Schulz v. Jeppesen Sanderson, Inc.
27 Cal. App. 5th 1167
Cal. Ct. App. 5th2018Background
- Plaintiffs (Silke and four minor children) sued aircraft- and chart-manufacturers after Rainer Schulz died in a Cessna crash in Germany; Herzog law firm represented them on a contingency basis and obtained an $18,125,000 unallocated settlement days before trial.
- Retainer: Herzog and Silke agreed to 31% of any settlement if resolved ≥30 days before trial (40% if later); Herzog advanced significant costs (~$300k+, unreimbursed ~$83,829.53).
- Trial court, exercising its duty to allocate wrongful-death proceeds and to approve fees for minors under Prob. Code §§3600–3601, allocated virtually all funds to the four minor children (Silke received $1) and approved only 10% of the children’s share as attorney fees.
- Trial court justified the 10% award based on the minors’ substantial future medical needs and criticized Herzog for late notice to deceased’s adult daughters, calling it negligent or bad strategy.
- Herzog appealed, arguing the court abused its discretion by failing to apply California Rules of Court, rule 7.955 factors and by giving undue weight to the children’s needs; the appellate court reversed and remanded for reconsideration of fee under rule 7.955.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court abused discretion by reducing contingency fee to 10% of minors' share | Herzog: 31% was reasonable given retainer, high risk, experience, costs advanced, and results obtained | Silke: Court may reduce fees to protect minors; 10% appropriate given children’s massive future medical needs and late notice to adult daughters | Reversed — trial court abused discretion by not properly applying rule 7.955 factors and overweighting children’s needs |
| Proper application of Cal. Rules of Court, rule 7.955 | Herzog: Court must evaluate retainer and circumstances as of when agreement was made and balance all listed factors | Silke: Court entitled to scrutinize fees for minors and protect their interests, including reducing contingent fees | Court: Rule 7.955 requires balancing multiple factors (risk, time, skill, informed consent); trial court failed to consider many factors and gave undue weight to single factor |
| Whether appellate court should decide the appropriate fee amount or remand | Herzog: Appellate court should award 31% now | Silke: Implicitly preferred trial court discretion to set fee | Appellate court declined to set fee; remanded so trial court can exercise its discretion in first instance |
| Forfeiture of appellate challenge for failure to object to statement of decision | Silke: Herzog forfeited objections by not filing objections to the statement of decision (Arceneaux) | Herzog: Arceneaux does not bar challenge to trial court’s discretionary balancing where the court resolved the issue on the merits | Held: No forfeiture — Arceneaux/Code Civ. Proc. §634 inapplicable because the court resolved attorney-fee issue and Herzog challenges the exercise of discretion, not an unresolved issue |
Key Cases Cited
- Laffitte v. Robert Half Internat. Inc., 1 Cal.5th 480 (Supreme Court of California) (approving one-third fee in a class-action settlement)
- Thayer v. Wells Fargo Bank, 92 Cal.App.4th 819 (Court of Appeal) (standard: review attorney-fee award for abuse of discretion)
- Flannery v. California Highway Patrol, 61 Cal.App.4th 629 (Court of Appeal) (abuse of discretion requires no reasonable basis or wrong test applied)
- In re Bluetooth Headset Products Liability, 654 F.3d 935 (9th Cir.) (25% as starting point in class-action fee awards)
- Consumer Privacy Cases, 175 Cal.App.4th 545 (Court of Appeal) (approving class-action fee percentages consistent with common benchmarks)
- Lealao v. Beneficial California, Inc., 82 Cal.App.4th 19 (Court of Appeal) (discussion of percentage-fee reasonableness)
- In re Marriage of Arceneaux, 51 Cal.3d 1130 (Supreme Court of California) (procedural rule on objections to statement of decision; distinguished here)