In Re Retirement Cases

Full title: In re RETIREMENT CASES. RICHARD PRICE et al., Plaintiffs and Appellants…

Court: Court of Appeals of California, First District, Division Two.

Date published: Nov 4, 2003

JCCP No. 4049 (Cal. Ct. App. Nov. 4, 2003)

Opinion

JCCP No. 4049. No. A099914.

11-4-2003

In re RETIREMENT CASES. RICHARD PRICE et al., Plaintiffs and Appellants, v. BOARD OF RETIREMENT OF THE SACRAMENTO COUNTY EMPLOYEES RETIREMENT SYSTEM et al., Defendants and Appellants. ERNEST BUDA et al., Plaintiffs and Appellants, v. SACRAMENTO COUNTY EMPLOYEES RETIREMENT SYSTEM et al., Defendants and Appellants.

Lambden

The trial court awarded attorney fees pursuant to Government Code section 31536 ¹ to counsel representing members of the Sacramento County Employees Retirement System (SCERS) after issuing a judgment in a consolidated action involved in the coordinated proceedings related to the calculation of retirement benefits under the County Employees Retirement Law of 1937 (CERL) as codified in 1947. (§ 31450 et seq.) The Board of Retirement of the Sacramento County Employees Retirement System and the County of Sacramento (collectively, Sacramento County and retirement board) challenge the order awarding attorney fees to Stephen H. Silver (Silver) of Silver, Hadden & Silver (SH&S), liaison counsel in the coordinated proceedings; to Christopher D. Burdick (Burdick) of Carroll, Burdick & McDonough (CB&M), former liaison counsel in the coordinated proceedings and co-class counsel for the members of SCERS; and to Robert W. Lucas (Lucas) of Rickards, Karalash & Lucas, LLP (RKL) and Donald W. Fraulob (Fraulob) of Farrell, Fraulob & Brown (FFB), co-class counsel for the members of SCERS. Sacramento County and retirement board assert that none of the fees awarded was reasonable but, except for the courts apparent failure to consider 46.1 hours double-billed to CB&M, we affirm the awards of fees.

1 All further unspecified code sections refer to the Government Code.

SH&S, CB&M, RKL, and FFB (collectively, class counsel) filed a cross-appeal, arguing that the trial court erred in refusing to award them fees under a common fund theory. The proper standard of review is abuse of discretion, and we uphold the courts method of awarding the fees under the statute rather than awarding class counsel a percentage of the recovery from the common fund.

BACKGROUND

This appeal and cross-appeal from the order awarding attorney fees follows a judgment in the coordinated proceedings that challenged the manner in which counties had calculated retirement benefits under CERL. (§ 31450 et seq.) (See our decision in the appeals from those judgments in the coordinated proceedings in In re RETIREMENT CASES (2003) 110 Cal.App.4th 426.) We set forth here only those facts regarding the substantive lawsuits that are relevant to the issue of attorney fees.

Prior to 1997, many, if not all, of the 20 retirement boards operating under CERL calculated employees pension benefits according to the holding in Guelfi v. Marin County Employees Retirement Assn. (1983) 145 Cal.App.3d 297 (Guelfi). The Guelfi court held that an item of "compensation" under CERL must be received by all employees in the applicable grade or class of position for it to be a mandatory part of a retiring employees "compensation earnable" and "final compensation" on which an employees pension is based. (Id. at pp. 303-307.) Fourteen years later, our Supreme Court, in Ventura County Deputy Sheriffs Assn. v. Board of Retirement (1997) 16 Cal.4th 483 (Ventura), overruled Guelfis interpretation of "compensation earnable," holding that "items of `compensation paid in cash, even if not earned by all employees in the same grade or class, must be included in the `compensation earnable and `final compensation on which an employees pension is based." (Ventura, supra, at p. 487.)

After numerous counties and retirement boards refused to apply the Ventura holding retroactively, Randell E. Francis, a retired county employee, filed a petition for writ of mandamus (Code. Civ. Proc., § 1085) on behalf of himself and other members of his class against the Board of Retirement of the Stanislaus County Employees Retirement Association, with the County of Stanislaus as real party in interest. This petition alleged that Ventura must be applied retroactively; that arrears contributions or interest collected cannot, among other things, be from members not benefiting from retroactive relief; and that cash-outs of unused leave upon separation from service, employers payments for insurance premiums, and employers payments to the retirement fund must be included in the calculations of "final compensation" for retirement benefits under CERL. Many similar petitions were filed by individuals on behalf of themselves and others and associations receiving retirement benefits under CERL (plan members) across the State. Three such petitions were filed in the Superior Court of Sacramento County.

Richard Price and Scott Eckert filed an action against Sacramento County and retirement board on December 12, 1997 (Price v. Board of Retirement of the Sacramento County Employees Retirement System (Sacramento County Super. Ct. No. 97-CS03043)). RKL² and FFB represented Price and had a contingent fee agreement with him. On February 17, 1998, the Sacramento County Deputy Sheriffs Association, Robert White, and Edward Shaughnessy brought a similar action (Sacramento County Deputy Sheriffs Association v. Board of Retirement of the Sacramento County Employees Retirement System (Sacramento County Super. Ct. No. 98-CS00443)); they were represented by Richard J. Chiurazzi. On March 14, 1998, Ernest Buda, Thomas J. Burns, and Michael Dutra filed their action (Buda v. Sacramento County Employees Retirement System (Sacramento County Super. Ct. No. 98-CS00703)). Burdick of CB&M represented Buda and had a contingent fee agreement. The Sacramento County Superior Court ordered all three actions consolidated with Price as the lead case (referred to as the Sacramento action).

2 At the time of the agreement, the firm was Rickards & Lucas.

All of these actions by plan members, including the consolidated Sacramento action, were coordinated pursuant to Code of Civil Procedure section 404 et seq. into Judicial Council Coordinated Proceeding No. 4049 on December 21, 1998. On January 19, 1999, the Honorable Stuart R. Pollak, sitting in San Francisco, was assigned as coordination trial judge. The Sacramento action was certified as a single class consisting of all individuals who were past, present, or future members of SCERS, including retirees, deferred retirees, active employees, and their survivors, beneficiaries, agents, assigns, and successors in interest, and the labor organizations recognized as the bargaining agents for the active employee members of SCERS. The court appointed Burdick of CB&M, Lucas of RKL, and Fraulob of FFB, as the attorneys for that single class. Richard Price, Scott Eckert, Ernest Buda, Thomas J. Burns, and Michael Dutra were appointed class representatives.

On March 12, 1999, the court appointed Burdick of CB&M as liaison counsel for all of the plan members who had filed petitions.³ An order filed on April 17, 1999, set forth the following powers and duties of liaison counsel: "(1) to receive on behalf of and promptly distribute to the parties for whom the Liaison Counsel acts, notices and other documents from the Court; (2) to designate counsel to brief each issue identified by the Court for briefing; and (3) to call meetings of counsel for the purpose of proposing joint action. [¶] IT IS FURTHER ORDERED that any parties wishing to submit a supplemental brief in addition to those submitted by counsel designated by Liaison Counsel shall be permitted to submit such supplemental brief(s)."

3 The court also appointed liaison counsel for the retirement boards and for the counties.

The trial court bifurcated the hearings on the two main legal issues of the coordinated proceeding: the includability of various items of remuneration in the calculation of "compensation earnable," and the retroactivity of the Ventura decision.

On June 1, 2000, the court held a hearing on the includability issues and ordered Silver of SH&S to replace Burdick⁴ of CB&M as the liaison counsel for plan members. An order dated June 20, 2000, specified: "IT IS HEREBY ORDRED that, after the Court issues its Ruling on the benefits at issue at the June 1, 2000 hearing, counsel in each action shall meet and confer over whether: (i) the Courts Ruling resolves all issues concerning whether items in their individual actions must be included in calculating pension benefits, save for the [retroactivity] issue . . . ; and (ii) if not, what issues remain." On July 20, 2000, the trial court issued a statement of decision on the includability issues, rejecting the claims by plan members.

