. Dick’s Sporting Goods, Inc., 190 Cal. Rptr. 3d 337, 351–52 (Ct. App.

2015) (affirming court’s decision not to apply fee multiplier in part because

“[m]ore appearances were made than were necessary because paperwork was not

complete on the first attempt”). The court’s finding that class counsel’s

performance would “[i]f anything . . . warrant a downward adjustment” to the

lodestar was not clearly erroneous.

3. A federal court’s “failure explicitly to consider the . . . factors” relevant

to a lodestar enhancement “[is] an abuse of discretion.” Stanger v. China Elec.

Motor, Inc., 812 F.3d 734, 740 (9th Cir. 2016) (per curiam). But see Taylor v.

Nabors Drilling USA, LP, 166 Cal. Rptr. 3d 676, 694 (Ct. App. 2014) (holding that

California trial court’s failure to “specify the factors it had considered” when

deciding whether to apply fee multiplier did “not compel a reversal”).2 Here, the

district court explicitly considered “the results of the action” obtained by class

counsel, “the contingent nature of counsel’s fee arrangement,” and “the skill

2 State law governs both plaintiffs’ “right to fees” and the “method of calculating the fees.” Mangold v. Cal. Pub. Utils. Comm’n, 67 F.3d 1470, 1478 (9th Cir. 1995). We assume without deciding that federal law governs whether a district court must state on the record the factors it considered in deciding whether to enhance the lodestar. See CRST Van Expedited, Inc. v. Werner Enters., Inc., 479 F.3d 1099, 1111 (9th Cir. 2007) (“[F]ederal courts sitting in diversity . . . apply state substantive law and federal procedural law.”); cf. Black v. Romano, 471 U.S. 606, 610 (1985) (characterizing as “procedural” the “requirement that the sentencing court explain its reasons” for revoking probation).

3 required in conducting the litigation and succeeding in the settlement.” There was

no procedural error. See Ketchum, 17 P.3d at 741–43 (explaining that California

courts frequently consider such factors).

4. An attorney’s “inefficient or duplicative efforts [are] not subject to

compensation.” Id. at 741. The district court did not abuse its discretion by

declining to award costs for airfare and lodging necessitated by class counsel’s

inadequate work and noncompliance with court orders.

5. Similarly, the district court did not abuse its discretion by declining to

award taxi costs incurred during class counsel’s unnecessary trips.

6. Because plaintiffs never requested $833.69 in costs related to the final

approval hearing, the district court did not abuse its discretion by not awarding this

amount.

7. The district court did not abuse its discretion by awarding only $5,000 of

the requested $10,000 per class representative for incentive payments. The court

did not clearly err in finding that the class representatives’ risk of reputational

injury from the litigation was “not so great as to justify deviating from the standard

$5,000 incentive award.” Although the court’s internet research constituted

improper factfinding, see de Fontbrune v. Wofsy, 838 F.3d 992, 999 (9th Cir.

2016), the court performed this research because plaintiffs’ evidentiary

submissions were inadequate to support their claim of reputational injury. See

4 Clark v. Am. Residential Servs. LLC, 96 Cal. Rptr. 3d 441, 457 (Ct. App. 2009)

(“[T]he trial court is not bound to, and should not, accept conclusory statements

about ‘potential stigma’ and ‘potential risk,’ in the absence of supporting

evidence . . . .”). Thus, the error was harmless.

8. The district court’s other reasons for declining to award extraordinarily

large incentive payments were logical and supported by the record. The court

found that “[a]n incentive award of $10,000 is approximately 4.1 times greater

than the average class member award of $2,440” and therefore “disproportionate.”

Even if the court had calculated this ratio using the actual attorney’s fees and costs

it awarded rather than the higher amounts estimated by the settlement

administrator, 3 the resultant ratio of 3.6 was still within the range that the district

court here cited as disproportionate in Burden v. SelectQuote Insurance Services,

No. 3:10-cv-05966, 2013 WL 3988771, at *6 (N.D. Cal. Aug. 2, 2013) (declining

request to award incentive payment that was 3.0 to 5.4 times “the average payment

to the class members”). The district court did not clearly err in finding that “none

of the [lead] plaintiffs played a particularly active role in the litigation” and that

doubling the standard $5,000 award would reduce the funds available to the rest of

the class.

3 It was not illogical for the district court to exclude the PAGA distributions, for which only a subset of the class was eligible, from the average award per class member.

5 9. A district court “must evaluate [incentive] awards individually.” Staton

v. Boeing Co., 327 F.3d 938, 977 (9th Cir. 2003). The district court did so here

and found that the differences between the class representatives’ asserted

participation and reputational harm were slight. The court observed that “[e]ach of

the plaintiffs attests that they spent between 75–90 hours on this action,” and

“each . . . attests that they performed . . . identical tasks.” This finding, which is

supported by the record, was a logical basis to award the same incentive payment

to each class representative.

AFFIRMED.