RUTH M. MULLER-MORENO v. RICHARD MALOUF

(NOTE: The status of this decision is .)
 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5722-06T35722-06T3

RUTH M. MULLER-MORENO, KIMBERLY A. ALLEN and STEPHANIE FIGUEROA, on behalf of themselves and all others similarly situated,

Plaintiffs-Respondents/

Cross-Appellants,

v.

RICHARD MALOUF; RICHARD MALOUF d/b/a MALOUF AUTO GROUP; MALOUF

AUTO GROUP d/b/a MALOUF LINCOLN MERCURY INC., MALOUF FORD, INC.,

MALOUF BUICK-PONTIAC-GMC TRUCK, INC. and MALOUF LEASING AND RENTAL CORPORATION; MALOUF FORD, INC; MALOUF LINCOLN MERCURY, INC. f/k/a MALOUF DODGE, INC. and MALOUF HYUNDAI, INC.; MALOUF BUICK-PONTIAC-GMC TRUCK, INC. f/k/a MALOUF BUICK-GMC TRUCK, INC. and MALOUF BUICK, INC.,

Defendants-Appellants/

Cross-Respondents.

________________________________

 

Argued: October 16, 2008 - Decided:

Before Judges Cuff, Fisher and C.L. Miniman.

On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Middlesex County, Docket No. L-4464-02.

Mark P. Ciarrocca argued the cause for appellants (Ciarrocca & Ciarrocca, attorneys; Mr. Ciarrocca, of counsel; Paula C. Nunes, on the brief).

Andrew R. Wolf argued the cause for respon dents (Galex Wolf, LLC attorneys; Steven A. Skalet (Mehri & Skalet, PLLC) of the Wash ington D.C. bar, admitted pro hac vice; Mr. Wolf and Mr. Skalet, on the brief).

PER CURIAM

This appeal requires us to decide whether the award of $907,865.79 in counsel fees in this class action was consistent with the standards established by Furst v. Einstein Moomjy, Inc., 182 N.J. 1 (2004), and Rendine v. Pantzer, 141 N.J. 292 (1995). The judge set the lodestar at $626,114.33 and enhanced that sum by forty-five percent. Defendants contend that the judge abused his discretion both when he set the lodestar and when he enhanced it. Plaintiffs assert the judge did not abuse his discretion in either respect and that defendants are seeking to mire their counsel fee application in a second round of liti gation, contrary to Furst, supra, 182 N.J. at 24-25. Plain tiffs' cross-appeal seeks interest on the fee award plus an award of appellate fees and costs.

I.

The class-action complaint in this matter was filed on April 30, 2002, and sought damages from defendants, all automo bile dealers, for violations of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20; the Truth-in-Consumer Con tract, Warranty and Notice Act (TCCWNA), N.J.S.A. 56:12-14 to -18; and regulatory requirements for documentary and predelivery fees, N.J.A.C. 13:45A-26B.2; and for equitable fraud, common-law fraud, failure to deal in good faith, and unjust enrichment. Plaintiff Ruth M. Muller-Moreno alleged that she purchased a 2000 Mercury Sable from defendants and that they violated the CFA by overcharging her for title and registration fees and vio lated the TCCWNA by failing to itemize the overcharges and by failing to notify consumers of their rights. Similar allega tions were made by the other named plaintiffs in the amended complaint.

Defendants answered the complaint on June 26, 2002, and the parties then engaged in discovery and motion practice. A class of about 41,657 members was certified on September 19, 2003, and partial summary judgment was granted to plaintiffs on February 3, 2005. The judge found that defendants' overcharge of offi cial motor vehicle fees violated the Automobile Sales Practices Regulations, N.J.A.C. 13:45A-26B.2(a)(2), and the CFA. He also found that the failure to itemize that overcharge violated N.J.A.C. 13:45A-26B.2(a)(2)(i) and the TCCWNA. Finally, he found that defendants' failure to print the required notice in ten-point typeface violated N.J.A.C. 13:45A-26B.2(a)(2)(iii). A settlement agreement was reached on May 9, 2005, providing relief to class members, primarily in the form of coupons and cash certificates worth $325 for each class member. Thus, the total settlement exposed defendants to a payout of over $1.3 million. The settlement did not resolve the issue of counsel fees. The class settlement was approved on March 16, 2006, and the complaint was dismissed. A year later plaintiffs' counsel sought an award of fees and costs, which defendants opposed.