4 Burdick retired from active practice in June 2000.

After a status conference in late July, the court issued an order filed August 8, 2000. This order provided that plan members may file a brief on the retroactive application of the Ventura decision "either jointly or county-by-county, if necessary." With regard to discovery, it ordered: "Although the Court expects the parties to cooperate in informal discovery, no formal discovery will be permitted prior to the filing of the opening briefs. Following the filing of the opening briefs, the proponents of retroactivity will be permitted to conduct discovery. Absent stipulation among the parties to a particular action or an order of this Court (upon a showing of good cause), only parties to a particular action may participate in discovery in that action. However, all discovery requests and responses (including deposition notices) served in specific cases also must be served on Liaison Counsel. . . ."

On September 18, 2000, SH&S filed the only brief on the retroactivity issue on behalf of all plan members. SH&S also conducted all discovery.

On August 15, 2001, after the parties stipulated to a modification of the Sacramento class of retirees, the court entered its order dividing the group into two subclasses, as follows: "a. A class consisting of all retirees entitled to benefits from SCERS, and their survivors, beneficiaries, agents and assigns. For this purpose, `retirees means (1) all persons who actually retired or who elected a deferred retirement prior to October 1, 1997; or (2) all persons whose final compensation was based, in whole or in part, on remuneration received prior to October 1, 1997; or (3) all persons who retired on or after October 1, 1997 being represented by Richard Price, Scott Eckert, Ernest Buda, Thomas J. Burns and Michael Dutra; and [¶] b. A class consisting of all active employee members of SCERS, and the labor organizations recognized as the bargaining agents for the active employee members of SCERS being represented by the Sacramento County Deputy Sheriffs Association." The court further ordered that Lucas of RKL, Fraulob of FFB, and Burdick of CB&M would represent the retiree class defined in the first part of this order (section a.). The court appointed Richard J. Chiurazzi (Chiurazzi) of Mastagni, Holstedt, Chiurazzi & Amick to represent the class consisting of all active employee members of SCERS, and the labor organizations recognized as the bargaining agents for the active employee members of SCERS.

On August 31, 2001, the court issued its statement of decision, ruling that the Ventura decision should be applied retroactively. Appeals and cross-appeals from the orders on the includability and retroactivity issues followed, and we affirmed the lower court in In re RETIREMENT CASES, supra, 110 Cal.App.4th 426.

Judge Pollak granted separate judgments on the retroactivity and includability issues in each of the cases involved in the coordinated proceedings; judgment in the Sacramento action was filed on November 30, 2001.

During this period, counsel filed various motions for attorney fees in the actions involved in the coordination trial court.

Chiurazzi, as an attorney for the active members moved for attorney fees. Separately, class counsel for retirees moved for fees to be awarded out of the class common fund or, alternatively, statutory attorney fees pursuant to section 31536. After the hearing on the motions for attorney fees on February 14, 2002, the parties stipulated that the motion for fees by Chiurazzi on behalf of the class of all active employee members of SCERS was to be withdrawn without prejudice. The court requested additional briefing from class counsel representing retirees.

On April 22, 2002, the court held another hearing on the joint motions for attorney fees by class counsel representing retirees. It then requested further documentation from some of the attorneys. On June 10, 2002, the court denied an award of attorney fees under the common fund and awarded fees under section 31536. The court awarded $618,360 to RKL, $506,400 to FFB, $952,120.63 to CB&M, and $243,120 to SH&S.

On August 16, 2002, Sacramento County and retirement board filed a notice of appeal from the order awarding statutory attorney fees in the Sacramento action. One week later, class counsel filed a notice of cross-appeal from that portion of the order denying attorney fees based on a common fund.

DISCUSSION

I. Sacramento County and Retirement Boards

Appeal Challenging the Awards of Attorney Fees

Sacramento County and retirement board attack the trial courts award of attorney fees under section 31536. Section 31536 provides: "If a superior court reverses the denial by the board of an application for a retirement allowance, or for a survivors allowance based on such allowance, or for a claim based on a claimed pension right or benefit, the superior court in its discretion may award reasonable attorneys fees as costs to the member or beneficiary of the member who successfully appealed the denial of such application. Such costs shall be assessed against the board, shall be considered a cost of administration, and shall in no event become a personal liability of any member of the board."

Sacramento County and retirement board contend that the court did not have the authority to award fees to SH&S, as liaison counsel, because the plan members in the Sacramento action had their own attorney. In addition, they claim that the fees awarded to SH&S, CB&M, FFB, and RKL were unreasonable.

A. Standard of Review

Courts have interpreted section 31536 as providing the trial court "permissive discretion" in granting or denying attorney fees. (Van Hook v. Board of Retirement (1983) 148 Cal.App.3d 714, 719.) The " `experienced trial judge is the best judge of the value of professional services rendered in [the] court, and while [the trial judges] judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong [citation]" (Serrano v. Priest (1977) 20 Cal.3d 25, 49 (Serrano III)), and "only if `there has been a prejudicial abuse of discretion. [Citation.]" (County of Marin Assn. of Firefighters v. Marin County Employees Retirement Assn. (1994) 30 Cal.App.4th 1638, 1654.) " ` "To be entitled to relief on appeal . . . it must clearly appear that the injury resulting from such a wrong is sufficiently grave to amount to a manifest miscarriage of justice. . . ." [Citation.] However, `discretion may not be exercised whimsically and, accordingly, reversal is appropriate "where no reasonable basis for the action is shown." [Citation.] [Citations.]" (Baggett v. Gates (1982) 32 Cal.3d 128, 143.)

Sacramento County and retirement boards position that the court lacked authority to grant attorney fees to liaison counsel under section 31536 is a question of law. Accordingly, we review this ruling de novo. (See, e.g., Morcos v. Board of Retirement (1990) 51 Cal.3d 924; Austin v. Board of Retirement (1989) 209 Cal.App.3d 1528, 1531.)

B. Awarding Fees to Liaison Counsel

Sacramento County and retirement board contend that liaison counsel, Silver of SH&S, did not have standing to request attorney fees under 31536, because this firm was not counsel of record for any plan members in Sacramento County. Moreover, all of the plan members maintained their own counsel. Sacramento County and retirement board do not set forth any argument particular to this appeal but merely "adopt and join in the opposition to Mr. Silver[s] receiving attorneys fees filed by [San Mateo County and retirement board] since Mr. Silver represents no [plan member] in the Sacramento actions." For the same reasons that we rejected this argument in our unpublished opinion, Teamsters Union Local 856, AFL-CIO v. Board of Retirement of the San Mateo County Employee Retirement Association, A098137, A101036 and A101201 (filed Sept. 22, 2003) at pages 10 to 21, we reject this contention by Sacramento County and retirement board and conclude that the trial court had the authority to award liaison counsel attorney fees.

C. The Reasonableness of the Fees

1. Amount Awarded to SH&S

The court awarded $243,120 in attorney fees to Silver of SH&S for his work as liaison counsel in the Sacramento action. The court explained: "The court finds that the firms reasonable lodestar is $60,780. This amount is based on 105 common hours, 57.6 Sacramento County only hours and 40 hours incurred on this fee application, charged at a rate of $300 an hour. The lodestar amount is further enhanced by a multiplier of 4."

a. Allocation of common hours: Sacramento County and retirement board do not appear to be challenging the 57.6 hours and 40 hours Silver of SH&S devoted solely to the Sacramento action. They do contend, however, that the 105 common hours allocated to the Sacramento action resulted in a double recovery.

At the hearing on the attorney fees on April 22, 2002, the court noted that SH&S was seeking compensation for 1,904 hours and that Sacramento County and retirement board had submitted their own calculations that indicated that SH&S was only entitled to compensation for 1,232 hours. The court agreed that 1,232 hours was the correct total. In calculating the allocation of common hours, the court noted that there were 14 counties involved in the litigation but Ventura, Fresno, and Santa Barbara Counties settled early. The court stated that, for each of these three counties, it was allocating one-fourteenth of the hours that had been incurred at the point they settled to each of the three settling counties, for a total of 167 hours to these three cases (42.9, 45.9, and 77.9 hours, respectively). It then subtracted 167 from 1,232, and divided that result (1,065 hours) by the 11 counties that had remained in the litigation. Thus, 96.8 hours of Silvers common time was being allocated to the Sacramento action.

