On February 13th, the Minnesota Supreme Court held that the lodestar method must be used when determining attorney fees in consumer protection cases.
An unanimous Minnesota Supreme Court in Green v. BMW of N. Am., A11-0581 (Minn. Feb. 13, 2013), ruled that the lodestar method applies for the attorney fee calculation under Minnesota’s lemon law. In addition, the Minnesota Supreme Court stated that courts must consider, among other factors, the amount involved in the litigation and the results obtained.
In the Green case, the district court issued a verdict in favor of Green and awarded her $25,157 in damages. The district court also granted attorney fees and costs in the amount of $229,064. The Minnesota Court of Appeals affirmed. The Minnesota Supreme Court reversed the decision, and remanded.
When determining the appropriate amount for fees – the court did not consider any other factors, other than the reasonableness of the fees. The court heavily relied on the policy behind the fee-shifting provisions. The court explained that the purpose of fee-shifting provisions was to provide incentives for attorneys to take these types of cases.
The district court did not award fees under the Magnuson-Moss Warranty Act because the court did not allow for double recovery.
The Supreme Court reversed the fees decision because the lodestar method should have been applied. Under Minnesota’s Lemon Law, Minn. Stat. 325F.665, subd. 9, consumers “may bring a civil action to enforce” the lemon law and “recover costs and disbursements, including reasonable attorney’s fees incurred in the civil action.”
The Supreme Court explained that Minnesota courts have consistently used the lodestar method for determining the reasonableness of fees. In fact, courts have used the lodestar method in numerous settings, including MFLSA, MHRA, Minnesota Securities Act, and in polygraph testing. Given the broad application of lodestar, the Supreme Court held that applying lodestar in consumer protection cases was appropriate.
When applying the lodestar method, courts must first determine the number of hours reasonably expended and multiply those hours by a reasonable hourly rate. When determining “the reasonable value of legal services,” the court must consider “all relevant circumstances.” The Supreme Court explained,
The circumstances that inform a court’s “determine[ation of] reasonableness include ‘the time and labor required; the nature and difficulty of the responsibility assumed; the amount involved and the results obtained; the fees customarily charged for similar legal services; the experience, reputation, and ability of counsel; and the fee arrangement existing between counsel and the client.’”
The Supreme Court rejected the argument that the “amount involved” was confined to a consideration of the amount involved only as it relates to a prevailing party’s percentage of success. The Supreme Court held that courts look “to both the amount involved and the results obtained.” (emphasis in original).