Opinion
A139566
01-18-2018
JOHNA PECOT et al., Plaintiffs and Cross-Respondents, v. DAVID WONG et al., Defendants and Cross-Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Francisco County Super. Ct. No. CGC10501168)
Plaintiffs brought this class action against the San Francisco Deputy Sheriff's Association (SFDSA), the San Francisco Deputy Sheriff's Foundation (the Foundation), and four individuals, alleging they misappropriated membership dues. Defendants brought a special motion to strike six of the seven causes of action, which the trial court granted. (Code Civ. Proc., § 425.16.) Defendants sought nearly $200,000 in attorney fees for their expenses in bringing the anti-SLAPP motion. (§ 425.16, subd. (c).) The trial court awarded them $20,000. On appeal, defendants contend the trial court abused its discretion in not making a larger attorney fee award. We shall affirm the order.
The named plaintiffs are Johna Pecot, Thomas Arata, Rich Owyang, Stephen Tilton, Joseph Leake, and Oscar Taylor. The named individual defendants are David Wong, Michael Zehner, Brian Savage, and Shedrick McDaniels, all allegedly current or former officers of the SFDSA. The cross-appellants are the individual defendants and the Foundation.
All statutory references are to the Code of Civil Procedure. Section 425.16 authorizes a party to bring a special motion to strike a cause of action arising from an act in furtherance of the right to petition or free speech. Such an action is commonly known as a "strategic lawsuit against public participation," or SLAPP, and section 425.16 is referred to as the "anti-SLAPP statute." (Navellier v. Sletten (2002) 29 Cal.4th 82, 85, fn. omitted.)
I. BACKGROUND
The individual plaintiffs are employees of the San Francisco Sheriff's Department and members of the SFDSA. The complaint alleged that SFDSA and its former president, defendant David Wong, "hatched a scheme to misappropriate the membership dues of the rank and file Sheriff's Deputy members of the SFDSA." The alleged scheme involved inducing members of the SFDSA to approve an increase in their dues, which would be placed in separate accounts designated for specific purposes. Rather than opening the accounts as promised, defendants allegedly misappropriated the funds and directed them to Wong, the Foundation, or other individuals or entities. The complaint alleged causes of action for breach of contract (first cause of action), interference with performance of contract (second cause of action), fraud (third cause of action), conspiracy (fourth cause of action), unfair competition (fifth cause of action), denial of access to corporate records (sixth cause of action), and removal of directors for cause (seventh cause of action).
Defendants brought an anti-SLAPP motion as to all causes of action except the sixth, on the grounds that the claims arose from protected acts in connection with union elections, advocacy, board votes and decisions, and union governance. The trial court granted the motion, ruling that each of the challenged causes of action arose from nonincidental protected activity and that plaintiffs had not shown they were likely to prevail.
Defendants then sought the fees they incurred bringing the anti-SLAPP motion. They argued that the motion required extensive amounts of time reviewing "boxes and discs of documents from 2010 going back to 2002" to establish that the basis of the challenged causes of action was not theft, but protected activity, such as votes by the union's board of directors to approve Wong's salary, by members of the union to increase their dues, and by Wong and the SFDSA to move from one union affiliation to another. Those documents included board minutes, correspondence, communications, notes, and advocacy pieces. Moreover, defendants contended, they had to spend substantial time showing that plaintiffs were not likely to prevail on the merits of their causes of action, either because they were identical to claims that plaintiffs had asserted against them in a federal court action, which had been dismissed with prejudice, or because they were barred by the statute of limitations.
Defendants contended the market rate for services provided by an attorney with their counsel's experience was $600 an hour and that he had worked 158.95 hours to prepare the anti-SLAPP motion. When the time spent by his officer manager and secretary were included, the total claimed cost, before a multiplier, was $99,195.75. Defendants also sought a fee multiplier of two, because the motion raised difficult issues, because of the skill displayed by counsel (particularly in persuading the court its tentative ruling was wrong), and because of the risk of losing the motion and the risk that counsel would not be paid.
Defendants submitted expert testimony that this rate was consistent with the normal and customary rate for similar services and that it would not be uncommon to require 150 hours to complete work on the motion.
In opposition to the request for attorney fees, plaintiffs submitted expert testimony that the reasonable hourly rate for a skilled attorney specializing in anti-SLAPP law in the San Francisco Bay Area was approximately $300 to $500 per hour, depending on the attorney's experience; that defendant's counsel had only "some" anti-SLAPP experience and only moderate success; that the anti-SLAPP motion was of only moderate complexity and could have been handled in 40 to 50 hours; and that $395 was a reasonable hourly rate. Plaintiffs argued a reasonable attorney fee recovery was $20,000.
The trial court awarded defendants attorney fees of $20,000. Defendants challenge this award on appeal as inadequate.
