Gendron v. Mont. Univ. Sys.

• Decision Date: 07 April 2020
• Docket Number: DA 19-0115
• Citation: 399 Mont. 470,461 P.3d 115,2020 MT 82
• Parties: Whitney Erin GENDRON, individually and on behalf of all other similarly situated, Plaintiffs and Appellants, v. MONTANA UNIVERSITY SYSTEM, John Doe Defendants 1-100, and John Doe Defendants 101-150, Defendants and Appellees.
• Court: Montana Supreme Court

399 Mont. 470

461 P.3d 115

2020 MT 82

Whitney Erin GENDRON, individually and on behalf of all other similarly situated, Plaintiffs and Appellants,

v.MONTANA UNIVERSITY SYSTEM, John Doe Defendants 1-100, and John Doe Defendants 101-150, Defendants and Appellees.

DA 19-0115

Supreme Court of Montana.

Submitted on Briefs: October 30, 2019

Decided: April 7, 2020

For Appellants: Hillary P. Carls, Blackford Carls, P.C., Bozeman, Montana, Erik B. Thueson, Thueson Law Office, Helena, Montana, Mark J. Luebeck, Angel, Coil & Bartlett, Bozeman, Montana

For Appellee: Robert C. Lukes, J. Andrew Person, Garlington Lohn & Robinson, PLLP, Missoula, Montana

For Amicus Montana Trial Lawyers Association: John C. Heenan, Heenan & Cook, Billings, Montana

For Amicus Montana Defense Trial Lawyers: Matthew B. Hayhurst, Randy J. Tanner, Boone Karlberg P.C., Missoula, Montana

Justice James Jeremiah Shea delivered the Opinion of the Court.

¶1 Whitney Erin Gendron appeals the January 25, 2019 Findings of Fact, Conclusions of Law, and Order Re: Attorneys’ Fees of the Eighteenth Judicial District Court, Gallatin County, partially denying her motion for attorney fees. We restate and address the following issues on appeal:

Issue One: Did the District Court abuse its discretion in its determination of whether the attorney fees awarded to Class Counsel were reasonable?

Issue Two: Is Gendron entitled to interest accrued on the award of attorney fees?

¶2 We affirm the decision of the District Court, but remand the case for a determination of the interest to which Gendron is entitled.

PROCEDURAL AND FACTUAL BACKGROUND

¶3 In October 2009, Gendron filed individual and class action claims against her employer, Montana University System (MUS), based on violations of certain provisions of Montana’s insurance law relating to benefits claims she requested under the MUS group health plan following an automobile collision.

¶4 In November 2016, the parties reached a partial settlement wherein MUS agreed to pay class members for certain insurance claims withheld and modify its policy language. The parties then filed a joint motion for preliminary approval of the settlement, class certification, and appointment of class counsel. On March 24, 2017, the District Court granted the motion and appointed Gendron the Class Representative and her attorneys as Class Counsel. The District Court’s order further provided, "Class Counsel are entitled to an award of reasonable attorneys’ fees and costs, over and above, and separate from, the amount paid to Class Members."

¶5 On January 4, 2018, the District Court gave its final approval of the settlement. The parties were unable to agree to a total attorney fees and costs award. The District Court held an evidentiary hearing over the course of three different days to determine the amount of the award. At the hearing, Class Counsel stated they took Gendron’s case on a contingency fee basis and requested the District Court calculate a fee award based on 33?% of the estimated aggregate settlement value of $10,842,000, for a total fee award of $3,610,386. Class Counsel alternatively requested the District Court award fees based on hourly rates of $350 and $400, respectively, with application of a multiplier of 4.22 to account for the additional responsibility and risk of taking on a class action, for a total fee award of $3,108,013.12. Class Counsel admitted they both retrospectively created their time records because they took Gendron’s case on a contingency fee basis and typically do not keep contemporaneous time records for such cases.

¶6 On January 25, 2019, the District Court issued its Findings of Fact, Conclusions of Law, and Order Re: Attorneys’ Fees, declining to award Class Counsel their requested fees under a percentage-based calculation. The District Court reasoned that the relief obtained by Gendron and other class members was primarily "injunctive in nature" and therefore could not be "easily monetized" or "estimated with reasonable certainty," nor did the parties agree on a total settlement value. The District Court instead calculated Class Counsel’s fee award by multiplying the hours worked on the case by hourly rates of $275 and $375, respectively, finding those rates to be customary of other attorneys in the area. The District Court did not apply a multiplier to the calculation, concluding it would have increased each Class Counsel’s hourly rate to over a thousand dollars an hour. The District Court also reduced Class Counsels’ claimed hours not contemporaneously recorded by 20%, resulting in a total fee award of $511,463.40. As added support for its analysis, the District Court cross-checked its fee against a percentage of the actual class member payout as of October 2018, $1,219,672.76, which would have resulted in a lower fee award of $406,557.55. The District Court directed MUS to pay Gendron’s fees and costs within 30 days of the order.

