Filed 8/21/20 Wheeler v. King Digital Entertainment PLC CA1/5

           NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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      IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             FIRST APPELLATE DISTRICT

                                        DIVISION FIVE


                                                                  A158660
 CHARLES WHEELER et al.,
                  Plaintiffs and Appellants,                      (San Francisco City and County
                                                                  Super. Ct. Lead Case No.
 v.                                                               CGC-15-544770)
 KING DIGITAL ENTERTAINMENT
 PLC et al.,
               Defendants;
 BOTTINI & BOTTINI, INC.,
                Appellant;
 SCOTT + SCOTT LLP,
                Respondent.


        This appeal involves a dispute between counsel regarding the
allocation of attorney fees awarded from a common fund in a class
action. Bottini & Bottini, Inc. represented two members of the class
but were not selected to serve as class counsel. After an $18.5 million
settlement was negotiated, roughly $5.5 million was awarded to
plaintiffs’ counsel, and judgment was entered, the trial court concluded
the Bottini firm should receive $158,446 out of a total requested fee



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award of $338,699.25. The Bottini firm appealed, arguing the trial
court abused its discretion.1 We disagree and affirm.
                              BACKGROUND
                                    A.

      “California has long recognized, as an exception to the general
American rule that parties bear the costs of their own attorneys, the
propriety of awarding an attorney fee to a party who has recovered or
preserved a monetary fund for the benefit of himself or herself and
others. In awarding a fee from the fund or from the other benefited
parties, the trial court acts within its equitable power to prevent the
other parties’ unjust enrichment.’ ” (Laffitte v. Robert Half Internat.
Inc. (2016) 1 Cal.5th 480, 488–489 (Laffitte).)
      When determining attorney fee awards in class actions, courts
have an independent obligation to ensure that the amount is
reasonable. (Laffitte, supra, 1 Cal.5th at p. 504; Lofton v. Wells Fargo
Home Mortgage (2014) 230 Cal.App.4th 1050, 1055, 1064-1065
(Lofton).) A court may set the fee award by choosing an appropriate
percentage of the monetary fund, which can then be cross-checked for
reasonableness by comparing the amount to the lodestar. (Laffitte,
supra, 1 Cal.5th at pp. 503-504.)
      Additionally, the attorney fee award is wholly contingent on
achieving benefit for the class. (See Rebney v. Wells Fargo Bank (1990)
220 Cal.App.3d 1117, 1142 (Rebney), disapproved on other grounds by




      1Although the Bottini firm’s clients, Charles Wheeler and Phyllis
Wheeler, filed the underlying motion and are named as additional
appellants on the notice of appeal, we refer to the firm as the appellant
because it is more directly interested.

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Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260, 269-270;
In re Cendant Corp. Sec. Litig. (3d Cir. 2005) 404 F.3d 173, 186-187
(Cendant).) This requirement applies both to lead counsel and non-lead
counsel—each must demonstrate that their work actually benefited the
class. (See Rebney, supra, 220 Cal.App.3d at p. 1142; Lofton, supra,
230 Cal.App.4th at p. 1064; Thayer v. Wells Fargo Bank (2001) 92
Cal.App.4th 819, 841-845 (Thayer); Cendant, supra, 404 F.3d at pp.
181, 195.) Thus, fees incurred by non-lead counsel in filing a complaint
on behalf of their individual clients, or monitoring lead counsel’s
representation of the class, are generally not recoverable out of the
class’s recovery unless such efforts increased the recovery to the class.
(Lofton, supra, 230 Cal.App.4th at p. 1064 [“[a] duplicative action that
does nothing to contribute to a result achieved in a class action does not
justify a separate award of fees”]; In re Vitamin Cases (2003) 110
Cal.App.4th 1041, 1054-1055 & fn. 9; Thayer, supra, 92 Cal.App.4th at
p. 841 [“it is . . . impossible to conclude that the filing of so many nearly
identical actions significantly increased the value of this litigation”];
Cendant, supra, at p. 191.)
                                     B.
      In April 2015, the Bottini firm filed a putative class action
complaint on behalf of the Wheelers against King Digital
Entertainment plc (King) and certain of its officers, directors, and
underwriters. The Wheelers sought damages pursuant to sections 11,
12(a)(2), and 15 of the Securities Act of 1933 (15 U.S.C. §§ 77k,
77l(a)(2), 77o), on behalf of themselves and a proposed class of similarly
situated plaintiffs, for misstatements and omissions allegedly made in
connection with King’s initial public offering. The Wheelers’ complaint



