Bohannon v. Facebook, Inc., No. 5:2012cv01894 - Document 166 (N.D. Cal. 2016)
Court Description: AMENDED ORDER GRANTING AS MODIFIED MOTION FOR FEES, COSTS, AND EXPENSES. Signed by Judge Beth Labson Freeman on 6/2/2016. (blflc2S, COURT STAFF) (Filed on 6/2/2016)
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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 GLYNNIS BOHANNON, et al., Case No. 12-cv-01894-BLF Plaintiffs, 8 v. 9 10 FACEBOOK, INC., Defendant. AMENDED ORDER GRANTING AS MODIFIED MOTION FOR FEES, COSTS, AND EXPENSES [Re: ECF 142] United States District Court Northern District of California 11 12 The parties have settled this class action with agreement by Facebook to bring its refund 13 14 practices and policies into compliance with the California Family Code, update the relevant 15 language in its terms, and dedicate an internal queue to refund requests for in-app purchases made 16 by U.S. minors and agreement by Plaintiffs to release their, but no other class member’s, claims. 17 The parties have agreed on all but attorneys’ fees, costs, and incentive payments to Plaintiffs—a 18 dispute they now bring to the Court. Plaintiffs seek $1.25 million in attorneys’ fees, $29,115.66 in 19 costs, and $10,000 in incentive payments. Mot., ECF 142. Defendant opposes the request. Opp., 20 ECF 145. For the reasons stated below, the Court GRANTS the motion AS MODIFIED. 21 I. BACKGROUND 22 As discussed below, the parties’ attorneys’ fee dispute focuses on the reasonableness of the 23 hours expended and the public benefit of the outcome achieved. Therefore, the Court begins with a 24 summary of the history of the case. 25 A. Complaints 26 Glynnis Bohannon initiated this lawsuit on behalf of herself and her minor child, I.B. on 27 February 23, 2012 in state court. Compl., ECF 1-4. Ms. Bohannon based her single claim for 28 unjust enrichment on allegations that, after she granted I.B. permission to use her credit card to 1 make $20 of purchases in a Facebook game, I.B. proceeded to charge several hundreds of dollars 2 to her card for in-app purchases while believing that he was using virtual currency. Id. ¶ 4. 3 Facebook refused to provide a refund. Id. ¶ 5. The Complaint spanned only three pages, pled one 4 claim, and contained no class allegations. 5 On March 2, 2012, Ms. Bohannon amended her complaint to include a putative class of 6 U.S. parents whose minor children made unauthorized purchases on Facebook. First Amended 7 Compl. (“FAC”) ¶ 24, ECF 1-7. The FAC also introduced claims under the Consumers Legal 8 Remedies Act (“CLRA”) and California’s Unfair Competition Law (“UCL”). After Facebook removed the case to federal court and moved to dismiss, Plaintiffs filed a 9 Second Amended Complaint on May 31, 2012 (“SAC”). ECF 18. Julie Wright and her minor child 11 United States District Court Northern District of California 10 J.W. joined as named plaintiffs, alleging that J.W. charged more than $1,000 to his parents’ debit 12 card for in-app purchases on Facebook, of which Facebook refunded only $59.90. Id. ¶¶ 29, 31. 13 In the SAC, Plaintiffs sought to represent an umbrella class and three subclasses that, for 14 the first time, included minors. The “Minor Class” was defined as: “All Facebook users who are or 15 were minor children according to Facebook’s own records, and those children’s parents and 16 guardians” over a specified time period. Id. ¶ 39. 1 The SAC also defined two subclasses of the 17 Minor Class: those minors and adults who sought refunds of credit transactions originating from a 18 minor’s account and those whose payment was made via a debit card or PayPal account. Id. ¶¶ 40, 19 41. In addition, the SAC introduced a claim for declaratory relief that the purchases are void or 20 voidable under California Family Code §§ 6701(a), (c), and 6710 and a claim under the Electronic 21 Funds Transfer Act (“EFTA”). Id. ¶¶ 59-72, 108-112. Facebook filed its second Motion to Dismiss on July 2, 2012. ECF 25. After the Court2 22 23 struck Plaintiffs’ Opposition for failure to comply with the Civil Local Rules, ECF 31, Plaintiffs 24 filed an amended Opposition, ECF 32. On October 25, 2012, the Court dismissed with prejudice the parents’ claims to disaffirm 25 26 27 1 The SAC refers to this group as both a class and a subclass. See SAC ¶ 39. References to “the Court” encompass actions taken by Judge Wilken, to whom this case was previously assigned. 2 2 28 1 the minors’ contracts, the CLRA claim, and related UCL claims. First Dismissal Order at 1, ECF 2 44. The Court also dismissed the EFTA claim and the unlawful and fraudulent UCL claims with 3 leave to amend. Id. Finally, the Court allowed the minors’ claims to disaffirm the contracts and the 4 unfair UCL claim to go forward. Id. 5 6 7 Benjamin Edelman was added as counsel for Plaintiffs shortly before the Court issued its First Dismissal Order, and Daniel Edelman was added shortly after. ECF 41, 49. On November 15, 2015, Plaintiffs filed their Third and final Amended Complaint 8 (“TAC”). ECF 50. Consistent with the Court’s order, the TAC alleged UCL, EFTA, and 9 declaratory relief claims. The TAC also offered new class definitions, including a “Minor Class” that was, for the first time, limited exclusively to minors. Id. ¶ 36. The Minor Class also included a 11 United States District Court Northern District of California 10 purported “Minor Purchasing Subclass,” defined as those minors “from whose Facebook accounts 12 Facebook Credits were purchased.” Id. ¶ 36. 13 Facebook moved to dismiss the TAC on December 6, 2012. ECF 53. After taking the 14 matter under submission, the Court dismissed the EFTA and UCL claims—the only remaining 15 claims of the adult Plaintiffs—with prejudice and allowed the minors’ claim for declaratory relief 16 to go forward. Second Dismissal Order at 11, 14, 16, ECF 58. As a result, the adult Plaintiffs were 17 no longer parties to the action. Id. at 16. 