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Attorney's Fees: S.D. Cal.

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  • Attorney's Fees: S.D. Cal.

    In a brief opinion from California, the court reasons through Defendant's objection arguing: (1) the Order violates the Supreme Court’s prohibition against windfalls and use of contingency multipliers, (2) the Ninth Circuit has “opened the door” to District Court consideration of whether Plaintiff has a hidden contingency multiplier, and (3) the Order incorrectly interprets Ninth Circuit authority regarding available remedies.

    The Court disagrees with Defendant's assertions, instead finding:

    The Court concludes that Magistrate Judge Gallo’s reading of the relevant Ninth Circuit precedent is not clearly erroneous: Pursuant to binding Ninth Circuit precedent, even if the Agreement were to show evidence of windfall, the Agreement is irrelevant, as it cannot be used either way to inform the amount of attorney’s fees. See Quesada v. Thomason, 850 F.2d 537, 543 (9th Cir. 1988) (holding that district court abused its discretion in applying downward multiplier to lodestar amount based on contingency agreement); see also City of Burlington v. Dague, 505 U.S. 557 (1992) (holding that federal fee-shifting statutes do not allow for upward adjustments to lodestar amount based on contingency agreement).
    Defendant also argues that “[other] case law cited in the Order did not determine that contingency agreements cannot be considered to evaluate whether a retainer agreement is discoverable.” Obj. at 9. Although it is true that several cases relied on in the Order do not deal with contingency agreements directly, those cases do underscore the Ninth Circuit’s steadfast disfavor of using attorney-client agreements to determine attorney’s fees.1 Consequently, the Court does not find Magistrate Judge Gallo’s citation to those cases to be clearly erroneous.
    Finally, Defendant contends that the Order “ignored the multi-pronged holding of [Welch v. Metropolitan Life Insurance Co., 480 F.3d 942 (9th Cir. 2007)].” Obj. at 13. Defendant misleadingly cites to a portion at the end of the opinion stating that “the [district] court may clarify the extent to which . . . [the attorney’s rates] do in fact include a contingency factor and reduce the hourly rate accordingly.” Id. (citing Welch, 480 F.3d at 947–48.). But Plaintiff puts this quotation in context, revealing that the Ninth Circuit in Welch previously clarified that “[t]he district court correctly observed that contingency cannot be used to justify a fee enhancement, or an inflated rate” and that it was “unclear to what extent, if any, the requested . . . rates included a ‘contingency multiplier[.’]” Opp’n at 14–15 (quoting Welch, 480 F.3d at 946–48).
    Having read the opinion in its entirety, the Court finds that Judge Gallo’s reading of Welch is not clearly erroneous. In Welch, the Ninth Circuit remains firm in its prohibition regarding consideration of contingency agreements to determine reasonable attorney’s fees in cases of this nature.
    Ultimately, the Court Defendant's objection. The full opinion is attached below.
    Attached Files
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