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was the fifth such complaint filed against King; Sean Debotte and
Michael Nunes, represented by Scott + Scott LLP, filed the first class
action suit a month earlier.
      Less than a month later, the trial court consolidated six of these
related actions, appointed the Scott firm and Robbins Geller Rudman &
Dowd LLP to serve as lead counsel representing plaintiffs, and
designated three law firms, including the Bottini firm, to serve as an
executive committee. The order granted lead counsel the authority to
make all decisions regarding the plaintiffs’ pleadings and to speak for
the plaintiffs with respect to pre-trial procedure, trial, and settlement.
Notably, the order also gave lead counsel the authority to “make all
work assignments in such manner as to facilitate the orderly and
efficient prosecution of the Consolidated Action and to avoid duplicative
or unproductive effort.” Before submitting the proposed order to the
court, all of plaintiffs’ counsel, including the Bottini firm, agreed to the
terms of the consolidation order.
      About a year later, following a mediation before retired Judge
Layn Phillips, the parties settled the action. King agreed to pay $18.5
million (plus any accrued interest) into a settlement fund. The parties
also agreed that the trial court would retain jurisdiction over
implementation and enforcement of the settlement agreement. The
trial court (Judge Curtis Karnow) granted preliminary approval to the
settlement and set a schedule for final approval and for filing of an
attorney fees application.
      In preparing to file their fees motion, lead counsel asked the
executive committee firms to provide declarations attesting to their
lodestars and expenses. The Bottini firm’s declaration sought



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$225,799.50, which represented its lodestar for 508.40 hours, plus
$2,333.88 in expenses. Those 508.40 hours included: (1) 13.7 hours on
factual investigation; (2) 15.3 hours on pleadings, briefs, and pretrial
motions; (3) 43 hours on drafting the initial or amended complaints; (4)
388.4 hours on document review; (5) 9.1 hours on legal research; (6) 1.5
hours on client/shareholder communications; (7) 14.1 hours on
litigation strategy and analysis; and (8) 23.3 hours on settlement
negotiations, stipulation, and plan of allocation.
      When lead counsel filed their motion for an award of attorney
fees and expenses, they opted to omit the time and expense
declarations from non-lead firms; instead, they relied on lead counsel’s
declarations of time and expenses. Lead counsel sought 29.5% of the
$18.5 million recovery, or $5,457,500, which equated to a multiplier of
approximately 1.5 of lead counsel’s aggregate lodestar of $3,672,792.75
(for over 5,900 hours).
      The trial court granted the motion. The trial court did not use a
lodestar/multiplier method but, rather, based its fee award on a
percentage of the recovery—29.5%. The order also stated: “The
awarded attorneys’ fees shall be allocated by Class Counsel among
Plaintiffs’ Counsel in a manner which they in good faith believe reflects
the contribution of counsel to the prosecution and settlement of the
Litigation.”
      On the same day, the trial court gave its final approval to the
settlement and entered judgment. The trial court retained jurisdiction
over “any award or distribution of the Settlement Fund,” as well as




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“hearing and determining applications for attorneys’ fees, interest and
expenses.”
                                    C.
      Without conferring with the Bottini firm, lead counsel allocated it
$124,000—slightly more than half of the Bottini firm’s claimed lodestar
and expenses ($228,133.38). Francis Bottini, Jr. contacted lead
counsel, questioned the allocation, and attempted to meet and confer.
      After reaching an agreement with Robbins Gellar but not with
the Scott firm, the Bottini firm sought relief from the trial court.
Specifically, the Bottini firm asked the court to refer the attorney fees
dispute to Judge Phillips (who had mediated the settlement) or, in the
alternative, award it additional attorney fees and expenses in the
amount of $162,033.13 plus interest. This number was arrived at by
multiplying the Bottini firm’s lodestar ($225,799.50) by a 1.5
multiplier, adding $2,333.88 in expenses, and then subtracting
$179,000 in attorney fees that had already been paid by the Scott firm
and Robbins Geller.
      The Scott firm opposed the motion, disputing the Bottini firm’s
claim that it had agreed to arbitrate the fee dispute. The Scott firm
conceded Bottini & Bottini performed the work described in its fees
declaration but argued: “payment of fees in this action was never a
mathematical calculation of hours and rates. Instead, fee payments
were to directly reflect the contributions to the litigation and the
settlement, and that is what was done in this case.” The Scott firm also
contended that because it did not assign work to Bottini & Bottini, any