At a later point during the hearing, SH&S urged the court to remove from the denominator two counties, Orange and Sonoma. Thus, the firm argued that the original denominator should have been 12 (not 14) and the second denominator should have been 9 (not 11). Silver asserted that there had been a tentative settlement with Orange County and the calculation of attorney fees in that case did not include any common hours, only the hours unique to Orange County. He declared that Sonoma County should also be removed, but added that he would "be happy to leave them in if your Honor thinks its appropriate . . . ." Silver stated that Sonoma County did not enter into the case until after the court rendered its statement of decision and had entered several of the judgments.

The court did not explain exactly how it arrived at the 105 common hours it allocated to the Sacramento action, but SH&Ss calculations establish that it was a product of reducing the two denominators by one, to 13 and 10, respectively.⁵

5 SH&Ss calculation was as follows: "First, we divided the 600 common hours subject to allocation with respect to Ventura County by 13, instead of 14, which produced a quotient of 46.2 hours. Dividing the 643 hours attributable to Fresno by 13 produced a quotient of 49.4 hours, and dividing the 1091 hours attributable to Santa Barbara by 13 produced a quotient of 83.9 hours. The sum of these quotients, or 179.5 hours (which we rounded up to 180 hours), was then subtracted from the 1232 total hours in accordance with the approach advocated by [Sacramento County and retirement board] and followed by Judge Pollak to produce a remainder of 1052 hours. Dividing that amount by the 10 (instead of 11) remaining counties produced the result of an allocation of 105 to each county, including Sacramento."

Sacramento County and retirement board contend that Silver actually was paid for 134 hours in San Joaquin, 136 hours in Kern, and 121 hours in Santa Barbara Counties and therefore they were being charged for work for which he had already received compensation. However, as SH&S points out, in San Joaquin, Santa Barbara, and Kern Counties, the awards of attorney fees were based on agreements made between the parties.

Indeed, the court explained: "Weve talked about this before. Mr. Silver has acknowledged previously that the methods of allocation, the method that he used, isnt conducted the way one would conduct brain surgery. He has approximated. He has tried to do something thats basically fair, but its not precise, and as far as Im concerned, it doesnt have to be precise to the last hour, but there are some basic principles that we have to apply so we reach at least approximately the right amount and come up with reasonable amounts in the final analysis.

"First of all, it seems to me that if—and I underscore `if without deciding, but for purposes of this discussion assuming that in prior cases in which Mr. Silver has been awarded attorneys fees for time that affected this case and other cases, assuming that the fees that he received in other cases was either too great or not enough, either way, whether he charged some other county or retirement system more than their proportionate share or less than their proportionate share, either way that really shouldnt affect what is a reasonable award in these cases.

"First of all, some of the other attorneys fees were determined by agreement. The parties agreed and the court said it was reasonable and approved it. Some other retirement board[s] agreed to pay Mr. Silver for more hours than they really should have. Well, they agreed to it, the court approved it, and I dont see that thats any basis for reducing attorneys fees in this case. The same would be true if he didnt get enough. If he didnt get enough in some other cases, thats no reason to penalize the retirement system here and make them pick up the deficiency.

"I think the question that we have to address here is what is a reasonable apportionment of the common fees to Mr. Silvers firm for these cases?"

Similarly, the question on appeal is whether the fee apportionment to the Sacramento action was reasonable. Sacramento County and retirement board insist that the court must subtract the actual amount of fees awarded, even when the sum was based on a settlement between the parties. However, we agree with the trial court that the settlements should not increase or decrease a court-awarded fee because Sacramento County and retirement board should not have to pay more or less based on negotiations made by other counties. Further, it would create a nightmare for the court to calculate and recalculate—and recalculate—fees based on settlement agreements, which have occurred at various points in time. Rather, the court roughly estimated the amount of common time allocated to the Sacramento action by dividing the total number of hours by the number of counties involved in the litigation.

In reviewing the attorney fee award, we are mindful of the following admonishment: " `We do not want "a [trial] court, in setting an attorneys fee, [to] become enmeshed in a meticulous analysis of every detailed facet of the professional representation. It . . . is not our intention that the inquiry into the inadequacy of the fee assume[s] massive proportions, perhaps dwarfing the case in chief." " (Serrano v. Unruh (1982) 32 Cal.3d 621, 642 (Serrano IV).) Accordingly, we conclude that Sacramento County and retirement board have failed to establish that the method of allocation used by the trial court was unreasonable.

b. Allocating between work on retroactivity and work on includability issues: Sacramento County and retirement board also maintain that the court abused its discretion in failing to consider that class counsel was unsuccessful on the includability issue. The court, they argue, should have apportioned the fees between their successful retroactivity claim and unsuccessful includability claim. (See Greene v. Dillingham Construction, N.A., Inc. (2002) 101 Cal.App.4th 418 (Greene) [trial court has discretion to reduce award of fees for hours spent on unsuccessful claims].)

When a plaintiff sues on a number of causes of action and prevails on only one of them, it may be appropriate to reduce the fee award. (Greene, supra, 101 Cal.App.4th at p. 423, citing Sokolow v. County of San Mateo (1989) 213 Cal.App.3d 231, 250.) However, when the claims are "so intertwined that a further allocation of fees between successful and unsuccessful claims [is] not possible because the claims [are] based on the same set of facts and course of conduct," a reduction in the fees may be inappropriate. (Id. at p. 423; see also Downey Cares v. Downey Community Development Com. (1987) 196 Cal.App.3d 983, 997 (Downey); Hensley v. Eckerhart (1983) 461 U.S. 424, 435-436 [most critical factor is degree of success obtained].) "The trial court [is] in the best position to understand the relationship between the claims and to determine whether time spent on a related claim contributed to [the plaintiffs] objectives at trial." (Greene, supra, at p. 423.)

"Where a lawsuit consists of related claims, and the plaintiff has won substantial relief, a trial court has discretion to award all or substantially all of the plaintiffs fees even if the court did not adopt each contention raised." (Downey, supra, 196 Cal.App.3d at p. 997.) Here, there is no question that plan members received substantial relief when class counsel prevailed on the claim that Ventura should be applied retroactively. Further, the record establishes that the pursuit of the includability issue aided liaison counsel in convincing many counties to settle both the retroactivity and includability issues. Given the substantial relief achieved by liaison counsel and the interrelationship of the claims when negotiating settlements, we hold that the trial court did not abuse its discretion in refusing to reduce the award of attorney fees by the hours devoted solely to the includability issue.⁶

6 Class counsel argue that an award under section 31536 is similar to that under the Fair Employment and Housing Act (FEHA). (See Beaty v. BET Holdings, Inc. (9th Cir. 2000) 222 F.3d 607, 612; Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1175; Feminist Womens Health Center v. Blythe (1995) 32 Cal.App.4th 1641, 1674.) Courts have required a "high threshold [in FEHA cases] for triggering decreases [in attorney fees] due to limited success . . . . Such cases vindicate important public interests whose value transcends the dollar amounts that attach to many civil rights claims." (Beaty, supra, at p. 612.) We do not need to reach the question of whether the rationale for rarely reducing attorney fees under FEHA applies with equal force to the award of fees under section 31536, because we conclude that, under the precedent related to the determination of substantial relief, the trial court did not need to reduce the fees based on a partial recovery theory.

c. Awarding a multiplier of four: Sacramento County and retirement board challenge the courts use of a multiplier of four. They complain that the court failed to explain its reasons for using this multiplier.

Our Supreme Court set forth the following factors a court should consider when determining a positive or negative multiplier: "(1) the novelty and difficulty of the questions involved, and the skill displayed in presenting them; (2) the extent to which the nature of the litigation precluded other employment by the attorneys; (3) the contingent nature of the fee award, both from the point of view of eventual victory on the merits and the point of view of establishing eligibility for an award; (4) the fact that an award against the [defendant] would ultimately fall upon the taxpayers; (5) the fact that the attorneys in question received public and charitable funding for the purpose of bringing law suits of the character here involved; (6) the fact that the monies awarded would inure not to the individual benefit of the attorneys involved but the organizations by which they are employed; and (7) the fact that in the courts view the . . . law firms involved had approximately an equal share in the success of the litigation." (Serrano III, supra, 20 Cal.3d at p. 49, fn. omitted.)

