Tibbetts v. SightN Sound Appliance

• Citation: 77 P.3d 1042,2003 OK 72
• Decision Date: 16 September 2003
• Docket Number: No. 96,079.,96,079.
• Parties: Paul TIBBETTS, Erwin Olds, Mary Dittemeyer, Mary Pittman, on behalf of themselves and all others similarly situated, Plaintiffs/Appellees, v. SIGHT `N SOUND APPLIANCE CENTERS, INC., an Oklahoma Corporation, d/b/a Sight `n Sound & Cost Warehouse, Defendant/Appellant.
• Court: Oklahoma Supreme Court

77 P.3d 1042

2003 OK 72

Paul TIBBETTS, Erwin Olds, Mary Dittemeyer, Mary Pittman, on behalf of themselves and all others similarly situated, Plaintiffs/Appellees, v. SIGHT `N SOUND APPLIANCE CENTERS, INC., an Oklahoma Corporation, d/b/a Sight `n Sound & Cost Warehouse, Defendant/Appellant.

No. 96,079.

Supreme Court of Oklahoma.

September 16, 2003.

As Corrected September 16, 2003.

David Humphreys and Luke Wallace of Humphreys Wallace Humphreys, Tulsa, OK, and Justin LaMunyon of Faulkner & LaMunyon, P.L.L.C., Enid, OK, for Plaintiffs/Appellees.

Craig L. Box and Julia C. Rieman of Gungoll, Jackson, Collins, Box & Devoll, P.C., Enid, OK, for Defendant/Appellant.

LAVENDER, J.:

¶ 1 We decide here if the trial judge erred in awarding $375,000.00 in attorney fees to plaintiffs/appellees in their class action suit brought against defendant/appellant, Sight `n Sound Appliance Centers, Inc., d/b/a Sight `n Sound & Cost Warehouse under the Oklahoma Consumer Protection Act (OCPA), 15 O.S.1991, § 751 et seq., as amended.¹ We hold the trial judge erred, and the Court of Civil Appeals (COCA), Division I mistakenly affirmed, because the only reasonable attorney fee in this case is no fee, plaintiffs seeking solely money damages, but recovering zero damages (i.e., nothing) via a jury verdict. We also overrule Tibbetts v. Sight `n Sound Appliance Centers, Inc. (Tibbetts I), 2000 OK CIV APP 47, 6 P.3d 1064 (cert. denied 3-30-00), a prior COCA, Division IV opinion involving the same case, as it wrongly held these private plaintiffs may recover attorney fees in this OCPA case merely by showing a violation of the OCPA without an attendant showing of damages or actual injury.

¶ 2 This Court's decision in Walls v. American Tobacco Co., 2000 OK 66, 11 P.3d 626, followed shortly by Patterson v. Beall, 2000 OK 92, 19 P.3d 839, held that for a private plaintiff to have a viable claim under the OCPA the plaintiff must show as an essential element of the claim, actual damages, i.e., injury in fact. To the extent plaintiffs argue Tibbetts I is the law of the case such that the propriety of at least some attorney fee award may not now be challenged as they have been determined to be the prevailing/successful parties by Tibbetts I, we hold an exception to the law of the case doctrine applies as Tibbetts I is palpably erroneous and a gross or manifest injustice would be done were we to allow the award for fees to stand when it is clearly not authorized by law and plaintiffs cannot be deemed to have prevailed because they recovered nothing.

PART I. STANDARD OF REVIEW.

¶ 3 What constitutes a reasonable attorney fee is a matter addressed to the sound discretion of the trial court to be decided based on various factors and a judgment awarding attorney fees will not be reversed absent an abuse of discretion. Continental Natural Gas, Inc. v. Midcoast Natural Gas, Inc., 1996 OK CIV APP 157, 935 P.2d 1185, 1188; see also State ex rel. Burk v. City of Oklahoma City, 1979 OK 115, 598 P.2d 659, 663

(review standard is abuse of discretion when reasonableness of attorney fees awarded is issue on appeal). As a general matter, an abuse of discretion review standard includes appellate examination of both fact and law issues [Christian v. Gray, 2003 OK 10, ¶ 43, 65 P.3d 591, 608] and abuse occurs when the ruling being reviewed is based on an erroneous legal conclusion or there is no rational basis in the evidence for the decision. Fent v. Oklahoma Natural Gas, Co., 2001 OK 35, ¶ 12, 27 P.3d 477, 481; Abel v. Tisdale, 1980 OK 161, 619 P.2d 608, 612 (reversal for abuse of discretion proper if trial judge makes clearly erroneous conclusion and judgment, against reason and evidence).

¶ 4 Further, when an assigned error is one of law a de novo review standard applies [Christian v. Gray, supra, 2003 OK 10, at ¶ 43, 65 P.3d at 608], a non-deferential, plenary and independent review of the trial court's legal ruling. Samman v. Multiple Injury Trust Fund, 2001 OK 71, ¶ 8 and n. 5, 33 P.3d 302, 305 and n. 5. Though normally when reviewing the reasonableness of an attorney fee award an appellate court affords the trial judge's finding(s) much deference because of the nature of the factual inquiry into the factors delineated in State ex rel. Burk v. City of Oklahoma City, supra,

in that here the overriding and critical factor of the results obtained is undisputed and leads to only one rational conclusion as to what a reasonable fee should be (i.e., no fee), the ultimate decision in this case turns on a question of law.