18 B. Class Certification 19 On August 21, 2014, Plaintiffs moved to certify the Minor Class and Minor Purchasing 20 Subclass. ECF 82. At the hearing, the Court ordered the parties to provide supplemental briefing 21 on whether or not the Court can certify a nationwide class of minors pursuant to alleged violations 22 of the California Family Code. See Transcr. at 40:11-15, ECF 123; see also Pls.’ Supp. Brief, ECF 23 126; Def.’s Supp. Brief, ECF 127. On March 10, 2015, the Court certified the Minor Class and 24 Minor Purchasing Subclass to pursue declaratory and injunctive, but not monetary, relief. ECF 25 131. Of the cases the Court cited in its decision, half were the result of the Court’s own research 26 and several others appeared only in the parties’ supplemental briefing. 27 28 Defendant then filed for permission to appeal the Class Certification Order pursuant to Rule 23(f), ECF 132, which Plaintiffs successfully opposed with the help of Audra Ibarra, ECF 3 1 136. 2 C. Sealing Motions 3 In addition, the parties expended significant time on a dispute over sealing related to the 4 Motion for Class Certification. First, because Plaintiffs used materials Facebook had designated as 5 confidential in their Motion for Class Certification, Plaintiffs filed an administrative motion to seal 6 that information. ECF 81. However, after reviewing Facebook’s supporting brief and declaration, 7 see ECF 87, 88, Plaintiffs determined that most of the redactions were improper and filed a Notice 8 of Intent to Withdraw their sealing request. ECF 90. The parties met and conferred numerous 9 times to determine the proper redactions, but were unable to agree. Plaintiff then filed an 18-page opposition to the sealing, ECF 96, Facebook filed a 6-page reply, ECF 101, and the Court 11 United States District Court Northern District of California 10 approved the requested redactions. ECF 103. 12 Separate from that debate, Plaintiffs also filed two motions asking the Court to remove 13 confidential documents they had inadvertently filed publicly without redaction. See ECF 86, 116. 14 In granting the second of these requests, the Court wrote, “Troublingly, this is the second time 15 Plaintiffs have filed a motion to remove an incorrectly filed document with regard to this Motion” 16 and warned that improper filing of confidential information could result in sanctions. ECF 118. 17 D. Settlement 18 Following certification of the Minor Class, the parties stipulated to continue the trial date 19 and engaged in private mediation. ECF 134; see also Infante Decl. ¶ 2, ECF 141-3. On January 15, 20 2016, the parties submitted a settlement agreement for the Court’s approval. See Exh. 1 to Cutter 21 Decl., ECF 141-2. The Court provided comments at a hearing and Plaintiffs then submitted a 22 revised version of the agreement. ECF 157 (“Revised Settlement Agreement”). 23 Pursuant to the Revised Settlement Agreement, Facebook has agreed to do the following 24 for at least three years: (1) bring its refund practices and policies with respect to U.S. minors into 25 compliance with the California Family Code; (2) include language like “All funding transactions 26 are final unless otherwise required by law” in its Community Payments Terms (“CPT”) applicable 27 to U.S. minor users; (3) include language like “You acknowledge that transactions with minors 28 may be voidable by law and agree that you may be required to refund amounts paid” in its 4 1 Developer Payments Terms applicable to U.S. developers; (4) add a checkbox or something 2 similar and accompanying text to its refund request form for In-App Purchases for U.S. users, 3 such that users are able to indicate that the Purchases for which they are seeking a refund were 4 made when the user was a minor; (5) implement a dedicated queue to addressing refund requests 5 in In-App Purchases made by U.S. minors, staffed by employees who receive special training, (6) 6 include like “Please always make sure you have your parent or guardian’s consent to use their 7 payment sources” in receipt and confirmation emails sent to U.S. minors, as well as a link to the 8 CPT; and (7) emphasize the following language in the CPT: “If you are under the age of eighteen 9 (18), you may use Facebook Payments only with the involvement of your parent or guardian. Make sure you review these Terms with your parent or guardian so that you both understand all of 11 United States District Court Northern District of California 10 your rights and responsibilities.” Id. § 2.1. The Agreement does not include a class-wide release of 12 any kind and binds only Facebook, the minor Plaintiffs, and their parents. Id. § 3. Pursuant to the 13 Revised Settlement Agreement, Plaintiffs cannot seek more than $1.25 million in fees or $5,000 14 service awards for each of the class representatives. Revised Settlement Agreement §§ 2.4(a), 2.5. 15 Plaintiffs now seek $1.25 million in attorneys’ fees for the work of Cutter Law P.C., Katz, 16 Marshall & Banks LLP (“Cutter Law”)3 and Benjamin Edelman (“Class Counsel”), as well as 17 attorneys Daniel Edelman and Audra Ibarra. Mot., ECF 142-1. In addition, Plaintiffs seek 18 $29,115.66 for costs and $5,000 in incentive payments to each of I.B. and J.W. 19 II. LEGAL STANDARD “In a certified class action, the court may award reasonable attorney's fees and nontaxable 20 21 costs that are authorized by law or by the parties' agreement.” Fed. R. Civ. P. 23(h). “Because 22 [California] law governed the claim, it also governs the award of fees.” Vizcaino v. Microsoft 23 Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). This extends to determining “not only the right to 24 fees, but also . . . the method of calculating the fees.” Mangold v. California Pub. Utilities 25 Comm'n, 67 F.3d 1470, 1478 (9th Cir. 1995). Under California law, a court may award attorneys’ fees to a “successful party” if “(1) [the 26 27 3 28 For the majority of the case, the Cutter Law attorneys who seek fees were partners or associates at Kershaw, Cutter & Ratinoff, LLP (“Kershaw Law”). See Cutter Decl. ¶ 1, ECF 142-4. 