The judge found that the primary legal focus of the action was the CFA and that the action "was a relatively early case of this type" and had its own "unique set of facts and legal theo ries for recovery." He also found that "[t]his case has been vigorously litigated, even though a settlement was eventually reached. There were also some post-settlement proceedings." He additionally observed,

Class counsel worked hard for the set tlement, it was not handed to them. In addition, class counsel have been, and may well continue to be, involved in the admini stration of the settlement notice and imple mentation process, some of which will be future work for which they will not be able to make supplemental fee requests.

The judge explained that he took "this sort of on-going post-settlement litigation into account in determining the final fee award" and based the fee award on the original, but not the sup plemental, application for fees incurred after the initial fee application in the amount of $12,865.50.

The judge further found that "Andrew R. Wolf, Esquire, and Steven A Skalet, Esquire, are highly skilled class-action attor neys with an impressive record in class action and other multi-party litigation." He concluded that the hourly rates sought by class counsel were reasonable, appropriate, and "consistent with rates charged in New Jersey for complex commercial litigation in [his] experience." He specifically found that the rate of $350 for Christopher McGinn, Esquire, was appropriate despite his relatively short tenure as a member of the bar because he had "considerable prior experience in the area of consumer protection."

With respect to billings for internal conferences and telephone calls among class counsel, the judge found:

While multiple attorney conferences or attendance at court would not be appropriate for the average personal injury or contract action, they are, in my view, reasonable in class actions which are developing new theo ries of recovery and which are being vigor ously defended. Although a class action defendant certainly has the right to mount a defense, they do so knowing that, if unsuccessful, they will be bearing the litigation expenses of class counsel.

Finally, he expressed the belief "that class counsel made appro priate use of paralegal time for performing work that might oth erwise have been done by attorneys at a higher rate." Having made these findings, the judge "determined that the appropriate lodestar amount for this case is the $626,114.33 claimed by class counsel."

The judge "also concluded that a contingency enhancement is appropriate" because the case was taken on a contingency basis and because considerable time will have to be spent finalizing and administering the settlement, "including the time spent after the initial fee submission," which he did not include in the lodestar. He determined that it was appropriate to set the enhancement toward the top of the ordinary range suggested by Rendine, supra, 141 N.J. at 343, and concluded that forty-five percent was "fully warranted." The judge entered an order on June 15, 2007, awarding total counsel fees in the amount of $907,865.79. This appeal followed.

II.

Although New Jersey generally follows the "American Rule," barring a prevailing litigant from collecting attorneys' fees from the losing party, id. at 322, where a statute provides for such fees, the party seeking the fees may apply therefor under Rule 4:42-9(a)(8) by complying with the provisions of Rule 4:42-9(b) and Rule of Professional Conduct ("RPC") 1.5(a). RPC 1.5(a) "must inform the calculation of the reasonableness of a fee award in . . . every case" and "a trial court must analyze [these] factors in determining an award of reasonable counsel fees." Furst, supra, 182 N.J. at 21-22. RPC 1.5(a) provides:

A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particu lar employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; [and]

(8) whether the fee is fixed or contingent.

Rule 4:42-9(b) provides in pertinent part:

[A]ll applications for the allowance of fees shall be supported by an affidavit of ser vices addressing the factors enumerated by RPC 1.5(a). The affidavit shall also include a recitation of other factors perti nent in the evaluation of the services ren dered, the amount of the allowance applied for, and an itemization of disbursements for which reimbursement is sought. If the court is requested to consider the rendition of paraprofessional services in making a fee allowance, the affidavit shall include a detailed statement of the time spent and services rendered by paraprofessionals, a summary of the paraprofessionals' qualifica tions, and the attorney's billing rate for paraprofessional services to clients gener ally. No portion of any fee allowance claimed for attorney's services shall dupli cate in any way the fees claimed by the attorney for paraprofessional services rendered to the client.