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work the Bottini firm performed was done without lead counsel’s
authorization.
      In reply, Bottini & Bottini argued it was irrelevant that the Scott
firm did not assign it work because Robbins Geller had. Its reply
declaration only establishes that Robbins Geller assigned document
review work to the Bottini firm.
                                    D.
      In the two years since the trial court entered judgment, the case
had been reassigned. Judge Anne-Christine Massullo granted in part
and denied in part the Bottini firm’s motion. Judge Massullo declined
to compel arbitration, concluding that the two firms had not agreed to
arbitrate the attorney fees dispute. The court next concluded that the
Scott firm failed to act in good faith when it allocated “an arbitrary”
amount ($124,000) to the Bottini firm on the basis of faulty
assumptions—that lead counsel had not assigned any of the work
shown in the Bottini firm’s declaration and that its lodestar was
unreasonable.
      Although the trial court also observed the Scott firm had not
raised a timely “reasonableness” objection to the Bottini firm’s lodestar,
it nonetheless concluded the Bottini firm was only entitled to its
document review fees ($158,446) because that was its only assignment
approved by lead counsel. Peculiarly, the trial court stated the issue
had not been raised by the parties or the court “in briefing or oral
argument.”
      The trial court also declined to apply a multiplier to the
document review lodestar, explaining that the Bottini firm had not
submitted any evidence justifying a multiplier and that Judge



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Karnow’s original fee award had been based on a percentage of the
recovery. Finally, the trial court declined to award postjudgment
interest, reasoning that it was not appropriate because Judge Karnow’s
original fees award did not allocate a specific amount to the Bottini
firm. After taking the amount Robbins Gellar had already paid into
account, the trial court concluded the Scott firm owed “less than the
$124,000 [it] originally offered.”
                               DISCUSSION
      We review attorney fee awards for abuse of discretion. (Laffitte,
supra, 1 Cal.5th at p. 488.) “ ‘The “experienced trial judge is the best
judge of the value of professional services rendered in [her] court, and
while [her] judgment is of course subject to review, it will not be
disturbed unless the appellate court is convinced that it is clearly
wrong.” ’ ” (Ibid.) Fees awarded by the trial court are presumed
reasonable, and it is the appellant’s burden to show an abuse of
discretion. (Ibid.; Wilder v. Wilder (1932) 214 Cal. 783, 785 [“[a]n abuse
of discretion is never presumed and it must be affirmatively
established”].)
                                     A.
      The Bottini firm first argues the order must be reversed because
the trial court violated due process by sua sponte examining its fees for
lead counsel’s authorization, without providing notice or an opportunity
to argue the firm’s position. We disagree.
                                     1.
      “The essence of due process is notice and the opportunity to be
heard.” (Andre v. Superior Court (1991) 2 Cal.App.4th 11, 19; accord,
Mullane v. Central Hanover Bank & Trust Co. (1950) 339 U.S. 306,



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314.) Due process is violated when a party is not “afforded the right to
present his arguments against the proposed ruling.” (Andre, supra, at
p. 19.)
                                     2.
          There are at least two problems with the Bottini firm’s
argument. First, it ignores the fundamental question it, as the moving
party, asked the trial court to resolve. The Bottini firm cites no
authority supporting its apparent position that it became entitled to its
entire lodestar (plus a multiplier of 1.5) merely by showing Scott &
Scott failed to allocate fees in good faith. In fact, the Bottini firm is
only entitled to payment of fees from the common fund to the extent it
can show its efforts conferred a benefit on the class beyond that
conferred by lead counsel. (See Rebney, supra, 220 Cal.App.3d at p.
1142 [“an award of attorney fees in class action litigation must be tied
to counsel’s actual efforts to benefit the class”]; Lofton, supra, 230
Cal.App.4th at p. 1064; In re Vitamin Cases, supra, 110 Cal.App.4th at
pp. 1054-1055 & fn. 9; Thayer, supra, 92 Cal.App.4th at pp. 841, 844;
Cendant, supra, 404 F.3d at pp. 181, 191, 195.) Otherwise, there has
been no unjust enrichment. (Laffitte, supra, 1 Cal.5th at pp. 488–489.)
      Thus, regardless of whether it chose to address the issue in its
moving papers, the Bottini firm bore the burden of showing that its
efforts (beyond a lodestar of $124,000) benefited the class. (See In re
Marriage of O'Connell (1992) 8 Cal.App.4th 565, 574-576 [failing to
specify a particular issue in pleadings does not preclude a court from
granting relief on issue noticed motion implicitly places before court as
long as losing party had reasonable opportunity to address it].) And, at
least for the period after consolidation, it was agreed by all named