5 1 party’s] action has resulted in the enforcement of an important right affecting the public interest, 2 (2) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general 3 public or a large class of persons, and (3) the necessity and financial burden of private 4 enforcement are such as to make the award appropriate.’” Bui v. Nguyen, 230 Cal. App. 4th 1357, 5 1365 (2014) review denied (Feb. 25, 2015) (quoting Woodland Hills Residents Assn., Inc. v. City 6 Council, 23 Cal. 3d 917, 935 (1979)); see also Cal. Civ. Proc. Code § 1021.5. 7 “District courts must calculate awards for attorneys’ fees using the ‘lodestar’ method, and the amount of that fee must be determined on the facts of each case.” Camacho v. Bridgeport Fin., 9 Inc., 523 F.3d 973, 978 (9th Cir. 2008) (quoting Ferland v. Conrad Credit Corp., 244 F.3d 1145, 10 1149 n.4 (9th Cir. 2001); see also Hensley v. Eckerhart, 461 U.S. 424, 429 (1983). “The lodestar 11 United States District Court Northern District of California 8 figure is calculated by multiplying the number of hours the prevailing party reasonably expended 12 on the litigation (as supported by adequate documentation) by a reasonable hourly rate for the 13 region and for the experience of the lawyer.” Yamada v. Nobel Biocare Holding AG, No. 14- 14 55263, 2016 WL 1579705, at *6 (9th Cir. Apr. 20, 2016) (internal citation omitted). “[T]he fee 15 applicant bears the burden of establishing entitlement to an award and documenting the 16 appropriate hours expended and hourly rates.” Hensley, 461 U.S. at 437. Once calculated, the 17 lodestar amount, which is presumptively reasonable, may be further adjusted based on other 18 factors not already subsumed in the initial lodestar calculation. Morales, 96 F.3d at 363-64, nn.3-4 19 (identifying factors) (citing Kerr v. Screen Guild Extras, Inc., 526 F.2d 67, 70 (9th Cir. 1975)). 20 “Attorneys' fee awards are reviewed for abuse of discretion, and an award will be upheld 21 unless ‘there is no substantial evidence to support the trial court's findings or when there has been 22 a miscarriage of justice.’” MacDonald v. Ford Motor Co., No. 13-CV-02988-JST, 2015 WL 23 6745408, at *3 (N.D. Cal. Nov. 2, 2015) (quoting Bui, 230 Cal.App.4th at 1367–68). 24 III. DISCUSSION 25 A. Availability of Fees 26 The Court first considers whether or not an award of attorneys’ fees is proper in this case. 27 Plaintiffs contend that they satisfy each of § 1021.5’s four requirements, while Defendant disputes 28 only one: that the lawsuit resulted in the enforcement of “an important right affecting the public 6 1 2 interest.” Therefore, the Court focuses its inquiry on that factor. Section 1021.5 “directs the judiciary to exercise judgment in attempting to ascertain the 3 ‘strength’ or ‘societal importance’ of the right involved.” Bui, 230 Cal. App. 4th at 1366 (quoting 4 Woodland Hills, 23 Cal. 3d at 935). Plaintiffs argue that this lawsuit resulted in vindication of an 5 important right by enforcing laws that protect minors’ rights to disaffirm contracts under 6 California law. Plaintiffs argue that this suit was about “a large corporation that systematically 7 encourages and facilitates minors to become users . . . and denies their requests for refunds.” 8 Reply at 2-3; see also Mot. at 4-5. Defendants, on the other hand, contend that this case resulted in 9 nothing more than enabling minors to get refunds for virtual goods they purchased in online games—often without their parents’ permission and after using the products. Opp. at 4. Defendant 11 United States District Court Northern District of California 10 describes this as a “valuable benefit to the class,” but not “an important right affecting the public 12 interest.” Id. 13 Defendant compares this case to two cases in which a court did not award fees in part 14 because the interest at stake was only recreational. In Olsen v. Breeze, Inc., 48 Cal. App. 4th 608 15 (1996), the appellate court upheld the denial of a pro se plaintiff’s request for attorneys’ fees after 16 his lawsuit led numerous ski shops to modify the liability language in their contracts in part 17 because the action “did not vindicate ‘an important right,’ inasmuch as skiing is not a matter of 18 public interest.” Id. at 616-17, 629 (quoting Westside Community for Independent Living, Inc. v. 19 Obledo, 33 Cal. 3d 348, 353 (1983)). Similarly, in Grant v. American Golf Corp., No. E031417, 20 2003 WL 22080215 (Cal. Ct. 6 App. Sept. 9, 2003), an unpublished and not citable decision under 21 California Rule of Court 8.1115, the trial court denied a plaintiff’s request for attorneys’ fees after 22 she won some claims challenging a country club’s transfer fee in part because “the right at issue 23 relates primarily to golfing, a recreational activity.” Id. at *6-7. Defendant argues that the same 24 result should apply here because, like skiing and golfing, playing games on Facebook does not 25 qualify as a matter of public interest. Opp. at 5. 26 The Court agrees with Plaintiffs. This case resulted in the enforcement of an important 27 right affecting the public interest, specifically the protection of minors against their “own 28 improvidence and the designs of others.” See Berg v. Traylor, 148 Cal.App.4th 809, 818 (2007). 7 1 “It is the policy of the law to protect a minor against himself and his indiscretions and immaturity 2 as well as against the machinations of other people and to discourage adults from contracting with 3 an infant.” Id. The result of this lawsuit enacts precisely that public policy by informing the 4 millions of children that Facebook allegedly targets for purchases of their rights and enabling them 5 to seek refunds. Thus, the Court finds that attorneys’ fees to Plaintiffs are warranted pursuant to § 6 1021.5 in this case and turns to the amount requested.4 B. Amount of Fees 7 1. Reasonableness of Rates 8 First, the Court must determine whether Plaintiffs’ attorneys’ rates are reasonable. When 9 determining the reasonable hourly rate, the court must weigh the “experience, skill, and reputation 11 United States District Court Northern District of California 10 of the attorney requesting fees,” and compare the requested rates to prevailing market rates. 