A review of class counsels' certifications in support of the fee allowance demonstrates that they fall woefully short of meeting the requirements of these two rules. Andrew R. Wolf, Esquire, from Galex Wolf, LLC, did not address RPC 1.5(a) fac tors (1), (3), (5) and (6) at all in his supporting certifica tion and only partially addressed factors (2) and (4). Wolf also did not comply with Rule 4:42-9(b) with respect to 144.40 hours of paraprofessional services because he did not provide "a summary of the paraprofessionals' qualifications, and the attor ney's billing rate for paraprofessional services to clients gen erally." Ibid. (emphasis added). Furthermore, he did not demonstrate that "[n]o portion of any fee allowance claimed for attorney's services . . . duplicate[d] in any way the fees claimed by the attorney for paraprofessional services rendered to the client," as required by Rule 4:42-9(b).

There were even greater deficiencies in the certification submitted by Steven A. Skalet, Esquire, from Mehri & Skalet, PLLC. His certification was limited to attaching the time records from his firm; attaching the firm resume describing his experience and that of other attorneys in his firm; and certify ing that the firm spent a total of 960.12 hours on the matter, "resulting in a lodestar of $340,949.33," plus expenses of $7,940.95. His supplemental certification only partially reme died these deficiencies by comparing his firm's fees with those reported for Washington D.C. in an Altman Weil national study of standard hourly billing rates.

In the absence of compliance with Rule 4:42-9(b) and RPC 1.5(a), the judge should have denied the application for a fee allowance without prejudice because he was not in a position to "analyze [these] factors in determining an award of reasonable counsel fees." Furst, supra, 182 N.J. at 21. Additionally, the judge did not comply with the Rendine and Furst paradigm for determining a reasonable fee award.

III.

The CFA and the TCCWNA both allow a prevailing party to recover a reasonable attorney's fee and court costs. N.J.S.A. 56:8-19; N.J.S.A. 56:12-17. Our Supreme Court first addressed the calculation of a reasonable attorney's fee under a fee-shifting statute in Rendine, supra, 141 N.J. at 316-45, an action under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -42. The Court held that "the first step in the fee-setting process is to determine the 'lodestar': the number of hours reasonably expended multiplied by a reasonable hourly rate." Rendine, supra, 141 N.J. at 334-35. The Court explained that this "is the most significant element in the award of a reasonable fee because that function requires the trial court to evaluate carefully and critically the aggregate hours and spe cific hourly rates advanced by counsel for the prevailing party to support the fee application." Id. at 335; see also Szczepan ski v. Newcomb Med. Ctr., Inc., 141 N.J. 346, 366 (1995) ("[A] trial court should carefully and closely examine the lodestar-fee request to verify that the attorney's hours were reasonably expended.").

The Court cautioned that judges "should not accept pas sively the submissions of counsel to support the lodestar" because "'billing judgment is an important component in fee setting.'" Rendine, supra, 141 N.J. at 335 (quoting Copeland v. Marshall, 641 F.2d 880, 891 (D.C. Cir. 1980)) (internal quota tion omitted). "Fee-shifting cases are not an invitation to prolix or repetitious legal maneuvering." Szczepanski, supra, 141 N.J. at 366. In other words, "'[h]ours that are not prop erly billed to one's client also are not properly billed to one's adversary pursuant to statutory authority.'" Rendine, supra, 141 N.J. at 335 (quoting Copeland, supra, 641 F. 2d at 891). For example, where one attorney at a hearing would suf fice, fees for additional attorneys at the hearing should be denied as excessive. Ibid.

Courts should consider the extent to which a defendant's discovery posture, or a plain tiff's, has caused any excess expenses to be incurred. Courts reviewing fee allowances should assess what legal services reasonably competent counsel would consider as required to vindicate the protected legal or consti tutional rights. Neither the tortoise nor the hare should be the model for compensation.

[Szczepanski, supra, 141 N.J. at 366.]