The trial court is not bound to consider all of the foregoing factors, but they are among those "the trial court may consider in adjusting the lodestar figure." (Press v. Lucky Stores, Inc. (1983) 34 Cal.3d 311, 322, fn. 12.) "California courts often use `the amount at stake, and the result obtained by counsel as relevant factors justifying enhancement of a lodestar fee through use of a multiplier [citation], as do their federal counterparts." (Lealao v. Beneficial California, Inc. (2000) 82 Cal.App.4th 19, 45-46 (Lealao).)

Sacramento County and retirement board cite Ramos v. Countrywide Home Loans, Inc. (2000) 82 Cal.App.4th 615 (Ramos) to support their argument that the court must explain its reasons for imposing a multiplier. Ramos involved the settlement of one of a series of class actions that challenged certain mortgage lenders practices of imposing forced order property insurance charges against their borrowers who had failed to maintain their own property insurance. (Id. at p. 618.) When awarding attorney fees in this one particular lawsuit, the trial court had imposed a multiplier of 2.5 on the base amount of fees. (Id. at p. 625.) The reviewing court concluded that the court had appeared to use the skill of counsel and the public benefit achieved by the lawsuit both to set the amount of fees and to justify the multiplier. (Id. at p. 626.) The court explained that double counting is not allowed, and that "[m]ore detailed findings" were necessary to permit review of the award. (Ibid.)

The Ramos court reversed and remanded the award of attorney fees and explained: "In general, where the trial court decides to depart from the lodestar attorney fee approach to select and apply a multiplier, it must make appropriate findings on the factors recognized by case law to explain this discretionary determination in such a manner as to make meaningful appellate review possible. Specifically, here, while this case presented risks for plaintiffs counsel, it was also resolved without the risks of trial. While it involved some limited novelty of issues, it was also part of a series of related litigation. Further, as we have explained, the lodestar calculation apparently fully compensated counsel at their respective professional rates for the hours spent in the litigation. Thus, if the trial court on remand wishes to enhance the lodestar amount by a multiplier, it must more precisely articulate why such increment is appropriate. General reference to risk, novelty and skill on this record does not support the relatively large multiplier selected by the trial court. Due to the discretionary nature of this determination, subject to the additional considerations we have identified, we express no opinion as to the ultimate award the court should select on remand." (Ramos, supra, 82 Cal.App.4th at p. 629, fn. omitted.)

Contrary to Sacramento County and retirement boards assertion, this is not a situation where meaningful court review is impossible, nor is it a situation where the court used the same factors for determining the lodestar as it used for ruling on the multiplier. (See, e.g., Ketchum v. Moses (2001) 24 Cal.4th 1122, 1142 ["By using counsels qualifications and the submitted declarations to justify both the hourly rate and the multiplier, the court appears to have counted the same factor twice"].) At the hearing on April 22, 2002, the court made clear the factors it considered when determining the lodestar. The court explained: "Let me tell you my assessment of this situation. As I understand Mr. Silvers application—and Im just going to focus on the lodestar for the beginning and the lodestar for which Mr. Silver is requesting fees—is first of all, based on an hourly rate of $300 an hour, and although I think theres some objection to that, I think thats a reasonable rate, certainly reasonable in terms of San Francisco, and this is where the litigation was handled, and also very reasonable in terms of Mr. Silvers experience and ability, so the hourly rate is fine as far as Im concerned." Thus, the court decided the hourly rate based on a reasonable rate in San Francisco and based on Silvers skills.

In the trial courts order regarding the award of attorney fees, the court stated: "After considering all pertinent factors, including the quality of the work performed by counsel, the magnitude and complexity of the litigation, the size of the recovery, and the risks of delayed payment and non-recovery assumed by counsel, the court considers these awards . . . to provide fair and reasonable compensation to each of the attorneys who contributed to the commencement, prosecution and favorable resolution of this litigation." The court set forth factors such as the complexity and magnitude of the litigation and the risks involved in litigating the lawsuit as being factors considered when determining the multiplier. These were factors properly considered by the court (Serrano III, supra, 20 Cal.3d at p. 49), and not used when setting the lodestar.

When the lodestar is based on the general local hourly rate, the trial court has discretion to apply a multiplier when other factors, such as the ones set forth by Judge Pollak, are present. As our Supreme Court stated in Ketchum v. Moses, supra, 24 Cal.4th at page 1138: "Nor is it true that applying a fee enhancement will inevitably result in unfair double counting or a windfall to attorneys . . . . Under our precedents, the unadorned lodestar reflects the general local hourly rate for a fee-bearing case; it does not include any compensation for contingent risk, extraordinary skill, or any other factors a trial court may consider . . . . The adjustment to the lodestar figure, e.g., to provide a fee enhancement reflecting the risk that the attorney will not receive payment if the suit does not succeed, constitutes earned compensation; unlike a windfall, it is neither unexpected nor fortuitous. Rather, it is intended to approximate market-level compensation for such services, which typically includes a premium for the risk of nonpayment or delay in payment of attorney fees."

Sacramento County and retirement board insist that this case was not sufficiently unique or difficult to justify a multiplier because the change in legal precedent had been accomplished by Ventura. They complain that the court in Ramos noted that a payment as high as $800 per hour to an attorney is only available in "truly pioneering and high risk cases" (Ramos, supra, 82 Cal.App.4th at p. 626), and Silver received $ 1,200 an hour. First, we note that the lawsuit in Ramos was filed in San Diego in 1995. (Id. at p. 619.) Many may lament this, but attorney fees have risen considerably since then and fees in San Francisco tend to be higher than fees in most other areas in California. Further, the Ramos litigation resulted in settlement and other lawsuits, with essentially identical claims, had been filed prior to the pleadings filed in Ramos. (Ibid.) Thus, the record did not indicate that the case in Ramos was particularly complex or required particular skills by counsel.

In marked contrast, the court here specifically found that this case was complex and the legal work was highly skilled. Sacramento County and retirement boards argument that Ventura settled essentially all of the issues is disingenuous, especially in light of the extensive litigation of the retroactivity issue as well as the numerous and lengthy appellate briefs filed on this issue. Clearly, Ventura did not settle the crucial question of retroactivity. In addition, Sacramento County and retirement board do not claim or cite to any evidence in the record indicating that a rate of $300 per hour is unreasonable for comparable legal work by attorneys in San Francisco.

Accordingly, we affirm the award of fees in the amount of $ 243,120 to SH&S.

2. Amount Awarded to RKL and FFB

In its order awarding attorney fees, the trial court awarded RKL the sum of $618,360. The court explained that the lodestar was $154,590. It was awarding fees at a rate of $300 an hour for 233.9 hours devoted to the case prior to coordination, 192 hours devoted after coordination, and 55 hours devoted to the fee application. In addition, it was awarding fees at a rate of $150 an hour for 68.8 hours by non-attorneys prior to coordination. The court explained: "Without questioning the accuracy of the time sheets submitted by [RKL], the court has substantially reduced the number of compensable hours for time devoted to this matter after coordination on the ground that the number of hours was excessive in view of the limited role performed by these attorneys during this time period, as confirmed by reference to the number of hours devoted to this litigation by attorneys performing both greater and similar responsibilities. The reduction has been made across the board to encompass both attorney and paralegal/consultant time. The lodestar has similarly been enhanced by a multiplier of 4."

The court awarded $506,400 to FFB. The court used a lodestar of $126,600. This amount was based on a rate of $300 an hour for 175 hours performed prior to coordination of the case, 192 hours devoted after coordination, and 55 hours spent on the fee application. The court applied a multiplier of four.

a. Number of hours charged: In its initial request for attorney fees, RKL asked to be compensated for 952.7 hours. The firm requested $400 per hour for Lucass services, $300 per hour for other partners in the firm, and $150 per hour for a person named Wendell Phillips (Phillips). Lucas stated that he expected to spend an additional 31 hours on the matter and the lodestar figure was $335,155. He also requested a multiplier of four, and therefore requested an award of attorney fees in the amount of $1,320,620. In its initial request, FFB requested that the court set the lodestar at $133,440, and use a multiplier of four for a total of $533,760.