12 Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986) opinion amended on denial 13 of reh’g, 808 F.2d 1373 (9th Cir. 1987); see also Blum v. Stenson, 465 U.S. 886, 886 (1984). The 14 relevant community for analyzing reasonable hourly rates “is the forum in which the district court 15 sits,” here the Northern District of California. Camacho, 523 F.3d at 979. Plaintiffs seek to recover fees for work performed by seven attorneys: C. Brooks Cutter, 16 17 John R. Parker Jr., Daniel Edelman, Benjamin Edelman, Audra Ibarra, Tiffany Tran, and Jeremy 18 Price. Their hourly rates and years of litigation experience are as follows: 19 Attorney Hourly Rate Years of Experience 20 C. Brooks Cutter $800 28 21 John R. Parker, Jr. $600 10 22 Daniel Edelman $800 47 23 24 25 26 27 28 4 Furthermore, the Court notes that neither Olsen nor Grant denied the request for fees solely because the relevant interest was recreational. In Olsen, the court also found that the plaintiff “did not obtain the ‘primary relief sought’” and noted that, because the plaintiff was pro se, “his eligibility to recover attorney fees is in doubt.” Olsen, 48 Cal. App. 4th at 621. In Grant, the court “found that, for purposes of recovering costs, neither side prevailed” and that the alleged misconduct affected “‘a relatively small number of condominium owners’ rather than the public at large.” Grant, 2003 WL 22080215 at *1, *6. 8 1 Benjamin Edelman $650 8 2 Audra Ibarra $525 17 3 Tiffany Tran $150 Not provided 4 Jeremy Price $150 Not provided 5 6 See Cutter Decl. §§ 22, 23, ECF 142-4; D. Edelman Decl. ¶¶ 1, 10, ECF 142-5; B. Edelman Supp. 7 Decl. ¶¶ 2, 26, ECF 148-3; Ibarra Decl., ¶¶ 1, 7, ECF 142-2. 8 In support of their request, Plaintiffs, who bear the burden of establishing that the rates are reasonable, direct the Court to In re LinkedIn User Privacy Litig., 309 F.R.D. 573, 591-92 (N.D. 10 Cal. 2015). That decision, issued in September 2015, considered prevailing rates in a class action 11 United States District Court Northern District of California 9 suit against a social networking site and found that “[i]n the Bay Area, ‘reasonable hourly rates for 12 partners range from $560 to $800, for associates from $285 to $510, and for paralegals and 13 litigation support staff from $150 to $240.’” 309 F.R.D. 573, 591 (N.D. Cal. 2015) (quoting In re 14 Magsafe Apple Power Adapter Litig., No. 5:09-CV-01911-EJD, 2015 WL 428105, at *12 (N.D. 15 Cal. Jan. 30, 2015)). Plaintiffs argue that their requested rates of $525-800 for partners and $150 16 for associates fall well within these parameters. Mot. at 7-8. 17 Defendant takes issue with the proposed rates for Benjamin Edelman, Ms. Tran, and Mr. 18 Price, arguing that Plaintiffs have not provided any information concerning these attorneys’ legal 19 experience. Opp. at 19-20. Benjamin Edelman, an associate professor at Harvard Business School 20 who graduated from law school in 2008, responded with a supplemental filing that identifies three 21 class actions in which he has taken an active role. B. Edelman Supp. Decl. ¶ 26. However, 22 Plaintiffs failed to note, much less correct, the deficiency regarding Ms. Tran and Mr. Price. As a 23 result, the Court lacks information regarding when, or even whether, these individuals graduated 24 from law school or gained admittance to the bar.5 While the Court notes that $150/hour is a low 25 request for an associate’s hourly fee in the Bay Area, Plaintiffs have failed to establish that the rate 26 27 28 5 Public records also fail to reveal their years of practice, as the California Bar lists two admitted attorneys named Tiffany Tran and three named Jeremy Price, none of whom are listed as working at Kershaw Law or Cutter Law. 9 1 is reasonable for these particular associates. Accordingly, the Court finds that the requested hourly 2 billing rates are reasonable for all counsel but Ms. Tran and Mr. Price. 3 2. Reasonableness of Hours 4 The Court next considers the reasonableness of the hours expended. The Court cannot 5 “uncritically” accept the plaintiff’s representations of hours expended; rather, the Court must 6 assess the reasonableness of the hours requested. Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 7 1385 (9th Cir. 1984). In making this determination, the Court can reduce hours when 8 documentation is inadequate, or when the requested hours are redundant, excessive, or 9 unnecessary. Hensley, 461 U.S. at 433-34. Plaintiffs seek fees for the 1,999.2 hours of work done by Mr. Parker (“JRP”), Mr. Cutter 10 United States District Court Northern District of California 11 (“BCB”), Benjamin Edelman (“BE”), Daniel Edelman (“DE”), Ms. Ibarra, Ms. Tran, and Mr. 12 Price. See Exh. E to Cutter Decl., ECF 142-3; see also Cutter Decl. ¶ 29; Mot. at 6. Plaintiffs do 13 not submit hourly records, but offer a table that divides each attorney’s hours into fifteen 14 categories of work, which the Court reproduces below.6 15 16 JRP CBC BE DE Ibarra Tran Price 17 Pre-investigation 10.2 0 28 0 0 0 0 18 Complaints 69.4 15.1 45.2 9.2 0 0 0 19 MTD Briefing 92.5 32.7 42.4 42.35 0 0 0 20 MTD Hearing 15 0 0 0 0 0 0 21 Case Management 48.2 15.3 32 0.8 0 1.3 0 22 Discovery 66.9 3.3 24.7 20.6 0 73 9.5 23 Document Review 65.2 0 18.9 32.1 0 117.8 0 24 Depositions 174 0 21.1 0 0 29.2 0 25 Class Cert. Briefing 133.8 24.9 55.5 133.3 0 46.5 0 26 27 28 6 Plaintiffs also offer a table where the hours for Complaints, MTD Briefing, and MTD Hearing are reduced by 10 percent to reflect unsuccessful claims. Because, as discussed below, the Court finds this reduction to be arbitrary, the Court uses the full hours request as its starting point. 10 1 Class Cert. Sealing 17.4 1.3 26.5 0 0 10 0 2 Class Cert. Hearing 27.5 18.5 7.2 8.5 0 0 0 3 23(f) Motion 22.2 12.8 2.5 18 23.5 0 0 4 Settlement 69 31.5 26.7 23.35 0 0 0 5 Approval/Fees 35 6 5 7.9 3.5 0 0 6 Trial Preparation 18 9 14.8 3.6 0 0 0 7 Total 864.3 170.4 350.5 299.7 27 277.8 9.5 8 See Exh. E to Cutter Decl (“Before Deductions” Table). Defendant first challenges Plaintiffs’ submission as too general and insufficiently 10 documented to enable the Court to assess the reasonableness of the claimed hours. Opp. at 7-11.7 11 United States District Court Northern District of California 9 Plaintiffs respond that the chart they submitted provides sufficient detail. Reply at 4-5, ECF 148. 