Additionally, "'the court can reduce the hours claimed by the number of hours spent litigating claims on which the party did not succeed and that were distinct in all respects from claims on which the party did succeed.'" Rendine, supra, 141 N.J. at 335 (quoting Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990)) (internal quotation omitted). In this respect, the Court has "reject[ed] a mathematical approach comparing the total number of issues in the case with those actually prevailed upon because such a ratio provides little aid in determining what is a reasonable fee in light of all the relevant factors." New Jerseyans for a Death Penalty Moratorium v. N.J. Dep't of Corr., 185 N.J. 137, 154 (2005) (quoting Silva v. Autos of Amboy, Inc., 267 N.J. Super. 546, 555-56 (App. Div. 1993)) (internal quotations omitted). Rather, the lodestar "'should not be reduced simply because the plaintiff failed to prevail on every contention raised in the lawsuit.'" Ibid. (quoting Hensley v. Eckerhart, 461 U.S. 424, 435, 103 S. Ct. 1933, 1940, 76 L. Ed. 2d 40, 52 (1983)). When the results are excellent, the "'attorney should recover a full compensatory fee.'" Ibid. (quoting Hensley, supra, 461 U.S. at 435, 103 S. Ct. at 1940, 76 L. Ed. 2d at 52).

Although damages recovered are a factor bearing on reason ableness, there is no requirement for proportionality. Rendine, supra, 141 N.J. at 336. Yet, "[t]he trial court's responsibil ity to review carefully the lodestar fee request is heightened in cases in which the fee requested is disproportionate to the damages recovered." Szczepanski, supra, 141 N.J. at 366.

[I]f the specific circumstances incidental to a counsel-fee application demonstrate that the hours expended, taking into account the damages prospectively recoverable, the interests to be vindicated, and the underly ing statutory objectives, exceed those that competent counsel reasonably would have expended to achieve a comparable result, a trial court may exercise its discretion to exclude excessive hours from the lodestar calculation.

[Rendine, supra, 141 N.J. at 336.]

The lodestar should also be reduced "if the level of suc cess achieved in the litigation is limited as compared to the relief sought." Ibid. Furthermore, "[i]n fixing counsel fees, a trial judge must ensure that the award does not cover effort expended on independent claims that happen to be joined with claims for which counsel is entitled to attorney fees." Grubbs v. Knoll, 376 N.J. Super. 420, 431 (App. Div. 2005) (citations omitted). "However, when a plaintiff's claims include common facts or are based on related legal theories, then the 'suit cannot be viewed as a series of discrete claims' for purposes of determining success." DePalma v. Bldg. Insp. Underwriters, 350 N.J. Super. 195, 218-19 (App. Div. 2002) (quoting Silva, supra, 267 N.J. Super. at 556).

Additionally, "the attorney's presentation of billable hours should be set forth in sufficient detail to permit the trial court to ascertain the manner in which the billable hours were divided among the various counsel . . . ." Rendine, supra, 141 N.J. at 337. This means that the attorney is to present the judge with some fairly definite information revealing "'how many hours were spent in what manner by which attorneys . . . devoted to various general activities . . . .'" Ibid. (quoting Lindy Bros. Builders, Inc. of Phila. v. Am. Radiator & Standard Sanitary Corp., 487 F.2d 161, 167 (3d Cir. 1973)).

The use of contemporaneously recorded time records is the preferred practice to verify hours expended by counsel in connection with a counsel-fee application. Webb v. [County] Bd. of Educ., 471 U.S. 234, 238 n.6, 105 S. Ct. 1923, 1926 n.6, 85 L. Ed. 2d 233, 239 n.6 (1985). Indeed, we would assume that applications for counsel fees invariably would be accompanied by contemporaneously recorded time records that fully support the calculation of hours expended by all attorneys who participated in the matter.

[Szczepanski, supra, 141 N.J. at 367.]

Finally, in order to establish the lodestar, the judge must determine the reasonable hourly billing rates. Rendine, supra, 141 N.J. at 337. This means that the trial court "should sat isfy itself that the assigned hourly rates are fair, realistic, and accurate, or should make appropriate adjustments." Ibid. Current hourly rates should be used in order to compensate for the delay in payment. Ibid.

IV.

Our Supreme Court requires a trial court making an award under fee-shifting statutes to "analyze the Rendine factors in determining an award of reasonable counsel fees and then must state its reasons on the record for awarding a particular fee." Furst, supra, 182 N.J. at 21 (citing Rule 1:7-4(a)). This requires a trial court "to acknowledge explicitly the principles outlined [in Furst] and more fully developed in Rendine, supra, in rendering its attorney-fee award." Furst, supra, 182 N.J. at 24. "[A] plenary hearing should be conducted only when certifi cations of counsel raise material factual disputes that can be resolved solely by the taking of testimony," hearings that the Court expected to be a rare occurrence. Ibid. A decision to deny such a hearing may only be disturbed when there is a clear misapplication of discretion. Id. at 25 (citing Rendine, supra, 141 N.J. at 317).

