California Sportfishing Protecting Alliance v. Forever Resorts, LLC et al.

Filing 20

ORDER signed by District Judge Morrison C. England, Jr on 2/9/2017 DENYING 10 Motion to Approve Consent Judgment. (Washington, S)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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CALIFORNIA SPORTFISHING
PROTECTION ALLIANCE,
Plaintiff,

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v.

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No. 2:16-cv-01595-MCE-EFB

MEMORANDUM AND ORDER

FOREVER RESORTS, LLC; LAKE
OROVILLE MARINA, LLC; BILL
HARPER; and REX MAUGHAN,
Defendants.

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Before the Court is a Motion for Settlement Approval, ECF No. 10, under

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California’s Safe Drinking Water and Toxic Enforcement Act of 1986, Cal. Health &

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Safety Code §§ 25249.5–.13, otherwise known as Proposition 65. Because the Court

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finds that the attorney’s fees awarded in the settlement are unreasonably high, the

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Motion is DENIED. 1

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Because oral argument would not have been of material assistance, the Court ordered this
matter submitted on the briefing. E.D. Cal. L. R. 230(g).

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BACKGROUND2

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Defendants operate a marina on Lake Oroville in California. Plaintiff alleges that

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Defendants violated a provision of Proposition 65 by knowingly discharging lead and

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lead compounds into Lake Oroville. On May 27, 2016, Plaintiff issued a Proposition 65

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“60-Day Notice of Violation” detailing the alleged violations to the Office of the California

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Attorney General, the District Attorney of Butte County, the City Attorney of Oroville, and

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Defendants. After the 60-day period required by Proposition 65, Plaintiff filed suit in this

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Court. The parties then pursued settlement options, reaching agreement on all terms on

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December 2, 2016.
The settlement agreement consists of four parts: (1) improvements Defendants

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are to make at their facility; (2) a civil penalty of $20,000, plus a stipulated civil penalty of

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$2,500 for each discharge of storm water measured to contain lead in a concentration

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greater than 0.5 micrograms/liter; (3) an additional payment of $15,000 to Plaintiff, to be

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used to prevent, reduce, or eliminate discharges of Proposition 65-listed substances to

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sources of drinking water; and (4) investigative, expert, and attorney’s fees and costs in

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the amount of $67,500.

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DISCUSSION

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California Health and Safety Code § 25249.7(f)(4) requires parties to submit

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Proposition 65 settlements between private parties to the court for approval. The statute

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sets out three express requirements for approval of such settlements:

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[T]he court may approve the settlement only if the court
makes all of the following findings:

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(A) The warning that is required by the settlement complies
with this chapter.

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Unless otherwise noted, the facts in this section are drawn directly, and in some cases verbatim,
from the Plaintiff’s Memorandum of Points and Authorities in Support of the Motion.

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(B) The award of attorney’s fees is reasonable under
California law.
(C) The penalty amount is reasonable based on the criteria
set forth in paragraph (2) of subdivision (b).

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Id.; see also Consumer Advocacy Grp., Inc. v. Kintetsu Enter. of Am., 141 Cal. App. 4th

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46, 61 (2006). The “trial court must look at the three factors and if any of those factors

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are not present it can’t approve the settlement.” Consumer Def. Grp. v. Rental Hous.

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Indus. Members, 137 Cal. App. 4th 1185, 1207 (2006) (emphasis removed); see also

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Leeman v. Adams Extract & Spice, LLC, 236 Cal. App. 4th 1367, 1376 (2015) (reversing

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a trial court’s unilateral modification of the amount of attorney’s fees awarded in a

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Proposition 65 settlement). The Court here finds the attorney’s fee unreasonable, and

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thus cannot approve the settlement.

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Under California law, “the fact that the defendant agreed to pay the fee does not

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automatically render the fee reasonable.” Cal. Code Regs. tit. 11, § 3291; see also

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Leeman, 236 Cal. App. 4th at 1376 n.2. “Hourly fees should be those reasonable for

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attorneys of similar skill and experience in the relevant market area.” Cal. Code Regs.

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tit. 11, § 3291(d). In support of Plaintiff’s motion, it provides a fee summary chart

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detailing the hours and rates of the attorneys who worked on the case. See Mem. of P &

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A in Supp. of Mot., ECF No. 15, at 12. That chart shows that three attorneys provided

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services for Plaintiff at three different hourly rates; the law firm’s principal charged a rate

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of $795 per hour, while his two associates billed at $375 per hour and $225 per hour.

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Decl. of Andrew Packard, ECF No. 13, Ex. B.

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In the Eastern District of California, these rates are well above the usually

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accepted rates. See, e.g., Millan v. Cascade Water Servs., Inc., No. 1:12-cv-01821-

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AWI-EPG, 2016 WL 3077710, at *12 (E.D. Cal. Jun. 2, 2016) (rejecting $725 per hour for

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a partner and $610 per hour for an associate in favor of $375 per hour and $325 per

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hour, respectively); Ontiveros v. Zamora, 303 F.R.D. 356, 373–74 (E.D. Cal. 2014)

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(rejecting $650 per hour and $495 per hour for partners and between $325 per hour and

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$425 per hour for associates in favor of $400 per hour for partners and $175 per hour for
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associates); Khanna v. Intercon Sec. Sys., Inc., No. 2:09-CV-2214 KJM EFB, 2014 WL

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1379861, at *15 (E.D. Cal. Apr. 8, 2014) (approving $300 per hour for partners, $200 per

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hour for associates, and $100 per hour for legal assistants); Adoma v. Univ. of Phoenix,

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Inc., 913 F. Supp. 2d 964, 984 (E.D. Cal. 2012) (approving $425 per hour for principals);

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Murillo v. Pac. Gas & Elec. Co., No. CIV. 2:08-1974 WBS GGH, 2010 WL 2889728, at

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*11 (E.D. Cal. Jul. 21, 2010) ($300 per hour for a principal). Indeed, this Court recently

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rejected an FLSA settlement due to the unreasonableness of attorney’s fees in which the

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plaintiff’s lodestar calculation was based on rates of $650 per hour for principals and

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between $350 and $400 for associates. See Mar v. Genuine Parts Co., No. 2:15-cv-

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01405-MCE-AC, 2017 WL 68287, at *2–3 (E.D. Cal. Jan. 6, 2017).

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Plaintiff fails to provide any evidence that its counsel’s high fees are appropriate

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in this case. Plaintiff’s counsel only avers generally that he “managed” the investigation

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of Defendants’ facilities and conducted “[i]ntensive negotiations.” Mem. of P & A in

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Supp. of Mot., at 12 (citing Decl. of Andrew Packard, ¶¶ 19, 21). Further, Plaintiff’s

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counsel provides no support for his averment that “[his] understanding of the rates

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charged by other attorneys (including those rates charged by leading Proposition 65

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defense counsel) with experience and expertise similar to mine, is that these rates are

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at, or substantially below, the prevailing rates charged by the majority of such lawyers.”

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Decl. of Andrew Packard, ¶ 15. Absent any evidence that such high rates are warranted

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in this case, the Court finds rates of $425 per hour for principals and $225 per hour for

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associates to be more appropriate.

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Applying these rates renders the settlement’s $67,500 of attorney’s fees more

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than 50% greater than the proper lodestar calculation. Accordingly, the Court finds the

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settlement’s attorney’s fees unreasonable and the settlement must be rejected.

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CONCLUSION

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For the reasons provided above, Plaintiff’s Motion for Settlement Approval, ECF
No. 10, is DENIED.
IT IS SO ORDERED.
Dated: February 9, 2017

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