12 “The essential goal in shifting fees . . . is to do rough justice, not to achieve auditing 13 perfection. So trial courts may take into account their overall sense of a suit, and may use 14 estimates in calculating and allocating an attorney's time.” Fox v. Vice, 563 U.S. 826, 838 (2011); 15 see also Lytle v. Carl, 382 F.3d 978, 989 (9th Cir. 2004) (“counsel need only identify the general 16 subject matter of their time expenditures”) (internal citation omitted). Here, Plaintiffs clearly meet 17 this standard for Mr. Cutter, Mr. Parker, Benjamin Edelman, Daniel Edelman, and Ms. Ibarra by 18 concisely detailing the time each person spent on fifteen discrete tasks, and supporting the hours 19 with declarations. However, because Plaintiffs provided no information regarding Ms. Tran and 20 Mr. Price’s experience, the Court cannot find any of their requested hours to be reasonable. 21 a. Unsuccessful Claims 22 Turning to the reasonableness of the remaining hours, Defendant first argues that the 23 request should be reduced to exclude time spent on unsuccessful claims. When counsel seeks fees 24 for both successful and unsuccessful claims, the Ninth Circuit instructs district courts to follow a 25 two-part analysis. 26 7 27 28 Defendant relies, in part, on the fact that neither Cutter Law nor Ms. Ibarra identified the manner in which they maintained their time records as required by Civil Local Rule 54-5(b)(2). Opp. at 7. Both corrected this deficiency with supplemental declarations. See Ibarra Supp. Decl. ¶¶ 3-4, ECF 148-1; Cutter Suppl. Decl. ¶ 2, ECF 148-2. 11 “First, the court asks whether the claims upon which the plaintiff failed to prevail were 1 related to the plaintiff’s successful claims.” Schwarz v. Sec’y of Health & Human Servs., 73 F.3d 3 895, 901 (9th Cir. 1995) (quoting Thorne v. El Segundo, 802 F. 2d 1131, 1141 (9th Cir. 1986). 4 “Echoing the Supreme Court's description of related-claim cases, [the Ninth Circuit has] said that 5 related claims involve a common core of facts or are based on related legal theories.” Webb v. 6 Sloan, 330 F.3d 1158, 1168 (9th Cir. 2003) (emphasis in original) (citing Hensley, 461 U.S. at 7 435). If the Court finds that the claims are unrelated, the inquiry ends and “the final fee award may 8 not include time expended on the unsuccessful claims.” Schwarz, 73 F.3d at 901 (quoting Thorne, 9 802 F. 2d at 1141). If, on the other hand, “the unsuccessful and successful claims are related, then 10 the court must apply the second part of the analysis, in which the court evaluates the ‘significance 11 United States District Court Northern District of California 2 of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the 12 litigation.’ If the plaintiff obtained ‘excellent results,’ full compensation may be appropriate, but if 13 only ‘partial or limited success’ was obtained, full compensation may be excessive. Such decisions 14 are within the district court’s discretion.” Id. (quoting Thorne, 802 F. 2d at 1141). 15 Here, Defendants seek to exclude time spent on the claims brought by the adults (“Adult 16 Claims”),8 which were dismissed with prejudice, as well as time spent seeking certification of a 17 class for monetary relief, which was not certified. Opp. at 11-15. Plaintiffs concede that the EFTA 18 and MTA claims,9 which encompass the bulk of the Adult Claims, were unrelated to the 19 successful claims. They argue that the hours spent on Complaints and Motions to Dismiss should 20 therefore be reduced by 10 percent, but oppose any reduction on any later work as related to the 21 successful claims. Mot. at 12; see also Reply at 7. As noted in the Background Section above, this case shifted dramatically through the 22 23 course of several iterations of the complaint and related motions to dismiss. What began as a case 24 of unjust enrichment by one parent ended as a class action by minors for declaratory and 25 26 27 28 8 These include the EFTA, CLRA, and § 6701(a) claims, as well as the unlawful and fraudulent UCL claims. They do not include the § 6701(c), § 6710, and unfair UCL claims. 9 Plaintiffs’ phrase “MTA claims” appears to refer to the portions of the UCL and CLRA claims that were based on violations of the California Money Transmission Act, California Financial Code § 2000 et seq. See SAC ¶¶ 33, 38, 78, 91. 12 1 injunctive relief. The Adult Claims, which ultimately failed, formed the bulk of Plaintiffs’ claims 2 at the early stages of litigation. In comparing the facts and legal theories upon which those claims 3 and the minors’ surviving §§ 6701(c) and 6710 claims were based, the Court finds that the Adult 4 Claims were not related to the successful claims by common legal theories or a core of facts. For 5 example, the surviving claims focus on theories regarding minors’ rights to disaffirm contracts and 6 the fact that minors made purchases from Facebook, while the unsuccessful claims focused on 7 legal theories pertaining to the use of credit cards under EFTA and whether or not Facebook 8 Credits qualify as a “good or service” under the CLRA, as well as ultimately irrelevant specifics of 9 the transactions and the economic harm to the adults. On the other hand, the Court agrees with Plaintiffs that the work they did after the 11 United States District Court Northern District of California 10 pleadings were set—specifically, seeking to certify a class for monetary relief—although 12 unsuccessful, was related by a common set of facts (i.e., minor Plaintiffs made purchases from 13 Facebook) and legal theories (i.e., those purchases are void or voidable under California law) to 14 the ultimately successful certification of a class for injunctive relief. 