The amount of a reasonable counsel-fee award pursuant to N.J.S.A. 56:8-19 and 56:12-17 lies within the sound discretion of the judge making the award. Branigan v. Level on the Level, Inc., 326 N.J. Super. 24, 31 (App. Div. 1999); see Furst, supra, 182 N.J. at 25; Rendine, supra, 141 N.J. at 317. We accord fee determinations substantial deference and disturb them only on the rarest of occasions. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001); Yueh v. Yueh, 329 N.J. Super. 447, 466 (App. Div. 2000). Nonetheless, a judge has a duty to make find ings of fact and conclusions of law "on every motion decided by a written order that is appealable as of right." R. 1:7-4(a). "Failure to perform that duty constitutes a disservice to the litigants, the attorneys, and the appellate court." Curtis v. Finneran, 83 N.J. 563, 569-70 (1980) (internal quotations omit ted). Moreover, "[n]aked conclusions do not satisfy the purpose of R. 1:7-4." Curtis, supra, 83 N.J. at 570. The exercise of discretion based on such naked conclusions rather than specific findings of fact constitutes an abuse of discretion. Flagg v. Essex County Prosecutor, 171 N.J. 561, 571 (2002); Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005); Khoudary v. Salem County Bd. of Soc. Servs., 281 N.J. Super. 571, 578 (App. Div. 1995); see also Scullion v. State Farm Ins. Co., 345 N.J. Super. 431, 439 (App. Div. 2001) ("In considering an award of counsel fees, the judge must comply with R. 1:7-4(a) and clearly set forth reasons for the exercise of discretion."); Patterson v. Vernon Twp. Council, 386 N.J. Super. 329, 338 (App. Div. 2006) ("[T]he judge failed to make any findings to explain the award," requiring a remand for reconsideration "under the guide lines set forth by" Furst and Rendine.). "The absence of a record establishing that a critical analysis of the fee request had been made leads to the conclusion that the fee awarded is not entitled to deferential treatment." Scullion, supra, 345 N.J. Super. at 439 (citing Yueh, supra, 329 N.J. Super. at 461); see also City of Englewood v. Exxon Mobile Corp., 406 N.J. Super. 110, 125-26 (App. Div. 2009) (Analysis of the relevant considerations for awarding counsel fees and a discussion of those fees at a hearing "are required to satisfy fundamental fairness and to accord meaningful review.") (citations omitted).

V.

We begin our review of the lodestar with the hourly rates charged by the professionals who worked on this class action. Andrew R. Wolf, Esquire, certified that the 2007 hourly rate for Richard Galex, Esquire, was $535; $465 for Wolf; $465 for Elea nor Lewis, Esquire; $375 for George Wilson, Esquire; $350 for Christopher McGinn, Esquire; $170 for law clerks; and $135 for paralegals. Wolf certified that his firm's rates had been approved in a number of other matters in Hunterdon, Middlesex, and Mercer Counties. He did not provide any information respecting usual and customary hourly rates for contingent work in New Brunswick or Middlesex County, or even New Jersey. He did not certify that the rates charged by his firm were usual and customary, nor did he compare the rates for this matter with rates generally charged to other clients on contingent and non contingent matters. Plaintiffs did not supply affidavits from other practitioners in Middlesex County attesting to their usual and customary rates. Steven A. Skalet, Esquire, did not even certify that the 2007 hourly rates charged by his firm were usual and customary. He merely certified that he was attaching the time and expense records of his firm as well as the firm resume to his certification. However, in his supplemental certification, Skalet certified that:

According to the annual national survey con ducted by Altman Weil, standard hourly bill ing rates for an attorney in Washington DC with my background and experience, for non-contingent work, average $528/hour for the upper quartile and $645/hour for the ninth decile as of January 1, 2006. Rates for January 1, 2007 have not yet been released.

