Hess v. Volkswagen Group of America, Inc.

2017 OK CIV APP 35, 398 P.3d 27, 2017 Okla. Civ. App. LEXIS 15, 2017 WL 2960150
Court of Civil Appeals of Oklahoma·Decided March 13, 2017·No. Case Number: 114131·Published·Cited by 8 cases

Opinions

DEBORAH B. BARNES, PRESIDING JUDGE:

¶ 1 The trial court previously granted attorney fees against Defendant/Appellant/Counter-Appellee Volkswagen Group of America, Inc., (Volkswagen) in an amount exceeding $7 million in this multi-jurisdic-tional, class action law suit. In an appeal from that award, the Oklahoma Supreme Court concluded the trial court abused its discretion by failing to deduct the entirety of fees claimed in certain “failed Florida litigation” when calculating the lodestar fee; the Court also concluded the trial court abused its discretion by multiplying the lodestar fee of approximately $3.6 million by 1.9. See Hess v. Volkswagen of Am., Inc., 2014 OK 111, ¶¶ 38 & 39, 341 P.3d 662. Thus, the Court reversed the trial court’s order and remanded the case with instructions that “[]t]he attorney fees, as herein modified, are to be assessed against Volkswagen ... in a manner consistent with this opinion and as ordered by the trial court.” Id. ¶ 40. The Court emphasized that the total recovery in this case against Volkswagen of only $46,780 is “minuscule” when “the pay-out is spread across the entirety of the defined class[].]” Id. ¶ 35. However, the Court stated in its conclusion that “[]t]here is a strong presumption that the lodestar method, alone, will reflect a reasonable attorney fee.” Id. ¶ 39 (footnote omitted). The Court declined to address Volkswagen’s “due process challenge, as attorney .fees must be recalculated on remand.” Id. ¶ 1 n.1.

¶ 2 Volkswagen now appeals from the trial court’s Order awarding, on remand, an attorney fee in the amount of $983,616.75, together with expenses and postjudgment interest “from the date of Judgment of June 14, 2013, through the present date.” Volkswagen does not contest that the trial court, as instructed, subtracted the fees generated in the failed Florida litigation from the lodestar fee. Moreover, Volkswagen admits the trial court “then reduced the lodestar by 70%[ ].]” However, Volkswagen asserts on appeal that the new attorney fee award — an award which constitutes a mere 13.6% of the prior attorney fee award — is still too high. Volkswagen points out that the new award equals approximately “21.5 times as much money as ... recovered for the entire class,” and argues that the award constitutes both “an abuse of discretion under Oklahoma law” and “violates due process.” Volkswagen also argues the trial court erred in finding that postjudgment interest is to run from June 14, 2013, rather than from June 18, 2015 — the date of the Order which is the subject of the present appeal.

¶ 3 Plaintiffs/Appellees/Counter-Appellants Rajina Hess and Kelly Parsons, and Interve-nor Plaintiffs/Counter-Appellants Charles and Vivian Miller, individually and on behalf of persons similarly situated (collectively, Plaintiffs), counter appeal. They argue the trial court erred in reducing the lodestar fee.

¶ 4 For a more detailed recitation of the facts and procedure of this case leading up to the prior appeal, see Hess, 2014 OK 111, 341 P.3d 662. This case was also the subject of an even earlier appeal — as noted by the Supreme Court, “[ ]a] more detailed account of the underlying certification process can be found in Hess v. Volkswagen of America, Inc., 2009 OK CIV APP 84, 221 P.3d 132.” 2014 OK 111, ¶ 3 n.5, 341 P.3d 662.

STANDARD OF REVIEW

¶ 5 As stated by the Supreme Court in the prior appeal,

The reasonableness of attorney fees .depends on the facts and circumstances of each individual case and is a question for the trier of fact. The standard of review for considering the trial court’s award of an attorney fee is abuse of discretion. Reversal for an abuse of discretion occurs where the lower court ruling is without rational basis in the evidence or where it is based upon eiToneous legal conclusions.

Hess, 2014 OK 111, ¶ 9, 341 P.3d 662 (footnotes omitted).

[31] ANALYSIS

I. Is the new attorney fee award so high as to constitute an ' abuse of discretion?

¶ 6 The fundamental goal of the trial court in this case was to “arriv[ ]e] at a fair and reasonable fee for class counsel,” and the trial court’s upward or downward adjustment, if any, of the lodestar fee — i.e., the “fee arrived at by multiplying the attorney’s hourly rate by the time expended” — was to be based on application of those factors delineated by the Legislature in 12 O.S. Supp. 2013 2013(G)(4)(e). Hess, ¶ 10. Those factors, as summarized by the Supreme Court, are:

time and labor required; novelty and difficulty of the questions; skill required to perform the legal services; preclusion of other employment; customary fee; whethér the fee is fixed or contingent; time limitations; amount involved and results obtained; experience, reputation, and abilities of attorneys involved; undesirability of the case; nature and length of the professional relationship with the client; awards in similar causes; risk of recovery; and whether any benefits of the recovery take a non-cash form.

Hess, ¶ 10 (footnote omitted).1

¶ 7 The trial court accomplished this task in its detailed and well-reasoned Order. The trial court first calculated the lodestar fee: that is, “$3,800,757.00 in raw lodestar billings tendered by all class counsel, less the $522,034.50 attributable to the [ jfailed Florida] litigation, which is deducted from the lodestar,” to arrive at a lodestar fee of $3,278,722.50. The trial court noted that this amount is consistent with “the directives of the Supreme Court and the evidence previously received[ ].]” Volkswagen does not contest the fact that $3,278,722.50 constitutes the appropriate lodestar fee in this case.

¶ 8 The trial court further stated in its Order as follows:

Plaintiffs argue correctly that the Supreme Court concluded its opinion by stating that there is a strong presumption that the lodestar method alone will reflect a reasonable attorney fee. []Hess, ¶ 39.] [ Volkswagen] responds by correctly asserting that the Supreme Court stated in its opinion that “[ ]i]n all cases, the attorney fees must bear some reasonable relationship to the amount in controversy.” [ ]Id. ¶ 10.] The Supreme Court previously held that a lodestar adjustment based on results obtained can be downward as well as upward, and substantial in amount as held in Arkoma Gas Company v. Otis Engineering Corp., 1993 OK 27, 849 P.2d 392. Therefore it is apparent to the Court that it has latitude in deciding a fee award between the amounts sought by [ ]Plaintiffs] of $3,290,669.50 and that argued for by [ Volkswagen] of $91,560.00.

¶ 9 In Arkoma, the Supreme Court affirmed the trial court’s reduction of a lodestar fee of $24,627.23 down to $5,500. The plaintiff in that case originally sought $70,000 in damages. However, after a three-day jury trial the plaintiff recovered only $100. As stated by the Supreme Court,

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Hess v. Volkswagen Group of America, Inc., 2017 OK CIV APP 35, 398 P.3d 27, 2017 Okla. Civ. App. LEXIS 15, 2017 WL 2960150 (Okla. Ct. App. 2017).

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