15 With those findings in mind, the Court turns to the second step. Because “the final fee 16 award may not include time expended on the unsuccessful claims,” the Court must exclude hours 17 expended on the Adult Claims. The Court finds that these hours are limited to time spent on Pre- 18 investigation, Complaints, and Motions to Dismiss, as all later work concerned only the minors’ 19 claims. The Court rejects Plaintiffs’ 10 percent proposal as arbitrary and instead eliminates all 20 hours spent on the initial Complaint and the FAC, neither of which included minor plaintiffs, as 21 well as hours devoted to the Adult Claims in the SAC, TAC, and two rounds of motions to 22 dismiss. In addition, of the 28 hours requested for pre-investigation work conducted by Benjamin 23 Edelman, 13 hours is disallowed because that time reasonably related to investigation of the 24 unsuccessful Adult Claims which made up much of the initial pleadings. 25 Because Plaintiffs do not offer time sheets showing dates, the Court approximates these 26 reductions based on: (1) the pages devoted to the Adult Claims in the Complaints and Motions to 27 Dismiss; (2) the fact that Benjamin and Daniel Edelman joined as counsel in time to work only on 28 the TAC and second Motion to Dismiss; (3) the duplication of work in opposing the initial Motion 13 1 to Dismiss given that the Court struck the first Opposition; and (4) the Court’s understanding of 2 how much work a person of each attorney’s skill should have been able to accomplish in a given 3 number of hours. As with all reductions that follow, the precise reductions are set forth by attorney 4 and task in the table at the bottom of this section. The resulting time awarded for the Pre- 5 Investigation, Complaint, Motion to Dismiss briefing, and Motion to Dismiss hearing total 25.2 6 hours, 43 hours, 80 hours, and 10 hours respectively. 7 b. Class Certification 8 As for the hours spent on the unsuccessful attempt to certify a class for monetary relief, which the Court found to be related to the successful claims, the Court now “evaluates the 10 significance of the overall relief obtained by the plaintiff in relation to the hours reasonably 11 United States District Court Northern District of California 9 expended on the litigation.” Schwarz, 73 F.3d at 901. The Court finds that Plaintiffs obtained an 12 excellent result—certification of a class of minors and injunctive relief that affirms minors’ rights 13 under California family law—and therefore will award reasonable fees for success in obtaining 14 class certification. 15 At the same time, the Court agrees with Defendant that Plaintiffs have failed to justify the 16 reasonableness of the 394 hours they request for researching and briefing class certification. As 17 Defendant notes, Plaintiffs fail to identify the precise work done by certain attorneys who claim 18 these hours. Opp. at 9. More importantly, the Court finds the request of nearly 400 hours to be 19 unreasonable given the years of experience of counsel and the high fees requested. Moreover, the 20 Court notes that it had to do its own work to certify the class, citing six cases that neither party 21 submitted and several others that the parties brought forth only after the Court identified the 22 precise issue to be briefed. Accordingly, the Court finds the hours expended to be excessive. 23 Mr. Parker and Daniel Edelman request 133 hours each for researching and drafting the 24 class certification motion, while Benjamin Edelman requests an additional 55.5 hours and Mr. 25 Cutter seeks 24.9 hours for the same motion. It simply is not reasonable for four senior attorneys 26 to draft a class certification motion. In light of the issues briefed, the Court observes that 140 27 hours is a reasonable amount of time for drafting the motion and apportions 70 hours each to Mr. 28 Parker and Daniel Edelman, who both represent that they devoted substantial time to drafting. The 14 1 Court also finds that Daniel Edelman, who has considerable expertise in class certification, 2 reasonably expended an additional 25 hours on advising and reviewing Mr. Parker’s work. 3 Considering their work to be the primary effort in researching and drafting the motion, the Court 4 determines that Mr. Cutter and Benjamin Edelman reasonably expended a similar number of hours 5 on advising and consultation only—24.9 hours as requested for Mr. Cutter and 25 hours for 6 Benjamin Edelman. Thus, the Court allows 70 hours for Mr. Parker, 95 hours for Daniel Edelman, 7 25 hours for Benjamin Edelman, and 24.9 hours for Mr. Cutter on the class certification motion. 8 Plaintiffs also request 46.5 hours for work performed by their associate Ms. Tran. While 9 this would appear reasonable for an associate, there is no evidence that Ms. Tran is an admitted attorney and her hours are therefore excluded. In sum, the Court will award 214.9 hours as 11 United States District Court Northern District of California 10 reasonable for the class certification research and briefing. The hours requested for the class 12 certification hearing and 23(f) motion are reasonable and allowed in full. Defendant next argues that Plaintiffs cannot recover fees for the 55.2 hours claimed for the 13 14 Motion to Seal the Class Certification Motion. Opp. at 15-16. Defendant contends that the 15 majority of this time was spent opposing Facebook’s sealing request, which did not aid class 16 members. Plaintiffs respond that this time proved fruitful, as shown by Facebook’s withdrawal of 17 certain requests to seal. Reply at 10. Having reviewed the filings, the Court finds that the time 18 reflects both successful public access efforts and a series of mistaken public filings that required 19 unnecessary work by Plaintiffs and the Court. Thus, the Court reduces the requested time for 20 sealing to 21.3 hours. 21 c. Discovery 22 Defendant also challenges the 656.3 hours Plaintiffs submit for discovery, with particular 23 focus on the time spent by Mr. Parker and Daniel Edelman, both senior attorneys, on document 24 review and the hours Benjamin Edelman claims for attending depositions during which he never 25 spoke. 