Gentile v. Cohodes

• Decision Date: 25 October 2021
• Docket Number: A161721
• Court: California Court of Appeals Court of Appeals
• Parties: GUY GENTILE, Plaintiff and Respondent, v. MARC COHODES, Defendant and Appellant.

GUY GENTILE, Plaintiff and Respondent, v. MARC COHODES, Defendant and Appellant.

A161721

California Court of Appeals, First District, Second Division

October 25, 2021

NOT TO BE PUBLISHED

(Sonoma County Super. Ct. No. SCV265069)

STEWART, J.

Appellant Marc Cohodes, a defendant who prevailed on a complex anti-SLAPP motion in a defamation action brought against him appeals from the trial court's order awarding him attorney fees. The sole question is whether the trial court abused its discretion by reducing the hourly rates charged by the attorneys he retained to defend him.

Cohodes asserts two errors in this regard. He argues the court should have calculated the lodestar based on hourly rates charged by comparable law firms practicing in the San Francisco Bay Area, rather than in Sonoma County where the case was brought. He also argues that even if it was appropriate to utilize Sonoma County rates, the fee award should be vacated "with instructions to enter an award based on the prevailing rate for similar work [in that county]-complex civil litigation of issues such as defamation and federal securities fraud," because the lodestar utilized by the trial court was not based on similar work.

We reject both contentions and affirm. The trial court had discretion to determine that the relevant geographic market for assessing a reasonable hourly rate was the county in which the court sits. And because Cohodes did not introduce any evidence of the prevailing market rate in Sonoma County for comparable kinds of legal work, he cannot now complain that the trial court took it upon itself to ascertain a reasonable hourly rate for such services based principally upon the trial court's own expertise and familiarity with the local legal market.

BACKGROUND

Guy Gentile, a major shareholder of a publicly traded company brought suit in Sonoma County Superior Court against Marc Cohodes, another investor who held a short position in the company' stock, alleging Cohodes made numerous defamatory statements about him on Twitter and other social media platforms in an effort to artificially depress the stock's price and claiming $25 million dollars in damages. Cohodes retained a team of experienced, high-caliber litigators from an Oakland, California-based law firm to defend him, and prevailed on an anti-SLAPP motion. He then filed a motion to recover $314, 115 in attorney fees (plus costs), pursuant to statute (see Code Civ. Proc., § 425.16, subd. (c)).

In his opening papers on the attorney fee motion, Cohodes argued that the hourly rates charged by his legal team were reasonable based on hourly rates charged by "other reputable firms in the San Francisco Bay Area specializing in complex litigation," and argued that the court should not base the fee award on local rates prevailing in Sonoma County. Alternatively, he argued that "even judged by a purely local Sonoma County standard," its requested fees were reasonable.

In support, Cohodes filed a declaration of its lead counsel Fred Norton, describing the complexity of the case and the credentials of his legal team. The hourly billing rates ranged from a low of $250 for two paralegals to a high of $750 for three of the lawyers involved (and $550 for two other lawyers). Norton opined that these rates are consistent with hourly rates "regularly charged by attorneys in Northern California with comparable experience" in complex commercial litigation. Cohodes also submitted evidence of pleadings in which the law firm representing Gentile in this case (Pillsbury Winthrop Shaw Pittman LLP), claimed similar hourly rates in fee motions filed in two unrelated federal district court cases (one pending in Arkansas, and the other in the Central District of California).

In opposition to the motion, Gentile objected to the hourly rates as excessive, and contended that the lodestar must be calculated based upon the local rates prevailing in Sonoma County. Gentile asked the court to reduce the top rates claimed by Cohodes's attorneys to no more than $300 per hour (and to make a similar adjustment for associates and paralegals). In support of his position, he introduced evidence of two other state court cases from Sonoma County in which trial judges had reduced the hourly rates sought by fee claimants as excessive for the local market and determined that a reasonable hourly rate for attorneys practicing in Sonoma County was, in one case, $300 and, in the other case, no more than $400 per hour.

