Over the last two years at The Legal Pulse, we’ve expended a lot of digital ink on food labeling class action lawsuit rulings from the Northern District of California (aka “The Food Court”). Our focus here shifts to similar suits from the Central District of California. Two recent decisions from that jurisdiction spotlight some questionable behavior by plaintiffs’ lawyers.
Jovel v. Boiron, Inc. Plaintiff Jovel alleged in a class action suit that the non-pharmaceutical flu remedy he purchased at GNC, Oscillo, did not relieve his flu-like symptoms as the product label claimed it would. Boiron opposed Jovel’s motion for class certification on a number of grounds, including that Jovel was not an adequate representative of the class under Federal Rule of Civil Procedure 23(a).
What was it that made Jovel inadequate? During his deposition, Boiron’s counsel asked Jovel when he first read the flu-relieving claims on the product label. He stated that he hadn’t read it until after he finished the entire box—a week after purchase. That fact is, of course, rather important in a case where the plaintiff must prove he relied on the label’s claims to make his purchase.
After a break in the deposition, Jovel’s story had changed. He said he had read the label before buying the Oscillo. Boiron’s counsel then asked:
Counsel: “Did you have a discussion with your counsel that refreshed your recollection about when you read the box?”
Judge Stephen Wilson held that such “inconsistency” in his testimony on a material issue in the case reflected poorly on Jovel’s credibility, and he denied class certification on that basis.
Not surprisingly, Boiron felt that Jovel’s testimony went well beyond “inconsistent,” and it asked Judge Wilson to sanction Jovel’s lawyers. While he found that the lawyer’s role in refreshing Jovel’s memory “does raise some suspicion of misconduct,” Judge Wilson concluded that conduct was not sufficiently “willful or reckless” to merit financial sanctions.
Henderson v. The J.M. Smucker Co. Henderson sued Smucker in 2010 for allegedly making misleading and false wellness claims on packaging for its Uncrustables and Crisco products. Chief Judge George King dismissed her claims in October 2012. Despite this loss, Henderson’s lawyers filed a request in January 2013 for attorneys’ fees and costs totally $3,305,512. They argued that Henderson’s suit was the catalyst for Smucker’s changes to its products’ recipes and labeling.
Although Chief Judge King unfortunately bought the plaintiff’s “catalyst” theory, he at least balked at the eye-popping amount of the fees demanded. He found the request to be “grossly excessive, especially in light of the limited success Plaintiff actually achieved.” The judge meticulously reviewed the billing records and repeatedly questioned the amount of time claimed for drafting documents and conducting discovery.
The lawyers billed for 1,766 hours for discovery. Chief Judge King ruled it could have been done in far fewer hours. He deducted the 708.7 hours the lawyers supposedly spent on two unsuccessful class certification motions because they were not “reasonably related to Plaintiff’s limited success.” He found the 177.2 hours claimed for settlement conferences “staggering” and “entirely unreasonable.” The lawyers wanted fees for 51 hours spent on constructing a website; the judge said .6 partner hours and 10 paralegal hours were reasonable. Finally, Chief Judge King agreed with Smucker that it should not have to cover the lawyers’ .9 hours of “work on articles and a class action symposium.”
The court awarded the lawyers $91,715—or $3,213,797 less than they sought.
Byproduct of Lawyer-Driven Litigation. Members of the Food Court Bar want us to think that aggrieved consumers are beating down their doors with lawsuit ideas. We’re not alone, as we discussed in a post last July, in believing otherwise. Outrageous fee requests and coaching of clients are characteristic of litigation crusades like asbestos, where lawyers’ desperate hunt for money turns people into pawns. Judges in these “private surgeon general” class actions must protect the interests of justice by taking forceful action against lawyer misbehavior, or else risk asbestos-like fraud in these cases.
While Judge Wilson drew the correct legal conclusion on the lead plaintiff’s inadequacy in Jovel, he should have used his inherent powers to sanction Jovel’s attorneys. A sizable sanction would have made that counsel, as well as others bringing analogous suits, less likely to manipulate material facts in the middle of a case after a defendant has spent tens of thousands in legal fees.
We also laud Chief Judge King for the tongue-lashing he gave the Henderson lawyers for padding their bills, and for depriving them of over $3.2 million. But the award of any attorneys’ fees in such a case, where Smucker actually prevailed on the law, sends a very disconcerting message to other defendants.
Judges must be at least as willing to dispense sanctions in a case like Jovel as they are to award fees in a case like Henderson if plaintiffs’ lawyers are ever going to face a proper balance of incentives and disincentives for only bringing the meritorious cases.
Also posted at WLF’s contributor site at Forbes.com.