26 Plaintiffs break their discovery hours into three categories: 198 hours for discovery, 234 27 hours for document review, and 224.3 hours for depositions. Of the total, 426.8 hours were 28 expended by senior lawyers (Mr. Cutter, Mr. Parker, B. Edelman, and D. Edelman) and 229.5 15 1 hours were expended by “associates.” As with the class certification briefing, although the hours 2 expended by Ms. Tran and Mr. Price would appear reasonable, there is no evidence that either one 3 is an admitted attorney. Absent such evidence, these hours are excluded. 4 As to the four senior attorneys, Plaintiffs explained at the hearing that their firm model requires partners to devote substantial time to discovery and document review. Daniel Edelman 6 explains that he needed to conduct document review to identify documents relevant to class 7 certification. D. Edelman Decl. ¶ 7. While the Court agrees that partners may be able to review 8 documents efficiently because they know what to look for, the Court finds that the submitted 9 hours reflect no such efficiency here. Daniel Edelman and Mr. Parker together seek nearly 100 10 hours to review documents—specifically, 1,455 documents spanning 11,645 pages, see Hearing 11 United States District Court Northern District of California 5 Transcr. at 45:23-24—that Benjamin Edelman represents he was able to review and notate in their 12 entirety in only 19 hours. See B. Edelman Supp. Decl. ¶ 14. Accordingly, the Court reduces the 13 hours requested for document review to reflect the amount of work an attorney of Mr. Parker and 14 Daniel Edelman’s skill would be expected to accomplish in a given amount of time. The hours are 15 reduced to allow 67 hours for document review. 16 As for Benjamin Edelman’s hours for the depositions, he admits that he did not speak 17 during the depositions, but explains that he listened and assisted Mr. Parker remotely by drafting 18 questions, identifying documents, and noting unclear answers. B. Edelman Supp. Decl. ¶ 15. The 19 Court finds the requested 21.1 hours to be entirely unreasonable for these tasks, and reduces the 20 time to 2 hours. The hours Mr. Parker requested for depositions are reasonable and allowed in full. 21 d. Case Management, Settlement, and Trial Preparation 22 The Court also finds the 97.6 hours requested for case management to be unreasonable. 23 The parties attended only four case management conferences and submitted five joint statements 24 that numbered less than ten pages each. In addition, Benjamin Edelman, who is located in Boston, 25 requests nearly a third of these hours. As with class certification, the Court observes that Mr. 26 Parker did the bulk of the work on case management, with advising by Mr. Cutter and therefore 27 allows 25 and 10 hours, respectively, for their work. The Court finds the 0.8 hours by Daniel 28 Edelman, located in D.C., to be reasonable while the 32 hours requested by Benjamin Edelman, 16 1 located in Boston, are unsupported and unreasonable. Therefore, the Court allows 5 hours for 2 Benjamin Edelman’s case management contributions. As above, because the Court lacks any 3 evidence of Ms. Tran’s admission to the bar, her requested hours (1.3) are excluded. In sum, the 4 Court awards 40.8 hours for case management. 5 Finally, Defendant challenges the 45.4 hours Plaintiffs seek for trial preparation because 6 the work occurred after the parties had agreed to mediate and the Court had moved the trial date to 7 several months away. Opp. at 18-19. The Court agrees that the hours were unreasonable given the 8 posture and schedule of the case and therefore reduces the time to 17 hours. The Court finds the 9 remaining hours, expended on settlement discussions, settlement approval, and this motion, to be 10 United States District Court Northern District of California 11 reasonable and awards them in full. Combining the reductions outlined above results in a total award of 1,159.35 hours, 12 detailed in the table below. As explained above, the Court finds these hours to be reasonable in 13 light of the work accomplished, the skill and expertise of the attorneys, and the mix of successful 14 and unsuccessful claims. 15 JRP 16 17 18 19 20 21 22 23 Pre-investigation CBC BE DE Ibarra Tran Price 10.2 0 15 0 0 0 0 Complaints 20 10 10 3 0 0 0 MTD Briefing 40 15 15 10 0 0 0 MTD Hearing 10 0 0 0 0 0 0 Case Management 25 10 5 0.8 0 0 0 66.9 3.3 24.7 20.6 0 0 0 50 0 12 5 0 0 0 174 0 2 0 0 0 0 Discovery Document Review 24 Depositions 25 Class Cert. Briefing 70 24.9 25 95 0 0 0 26 Class Cert. Sealing 10 1.3 10 0 0 0 0 27 Class Cert. Hearing 27.5 18.5 7.2 8.5 0 0 0 28 23(f) Motion 22.2 12.8 2.5 18 23.5 0 0 17 1 Settlement 69 31.5 26.7 23.35 0 0 0 2 Approval/Fees 35 6 5 7.9 3.5 0 0 3 Trial Preparation 5 5 5 2 0 0 0 4 Total 634.8 138.3 165.1 194.15 27 0 0 5 6 7 2. Lodestar Calculation Based on the foregoing, the total lodestar calculation is summarized in the following table: Attorneys Hourly Rate Hours Requested Hours Excluded Hours Awarded Total Tentatively Awarded 10 Mr. Parker $600 864.3 229.5 634.8 $380,880 11 Mr. Cutter $800 170.4 32.1 138.3 $110,640 12 B. Edelman $650 350.5 185.4 165.1 $107,315 13 D. Edelman $800 299.7 105.55 194.15 $155,320 14 Ms. Ibarra $525 27 0 27 $14,175 15 Ms. Tran -- 277.8 277.8 0 0 16 Mr. Price -- 9.5 9.5 0 0 8 United States District Court Northern District of California 9 17 Total $768,330 18 19 3. Lodestar Multiplier 20 Plaintiffs seek a multiplier of 1.2 to 1.5. Mot. at 2. They explain that they bore the entire 21 cost of this litigation and took the case, which has now spanned more than three years, on a purely 22 contingent basis. See Cutter Decl. ¶ 6; B. Edelman Decl. ¶ 6; Ibarra Decl. ¶ 9. They argue that this 23 risk, coupled with the significant outcome achieved, warrants a modest multiplier. Defendant 24 argues that such risk is inherent in nearly every class action and a significant outcome is necessary 25 for any recovery of fees under § 1021.5 at all. Opp. at 20-23. 