¶7 On February 22, 2019, Gendron filed her notice of appeal of the District Court’s attorney fee award. Pending appeal, MUS tendered full payment of the attorney fee award to Class Counsel, but Class Counsel refused to accept the funds. MUS then moved the District Court to deposit the funds with the Clerk of District Court or in a trust account, and requested a ruling that it would not have to pay interest on the attorney fee judgment because Class Counsel refused to accept the funds. Class Counsel subsequently moved to stay execution of the judgment. On May 17, 2019, the District Court granted Class Counsel’s motion to stay, but it declined to rule whether interest would accrue on the judgment and ordered MUS to hold the funds pending resolution of the case on appeal, stating, "Pursuant to Rule 19(4), [M. R. App. P.], this Court does not have authority to deny interest on the judgment as requested by MUS. The issue should be raised with the Montana Supreme Court."

STANDARDS OF REVIEW

¶8 Where legal authority exists to award attorney fees, we will not disturb on appeal the amount of a party’s fee award absent an abuse of discretion. Davis v. Jefferson Cty. Election Office , 2018 MT 32, ¶ 8, 390 Mont. 280, 412 P.3d 1048 ; James Talcott Constr. Inc. v. P&D Land Enters. , 2006 MT 188, ¶¶ 27, 62, 333 Mont. 107, 141 P.3d 1200. An abuse of discretion occurs when the district court acts arbitrarily, without employment of conscientious judgment, or in excess of the bounds of reason, resulting in substantial injustice. Talcott Constr. , ¶ 62 (citing Renville v. Farmers Ins. Exchange , 2004 MT 366, ¶ 24, 324 Mont. 509, 105 P.3d 280 ).

¶9 Whether a party is entitled to post-judgment interest is a conclusion of law which we review de novo.

Healy v. Healy , 2016 MT 154, ¶ 19, 384 Mont. 31, 376 P.3d 99 ; In re Marriage of Pfeifer , 2000 MT 100, ¶ 11, 299 Mont. 268, 999 P.2d 340 (citing Tipp v. Skjelset , 1998 MT 263, ¶ 11, 291 Mont. 288, 967 P.2d 787 ).

DISCUSSION

¶10 Issue One: Did the District Court abuse its discretion in its determination of whether the attorney fees awarded to Class Counsel were reasonable?

¶11 Montana follows the "American Rule" regarding attorney fees, which generally requires each party to a dispute pay its own fees regardless of the outcome of the case, absent contractual or statutory fee-shifting authority. See Abbey/Land v. Glacier Constr. Partners, LLC , 2019 MT 19, ¶ 63, 394 Mont. 135, 433 P.3d 1230 (citing Goodover v. Lindey’s , 255 Mont. 430, 445, 843 P.2d 765, 774 (1992) ); Folsom v. Mont. Pub. Emples. Ass’n , 2017 MT 204, ¶ 43, 388 Mont. 307, 400 P.3d 706. When attorney fees are authorized, the controlling standard in all actions, including class actions, is that the amount of fees awarded be reasonable. See Talcott Constr. , ¶ 63 ; Ass’n of Unit Owners of Deer Lodge Condominium v. Big Sky , 242 Mont. 358, 362-63, 790 P.2d 967, 970 (1990) (quotations omitted) ("[I]n a class action an award of attorney fees is contingent upon success, and upon the existence of a fund from which the fees can be paid, and that the evaluation of settlement must be fair, reasonable, and in the best interests of all affected."). The reasonableness of fees depends on the facts of each case. Kenyon-Noble Lumber Co. v. Dependant Founds., Inc. , 2018 MT 308, ¶ 31, 393 Mont. 518, 432 P.3d 133 (citing Houden v. Todd , 2014 MT 113, ¶ 37, 375 Mont. 1, 324 P.3d 1157 ).

¶12 We recognize two primary methods of calculating reasonable fees: the lodestar method, which involves "multiplying the number of hours reasonably spent on the case by an appropriate hourly rate in the community for such work," Tacke v. Energy West, Inc. , 2010 MT 39, ¶ 32, 355 Mont. 243, 227 P.3d 601 (quoting Saizan v. Delta Concrete Prods. Co. , 448 F.3d 795, 799 (5th Cir. 2006) (per curiam)), and the percentage of the recovery method, which authorizes fees to be paid from a percentage of a common fund or a contingency fee agreement, see Buckman v. Montana Deaconess Hosp. , 238 Mont. 516, 520, 776 P.2d 1210, 1212 (1989) (quoting Wight v. Hughes Livestock Co. , 204 Mont. 98, 110, 664 P.2d 303, 309-10 (1983) ) ("Ordinarily, when lawyers undertake a representation on a contingency basis, they bargain for a percentage of the recovery."); Mt. W. Farm Bureau Mut. Ins. Co. v. Hall , 2001 MT 314, ¶ 14, 308 Mont. 29, 38 P.3d 825 (providing that a party who creates or preserves a common fund benefiting ascertainable, non-participating beneficiaries of the litigation is generally entitled to reimbursement of his or her attorney fees from that common fund).

¶13 Under the lodestar method, we have identified seven guiding factors to be used in determining the number of hours counsel reasonably expended:

(1) the amount and character of the services rendered;

(2) the labor, time and trouble involved; (3) the character and importance of the litigation in which the services were rendered;

(4) the amount of money or the value of the property to be affected;

(5) the professional skill and experience called for;

(6) the attorneys’ character and

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