PART II. PROCEDURAL AND FACTUAL BACKGROUND.

¶ 5 The Pre-Trial Conference Order (PTO)² filed in the lower court in August 1997 indicates plaintiffs contended defendant's conduct violated the OCPA, § 753(8), (9) and (12). Subsection 12 details prohibited conduct of bait and switch advertising, accompanied by various forms of behavior concerning not selling or supplying the product advertised. Subsections 8 and 9, respectively, declare unlawful advertising, knowingly or with reason to know, a product with intent not to sell it as advertised or with intent not to supply the reasonably expected public demand unless the ad discloses a limitation of quality.³ Basically, plaintiffs' case, as presented to the jury, centered on the advertising of Magnavox television sets, but then steering the customer to another brand of television, i.e., Goldstar. Tibbetts I, 2000 OK CIV APP 47, at ¶ 3, 6 P.3d at 1066-1067.⁴ Although plaintiffs' initial October 1994 petition had requested injunctive relief to prohibit defendant from continuing to violate the OCPA, the PTO—which controlled the subsequent course of the action—unequivocally sets forth that plaintiffs sought solely monetary relief—i.e., damages—both compensatory and punitive. Two of plaintiffs' attorneys, in effect, voiced their view at the attorney fee hearing held after remand from Tibbetts I, that the OCPA does not permit injunctive relief in a private consumer action and the request for injunctive relief was abandoned.

¶ 6 After the case was tried, the jury was instructed on the law and provided three verdict forms: a defendant's verdict form which generally allowed the jury to find the issues in favor of defendant; a plaintiffs' verdict form generally allowing the jury to find in favor of the plaintiffs and to fix the amount of damages to the class as a whole; and a punitive damage verdict form. Nine members of the jury signed the plaintiffs' verdict form, but it unequivocally fixed the amount of damages at zero. The same nine jurors signed the punitive damage verdict form and it fixed the amount of punitive damages at zero. Based on these verdicts we must assume the jury found defendant did engage in some violation of the OCPA, but that plaintiffs failed to carry their burden to show any damages.⁵ Judgment was entered by the trial judge, awarding plaintiffs nothing. The issue of attorney fees was reserved for proper application.

¶ 7 Both sides, plaintiffs and defendant, moved for attorney fees and the trial judge denied both requests. Each side appealed the denials and the COCA, Division IV in Tibbetts I, in effect, decided that language employed in § 761.1(A) of the OCPA allowed plaintiffs to recover attorney fees merely by showing a violation of the OCPA without an attendant showing of damages or actual injury. Tibbetts I remanded for the trial judge to determine the amount of attorney fees. This Court denied defendant's quest for certiorari to review Tibbetts I, the matter returned to the trial court, and after various written submissions of the parties concerning the attorney fee issue and an evidentiary hearing, the trial judge entered the award of $375,00.00 in favor of plaintiffs now before us.⁶

¶ 8 The $375,000.00 fee was arrived at by the trial judge upon a determination that the reasonable amount of plaintiffs' attorneys' time was 3000 hours and that a reasonable hourly rate for the lawyers involved was an average of $125.00 per hour.⁷ Plaintiffs' attorneys had initially sought over 1 million dollars in attorney fees and the record contains evidence that said attorneys may actually have spent 7000 hours in attorney's time on the case. We also note the record is undisputed that plaintiffs' agreement with their counsel as to attorney fees is a contingency-based agreement, i.e., plaintiffs have no responsibility to pay their counsel attorney fees as nothing was recovered. Further, the Findings of Fact and Conclusions of Law (FF/CL) that accompanied the trial court "Judgement" awarding the fees under review, indicates that the amount in controversy in this case was never clearly established, but would not have exceeded $25.00 per class member, a sum that would not have exceeded $500,000.00 for the class as a whole. Evidence presented at the attorney fee hearing, however, seems to reveal plaintiffs sought about 1 million dollars in compensatory damages from the jury, i.e., apparently about $50.00 per class member.

¶ 9 Defendant appealed the award and the COCA, Division I affirmed, though it appeared to recognize that Tibbetts I's holding that plaintiffs were entitled to attorney fees merely because they had shown a violation of the OCPA was no longer good law in light of this Court's decision in Walls, supra, to the effect that an essential element of a private OCPA claim is actual damages. Division I's opinion determined it was powerless to reverse Tibbetts I, essentially in deference to the law of the case doctrine, and decided the amount awarded did not manifest an abuse of discretion.⁸ We previously granted certiorari and we now vacate the COCA's opinion, reverse the trial court judgment of $375,000.00 attorney fees in favor of plaintiffs and overrule Tibbetts I.

PART III. THE ONLY REASONABLE ATTORNEY FEE IN THIS CASE, WHERE PLAINTIFFS SOUGHT SOLELY MONEY DAMAGES AND RECOVERED NOTHING, IS NO FEE.

¶ 10 We first note that our review of the reasonableness of the fee awarded requires...