At the February 10, 2012 hearing on this matter, the court announced its intended ruling and instructed defendant's counsel to submit a proposed order. However, the trial court did not sign and file the written order until October 9, 2013. In the interim, the trial court had entered a judgment of dismissal after the anti-SLAPP motion, dismissing plaintiffs' claims against the Foundation and the individual defendants who were not named in the sole remaining cause of action; plaintiffs had appealed the judgment; and defendants had cross-appealed. Thus, as to the order granting attorney fees, it appears the defendants' appeal was premature. We shall treat defendants' notice of cross-appeal as a notice of appeal filed immediately after entry of the order granting attorney fees. (Cal. Rules of Court, rule 8.104(d)(2), (e).) Plaintiffs have abandoned their appeal, and the only issues before us are those raised by defendants in their cross-appeal.
II. DISCUSSION
Defendants argue the trial court failed to exercise its discretion appropriately in setting the attorney fee award.
A defendant who prevails on an anti-SLAPP motion is entitled to recover his or her attorney's fees and costs. (§ 425.16, subd. (c)(1).) We review such an attorney fee award for abuse of discretion. " ' "While the concept 'abuse of discretion' is not easily susceptible to precise definition, the appropriate test has been enunciated in terms of whether or not the trial court exceeded ' "the bounds of reason, all of the circumstances before it being considered. . . ." ' [Citations.]" [Citation.] "A decision will not be reversed merely because reasonable people might disagree. 'An appellate tribunal is neither authorized nor warranted in substituting its judgment for the judgment of the trial judge.' [Citations.] In the absence of a clear showing that its decision was arbitrary or irrational, a trial court should be presumed to have acted to achieve legitimate objectives and, accordingly, its discretionary determinations ought not be set aside on review." [Citation.]' [Citation.] Accordingly, an abuse of discretion transpires if ' "the trial court exceeded the bounds of reason" ' in making its award of attorney fees. [Citation.]" (Maughan v. Google Technology, Inc. (2006) 143 Cal.App.4th 1242, 1249-1250 (Maughan).)
In applying this standard of review, we bear in mind that " ' "[t]he 'experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong' ["]—meaning that it abused its discretion. [Citations.]' [Citation.] This rule applies in the context of fee awards under the anti-SLAPP statutes just as it does in the context of similar statutory fee-shifting provisions. [Citations.]" (Cabral v. Martins (2009) 177 Cal.App.4th 471, 491.) Moreover, the trial court is not required to issue a statement of decision with regard to a fee award, and " ' "[a]ll intendments and presumptions are indulged to support [the judgment] on matters as to which the record is silent, and error must be affirmatively shown." ' [Citation.]" (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140 (Ketchum).)
In setting attorney fees, the trial court considers a variety of factors. The fee award ordinarily includes compensation for all hours reasonably spent. (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 556.) "The basis for the trial court's calculation must be the actual hours counsel has devoted to the case, less those that result from inefficient or duplicative use of time. [Citation.]" (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 395 (Horsford).) Using the "lodestar" method, the court multiplies those hours by the prevailing hourly rate for private attorneys in the community conducting noncontingent litigation of the same type; it may then adjust the resulting figure based on a number of factors, including: "(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award." (Ketchum, supra, 24 Cal.4th at p. 1132; see also Horsford, supra, 132 Cal.App.4th at p. 395.)
Defendants contend the trial applied the wrong standard in exercising its discretion; that is, that rather than applying the lodestar factors, the court improperly based its decision on a theory of "proportionality." At the beginning of the hearing on the attorney fee request, the trial court explained the basis for its tentative ruling: "It's the proportionality issue. It's not even that you didn't spend the time. You may have spent the time, but it wasn't reasonable if you did spend this amount of time. And I'm in the business of reviewing motions. I've read far more motions than even you've had trials . . . I know I saw you had—you said you had over a hundred trials. I probably read over a hundred motions a week. I've read many, many anti-SLAPP motions. I have a pretty good sense of what I think is reasonable, in terms of how long it takes to file and prepare reply papers and to argue a motion. And you have some good stuff here, . . . lots of good stuff. [¶] . . . [¶] . . . You had some great stuff as to the protected activity point." Defense counsel pointed out that the trial court's tentative ruling on the anti-SLAPP ruling had been to deny the motion, and the court responded, "Nonetheless, in my view, it shouldn't have taken 160 hours to put forth the arguments here. It should have been a lot less; that's reasonable. That's not to say that you—that it was inappropriate for you to spend the time. That's your decision or your client's decision. It's, in my view, though, not appropriate for you to shift those costs to the defendant, the losing party here." The court reasoned, "This was not a four-month trial. This was a motion. This was a motion that was aided by what had transpired in the federal court action," and in particular by a report prepared in connection with that action (the Special Litigation Committee Report) that analyzed the bases and merits of the claims plaintiffs asserted.
