Category Archives: taxable costs

Minnesota Lodestar Fees in Consumer Protection cases

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).

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District of MN Bill of Costs

The District Court of Minnesota has put up an amended Bill of Costs Guide in order to conform to the recent US Supreme Court decision regarding document translation services (previously reported on this blog) and the taxation of costs statute.

You can access the Bill of Costs Guide here.

 

In sum, on page 10, the Guide states that translation services are not taxable costs.

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9th Circuit thwarts Kellogg cy pres settlement

Note to class action lawyers: When doling out settlement funds to charities as part of a cy pres award, specify the recipients and choose them carefully.

That was the message the 9th Circuit delivered Friday in a decision striking down a settlement plaintiffs’ lawyers reached with cereal maker Kellogg Co over the benefits of Frosted Mini-Wheats. The decision is the latest in a string of recent cases from the 1st, 5th and 9th circuits to question whether class funds that are not distributed to the plaintiffs are going to charities that serve the interests of class members.

The plaintiffs sued in 2009, taking Kellogg to task for its claim that the breakfast cereal was clinically shown to improve children’s attentiveness by 20 percent. The parties settled within three months, with Kellogg agreeing to provide $2.75 million for consumer refunds (up to $15 per customer), a $5.5 million charitable food donation and a promise to stop making similar claims for three years.

When two class members represented by the Law Offices of Darrell Palmer and the Bandas Law Firm objected to the settlement and then appealed its confirmation, the 9th Circuit grabbed the opportunity to elaborate on the standard for cy pres it set in November in a class action against AOL. A three-judge appellate panel tossed the settlement, concluding that for one thing, the cy pres donation was too vague because it said awards to charities that feed the indigent would be chosen later. Food banks were also the wrong recipients, the court concluded, given that the lawsuit involved claims of deceptive advertising, not food deprivation.

“The only relationship between this lawsuit and feeding the indigent is that they both involve food in some way,” Judge Stephen Trott wrote for a panel that also included Judge Sidney Thomas and Judge Kevin Duffy of the Southern District of New York, who was sitting by designation. Any charitable donation should have gone to consumer protection groups that combat false advertising, the appeals court concluded.

The court cited its rejection of the cy pres award in the AOL case, which called for $110,000 to go to charities unrelated to the concerns of its customers, who had sued over promotional messages included in their emails. The decision also comes after a 5th Circuit ruling in September, which held that $830,000 in leftover settlement funds from a case against Elf Atochem should go to class members, not charities.

Class counsel Timothy Blood of Blood Hurst & O’Reardon defended the connection between the Kellogg food donation and the lawsuit, which dealt with claims about the nutritional value of a food directed at children. “We felt it was important to provide food products to the indigent because most of the indigent are children,” he told On the Case, adding that the court’s decision would lead to settlements that were less beneficial to society at large. Kellogg counsel Kenneth Lee of Jenner & Block did not immediately respond to requests for comment. The company declined to comment on the litigation.

Darrell Palmer, a lawyer for the objectors, welcomed the decision as a sign that federal appeals courts are scrutinizing whether cy pres awards have a relationship to the underlying claims. Palmer noted that the 9th Circuit panel included a New York federal judge. “I’m hoping (the ruling) might resonate with the 2nd Circuit,” Palmer said. “Judges often think of the 9th Circuit as liberal.”

In addition to a problem with the intended recipients, the court also found the $2 million set aside for plaintiffs’ attorney fees was excessive. Based on hours worked, lawyers for the class were charging $2,100 per hour — more than even “the most highly sought-after attorneys,” the court found. Class counsel Blood disputed that number, claiming it didn’t take into account work performed over the course of two years.

via 9th Circuit thwarts Kellogg cy pres settlement.

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“Compensation of interpreters” does not include document translation

The Supreme Court decided Taniguchi v. Kan Pacific Saipan, holding that the cost of document translation is not a taxable cost under the federal cost-shifting statute, 28 U.S.C. § 1920. In an opinion by Justice Samuel Alito, the Court ruled – by a vote of six to three – that the Ninth Circuit had it wrong when it ruled that 28 U.S.C. § 19206’s allowance for “compensation of interpreters” includes translation of written documents, and not only what everyone agrees that provision comfortably covers: oral interpretation, such as in-court interpretation of testimony in a language other than English. Interestingly, it wasn’t just the Ninth Circuit that had it wrong. Most federal courts that had addressed the question had ruled that subsection 19206 covers document translation, and, as the dissent pointed out, awards for those costs have been commonplace in the district courts.

In this case, the Court held that “because the ordinary meaning of ‘interpreter’ is someone who translates orally from one language to another,” … ‘compensation of interpreters’ in [28 U.S.C.] § 1920(6) does not include costs for document translation.” Put even more simply, people who win federal-court lawsuits cannot be reimbursed by the losing party for any of their document translation costs.

via Opinion analysis: “Compensation of interpreters” does not include document translation : SCOTUSblog.

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