Mediation Message No. 91

MICHAEL D. MARCUS’S MEDIATION MESSAGE NO. 91

WHAT WAS SHE THINKING?

Ellis v. Toshiba America Information Systems, Inc. (2013) 218 Cal.App.4th 853 is about human frailties, including greed, bad judgment and overreaching.
Lori Sklar (Sklar), a member of the California and Minnesota Bars, and a Texas law firm (TLF) filed a class action against Toshiba on behalf of Toshiba laptop customers who had problems with their laptop covers. The case settled, with each class member receiving either a repair warranty extension or nominal credit vouchers. TLF then indicated to Los Angeles Superior Court Judge Anthony Mohr it would seek $1,125,000 in fees and costs. Sklar stated she would ask for legal fees of $24,743,965.50 (less whatever was awarded TLF), including expenses of $99,750, later increased to $114,900. Judge Mohr awarded TLF $1,125,000 in fees and costs. Sklar then requested fees of $12,079,534.69, plus expenses of $905,752.72. This request was lodestar based whereas the earlier $24 million plus request had been based on Sklar’s valuation of the class settlement. Toshiba did not oppose TLF’s fees request but opposed Sklar’s and initiated discovery regarding it.
Sklar fought Toshiba’s efforts for her original time entries. Apparently, she also destroyed relevant electronic files. After many discovery disputes, Judge Mohr ordered $165,000 in monetary sanctions against Sklar because of her failures to comply with discovery orders and to meet and confer with Toshiba in good faith. Judge Mohr also awarded Sklar’s law office (SLO) $176,900 in fees (1,769 hours at $100 an hour) for its work during the merit phase of the class action. He subtracted the $165,000 in sanctions from the $176,900, leaving SLO with a net award of $11,900. Judge Mohr did not award Sklar anything for her work because her billing records were unusable. “They contain troubling inconsistencies and omissions. There are numerous instances of what appear to be inaccurate and even contradictory billing entries. Moreover, the total number of hours claimed is excessive.” (Id. at pp. 872-873.) Judge Mohr also found that “the vast majority of (Sklar’s) efforts were not calculated to benefit the class, but to protect or inflate her fee claim” and that she had achieved minimal success on behalf of the class. Finally, he held that Sklar had “relinquished her entitlement to a fee” by her unprofessional misconduct, including refusal to provide straight answers to the court’s questions; refusal to cooperate in discovery; fighting legitimate efforts by Toshiba to confirm her time and making unfounded accusations against Toshiba and its counsel. (Id. at pp. 873-875.) Sklar appealed both the sanctions and fee orders. Toshiba cross-appealed the fees to be awarded SLO.
The appellate court’s analysis of the trial court’s goings on is anticlimactic – Sklar’s conduct and Judge Mohr’s rulings are the “meat and potatoes” of the case. The court quoted Judge Mohr extensively in affirming his decision not to award Sklar fees and to sanction her $165,000. It approved Judge Mohr’s finding that he would have to use “speculation and guesswork to figure out (Sklar’s) lodestar for the merits phase.” “We reach that conclusion after reviewing (her fee records) and agreeing with the trial court that it is a disorganized jumble, even as it appears in the record on appeal, so that any reorganization attempted by Sklar was fruitless.” (Id. at p. 885.) The appellate court also had problems with the number of hours claimed by Sklar and how she spent her time. Her time estimates for “over five years … show(ing) her working almost 11 hours a day, including weekends and holidays …are ‘hard to accept.’”https://advance.lexis.com/GoToContentView?requestid=f1ee8cf-3136-e68c-473e-251d58b7f326&crid=c54d74b3-56ef-43f7-9ceb-c9ef50577e9c (Quoting Judge Mohr.) (Id. at pp. 873-874.) The court also noted that Judge Mohr had used the correct legal standard in finding Sklar to not be credible. (Id. at pp. 883-884.)
An interesting part of the appellate court opinion is whether or not SLO should have received any costs for its work. Toshiba contended it was not entitled to any monies because, as required by Business and Professions Code section 6450, none of SLO’s personnel possessed certificates of completion from a paralegal program; they did not have baccalaureate degrees; none had obtained three years of law-related supervised work and Sklar had not provided a written declaration that any of them were qualified to perform paralegal tasks. Sklar argued that the staff were paralegals under Minnesota requirements, they had complied with California’s continuing education requirements and their billing rate of $100 was less than one-half of the rate at which Toshiba’s counsel had billed its paralegals. The appellate court side stepped the issue by finding it had ”found no California state cases holding, that compliance with the educational requirements of Business and Professions Code section 6540 is in every case a prerequisite to the recovery of paralegal fees.” (Id. at p. 890.) Besides, it noted that Judge Mohr had not found, in awarding SLO its fees, that Sklar’s staff were paralegals or that the $176,900 was for the work of paralegals. (Ibid.)
For reasons unrelated to the above paralegal issue, the appellate court reversed the $176,900 in fees awarded SLO and remanded that issue back to the trial court to correct the amount due, with a maximum cost award of $114,900. The trial court was also directed to award monetary sanctions for attorney’s fees and costs to Toshiba related to its motion on appeal to strike some of Sklar’s evidence. The clerk of the court was also directed to send a certified copy of the opinion to the State Bar. (Id. at pp. 890-891.)

The lessons to be learned from this case: The lessons are so obvious that they need not be stated; the facts of the case, by themselves, are a sufficient teaching tool.

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, September 2013

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