The trial court also concluded that defense counsel's requested rate of $600 per hour was excessive, stating, "I see it all the time. This is well in excess of market rate. You are not an anti-SLAPP lawyer."
Defense counsel argued that under Horsford and other legal authorities, the trial court must undertake a step-by-step analysis: review the time records to see what work was done, determine whether there was duplication, determine the legal rate in the community, and consider the risk the attorney would not be paid. The court replied, "I've considered all of this. And I know that you may not get paid by your clients here, at least one of your clients has affirmatively told you they are not going to pay you." The court awarded $20,000 in attorney fees, calculated as 50 hours at $400 per hour.
We discern no abuse of discretion in this ruling. The trial judge had read the papers in support of the anti-SLAPP motion, was familiar with the evidence, and concluded, based on the record of the motion and on his own extensive experience with such motions, that 160 hours was excessive. The court's conclusion that 50 hours—or more than a full work week—was sufficient time to prepare a motion was not "clearly wrong." (Cabral v. Martins, supra, 177 Cal.App.4th at p. 491.)
The anti-SLAPP motion and the attorney fee application were decided by different judges.
Nor are we persuaded the trial court failed to consider the other relevant factors. There was evidence to support the trial court's conclusion that a rate of $400 per hour was reasonable. Although the court did not expressly make findings on the novelty and difficulty of the questions involved, the skill displayed in presenting them, and the contingent nature of any attorney fee, the court indicated that it was aware of and had considered the step-by-step analysis contemplated by Horsford. We presume the trial court took into account the relevant factors. (See Ketchum, supra, 24 Cal.4th at p. 1140.) In fact, the record indicates the court took these factors into account. The judge noted that counsel had "great stuff" in the anti-SLAPP motion, but concluded, based on his experience, that the motion could have been prepared more efficiently. Indeed, as our high court has explained, "a trial court should award a multiplier for exceptional representation only when the quality of representation far exceeds the quality of representation that would have been provided by an attorney of comparable skill and experience billing at the hourly rate used in the lodestar calculation. Otherwise, the fee award will result in unfair double counting and be unreasonable." (Ketchum, supra, 24 Cal.4th at p. 1139.) The record does not compel a conclusion that counsel met that standard. And although the court noted that at least one of the defendants was unwilling to pay counsel's fees, we are aware of nothing in the record showing defense counsel had a contingent fee arrangement with his clients.
This is not a case, such as Horsford, in which the trial court "failed generally to exercise its judicial discretion to accomplish the purposes of the law granting such discretion." (Horsford, supra, 132 Cal.App.4th at p. 396.) In Horsford, the trial court stated that the standard it was using to set a fee award was not "adequate compensation" but "reasonable attorneys' fees," and the record of the fee award hearings did not show the court "undertook its review of the fee issue with a focus on providing an award of attorney fees reasonably designed to fully compensate plaintiffs' attorneys for the services provided." (Id. at p. 395.) The transcript of the hearing here, on the other hand, indicates the trial court did provide an award that would, in its judgment, compensate defense counsel adequately for the services provided.
This case is more akin to Maughan, supra, 143 Cal.App.4th 1242, which also considered an anti-SLAPP fee award. Defendant sought $112,288.63 in attorney fees and costs, and the trial court reduced that amount to $23,000. (Id. at pp. 1248-1249.) In doing so, the court explained that it routinely dealt with attorney fee requests, that it had experience with how much time attorneys typically spent on difficult and complex matters, that the claimed hours—over 200 hours of work—were excessive, and that it believed a reasonable time to spend on the anti-SLAPP motion and fee motion was approximately 50 hours. (Id. at pp. 1249, 1251.) The appellate court concluded there was no abuse of discretion. In the course of doing so, it noted that the trial court had properly taken into account its own experience and expertise in handling complex civil cases. (Id. at p. 1251.) Similarly here, defendants have not shown the trial court's decision was "arbitrary, irrational, or beyond the bounds of reason." (Maughan, 143 Cal.App.4th at p. 1253.)
In their respondents' brief, plaintiffs argue extensively that defendants concealed from the trial court the existence of various documents showing that the risk that their counsel would not be paid was not as great as they had suggested to the trial court. We do not rely on these documents in affirming the trial court's order. In their reply brief, defendants draw our attention to events that took place after the ruling at issue here. We consider only the record before the trial court at the time it made its ruling. (In re Zeth S. (2003) 31 Cal.4th 396, 405.)
III. DISPOSITION
The order awarding attorney fees is affirmed.
/s/_________
Rivera, J. We concur: /s/_________
Ruvolo, P.J. /s/_________
Reardon, J.
Retired Associate Justice of the Court of Appeal, First Appellate District, Division Four, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. --------