However, he did not attach the Altman Weil survey to his certi fication or seek to justify the entitlement of his firm to fees in the upper quartile, much less the ninth decile, in the survey.

We do not find the judge's bare conclusion that the hourly rates sought by class counsel were reasonable, appropriate, and "consistent with rates charged in New Jersey for complex commer cial litigation in [his] experience" to be sufficient fact-finding pursuant to Rule 1:7-4, although counsel hardly provided him with the tools necessary to discharge his duty. More is required than a general reference to the judge's experience. See Incollingo v. Canuso, 297 N.J. Super. 57, 64 (App. Div. 1997) (The judge "never compared appellants' rates to others he deemed reasonable, a step necessary pursuant to Rendine, supra, 141 N.J. at 337."). The judge's reliance on rates approved in other litigation was entirely improper as such litigation was not part of the record before him and the propriety of those awards evades our review.

Furthermore, nothing in the record suggests that the judge had any experience with usual hourly rates of Washington D.C. counsel. We do not know if he relied on the Altman Weil study, but if he did, he did not explain how he determined the reason ableness of the Galex Wolf LLC hourly rates from that study. Neither did the judge explain why the rates in this case should be compared to rates charged in complex commercial litigation, which hardly seems to be a proper characterization of CFA and TCCWNA claims.

With respect to the time expended in prosecuting the action, Wolf certified that the detailed time and expense records of the two firms with which he had been affiliated dur ing the pendency of the class action were attached along with a summary. The summary indicated the total number of hours devoted by each of the professionals to work on the class action as follows: Galex, 1.30 hours; Wolf, 390.90 hours; Lewis, 13.60 hours; Wilson, 4.40 hours; McGinn, 208.20 hours; law clerks, 13.90 hours; and paralegals, 144.40 hours. Skalet merely certified that the total number of hours expended on the matter was 960.12, "resulting in a lodestar of $340,949.33."

In opposing the fee applications, defendants raised a num ber of specific issues. Richard Malouf certified to the finan cial constraints then being suffered by the automobile industry generally and defendant dealerships in particular and expressed concern regarding the consequences of a large counsel fee award. Defendants' counsel provided a certification in which she ana lyzed the time records submitted in support of class counsels' fee application. She pointed out that the time records for Galex Wolf LLC contained 210.80 hours for interoffice communica tions, 17.50 hours for administrative work, 15.60 hours for unspecified work, 12.45 hours for leaving messages on voice mail, and 45.20 hours discussing unknown topics with other indi viduals. She also indicated that the time records for Mehri Skalet egregiously failed to describe the work done and that 186.67 hours were devoted to interoffice communication, 92.30 hours to administrative work, and 12.45 hours to work that was not described. She continued:

7. The above billing reports contain entries that are inappropriate because they are billing for administrative work. In addition, these firms do not adequately describe their projects. This creates a problem for the defense and for the court in determining what entries are properly allow able for inclusion into the calculation that leads to the lodestar figure. New Jersey courts have held that a plaintiff must describe time spent on work in order to facilitate the court's determination of whether time was spent on a project that succeeded or whether the argument was even tually abandoned for lack of merit. All entries must be fully described as to subject matter, purpose and legal argument.

. . . .

9. I also reviewed the hours dedicated to specific projects. The following numbers are approximate figures. Complaint: Galex Wolf entered a total of 11.9 hours for its work on the Complaint. Mehri Skalet entered 21.5 hours for the Complaint. Class Certi fication Motion: Galex Wolf entered 3.5 hours, withdrawing this motion, and entering 19.4 hours on a later motion. Mehri Skalet entered 90.6 hours. Amended Complaint: Galex Wolf entered 7.7 hours. Mehri Skalet entered 23.6. Motion to Dismiss: Galex Wolf entered 10.2 hours. Mehri Skalet entered 51.5 hours (26 hours for travel time). Summary Judgment Motions: Galex Wolf entered 31.8 hours. Mehri Skalet entered 134.85 hours (at least 10 hours travel time). Pro Hac Vice Motion: Galex Wolf entered 2.2 hours. Mehri Skalet entered 4.25 hours. Regarding the Notice to Potential Class Members: Galex Wolf entered 13.8 hours. Mehri Skalet entered 27.9 hours. Motion To Consolidate: Galex Wolf entered 44.5 hours. Mehri Skalet entered 16.25 hours. Attorneys Fees Motion: Galex Wolf entered 20 hours. Mehri Skalet entered 3.5 hours. Interlocutory Appeal: Galex Wolf entered 8.7 hours. Mehri Skalet entered 45 hours.

