LOS ANGELES - Attorneys seeking $540,000 in fees in a $65,000 lemon law case are defending the reasonableness of their request.
Representing plaintiff Mark Pedante in one of more than 1,000 cases consolidated in multi-district litigation (MDL) related to DPS6 transmissions in certain Ford Fiesta and Focus vehicles, attorneys from Knight Law Group (KLG) say their client's case tried in November required "substantial effort and substantial time."
"Ford has thrown every possible resource into this MDL," wrote KLG attorney Roger Kirnos. "Plaintiff must be able to have representation who can respond in kind. As a result, legal fees often exceed a plaintiff’s recovery."
Jurors at federal court in Los Angeles found in favor of Pedante on only one of five claims he made - breach of express warranty-violation of Song-Beverly Act - the state's lemon law.
They awarded him $21,721.69 in stipulated damages and $43,443.38 in civil penalties, for a total judgment of $65,165.07.
When Ford objected last month to KLG's "excessive" fee request, it in part argued that Pedante did not prevail at trial. While he was awarded damages and penaltes on breach of express warranty violations, jurors found in favor of Ford on four other counts that were dismissed with prejudice: breach of implied warranty, fraudulent inducement-concealment, fraudulent inducement-intentional misrepresentation and fraudulent inducement-negligent misrepresentation.
"The fact that his lawsuit did not hit a grand slam does not undermine his status as the prevailing party," Kirnos wrote in a Feb. 14 reply brief in support of fees requested.
"Indeed, as to his claim that confers his right to recovery of attorney fees, he obtained the absolute maximum that he could have achieved. This is the sort of consumer vindication that the legislature intended – Plaintiff had eight clutch repairs and five repairs as of the time he requested a repurchase, but Ford denied him."
The case is presided over by District Judge Andre Birotte, Jr. at the Central District of California. U.S. Magistrate Fredrick Mumm presides over pre-trial discovery.
A hearing is scheduled Feb. 28.
Ford also challenges why Pedante should recover any amount in penalties because jurors awarded $30,000 less (in civil penalties) than its settlement offer of $75,001, referenced as a Rule 68 offer in pleadings. In total, penalties and damages awarded to Pedante were approximately $10,000 less than what the company initially offered.
"To argue that Plaintiff’s counsel should receive no compensation because they did not obtain a result higher than the highest offer would vitiate the plain language of Rule 68, which cuts off fees incurred after the offer, not all fees before the offer as well," Kirnos countered in his brief. "To argue that an informal offer should result in reducing or denying fees would unlawfully import the punitive measures of a Rule 68 offer on to all informal offers."
Another one of Ford's arguments is that Pedante could end up owing the IRS more money than he will recover in damages given the exorbitant fees sought. The company says it must report to the IRS as potential income to Pedante the $43,443.38 in civil penalties and any attorneys’ fees ultimately awarded.
"Thus, Mr. Pedante’s tax liability increases with every dollar of statutory attorneys’ fees awarded," Ford attorney Molly Mrowka of Gordon Rees wrote last month. "This tax liability will reduce Mr. Pedante’s net recovery."
Kirnos fired back saying it was an attempt to "chill litigation" and "harass" its clients.
"Because Ford is by far the most litigious of all car manufacturers and because Ford produces the lowest quality vehicles, it has developed a new ploy to chill litigation and reduce its massive litigation costs instead of trying to comply with the law," Kirnos wrote.
"Months ago, for the first time in decades, if ever, Ford issued a directive that it would begin issuing a Form 1099 to all plaintiffs who succeed in a lawsuit against it. Ford hides behind the tax code to suggest the issuance is required, but the requirement has not changed in decades yet Ford has never followed it. Ford and its attorneys now seek to capitalize on a 2018 change in the tax code that eliminated deductions for certain types of attorney fees for the sole purpose of trying to chill litigation and to burden, harass and intimidate clients by going so far as to ask consumers questions about their taxes during depositions and by arguing, as it does here, that taxes should preclude the statutory fees that Ford must now pay."