June 28, 2017

Colorado Court of Appeals: When Calculating Lodestar Amount, Court Should Have Applied Percentage Reductions to Total Hours Billed Before Applying Hourly Rate Multiplier

The Colorado Court of Appeals issued its opinion in Payan v. Nash Finch Co. on August 16, 2012.

Colorado Consumer Protection Act—Civil Theft—Fee Award—Lodestar Amount.

Plaintiffs appealed the trial court’s order awarding attorney fees in their favor against defendant Nash Finch Company, doing business as Avanza Supermarket (Nash Finch). The order was affirmed in part and reversed in part, and the case was remanded.

In June 2008, Nash Finch implemented a misleading pricing scheme in two of its Denver metro area supermarkets. Customers were led to believe they would receive an additional 10% savings compared to regular prices, when in fact, the cashier added 10% to the price at checkout. Plaintiffs were customers at these supermarkets who did not immediately realize they had paid more than the advertised price. Plaintiffs ultimately litigated their Colorado Consumer Protection Act (CCPA) and civil theft claims at trial. Three days before trial, Nash Finch filed an admission of liability and confession of judgment for the full amount of the statutory damages sought by plaintiffs, a total of $4,200. The trial court entered an order awarding plaintiffs attorney fees.

Plaintiffs asserted that the trial court’s fee award was in error in numerous respects. First, plaintiffs contended the trial court did not take the proper arithmetical steps in calculating the lodestar amount before it made subsequent adjustments to that amount. The trial court should have applied the percentage reductions to the total hours billed before applying the hourly rate multiplier. Therefore, the court’s calculation of the lodestar amount was in error, and that amount should be recalculated on remand.

Plaintiffs further contended that the trial court abused its discretion and committed legal error in making certain downward adjustments to counsel’s billed hours. A trial court retains discretion to reduce the hours billed based on block billing if the court is unable to determine whether the amount of time spent on various tasks was reasonable. Therefore, the court did not abuse its discretion in making such adjustments to counsel’s billed hours.

Plaintiffs next contended that the trial court abused its discretion by making a reduction for time spent on dismissed claims and the class action complaint. Plaintiffs failed to present any proof as to the number of hours actually spent on the dismissed claims. Therefore, the trial court’s decision was not disturbed on appeal.

Plaintiffs also argued that the trial court erred in making a reduction for lack of complexity. The trial court was in the best position to observe and determine the relative complexity of the issues and arguments presented to it. Therefore, the trial court’s reduction of 5% for lack of complexity was not an abuse of discretion.

Plaintiffs also contended that the trial court erred in determining reasonable hourly rates for plaintiffs’ counsel based on its view of appropriate staffing of the case. The trial court did not abuse its discretion in making such a determination.

Furthermore, the trial court correctly determined that (1) the rule of proportionality could not be applied; (2) the court’s 10% reduction in the lodestar amount for lack of public importance was not an abuse of discretion, because the record supports the conclusion that plaintiffs’ suit was not a factor in inducing Nash Finch to cease its improper conduct; and (3) the court did not abuse its discretion in denying plaintiffs’ motion for discovery of Nash Finch’s billing records, given that both experts were able to produce their reports without the aid of such discovery.

Summary and full case available here.

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