At the April 22, 2002 hearing, the court expressed concern about the applications for attorney fees from FFB and RKL. The first concern expressed by the court was the inclusion of 211.3 hours for work completed by Phillips, who was not an attorney. The court acknowledged that the firms should be compensated 100 percent for the time worked on the case prior to coordination, but it was "troubled" with the time summaries for the work completed after coordination. The court noted that Lucas of RKL was requesting compensation for 772 plus hours, and FFB was requesting 448 hours; these sums were about equal to the amount of time Silver spent on the coordinated cases. The court commented that "[s]omething is wrong." The court therefore requested both law firms to submit a new breakdown of hours.

Subsequently, RKL submitted documents indicating that Lucas had spent 679.10 hours on the case, and two other partners had devoted 105 hours for a total of 784.10. The firm classified Phillipss time as "paralegal time" and stated that he spent 211.30 hours. FFB provided an accounting that indicated it had devoted 175 hours to the Sacramento action prior to coordination, 192 hours after coordination, and 55 hours spent on the fee application.

Ultimately, for RKL, the trial court reduced the attorney time by 39 percent to a total of 480.9 hours; it decreased the paralegal time by 67 percent to 68.8 hours. The court awarded fees to FFB for all of the hours claimed in its last submission (422 hours).

Sacramento County and retirement board protest that, even after these reductions, the hours the trial court considered in its award of fees to RKL and FFB comprised almost 80 percent of the total hours Silver used to research, brief, and try his entire case as liaison counsel for all plan members. In addition, they argue that the counsel representing petitioners in San Mateo only charged for 74.75 hours, which they claim is less than eight percent of the hours charged by co-class counsel in the Sacramento action.

We agree that the number of hours requested by FFB and RKL were significant.⁷ However, this is not a situation where the court simply accepted the hours reported as being accurate. Rather, the court requested further substantiation and then, still, decreased the number of hours for RKL. The court reviewed the documents that broke down the hours for each person working on the case and the hours were separated into two categories: pre-coordination and post-coordination. The court, recognizing that no other counsel were involved prior to coordination, was not concerned about duplication for that period. It is clear that it more carefully scrutinized the hours in the post-coordination category and it significantly reduced the hours requested by RKL for this period. Further, there were certain issues that were particular to the Sacramento action that attorneys for the plan members in the San Mateo action did not have to consider, such as consolidating the Sacramento cases, bifurcating the class to prevent a significant conflict from developing, and settlement discussions.⁸

7 Sacramento County and retirement board do not challenge the accuracy of the numbers reported, but complain that the "hours spent accomplished a negligible product, and the fees requested are so extremely disproportional to the product as to cause discredit to the profession . . . ." Because the original requests were, according to Sacramento County and retirement board, so "outrageous," they urge us to award RKL and FFB "zero" in attorney fees to deter such "outrageous" requests in the future.

8 In addition, since FFB and RKL had signed contingency agreements with their clients and believed that the fees would come from a common fund, they argue that they did not consider to the same extent the possibility that they were duplicating the effort of liaison counsel. Sacramento County and retirement board have not pointed to any specific, unreasonable instances of duplication.

Sacramento County and retirement board have not pointed to any particular instance where they believe there was inaccurate billing. Other than comparing the hours spent by counsel in the Sacramento action to the hours requested in cases involving other counties, they have presented no basis for concluding that the courts award was unreasonable. They have therefore failed to meet their burden of establishing that the trial courts ruling on the number of hours was excessive.

b. Awarding a multiplier of four: Sacramento County and retirement board stress that FFB and RKL merely filed the pleadings while Silver tried the case. Consequently, they contend, these law firms were not entitled to a multiplier of four. In addition, they repeat the same argument against the multiplier that they made with respect to SH&S.

As we have discussed ante (in part I.C.1.c.), regarding the award of attorney fees to SH&S, the courts order did set forth the factors it used to apply the multiplier of four, and those factors differed from its reason for awarding a rate of $300 an hour. FFB and RKL filed the initial pleadings, participated in the consolidation of the Sacramento action, consulted with liaison counsel, and participated in the development of the complex legal issues presented and briefed in this litigation. The multiplier was based upon the novelty and complexity of the issues and the risk involved with litigating this action, and we cannot say that the court abused its discretion in ruling that the work warranted a multiplier of four.

c. Allocating between work on retroactivity and work on includability issues: Sacramento County and retirement board maintain that, for the same reasons they made this argument with regard to SH&S, the trial court abused its discretion in failing to consider that FFB and RKL were unsuccessful on the includability issue. For the reasons discussed ante (in part I.C.1.b.), we reject this argument.

3. Amount Awarded to CB&M

The trial court found that the lodestar for the time spent by CB&M on work relating solely to the Sacramento action was $ 226,955. This sum was based on a rate of $350 per hour for a total of 455.9 hours for partners, $200 per hour for a total of 334.6 hours for associates, $100 per hour for a total of 3.7 hours for paralegals, and $40 per hour for a total of 2.5 hours for the librarian. In addition, the court found that the firm was entitled to add $8,078 to its lodestar to account for one-ninth of the common work performed for the benefit of both Sacramento and other counties in the coordinated proceedings. The court applied a multiplier of four and awarded costs in the amount of $11,988.63. Thus, the court awarded CB&M a total of $952,120.63 in attorney fees.

a. Number of hours charged: Sacramento County and retirement board recognize that CB&Ms involvement in the litigation surpassed RKL or FFB but, they contend, Silver did most of the work as CB&M admitted in the San Mateo action. Their principal argument is that the fees were excessive and duplicative of the other attorneys efforts.

In one sentence in their appellate brief, Sacramento County and retirement board cite to a letter sent by Burdick to the court indicating that 46.1 hours that he spent working directly for Silver was mistakenly included in the billing for both SH&S and CB&M. Burdicks letter disclosed that 46.1 hours should have been deleted from the total submitted by CB&M, with a resultant multiplier effect. The record, however, does not indicate that these hours were deducted in the courts final tally.

Other than the foregoing miscalculation, we conclude that the courts award of fees to CB&M was not excessive. CB&M submitted documents delineating the hours devoted to the Sacramento action researching facts and case law, reviewing and preparing documents, conferring with clients, and appearing in court. Sacramento County and retirement board have failed to point to any specific hours that they deem were unreasonable and therefore they have failed to establish that the fees awarded were excessive. Accordingly, we reverse and remand for the court to consider the sole issue of reducing the award to reflect the deduction of 46.1 hours billed by both SH&S and CB&M.

b. Awarding a multiplier of four: Sacramento County and retirement board make the identical argument made with regard to SH&S that the trial court should not have applied a multiplier of four when awarding attorney fees to CB&M. For the same reasons we affirmed this ruling as to SH&S (see, ante, part I.C.1.c.) and as to RKL and FFB (see, ante, part I.C.2.b.), we conclude that using a multiplier of four when calculating CB&Ms fees was not an abuse of discretion.

c. Allocating between work on retroactivity and work on includability issues: By simply referring to their earlier argument with regard to SH&S that the trial court should have decreased the total number of hours devoted to this action by the hours allocated to the unsuccessful includability issue, Sacramento County and retirement board argue that the trial court abused its discretion in refusing to make this deduction in CB&Ms total number of hours. For the same reasons we rejected this argument as applied to SH&S (see, ante, part I.C.1.b.), and as to RKL and FFB (see, ante, part I.C.2.c.), we uphold the courts refusal to make this deduction in the total number of attorney hours claimed by CB&M.

II. Class Counsels Cross-Appeal Challenging the

Denial of Attorney Fees Under a Common Fund Theory

A. Standard of Review

Class counsel acknowledge that the standard of review of an award of attorney fees under section 31536 is abuse of discretion. (See, e.g., County of Marin Assn. of Firefighters v. Marin County Employees Retirement Assn., supra, 30 Cal.App.4th at p. 1654.) However, they maintain that because the issue presented here—whether attorney fees should be awarded under the common fund theory even when there is a statutory basis for awarding the fees—is one of first impression, we should review the lower courts decision de novo.