26 27 28 “Although the lodestar figure is presumptively reasonable, the court may adjust it upward or downward by an appropriate positive or negative multiplier reflecting a host of ‘reasonableness' factors, including the quality of representation, the benefit obtained for the class, the complexity 18 1 and novelty of the issues presented, and the risk of nonpayment. Yamada, 2016 WL 1579705, at 2 *6 (internal citations omitted). “Of those factors, a party's success in the litigation is the ‘most 3 critical.’” Id. (quoting Hensley, 461 U.S. at 436). In addition, “[i]t is an established practice in the 4 private legal market to reward attorneys for taking the risk of non-payment by paying them a 5 premium over their normal hourly rates for winning contingency cases. This provides the 6 ‘necessary incentive’ for attorneys to bring actions to protect individual rights and to enforce 7 public policies.” Fischel v. Equitable Life Assur. Soc'y of U.S., 307 F.3d 997, 1008 (9th Cir. 2002). Applying those principles here, the Court finds a multiplier of 1.2 to be appropriate given 9 the novel issues involved in the case, the substantial benefit obtained for Facebook users who are 10 minors, and the fact that the case was taken on a contingency basis. The following table sets forth 11 United States District Court Northern District of California 8 the resulting totals: 12 Attorneys Total Tentatively Awarded Multiplier Total Awarded 14 Mr. Parker $380,880 1.2 $457,056 15 Mr. Cutter $110,640 1.2 $132,768 16 B. Edelman $107,315 1.2 $128,778 17 D. Edelman $155,320 1.2 $186,384 Ms. Ibarra $14,175 1.2 $17,010 Ms. Tran 0 1.2 0 Mr. Price 0 1.2 0 13 18 19 20 21 Total $921,996 22 23 C. Costs 24 In addition, Plaintiffs seek $29,115.66 as reimbursement for expenses and costs spent on 25 prosecuting this case. Mot. at 13; see also Cutter Decl. ¶¶ 26-29, 31; D. Edelman Decl. ¶ 14. 26 Defendant does not contest the amount, but argues that § 1021.5 does not provide for the recovery 27 of costs. Opp. at 24. Defendant relies on Benson v. Kwikset Corp., 152 Cal. App. 4th 1254 as 28 modified on denial of reh'g (July 26, 2007) for this result. However, while Benson explains that 19 1 “Section 1021.5 . . . does not mention costs” it concludes that “the Legislature clearly intended to 2 authorize recovery of attorney fees in private attorney general actions, but limited the recovery of 3 other expenses to the costs generally allowed in litigation.” Id. at 1283. In other words, rather than 4 preclude any award of costs, “the Legislature intended Code of Civil Procedure section 1033.5, the 5 general costs statute, to apply.” Id. 6 As a result, the Court finds that Plaintiffs may seek costs under § 1033.5, which permits 7 costs for, inter alia, filing and motion fees, certain travel expenses, and service. The statute 8 additionally provides that “[i]tems not mentioned in this section and items assessed upon 9 application may be allowed or denied in the court’s discretion.” Cal. Civ. Pro. Code § 1033.5(c) (4). Allowable costs include those that were “reasonably necessary to the conduct of the litigation 11 United States District Court Northern District of California 10 rather than merely convenient or beneficial to its preparation” and “reasonable in amount.” See 12 Cal. Civ. Pro. Code § 1033.5(c)(2) and (3). Having reviewed Plaintiffs’ table of Costs and 13 Expenses, see Cutter Decl. Exh. E, the Court finds that each item meets these standards. 14 Accordingly, the Court GRANTS Plaintiffs’ request for $29,115.66 in costs. 15 D. Incentive Awards 16 Finally, Plaintiffs seek an incentive payment of $5,000 for each named minor Plaintiff, I.B. 17 and J.W. Mot. at 13-15. Plaintiffs argue that I.B. and J.W. were critical to the success of this case, 18 which benefitted not only themselves but also millions of minor Facebook users, and that they 19 devoted significant time and energy to it. Id. at 14; see also I.B. Decl., ECF 142-7; J.W. Decl., 20 ECF 142-8. Defendant does not oppose this request. 21 “[N]amed plaintiffs, as opposed to designated class members who are not named plaintiffs, 22 are eligible for reasonable incentive payments.” Staton v. Boeing Co., 327 F.3d 938, 977 (9th 23 Cir.2003). “The district court must evaluate their awards individually, using ‘relevant factors 24 including the actions the plaintiff has taken to protect the interests of the class, the degree to which 25 the class has benefitted from those actions, . . . [and] the amount of time and effort the plaintiff 26 expended in pursuing the litigation . . . .” Id. “Incentive awards are fairly typical in class action 27 cases.” Rodriguez v. W. Publ'g Corp., 563 F.3d 948, 958-59 (9th Cir. 2009). 28 The Court finds that I.B. and J.W. devoted significant time and effort to protect the 20 1 interests of the class, responding to “written questions from Facebook’s lawyers” and requests for 2 production, making declarations, traveling to and attending depositions, and spending days 3 discussing the details of the case with their parents and lawyers. J.W. Decl. ¶¶ 3-6; I.B. Decl. ¶¶ 3- 4 7. As discussed at length above, the Court also finds that the case conferred a significant public 5 benefit. Thus, the incentive award is appropriate. See, e.g., Chao v. Aurora Loan Servs., LLC, No. 6 C 10-3118 SBA, 2014 WL 4421308, at *4 (N.D. Cal. Sept. 5, 2014) (nothing that $5,000 payment 7 is presumptively reasonable in this district). Accordingly, the Court GRANTS Plaintiffs’ request 8 for an incentive payment of $5,000 for each named minor Plaintiff. 9 10 IV. ORDER For the foregoing reasons, IT IS HEREBY ORDERED that Plaintiffs’ Motion for United States District Court Northern District of California 11 Attorneys’ Fees is GRANTED AS MODIFIED. Plaintiffs shall recover attorneys’ fees in the 12 amount of $921,996, costs in the amount of $29,115.66, and incentive payments in the amount of 13 $5,000 for each of I.B. and J.W. 14 IT IS SO ORDERED. 15 16 17 18 Dated: June 2, 2016 ______________________________________ BETH LABSON FREEMAN United States District Judge 19 20 21 22 23 24 25 26 27 28 21
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