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plaintiffs’ counsel that, to avoid duplicative or unproductive efforts,
lead counsel would authorize the work of other firms, thereby
essentially serving as a proxy for benefit. Accordingly, it was
incumbent upon the Bottini firm to demonstrate that lead counsel had
authorized the work or to otherwise show that it benefitted the class.
The trial court correctly focused on this issue.
         Second, the trial court was simply wrong when it stated that the
parties did not raise the issue themselves. To be sure, the Scott firm
conceded the Bottini firm performed the work described in its
declaration. But the Scott firm also argued that it did not assign the
Bottini firm any of the work reflected in its lodestar. The Bottini firm
admits that it understood the thrust of the argument—that the work
described in the Bottini firm declaration was performed without lead
counsel’s authorization. In its reply brief to the trial court, the Bottini
firm submitted a declaration that co-lead counsel Robbins Gellar
assigned it the document review work. Thus, not only did the Bottini
firm have notice that the issue was contested, it directly addressed the
issue.
         We see no reason for a second bite at the apple. The trial court
did not violate due process.
                                       B.
         The Bottini firm suggests substantial evidence does not support
the trial court’s finding that any work beyond document review was not
authorized by lead counsel. The Scott firm has the better argument.
         Bottini’s reply declaration (asserting Robbins Geller authorized
the document review tasks) and the Scott firm’s declarations (asserting
it provided no authorization) constitute substantial evidence supporting



                                      10
the trial court’s finding. Simply put, the Bottini firm did not meet its
burden to show it conferred a benefit on the class that went beyond
$158,446 in fees incurred for authorized document review. (See
Laffitte, supra, 1 Cal.5th at p. 488; Lofton, supra, 230 Cal.App.4th at p.
1064; Rebney, supra, 220 Cal.App.3d at p. 1142; Thayer, supra, 92
Cal.App.4th at pp. 841, 844; In re Vitamin Cases, supra, 110
Cal.App.4th at pp. 1054-1055 & fn. 9.)
                                      C.
      We also reject the Bottini firm’s argument that the trial court
abused its discretion by declining to apply a multiplier to the document
review lodestar.
      “The lodestar method, or more accurately the lodestar-multiplier
method, calculates the fee ‘by multiplying the number of hours
reasonably expended by counsel by a reasonable hourly rate. Once the
court has fixed the lodestar, it may increase or decrease that amount by
applying a positive or negative “multiplier” to take into account a
variety of other factors, including the quality of the representation, the
novelty and complexity of the issues, the results obtained, and the
contingent risk presented.’ ” (Laffitte, supra, 1 Cal.5th at p. 489.)
Counsel who seek fee enhancement in the form of a discretionary
multiplier bear the burden of proof. (Ketchum v. Moses (2001) 24
Cal.4th 1122, 1137–1138; Robbins v. Alibrandi (2005) 127 Cal.App.4th
438, 453-456; Thayer, supra, 92 Cal.App.4th at p. 835.)
      Here, the trial court concluded the Bottini firm did not meet its
burden. The Bottini firm did not specifically justify its demand for a
multiplier. Instead, in its briefs, it argued to the trial court that a 1.5
multiplier is reasonable because Judge Karnow used that multiplier



                                     11
when calculating the original fee award. The argument is misguided
because Judge Karnow did not use a multiplier to calculate the original
fee award; rather, the fee award was based on a percentage of the class
recovery, and Judge Karnow only referenced lead counsel’s lodestar and
an approximate multiplier for purposes of cross-checking the
percentage award’s reasonableness. The trial court did not abuse its
discretion.
                                    D.
      The trial court concluded the Bottini firm is not entitled to
postjudgment interest because the amount of its fee award had not yet
been calculated. (See City of Clovis v. County of Fresno (2014) 222
Cal.App.4th 1469, 1482-1483.) The Bottini firm contends this was
error but has forfeited its argument by failing to cite supporting legal
authority. (Berger v. California Ins. Guarantee Assn. (2005) 128
Cal.App.4th 989, 1007.)
                                    E.
      In the alternative, the Bottini firm contends this dispute must be
decided by arbitration. But the record contains no evidence of a written
agreement to arbitrate this dispute. (See Code Civ. Proc., § 1281 et
seq.; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th
394, 413 [moving party required to present “evidence of a written
agreement to arbitrate the controversy”].) To the extent the Bottini
firm relies on estoppel, it has forfeited the argument by failing to
present a reasoned legal argument. (Berger v. California Ins.
Guarantee Assn., supra, 128 Cal.App.4th at p. 1007.)
      We need not address the parties’ additional arguments.




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                              DISPOSITION
      The order is affirmed. The Scott firm is entitled to its costs on
appeal. (Cal. Rules of Court, rule 8.278(a)(2).)




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                                    _______________________
                                    BURNS, J.



We concur:




____________________________
SIMONS, ACTING P.J.




____________________________
NEEDHAM, J.




A158660




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