This is not a situation where the trial court believed that it did not have the discretion to award attorney fees under the common fund theory. To the contrary, the trial court expressly stated: "The court recognizes that it has the discretion to award fees based on the common fund theory and that it could do so in this case. Nonetheless, an award under Government Code section 31536 is more appropriate. . . . [¶] The reasoning for this decision was discussed in detail at prior hearings. Some considerations, however, bear emphasis. First, the retirement board does not oppose paying a reasonable fee in this case. The retirees will receive the full amount of their recovery and the county will pay no more than it is obligated to pay under the statute. There is no reason to believe that non-recovering members of the retirement system will in fact be prejudiced by the payment of these fees. Additional time and expense will be avoided because it will not be necessary to provide notice and an opportunity for class members to object, or to critically evaluate the present value of future benefits or provide a cumbersome mechanism to pay attorney fees into the future. Finally, the court is not persuaded that the denial of a common fund recovery (at the same time that a reasonable fee is awarded under section 31536) will deter competent counsel from representing aggrieved pension plan members in the future."

It is well settled that we review a trial courts determination of reasonable attorney fees for an abuse of discretion. (E.g., Lealao, supra, 82 Cal.App.4th at p. 25.) " `The scope of discretion always resides in the particular law being applied, i.e., in the "legal principles governing the subject of [the] action . . . ." Action that transgresses the confines of the applicable principles of law is outside the scope of discretion and we call such action an "abuse" of discretion. [Citation.] Accordingly, the question before us is whether the trial courts refusal to either award a percentage fee [under a fee-shifting statute] or consider the percentage-of-the-benefit approach in connection with its lodestar calculation is consistent with the applicable law." (Id. at pp. 25-26.)

B. Awarding Fees Under the Common Fund Theory or Under the Statute

Class counsel contend that the trial courts decision to calculate a lodestar under the statute rather than to calculate a percentage of the benefits under a common fund theory was inconsistent with California precedent and federal law.⁹ They argue that under the common fund both California and federal precedent suggest that the "benchmark" is 25 percent of the gross recovery. (See, e.g., Sanders v. City of Los Angeles (1970) 3 Cal.3d 252, 261 (Sanders ); Six (6) Mexican Workers v. Arizona Citrus Growers (9th Cir. 1990) 904 F.2d 1301, 1311.)

9 Class counsel admit that the Fourth District in Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794 interprets Serrano III, supra, 20 Cal.3d at pages 37-38 and other cases as "cast[ing] doubt on the use of the percentage method to determine attorney fees in California class actions. [Citations.]" (Dunk, at p. 1809.) Further, the Dunk court notes that the alternate approach, the lodestar or touchstone method, will "withstand scrutiny on appeal" as long as the record shows "the court awarded fees using that approach." (Id. at p. 1810.) Thus, under Dunk, there was clearly no abuse of discretion here. Class counsel argue that Dunk was incorrectly decided and cite cases postSerrano III that have awarded fees from a common fund (e.g., Crampton v. Takegoshi (1993) 17 Cal.App.4th 308, 317, disapproved on other grounds in Phelps v. Stostad (1997) 16 Cal.4th 23, 34; Rider v. County of San Diego (1992) 11 Cal.App.4th 1410, 1422-1423; Steinberg v. Allstate Ins. Co. (1990) 226 Cal.App.3d 216, 221-222; Bank of America v. Cory (1985) 164 Cal.App.3d 66, 89-91). We need not decide the continuing validity of Dunks holding on the issue of awarding fees from a common fund in a class action because we conclude that no California case compelled Judge Pollak to award fees under the common fund theory and we have already decided in part I., ante, that the amount awarded pursuant to the statute was reasonable.

In Lealao, we discussed the distinction between the payment of attorney fees under a fee-shifting statute from the payment of fees under a fee-spreading common fund theory. (Lealao, supra, 82 Cal.App.4th at pp. 26-28.) In the former, the court usually awarded "reasonable" attorney fees based on the lodestar method. "The lodestar . . . is produced by multiplying the number of hours reasonably expended by counsel by a reasonable hourly rate," which may be increased or decreased by a applying a positive or negative multiplier. (Id. at p. 26.) In contrast, "[f]ee spreading occurs when a settlement or adjudication results in the establishment of a separate or so-called common fund for the benefit of the class. Because the fee awarded class counsel comes from this fund, it is said that the expense is borne by the beneficiaries. Percentage fees have traditionally been allowed in such common fund cases, although . . . the lodestar methodology may also be utilized in this context." (Ibid.; see also Serrano IV, supra, 32 Cal.3d at pp. 632-633.)

We noted in Lealao that, under federal law, "the amount of fees awarded in a common fund case may be determined under either the lodestar method or the percentage-of-the-benefit approach [citation], although, about a decade ago . . . a `ground swell of support [arose] for mandating the percentage-of-the-fund approach in common fund cases. [Citation.]" (Lealao, supra, 82 Cal.App.4th at p. 27.) When our Supreme Court decided Serrano III, California courts could award a percentage fee in a common fund case, but we noted in Lealao that "it is not clear whether this may still be done." (Lealao, at p. 27, citing Dunk v. Ford Motor Co., supra, 48 Cal.App.4th at p. 1809.)

As we pointed out in Lealao, our Supreme Court in Serrano III held that in those situations where " `plaintiffs efforts have not effected the creation or preservation of an identifiable "fund" of money out of which they seek to recover their attorneys fees, the "common fund" exception is inapplicable. (Serrano III [, supra, 20 Cal.3d] at pp. 37-38.)" (Lealao, supra, 82 Cal.App.4th at p. 39.) In Lealao, we concluded that the attorney fees paid to the consumers counsel in a class action against a lender could not be based purely as a percentage of the class recovery, even if the ascertainable amount of money the lender had actually paid to satisfy the valid claims under the settlement was deemed to be a common fund. (Ibid.) Since no common fund had been created, we held that the trial court had not abused its discretion in refusing to "award class counsel a fee calculated purely as a percentage of the class recovery . . . ." (Ibid.)

Class counsel argue that, in contrast to Lealao, a common fund does exist here and also, unlike the situation in Lealao, they did seek a contingent fee from a common fund. They argue that the plan members received both a retroactive award of a lump sum payments and a prospective award of future increase in their monthly pension benefits. They cite to the record where the firm of William M. Mercer, Inc. completed an actuarial evaluation of the monetary recovery and it arrived at an upper estimate of $56 million.¹⁰ Sacramento County and retirement board respond that there is no definite fund here and the actual recovery is currently unknown.

10 If this figure proves to be accurate, class counsel have requested 25 percent, which would result in an award of attorney fees for the sum of $14 million. Although class counsel state that they offered to accept a sliding scale recovery when the trial court expressed concern about a potential windfall, they caution that "the great weight of authorities suggest such a practice [of accepting a sliding scale] is disfavored."

We do not need to consider whether a definite fund exists if we conclude that California law does not require the court to award attorney fees as a percentage of the class recovery. As discussed ante, in part I., the amount awarded pursuant to the statute was reasonable, and therefore the court was acting within its discretion unless the law compelled it to award fees under the common fund doctrine rather than under the fee-shifting statute.

Although class counsel argue extensively and vigorously that precedent required the court to award attorney fees on a percentage basis,¹¹ Sacramento County and retirement board never address this argument. However, independent review of the case law convinces us that class counsels argument does not have merit.

11 Class counsels position that we should review the lower courts ruling de novo because this is an issue of first impression appears to contradict their position that California precedent requires the court to award the attorney fees under the common fund doctrine.

Class counsel rely principally on Sanders, supra, 3 Cal.3d 252; Glendale City Employees Assn. v. City of Glendale (1975) 15 Cal.3d 328 (Glendale); and Melendres v. City of Los Angeles (1975) 45 Cal.App.3d 267 (Melendres). Indeed, class counsel maintain that Sanders and Glendale are "indistinguishable" from the Sacramento action.

Sanders involved an action by city employees against the city to recover retroactive pay increases and the Supreme Court held that this was an action for damages within the meaning of Civil Code section 3287. (Sanders, supra, 3 Cal.3d at pp. 262-263.) Our Supreme Court affirmed the lower courts order holding that "this was a proper case for surcharging a common fund with the expenses of its recovery and ordered respondents to pay 25 percent of the recovery, including interest, of each person who received a retroactive pay increase by reason of this litigation . . . ." (Id. at pp. 261, 263.) Our Supreme Court concluded that the "ascertainment of increases in salaries and wages due for the period in question, were capable of being made certain and were made certain by defendants . . . ." (Id. at p. 263.)

