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Delaney v. Enterprise Rent-A-Car Company, Inc.

2006 WL 1194274 (N.J. Super. App. Div. 2006) (Unpublished)

CONTRACTS; ATTORNEYS FEES—A court should lower the lodestar fee if the level of success achieved in the litigation is limited compared to the relief sought.

A car lessee suited a rental company, alleging illegal and deceptive sales practices and violations of the insurance licensing laws. Later, the individual moved for class certification, and the lower court certified the classes. Following subsequent proceedings, the court appointed a mediator and a settlement was reached. The class counsel sought an attorneys’ fee award comprising of a particular lodestar with a 60% enhancement; the lower court set the lodestar at a lower amount with a 15% enhancement. The car rental company appealed the lower court’s order award of attorneys’ fees. It also argued, on appeal, that the lower court failed to properly apply binding precedent in determining the amount of the fee award.

The Appellate Division explained the principles governing determination of a fee award. In determining a reasonable fee award, a trial court must analyze certain factors and state its reasons for awarding a particular fee. Under fee-shifting statutes, the first step in the process is to determine the “lodestar,” which is arrived at by multiplying the number of hours reasonably expended by a reasonable hourly rate. A lower court should reduce the lodestar fee if only a minimal success achieved in the litigation is limited as compared to the relief sought.

In all cases in which the attorney’s compensation is entirely or substantially contingent on a successful outcome, after determining the appropriate lodestar amount, a lower court should consider whether that fee should be increased to reflect the risk of nonpayment.

The car rental company did not dispute the lower court’s finding of the lodestar amount. Rather, it argued that the lower court never considered the limited nature of lessee’s success and that the lower court should have decreased the lodestar because the lessee achieved only a limited success in relation to the relief sought. Similarly, the leasing company contended that the lower court failed to consider whether the time spent by the lessee’s counsel was reasonable in order to achieve the relief obtained. In addition, the lessor contended that the lower court erred in failing to compare the unsuccessful deceptive sales practice claims with the settled insurance registration claims.

In analyzing the principle that a court should reduce the lodestar fee if the level of success achieved in the litigation is limited as compared to the relief sought, the Appellate Division found that the lower court failed to apply this rule. Namely, the Court found that the lower court failed to consider that if a plaintiff has achieved only partial or limited success, then multiplying the hours reasonably expended on the litigation by a reasonable hourly rate may be an excessive amount. To the Court, that the most critical factor is the degree of success obtained. Accordingly, it concluded that the disparity between the relief sought and the results achieved should have been addressed in detail by the lower court.

Additionally, the Court concluded that the lower court was required to determine whether the time expended on this action was equivalent to the time that competent counsel reasonably would have spent to achieve a similar result. In this regard, the lower court should have considered the relief obtained by the settlement. Further, the Court instructed the lower court to consider whether the time spent by the lessee’s counsel was reasonable, taking into account the damages prospectively recoverable, the interests to be vindicated, and the underlying statutory objectives, and apply reasonable discretion.


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