Laffitte v. Robert Half International Inc.
1 Cal. 5th 480
| Cal. | 2016Background
- Three related wage-and-hour class actions against Robert Half settled for a $19 million common fund; class counsel sought one-third ($6,333,333.33) in fees to be paid from the fund.
- Objector David Brennan challenged the fee as excessive and argued Serrano III requires lodestar-based fee awards (time × rate) rather than percentage-of-fund awards.
- Class counsel provided hours (≈4,263–4,463), hourly rates, a lodestar totaling about $2.97–$3.12 million, and argued a lodestar multiplier (≈2.03–2.13) was reasonable given contingency risk and litigation complexity.
- The trial court preliminarily and then finally approved the settlement and granted the requested one-third fee after performing a lodestar cross-check; the Court of Appeal affirmed.
- The California Supreme Court granted review to decide whether Serrano III bars percentage-of-fund fees in common-fund class actions and whether a lodestar cross-check is permissible.
Issues
| Issue | Plaintiff's Argument (Brennan) | Defendant's Argument (Robert Half / Class Counsel) | Held |
|---|---|---|---|
| Whether Serrano III requires lodestar as the exclusive method for all fee awards | Serrano III mandates fees be calculated from hours/time (lodestar) and thus percentage-of-fund awards are improper | Percentage method is appropriate for true common funds; Serrano III addressed private-attorney-general fees, not common-fund cases | Court held Serrano III does not bar percentage fees in common-fund cases; Serrano dealt with a different doctrine |
| Whether a percentage-of-the-fund award is per se unreasonable | Percentage awards can yield windfalls and should be rejected per Serrano III | Percentage method aligns incentives, approximates market for contingency work, and is widely accepted in common-fund cases | Court held percentage method is permissible for common funds and not per se unreasonable |
| Whether a lodestar cross-check is allowed | Lodestar should be primary; courts often fail to scrutinize hours, so cross-check may be meaningless | Lodestar cross-check is a useful objective check and may be used at courts’ discretion without exhaustive scrutiny | Court approved lodestar cross-check as discretionary and helpful but not mandatory; trial court may or may not perform it |
| Whether the trial court abused discretion in approving one‑third fee and multiplier | Objector: one‑third was excessive and implied multiplier was high; requested documentation insufficient | Counsel: one‑third falls within historical range; lodestar and multiplier supported by records and case complexity | Court affirmed: trial court did not abuse discretion given the true common fund, supporting evidence, and reasonable cross-check |
Key Cases Cited
- Serrano v. Priest, 20 Cal.3d 25 (Cal. 1977) (discussed lodestar approach in private-attorney-general context; court clarifies it did not address common-fund percentage method)
- Lealao v. Beneficial California, Inc., 82 Cal.App.4th 19 (Cal. Ct. App. 2000) (discussed limits of percentage usage where no separate fund is established and endorsed lodestar cross-check)
- Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973) (early Third Circuit endorsement of lodestar method in common-fund cases)
- Blum v. Stenson, 465 U.S. 886 (U.S. 1984) (distinguished common-fund percentage awards from statutory fee-shifting lodestar awards)
- Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002) (approved percentage-of-fund approach with benchmark and adjustments; discussed lodestar cross-check)
- Goldberger v. Integrated Resources, Inc., 209 F.3d 43 (2d Cir. 2000) (endorsed percentage method for common funds and explained utility of lodestar cross-check)