The Sanders court, however, was not faced with the situation here—that is, the award of reasonable fees under a statute when the fees could also be awarded under the common fund. Further, in Sanders, there was no valid challenge to contest the award of attorney fees because the only parties "`injuriously affected by the order for fees [were the] members of the class in whose behalf the action was brought and out of whose recoveries the fees [would] be paid," and they did not object or appeal the award. (Sanders, supra, 3 Cal.3d at p. 263 .) Sanders clearly did not require a court to award attorney fees on a percentage basis in a class action when the fees could be awarded under a statute. Indeed, the Sanders court never confronted the issue before us.¹²

12 Class counsel also cite to Adams v. California Mut. B. & L. Assn. (1941) 18 Cal.2d 487, 489. The Adams court stated: "Inasmuch as these are representative actions, brought on behalf of named plaintiffs and others similarly situated but not represented in corresponding litigation, any award of counsel fees should be paid out of that portion of the fund recovered by those for whose benefit these actions were brought. [Citation.] The reasonableness of any such award of counsel fees is for the determination of the trial court when the causes are remanded, as they must be . . . ." (Ibid.) Thus, this opinion merely points out that payment from the common fund was appropriate in this situation and that the trial court has the discretion to determine the reasonable amount. This case does not "require" a trial court to award fees from a common fund when the award of reasonable fees is authorized by statute.

Glendale, supra, 15 Cal.3d 328, is similarly unavailing. This case also involved an action by a city employees association to compel the city council to compute and pay compensation in accordance with a memorandum of understanding. (Id. at pp. 332-334.) The only discussion in the opinion remotely related to the issue raised in this appeal is in a footnote. When explaining that notice to the class was not necessary because the association was a recognized representative of the city employees, the court explained: "It is not necessary to find this suit a proper class action in order to uphold the portion of the judgment awarding counsel for plaintiffs 25 percent of all retroactive salaries and wages received. That award may be sustained under the rule that a litigant who creates a fund in which others enjoy beneficial rights may require those beneficiaries to pay their fair share of the expense of litigation. [Citations.]" (Id. at p. 341, fn. 19.) Again, this case did not "require" Judge Pollak to award fees from the common fund when a fee-shifting statute authorized his award and his award was reasonable.

Finally, class counsels reliance on Melendres, supra, 45 Cal.App.3d 267 is equally futile. In Melendres, the lower court had awarded the city police officers and fire department employees a retroactive pay increase and had awarded attorney fees from the common fund. (Id. at pp. 270-272.) In affirming the lower courts authority to award fees, although it reduced the amount awarded to reflect the amount stated in the contract (id. at p. 281), the reviewing court stated that our Supreme Court "recognizes the rule that in equity where the parties prosecuting the action recover, protect, preserve or increase a fund for the benefit of themselves and others, attorneys fees are permitted out of such fund. [Citations.]" (Id. at p. 272, italics added.) The court further explained: " `The bases of the equitable rule which permit surcharging a common fund with the expenses of its protection or recovery, including counsel fees, appear to be these: fairness to the successful litigant, who might otherwise receive no benefit because his recovery might be consumed by the expenses; correlative prevention of an unfair advantage to the others who are entitled to share in the fund and who should bear their share of the burden of its recovery; encouragement of the attorney for the successful litigant, who will be more willing to undertake and diligently prosecute proper litigation for the protection or recovery of the fund if he is assured that he will be promptly and directly compensated should his efforts be successful. [Citation.]" (Id. at pp. 272-273.)

The Melendres opinion is completely silent on the issue before us. Indeed, two of the three reasons in equity that were presented by the court for allowing attorney fees to be paid from a common fund are not relevant when a fee-shifting statute provides for the payment of fees. Thus, when a fee-shifting statute exists, successful litigants will be compensated and their recovery will not be " `consumed by the expenses . . . . " (See Melendres, supra, 45 Cal.App.3d at pp. 272-273.) In addition, when a fee-shifting statute exists, attorneys will be willing to undertake complex litigation as they will be compensated, if successful, under the statute. Not only does the Melendres court not stand for the proposition that a trial court must award fees under a common fund when a fund exists and fees can be awarded under a statute, but it emphasizes the discretion the court has when awarding fees. Thus, it states: " `In class litigation the amount of the counsel fee award is almost entirely in the discretion of the trial judge since it is subject only to the limitation—very flexible . . . that it must be fair and reasonable. " (Id. at p. 277.) Subsequently, it repeats: "The nature and circumstances of each case should determine the amount of fees to be awarded by the court, and should also guide it in determining which participating attorneys should be entitled to share in it and the manner of its distribution. Parenthetically, in the complex field of the class action suit, in the great majority of cases it is only the trial court, fully apprised of all the facts, that can render the proper decision on the amount and apportionment of attorneys fees." (Id. at p. 279.)

Accordingly, we conclude that California precedent did not obligate Judge Pollak to award attorney fees from a common fund.

Class counsel next contend that the lower court erred because it based its ruling partially on the lack of opposition to an award of attorney fees under the statute. They refer to the hearing on February 14, 2002, when the court first heard argument on the award of attorney fees and pointed out that it was "critically important" that Sacramento County and retirement board did not oppose fees under the statute. However, a review of the entire transcript of the hearing reveals that the court pointed out that this was an odd situation, because usually Sacramento County and retirement board would prefer to have the fees paid out of the fund and would oppose statutory fees. The court was not asserting that Sacramento County and retirement board had standing to oppose an award of fees from the common fund, but was merely stating that it believed it was important that Sacramento County and retirement board were not opposing an award under the statute (albeit they were objecting to the amount). It was not error for the court to consider this.

Further, the court made it clear that the lack of opposition to statutory fees was not the only consideration. The court explained that, "going beyond that," it would be difficult to calculate a defined fund because future benefits are involved, which would postpone the payment of attorney fees. The court explained that it did not believe that the fees should be paid in installments, and that the court should not award a percentage of recovery without knowing the size of the fund against which that percentage would be applied. Finally, the court expressed the following final consideration: "I dont really know how much weight should be given to this, but Ill mention it in any event[.] [T]he Court has been awarding attorneys fees in a lot of these retirement cases, many of them have been settled but not all of them and while there hasnt been a hundred percent consistency in what has evolved in one case as opposed to another, largely I think because some were settled, but in any event I think thus far there has been a general consistency of approach, and I do think that is a desirable thing to have happen. I mean on the face of it I cant see that there is any particular reason why the whole question of attorneys fee should be handled differently in the Sacramento cases than in the other cases that were part of this coordinated litigation. And so I think the desire to achieve some degree of consistency may well be another factor that favors this approach."

Thus, the court pointed out the unique aspects of this case, which distinguish it from the cases cited by class counsel (Sanders, supra, 3 Cal.3d 252; Glendale, supra, 15 Cal.3d 328; Melendres, supra, 45 Cal.App.3d 267). Not only are attorney fees authorized under the statute in the case before us, but this was a large coordinated action and the court was attempting to award attorney fees to "achieve some degree of consistency" and equity. Neither of these factors existed in any of the cases cited by class counsel. Moreover, consideration of these factors was proper and did not constitute an abuse of discretion.

Class counsel also assert that federal precedent supports an award of attorney fees from the common fund and the Ninth Circuit has consistently awarded a surcharge on such common funds of 25 percent of the recovery. They concede that federal precedent is not controlling and should only be consulted when there is no relevant California precedent. (See, e.g., Lealao, supra, 82 Cal.App.4th at p. 38.) We have already reviewed the federal cases that have discussed the award of attorney fees from a common fund versus a fee-shifting statute in Lealao, and we concluded the following: "[The cases we have reviewed] reflect the growing willingness of federal courts to disregard the strict theoretical distinction between fee shifting and fee spreading in cases in which fees are not authorized by statute, no separate fund is established, and fees are paid directly by the defendant—provided, of course, that the monetary value of the class recovery is reasonably ascertainable." (Lealao, supra, at p. 36, italics added.) Not only did we conclude that the federal cases did not require an award of fees from the common fund—but merely indicated a "growing willingness" to use this method—but this willingness was evident only "in cases in which fees are not authorized by statute . . . ." (Ibid.) As already stressed, fees are authorized by statute here and thus the majority of the federal cases we reviewed earlier in Lealao do not compel a different result.