With respect to billings for multiple-attorney conferences and attendance at court, the judge broadly found them "reasonable in class actions which are developing new theories of recovery and which are being vigorously defended." However, he did not describe the "new theories of recovery" that were being developed in this case, nor do we understand from the record before us what those theories might have been in light of the provisions of the CFA and TCCWNA. We do note from class coun sels' certifications that they have represented other classes in multiple, identical class claims, suggesting that the issue here were not unique.

The judge's only other finding respecting the time spent prosecuting that matter was his expressed belief "that class counsel made appropriate use of paralegal time for performing work that might otherwise have been done by attorneys at a higher rate." These findings do not satisfy the requirements of Rendine, Furst, and Rules 1:7-4 and 4:42-9(b).

The task of determining the number of hours reasonably expended on prosecution of the action "is the most significant element in the award of a reasonable fee." Rendine, supra, 141 N.J. at 335. The judge did not determine that the hours would properly have been billed to plaintiffs, yet he was required to do so. Ibid. He did not explain why more than one attorney was required for court appearances. Ibid. He did not address whether the common-law counts were unsuccessful and how much time was spent prosecuting those claims, for which attorneys' fees are not recoverable. Ibid. Nor did he consider whether the lodestar should be reduced as a result. He did not address whether reasonably competent counsel would have spent less time to achieve a comparable result. Id. at 336. He did not compare the relief obtained with the relief sought. Ibid.

Furthermore, the judge did not address defendants' concern that some of the time entries were not sufficiently specific to permit defendants to determine whether the time was appropriate. He made no findings with respect to whether drafting and final izing a thirteen-page complaint reasonably required 33.40 hours of work, nor did he make any such findings with respect to the 33.10 hours spent preparing the nineteen-page amended complaint. He made no findings with respect to the reasonable necessity of expending 113.50 hours preparing the motion for class certifica tion or the 81.70 hours spent on the motion to dismiss or how 26.00 of those hours could reasonably have been spent traveling, presumably from Washington D.C. to New Brunswick. He made no findings with respect to the propriety of spending 166.65 hours on a summary-judgment motion. Neither did the judge address the necessity of spending 60.75 hours on a motion to consolidate. In short, the record is bereft of any findings that would sug gest that the judge compared the hours expended to the work produced in order to determine the reasonableness of the time for which class counsel sought to be compensated. The award of attorneys' fees in the absence of specific fact-findings was a mistaken exercise of discretion in this matter. Flagg, supra, 171 N.J. at 571. Although we recognize that our Supreme Court anticipated that counsel-fee awards would "be disturbed only on the rarest of occasions, and then only because of a clear abuse of discretion," Rendine, supra, 141 N.J. at 317, that anticipa tion was based upon presumed compliance with the Rendine para digm. The failure to follow that paradigm constitutes "a clear abuse of discretion" and requires reversal in this case.

VI.

We next consider the forty-five percent enhancement allowed by the judge. Once the lodestar has been determined, the judge must consider whether the fee should be enhanced "to reflect the risk of nonpayment in all cases in which the attorney's compen sation entirely or substantially is contingent on a successful outcome." Id. at 338. The Court adopted the view of Justice Blackmun's dissent in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 747, 107 S. Ct. 3078, 3098, 97 L. Ed. 2d 585, 612 (1987) (Blackmun, J., dissenting), "that 'a court's job simply will be to determine whether a case was taken on a contingent basis, whether the attorney was able to mitigate the risk of nonpayment in any way, and whether other economic risks were aggravated by the contingency of payment.'" Rendine, supra, 141 N.J. at 339. This is so because "'it is the actual risks or burdens that are borne by the lawyer or lawyers that determine whether an upward adjustment is called for.'" Id. at 339-40 (quoting Delaware Valley, supra, 483 U.S. at 747, 107 S. Ct. at 3098, 97 L. Ed. 2d at 612 (Blackmun, J., dissenting)) (internal quotations omitted). Judges may also consider the legal risks inherent in the claim and order an additional enhancement where the result achieved "'is significant and of broad public interest.'" Id. at 340-41 (quoting Delaware Val ley, supra, 483 U.S. at 751, 107 S. Ct. at 3100, 97 L. Ed. 2d at 614 (Blackmun, J., dissenting)). Where "the likelihood of suc cess is unusually strong, a court may properly consider the inherent strength of the prevailing party's claim in determining the amount of contingency enhancement," id. at 341 (citation omitted), thereby reducing or denying an enhancement.

