SACRAMENTO – All eyes interested in tort reform in California are watching an almost 12-year-old class-action lawsuit expected to be heard before the State Supreme Court that could, depending on how it's decided, change the way class-action plaintiffs' attorneys are paid.
"This could go one of two ways," Lawrence W. Schonbrun, attorney for a plaintiff and class member in the case, David Brennan, said in a Northern California Record interview. "If it goes the way the courts have treated class actions in the past, the plaintiff's lawyers will receive what they want. However, if the Supreme Court of California follows the Supreme Court of the United States, it just might go the plaintiff's way."
Schonbrun, in addition to representing Brennan in this case, also is executive director of the nonprofit Class Action Watch and a nationally recognized spokesman on abusive class-action settlements and excessive class-action attorneys' fee awards. He has represented class members and objectors in many class-action lawsuits throughout the U.S.
In addition to litigants, attorneys and lawmakers across the country, Laffitte v. Robert Half International (Brennan) is being followed by tort reform activist groups, including California Citizens Against Lawsuit Abuse and California Civil Justice Association.
This case could be a game changer because if the high court finds for the plaintiff, a powerful incentive to file class-action cases rather than accept early settlement would be removed, CCALA Central Valley Director Julie Griffiths said in a separate interview.
The case began Sept. 10, 2004, when Mark Laffitte filed a wage and hour class-action suit against Robert Half, a human resource consulting firm based in Menlo Park. The case made its way through the court system until mediation in June 2012 produced a settlement in the Laffitte case and two other class-action lawsuits against Robert Half.
The following September, class representatives filed a joint motion for conditional certification of the class and preliminary approval of the settlement. The trial court combined all three class-action lawsuits, granted the motion and conditionally certified the class. Under terms of the settlement approved Nov. 13, 2012, Half agreed to pay $19 million, with attorney fees for plaintiffs in the class set at "not more than $6,333,333.33," or 33.33 percent of the gross settlement amount. There also were provisions for charitable contributions and other payments.
The following January, Brennan, as a member of the class, objected to the proposed settlement. Relying in part on rule 23 of the Federal Rules of Civil Procedure covering class action cases, Brennan said that the attorneys' fees in the settlement were excessive and that charitable contributions should not be considered in calculating attorney fees. Brennan also claimed that "information necessary for class members to intelligently object to or comment on the proposed settlement was missing from the notice and the pleadings."
In a joint motion filed the following month, representatives for members of the class said their fees in the settlement were reasonable, given the time spent on the case, the difficulties in the lawsuit, the quality of their work and other factors.
The following March, the court acknowledged Brennan's objections but stated that rule 3.769 of the California Rules of Court, not rule 23 of the Federal Rules of Civil Procedure, was applicable in this case. The trial court then overruled Brennan's objections after an April 10, 2013, hearing.
Later in the year, Brennan appealed the case, arguing that notice to the class members denied them due process because the procedure in the notice was unfair and some of its language pertaining to attorneys' fees was misleading. Brennan also argued the trial court erred by using a percentage of fund method and made mistakes in some calculations.
Since then, the case has continued to wind its way through the courts until it arrived in the 2nd Appellate District. The high court has said this case questions whether a previous ruling, Serrano v. Priest, permits a trial court to base its calculation of a reasonable attorney's fees in a class action on a percentage of the common fund recovered.
The state Supreme Court's docket, as of press time, does not list the date to hear oral arguments. Schonbrun said the high court usually gives litigants a month or two's notice, which hasn't yet arrived.
In an amici curiae brief submitted to the court earlier this month, Schonbrun explained how important this case is to the future of class-action cases in California, possibly also in the rest of the country.
"Indeed, over the course of time, the court's holding could affect the allocation of billions of dollars, both in California and nationally," Schonbrun wrote in his brief.
"This case will determine how many of those dollars remain in the hands of class members – on whose behalf this lawsuit was brought (and for whom the class-action mechanism was designed) – and how many of those dollars are to be taken from class members in judicial awards of reasonable attorneys' fees to the lawyers who litigate class action lawsuits."