Class counsel maintain that the Third Circuit in particular supports their position and they cite to the Report of the Third Circuit Task Force, Court Awarded Attorney Fees (1985) 108 F.R.D. 237, 246-249. As we discussed in Lealao, problems with the lodestar method set forth in the Report of the Third Circuit Task Force have been reiterated by other authorities, and most have been concerned about the "manner in which it exacerbates the problem of `cheap settlements and burdens already overworked trial judges." (Lealao, supra, 82 Cal.App.4th at pp. 29-30.) Neither of these criticisms compels a conclusion that a court abuses its discretion when it properly awards attorney fees using the lodestar method pursuant to statute. As we pointed out in Lealao, these concerns did not prevent a judge from awarding a fee based on the lodestar method but "stimulated greater judicial willingness to evaluate a fee award as a percentage of the recovery. [Citations.]" (Id. at p. 30.) We pointed out that "most federal appellate courts allow trial judges a range of discretion in this area" and only the District of Columbia Circuit and the 11th Circuit now appear to require courts to use the percentage-of-the-benefit approach. (Id. at p. 31.)

It bears repeating that, with only two exceptions, federal courts do not require courts to use the percentage-of-the-benefit approach. Further, the case before us is somewhat unique in that it involved coordinated, complex litigation. Judge Pollak, who was clearly in the best situation to determine the appropriate amount of fees, was concerned with not awarding fees in this case completely disproportionate to the fees awarded in the other cases.

Further, the fees here were authorized by statute.¹³ Class counsel ignore the portion of the Report of the Third District Task Force recommending the lodestar approach for statutory fee-shifting: "Of primary concern in dealing with fund-in-court cases is solving the problem raised when a class action lawyer secures a recovery for his clients and then proceeds to file a fee petition seeking compensation from those very same funds. In these situations, the plaintiffs attorneys role changes from one of a fiduciary for the clients to that of a claimant against the fund created for the clients benefit. The perspective of the judge also changes because the court now must monitor the disbursement of the fund and act as a fiduciary for those who are supposed to benefit from it, since typically no one else is available to perform that function—the defendant has no interest in how the fund is distributed and the plaintiff class members rarely become involved. Note that neither of these concerns arise in the statutory fee context, which continues to be an adversary proceeding until resolution, except when a statutory fee case is `converted into a fund case by settlement.

13 Class counsel refer to numerous federal cases that hold the existence of a statutory fee provision does not preclude a common fund award (Fleischmann Corp. v. Maier Brewing Co. (1967) 386 U.S. 714, 719; Brytus v. Spang & Co. (3rd Cir. 2000) 203 F.3d 238, 243). We need not address this argument because the issue is not whether the statute precluded a common fund award; rather, the issue was whether the court had the discretion to award fees pursuant to the statute.

"In response to these concerns, the Task Force concluded that the traditional common-fund case and those statutory fee cases that are likely to result in a settlement fund from which adequate counsel fees can be paid, should be treated differently than the more typical statutory fee case involving the declaration or enforcement of rights or relatively modest sums of money. The application of [the lodestar method] was thought necessary in the straightforward statutory fee case, because it is reasonably objective, neutral, and does not require making monetary assessments of intangible rights that are not easily equated with dollars and cents. But these protections were not believed to be needed in the traditional fund case or in those statutory fee cases likely to produce a sizeable fund from which counsel fees could be paid." (Court Awarded Attorney Fees, supra, 108 F.R.D. at p. 255, italics added, fns. omitted.)

Thus, contrary to class counsels argument, even under much of the federal precedent (see also Johnston v. Comerica Mortg. Corp. (8th Cir. 1996) 83 F.3d 241, 245-246), Judge Pollak did not abuse his discretion in using the lodestar method when awarding statutory attorney fees.

Finally, class counsel argue that public policy required the court to award fees on a percentage basis of the fund. They complain that the lower court ignored the preexisting fee agreements they had with the active litigants. For example, the fee agreement between CB&M and Buda provided for CB&M to receive 33-1/3 percent of the net recovery if the case settled before trial and 40 percent of the net recovery thereafter. They claim that the retainer agreements provided a reasonable reference and basis for setting a common fund fee award, and these fees were "well within the marketplace amount for regular attorneys in everyday matters and arguably well `below market for counsel of Messrs. Burdicks and Silvers expertise."

Class counsel contend that courts defer to the fee agreements and they claim that the trial courts award here impaired the obligation of contract. For example, they argue, in Melendres, the reviewing court reduced the common fund of 10 percent of the recovery to 5 percent, in accordance with the fee agreement. (Melendres, supra, 45 Cal.App.3d at pp. 281-282.) When reducing the fee award, the court cited the rule in Code of Civil Procedure section 1021, which provides: "`Except as attorneys fees are specifically provided for by statute, the measure and mode of compensation of attorneys . . . is left to the agreement, express or implied, of the parties . . . . " (Melendres, at p. 282.) The court explained, "absent statutory authority for attorneys fees, the amount and method of payment is left to the agreement of the parties." (Id. at p. 283.) In the case before it, there was no "provisionary statute as referred to in section 1021," and the attorneys services were limited to those expressed in the contract. (Ibid .) The court noted: "The record here does not show any legal factors or overriding equitable reasons for not awarding fees based on the contract. To the contrary, the judgment could possibly create a liability not contemplated by the parties or desired by the prevailing attorneys who remained consistent with their position and urged the trial court to award them fees based on the contract." (Ibid.)

The Melendres case does not require an award of attorney fees that differs from that provided by Judge Pollak. First, as already stressed, in the case before us a statute exists. Second, as Judge Pollak observed, the amount of the benefit was currently uncertain and could remain uncertain for a significant period of time into the future. Third, Judge Pollak was concerned with fairness when awarding fees in all the coordinated cases that did not settle. Indeed, the Report of the Third Circuit Task Force has recommended that negotiated fees should be applied in the event of settlement of statutory fee cases, but "in all fully litigated statutory fee cases the award would continue to be determined in an adversary manner under the basic [lodestar] approach . . . ." (Court Awarded Attorney Fees, supra, 108 F.R.D. at pp. 255-256, italics added.)

Class counsel also cite Venegas v. Mitchell (1990) 495 U.S. 82 as supporting their position that Judge Pollak should have awarded fees consistent with their contingent agreements with the plan members. In Venegas, the Supreme Court concluded that a 40 percent contingent fee in a civil rights action, resulting in a fee of $406,000, was reasonable even though the statutory award (42 U.S.C. § 1988) was $117,000. (Venegas, at pp. 84-85, 90.) The court, however, did not indicate that an award pursuant to the statute would be unreasonable. Indeed, the court did not deal with the proper method for calculating reasonable fees.

Here, it is unclear how the court interfered with contract when class counsel never requested the court to award them fees under the contract agreements.¹⁴ Rather, they requested attorney fees based on the common fund doctrine or under statute. Indeed, the situation here is exactly the type of situation where the Third Circuit—the federal court that class counsel trumpets as supporting their position—has explained that the lodestar method is preferable. The Third Circuit stated that "a court can use the lodestar method to confirm that a percentage of recovery amount does not award counsel an exorbitant hourly rate . . . ." (In re General Motors Corp. Pick-up Truck Fuel Tank (3rd Cir. 1995) 55 F.3d 768, 821, fn. 40.) This federal court warns that a percentage of the recovery can be "used to assure that counsels fee does not dwarf class recovery." (Ibid.) Thus, the federal court was concerned that, when awarding attorney fees, judges consider the method that would provide counsel with reasonable fees and not severely tax the class members. Here, not content with the reasonable amount awarded under the statute, class counsel is attempting to secure exorbitant fees for themselves.

14 Since the contingent agreements were with the representative members of the class and not with the entire class it is unlikely that the fees under the agreement would ever approach the amounts awarded under the statute.

Accordingly, we hold that the court did not abuse its discretion when it awarded attorney fees in the Sacramento action pursuant to statute rather than under the common fund doctrine. Since we have already held that the awards were reasonable in part I., ante, we conclude there was no abuse of discretion.

DISPOSITION

The order on attorney fees is vacated as to CB&M and the matter is remanded for proceedings consistent with this opinion. The order of attorney fees as to SH&S, RKL, and FFB is affirmed. The portion of the order denying an award of fees pursuant to a common fund theory is affirmed. No party is awarded costs.

We concur: Haerle Acting P.J., Ruvolo, J.