The Rendine Court recognized that "[d]etermination of the amount by which a lodestar fee should be enhanced to reflect the risk of nonpayment is conceptually difficult because there is 'no such thing as a market hourly rate in contingent litiga tion.'" Id. at 342 (citing 2 Mary Frances Derfner & Arthur D. Wolf, Court Awarded Attorney Fees 16.04[4][a], at 16-153 (rev. ed. 1990)). Finding that "fee awards of double the lodestar represent the high end of attorney fee awards under fee-shifting statutes," ibid., the Court "conclude[d] that contingency enhancements in fee-shifting cases ordinarily should range between five and fifty-percent of the lodestar fee, with the enhancement in typical contingency cases ranging between twenty and thirty-five percent of the lodestar," id. at 343. Further, the Court held that "[s]uch enhancements should never exceed one-hundred percent of the lodestar, and an enhancement of that size will be appropriate only in the rare and exceptional case in which the risk of nonpayment has not been mitigated at all . . . ." Ibid.

Rendine was not a class-action case where the settlement was largely comprised of coupons, nor have we found any New Jer sey case addressing the propriety of a fee enhancement in such a case. Yet these types of class actions do give rise to concerns about the propriety of an enhanced fee. See, e.g., Charles v. Goodyear Tire & Rubber Co., 976 F. Supp. 321, 326 (D.N.J. 1997) ("[A] positive multiplier is not warranted as the fee award is more than reasonable and already accounts for the risks of liti gation, the contingent nature of the case, the results achieved and the quality of representation."). This is so because the value of the settlement may be difficult to determine, yet it may be considered when enhancing a fee.

We cannot sustain the enhancer in this case. Wolf certi fied that he and his firm had been class counsel on four other matters where attorneys' fees were awarded with enhancements from one and one-half to five times the lodestar. The judge correctly observed that such enhancements were inconsistent with Rendine. However, he did not consider and apply all of the factors governing a fee enhancement.

The judge did not make any fact-finding respecting the risk of nonpayment, whether that risk could have been mitigated, and whether other economic risks were aggravated by the contingency of payment. Rendine, supra, 141 N.J. at 339-40. Indeed, he could hardly have been expected to do so because no facts were submitted in the certifications of class counsel that would have permitted such fact-findings. Neither could the judge determine the actual risks or burdens borne by counsel in order to justify an enhancer. Id. at 340. Class counsel supplied no such evidence to him.

The judge also did not apparently consider the legal risks inherent in the claim, which defendants contend were minimal, and he did not find that the result achieved "is significant and of broad public interest." Id. at 340-41. In fact, it would seem that the likelihood of success was strong because the class prevailed on a summary-judgment motion, which would suggest that a contingency enhancement was not appropriate at all. Id. at 341. He did not consider the value of the settlement as one factor bearing on the propriety of an enhancement. Although determining value in a coupon case may be difficult, here the coupons expire three years and three months after issuance. The coupons had already been issued before this fee application, which was heard almost two years ago. Historical experience should now permit some reasonable valuation of the settlement and this factor should be considered on remand.

 
Reversed and remanded for further proceedings consistent with this opinion.

The final judgment also awarded $13,325.24 in costs. The parties have not disputed the propriety of this amount on appeal.

The issues raised by cross-appeal are not cognizable because appeals are limited to orders and judgments. R. 2:2-3(a)(1); Do-Wop Corp. v. City of Rahway, 168 N.J. 191, 199 (2001). As a consequence, we dismiss the cross-appeal as improvidently filed.

These attorneys were all members of the New Jersey bar.

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A-5722-06T3

May 18, 2009