230 Cal. App. 4th 1050
Cal. Ct. App.2014Background
- Two parallel litigations over Wells Fargo home mortgage consultants: a San Francisco class action (Lofton) filed in 2005 and ILG’s related actions filed in Los Angeles (initial class later decertified, then ~600 individual/group suits).
- In February 2011 the parties mediated and reached two agreements: a $19M class settlement (Lofton) and an approximately $6M settlement between Wells Fargo and ILG on behalf of ILG’s ~600 clients; class counsel told the Lofton court ILG’s clients would opt out.
- No ILG clients opted out; many ILG clients instead submitted claims to the class fund after ILG advised them to do so and assisted with claims processing.
- After final approval of the Lofton settlement, ILG notified its clients it had separately negotiated ~$6M primarily as attorney fees and offered clients modest payments ($750 then $1,750) in exchange for releases; intervenor Maxon objected and intervened.
- The Lofton court issued a TRO requiring ILG to escrow the supplemental settlement funds, account for them, stop soliciting releases, and provide client contact information; ILG appealed the TRO and other relief.
Issues
| Issue | Plaintiff's Argument (Maxon) | Defendant's Argument (ILG) | Held |
|---|---|---|---|
| Court jurisdiction to issue TRO after final judgment | Court retained jurisdiction under §664.6 and equitable powers to protect fairness of the class settlement and supervise related fee allocations. | Once final judgment entered, court lacked power over nonparties/other counsel and could not restrain ILG. | Court had concurrent exclusive jurisdiction and equitable authority to preserve and review fee allocation; TRO proper. |
| Whether ILG was aggrieved re: intervention order (standing to appeal) | Maxon argued ILG lacked standing to challenge intervention. | ILG appealed the intervention order. | ILG was not an aggrieved party as to intervention; that portion of appeal dismissed. |
| Appropriateness and scope of TRO (deposit, speech/restraints, enforcement of releases) | TRO necessary to prevent dissipation, protect class members, and allow court review of fee reasonableness; temporary limits on communications justified. | TRO improperly compelled deposit, restricted speech, interfered with enforcement of releases and petition rights, and invaded client privacy. | Court did not abuse discretion: escrow order, communication restraints, and freeze on enforcing releases were proportionate and temporary; privacy concerns minimal. |
| Reliance on mediation-related evidence / admissibility objections | Maxon relied on letters, declarations, and some mediation materials to show concealment and harm. | ILG argued court relied on inadmissible mediation-confidential materials (Evidence Code §1152 et al.). | Any reliance on protected materials was harmless; sufficient admissible evidence supported the TRO. |
Key Cases Cited
- Thayer v. Wells Fargo Bank, N.A., 92 Cal.App.4th 819 (discusses fee awards when duplicative actions contribute little to class result)
- In re Vitamin Cases, 110 Cal.App.4th 1041 (multiple counsel and coordination of related class actions)
- Franklin & Franklin v. 7‑Eleven Owners for Fair Franchising, 85 Cal.App.4th 1168 (class-action court may enjoin related proceedings under exclusive concurrent jurisdiction)
- Consumer Privacy Cases, 175 Cal.App.4th 545 (risks of conflicts and unfairness in common-fund settlements)
- Wackeen v. Malis, 97 Cal.App.4th 429 (§664.6 retention of jurisdiction includes personal and subject-matter aspects)
- Shafer v. Berger Kahn Shafton Moss Figler Simon & Gladstone, 107 Cal.App.4th 54 (lawyer’s duty not to mislead nonclients or court)
- Rodriguez v. Disner, 688 F.3d 645 (court may deny or disgorge fees when lawyer misconduct affects value of services)
- In re Eastern Sugar Antitrust Litig., 697 F.2d 524 (disgorgement of fees permissible for egregious ethical breaches)