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Tuesday, December 21, 2010

Duran v. U.S. Bank: Superior Court Issues $18 Million Fee Award After Class Action Trial

On December 17, 2010, in Duran v. U.S. Bank, Alameda County Superior Court Judge Robert Freedman issued an $18 million fee award to plaintiffs’ counsel following eight years of litigation and 53 days of trial before the court on misclassification claims by a class of 260 bank employees. The fee award, based on California Code of Civil Procedure section 1021.5, included a 2.25 multiplier.

The underlying case challenged the bank's alleged misclassification, under the outside sales exemption, of a class of 260 employees who provided banking services to small businesses. The case was tried to the court after the plaintiffs dismissed their Labor Code causes of action and proceeded solely on a claim for violation of the Unfair Competition Law (UCL). Cal. Business and Professions Code section 17200.

The Court earlier found that the employees were not properly deemed exempt and entered judgment in their favor for approximately $15 million in unpaid overtime and prejudgment interest. The bank has appealed the judgment.

The plaintiffs had two principal lawyers who sought and were awarded fees for 14,400 hours on the merits, and 168 hours on fee-related services. To show that their hours were reasonable, plaintiffs' counsel moved to compel defense counsel to provide its billing records. The Court ordered defense counsel to provide the hourly rates of its various counsel, the total hours spent by each attorney, and the total amount of attorneys’ fees incurred by Defendant. Those records showed that defense counsel had a total of 42 lawyers working on the cases and spent 22,000 hours.

The Court held that plaintiffs’ successful challenge to defendant's unlawful practices qualified class counsel to an award of reasonable attorneys’ fees under California’s private attorney general fee-shifting statute, Code of Civil Procedure §1021.5 because: (1) plaintiffs enforced important rights affecting the public interest; (2) the litigation conferred significant benefits on a large group of people; (3) plaintiffs' burden was greater than their individual stake in the action; and (4) the interests of justice supported an award against the defendant.

The Court awarded a lodestar of $8.3 million on the merits, awarding fees between $575 and $700 per hour. The Court then applied a 2.25 multiplier based on:
(1) the great risk Plaintiffs’ counsel took in litigating the case on an entirely contingent basis; (2) the negative impact the case had on counsel’s ability to maintain a practice; (3) the exceptional efficiency displayed in obtaining such an exceptional result with only two small law firms with just three attorneys; (4) the exceptional difficulties and complexities of maintaining this action in the face of over eight years of USB’s relentlessly aggressive defense tactics; (5) the public service Plaintiffs’ attorneys performed by enforcing California’s fundamental wage and hour laws, at no expense to the taxpayers; and (6) the fees awarded in comparable cases.
The Court did not apply an enhancement to fees incurred in bringing the motion for fees.

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