In his reply papers, Cohodes doubled down. He again argued his lawyers' claimed billing rates were reasonable, that the relevant legal market was the San Francisco Bay Area "and that the comparable work is complex litigation involving white-collar criminal defense and sophisticated stock frauds." He also argued that hiring local counsel in Sonoma County was not practicable, as evidenced by the fact that both sides chose to retain attorneys from outside Sonoma County. Alternatively, he argued that if the court utilized Sonoma County billing rates, then the court should award him the full amount of his requested fees as an upward adjustment to the lodestar.

Cohodes did not submit any evidence with his reply papers disputing Gentile's evidentiary showing that local Sonoma County billing rates are considerably lower than the rates charged by his out-of-town counsel. Nor did he move to strike or otherwise object to Gentile's evidence on that subject. (He simply argued that the evidence could not be considered, because it consisted of unpublished appellate opinions which cannot be cited as legal precedent under California Rules of Court, rule 8.1115.)

In a thoughtful and thorough ten-page written ruling supported by ample citation to caselaw, the trial court exercised its discretion to reduce both the number of hours claimed by Cohodes's attorneys and their claimed hourly billing rates. As relevant here, the court rejected Cohodes's argument that it was impracticable to retain local counsel ("there is no evidence in the record to support that assertion") and made a finding that, "with the qualifications and experience set forth in the Norton Declaration, fees in line with similarly qualified attorneys in the local, Sonoma County, community are $450 for partners, $330 for senior associates, and $150 for paralegals. This results in an across-the-board reduction of 40% in the billing rates of all billers." The court said these figures represented "the high end of the local rates." "Although at oral argument Defendant pointed out that there is no case which requires the Court to define the local community by county line, the Court concludes that the relevant community in this case is Sonoma County, and does not include the major metropolitan areas of San Francisco and Oakland." It also observed that Cohodes "chose to retain a lawyer from outside the community; that is his right, but it does not make the fees incurred 'reasonable' for purposes of the fee award." The court also found there was no basis to apply a positive multiplier to the lodestar. Among other reasons, it explained that counsel's skill and the difficulty of the issues involved were already factored into the lodestar. The court awarded Cohodes $125, 881.80 in attorney fees (plus costs), and this timely appeal followed.

DISCUSSION

The standard for calculating attorney fee awards under California law is well-settled. It "ordinarily begins with the 'lodestar,' i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. . . . The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. [Citation.] Such an approach anchors the trial court's analysis to an objective determination of the value of the attorney's services, ensuring that the amount awarded is not arbitrary." (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095 (PLCM Group).) In calculating the lodestar, "The reasonable hourly rate is that prevailing in the community for similar work." (Ibid.)

We review the court's ruling for an abuse of discretion. "[T]he trial court has broad authority to determine the amount of a reasonable fee." (PLCM Group supra, 22 Cal.4th at p. 1095.) "The determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court. [Citation.] The experienced trial judge is the best judge of the value of professional services rendered in his or her court. [Citation.] Accordingly, the trial court's ruling will not be disturbed unless the appellate court is convinced that it is wrong. [Citation.] In other words, the trial court's exercise of discretion will be reversed only if its decision 'exceeded the bounds of reason,' i.e., it was arbitrary, capricious, or patently absurd." (Rey v. Madera Unified School Dist. (2012) 203 Cal.App.4th 1223, 1240 (Rey).)

Cohodes argues the trial court was legally precluded from calculating the lodestar based on local hourly rates prevailing in Sonoma County. In other words, that the court had no discretion whatsoever to award attorney fees based upon reasonable hourly rates prevailing in the county in which the court sits.

That is not the law. In setting the lodestar, "[t]he general rule is '[t]he relevant "community" is that where the court is located, '" unless the party claiming fees demonstrates that hiring local counsel was impracticable or local counsel was not available. (Marshall v. Webster (2020) 54 Cal.App.5th 275 285-286, italics added; accord, Ketchum v. Moses (2001) 24 Cal.4th 1122, 1138 (Ketchum) ["the unadorned lodestar reflects the general local hourly rate for a fee-bearing case," italics omitted]; Nishiki v. Danko Meredith, APC (201...