9 united states district court 10 for the northern...

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Johnson v. Triple Leaf Tea Inc., Case No. 3:14-cv-01570 MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR ATTORNEY’S FEES, COSTS AND

INCENTIVE AWARD

LAW OFFICES OF RONALD A. MARRON, APLC RONALD A. MARRON (SBN 175650) [email protected] SKYE RESENDES (SBN 278511) [email protected] ALEXIS M. WOOD (SBN 270200) [email protected] 651 Arroyo Drive San Diego, California 92103 Telephone: (619) 696-9006 Facsimile: (619) 546-6665 Class Counsel

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

EUNICE JOHNSON, individually, on behalf of all others similarly situated, and the general public,

Plaintiff,

v.

TRIPLE LEAF TEA INC.;

Defendant.

CASE NO.: 3:14-cv-01570 MMC CLASS ACTION MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF’S MOTION FOR ATTORNEY’S FEES, COSTS AND INCENTIVE AWARD [Filed concurrently with Decl. of Ronald A. Marron] (HEARING DATE SET BY ORDER GRANTING PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT [DKT. NO. 53]) Judge: Hon. Maxine M. Chesney Courtroom: 7 (19th Floor)

Date: Nov. 13, 2015 Time: 9:00 a.m.

Case3:14-cv-01570-MMC Document54 Filed08/15/15 Page1 of 34

mailto:[email protected]

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i Johnson v. Triple Leaf Tea Inc., Case No. 3:14-cv-01570

MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR ATTORNEY’S FEES, COSTS AND INCENTIVE AWARD

TABLE OF CONTENTS I. PRELIMINARY STATEMENT AND SUMMARY OF ARGUMENT .................................. 1

II. STANDARD OF REVIEW ....................................................................................................... 2

III. PLAINTIFF IS ENTITLED TO FEES UNDER GOVERNING CALIFORNIA LAW ........... 2

A. The CLRA Requires Fees be Awarded to a “Prevailing Plaintiff” ...................................... 3

B. The Private Attorney General Statute Separately Entitles a “Successful Party” to Fees in Public Interest Cases ............................................................................................ 3

C. Plaintiff is “Prevailing” and “Successful” Under the CLRA and Private Attorney General Statute ......................................................................................... 4

D. The Settlement Agreement Provides for Attorneys’ Fees, Costs, and Incentive Awards.... 5

IV. THE COURT SHOULD APPLY THE LODESTAR METHOD TO DETERMINE CLASS COUNSEL’S REASONABLE FEES .......................................................................... 6

V. CLASS COUNSEL’S RATES AND HOURS EXPENDED ARE FAIR AND REASONABLE ......................................................................................................................... 7

A. Class Counsel’s Rates are Reasonable ................................................................................. 7

B. Class Counsel’s Hours Expended are Reasonable ............................................................. 13

VI. CLASS COUNSEL’S REQUESTED FEE IS REASONABLE .............................................. 14

A. The Results Achieved for the Class ................................................................................... 14

B. The Effort, Skill, and Experience of Class Counsel .......................................................... 17

C. The Complexity of the Issues ............................................................................................. 17

D. Risk of Non-Payment, Preclusion of Other Employment, and Ongoing Work ................. 18

E. Reaction of the Class .......................................................................................................... 19

F. A Multiplier Would Be Reasonable ................................................................................... 19

VII. THE REQUESTED COSTS ARE FAIR AND REASONABLE ............................................ 22

VIII. THE REQUESTED INCENTIVE AWARD IS FAIR AND REASONABLE ....................... 22

IX. CONCLUSION ........................................................................................................................ 24


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ii Johnson v. Triple Leaf Tea Inc., Case No. 3:14-cv-01570


TABLE OF AUTHORITIES

Cases

Barcia v. Contain-A-Way, Inc., No. 07cv938-IEG-JMA, 2009 WL 587844 (S.D. Cal. Mar. 6, 2009) ............................................. 24

B-K Lighting, Inc. v. Vision3 Lighting, 2009 U.S. Dist. LEXIS 111968 (C.D. Cal. Nov. 16, 2009) ............................................................. 12

Blum v. Stenson, 465 U.S. 886 (1984) ....................................................................................................................... 7, 8

Brazil v. Dell Inc., 2012 U.S. Dist. LEXIS 47986 (N.D. Cal. Apr. 4, 2012) ............................... 4, 6, 16

Broughton v. Cigna Healthplans, 21 Cal. 4th 1066 (1999) ..................................................................................................................... 3

Bruno v. Quten Research Inst., LLC, No. 8:11-cv-00173-DOC-E, 2013 WL 990495 (C.D. Cal. Mar. 13, 2013) ..................................... 11

Camancho v. Bridgeport Fin., Inc., 523 F.3d 973 (9th Cir. 2008).............................................................................................................. 7

Castagnola v. Hewlett Packard Co., No. C 11-05772 JSW, 2012 WL 2159385 (N.D. Cal. June 13, 2012) ....................................... 16, 18

Champion Produce, Inc. v. Ruby Robinson Co., 342 F.3d 1016 (9th Cir. 2003)............................................................................................................ 2

Collado v. Toyota Motor Sales, U.S.A., Inc., 2011 U.S. Dist. LEXIS 133572 (C.D. Cal. Oct. 17, 2011) ................................................................ 8

Cunningham v. County of Los Angeles, 879 F. 2d 481 (9th Cir. 1988)........................................................................................................... 14

Dunk v. Ford Motor Co., 48 Cal. App. 4th 1794 (1996) .......................................................................................................... 13

Farmers Ins. Exch. v. Sayas, 250 F.3d 1234 (9th Cir. 2001)............................................................................................................ 2

Fitzgerald v. City of Los Angeles, 2009 U.S. Dist. LEXIS 34803 (C.D. Cal. Apr. 7, 2009).................................................................... 4

Gallucci v. Boiron, Inc., No. 11cv2039 JAH (NLS), 2012 WL 5359485 (S.D. Cal. Oct. 31, 2012) ...................................... 11

Gee v. Temeco, Inc., 615 F.2d 857 (9th Cir. 1980).............................................................................................................. 2

Graciano v. Robinson Ford Sales, Inc., 144 Cal. App. 4th 140 (2006) ............................................................................................................ 5

Graham v. DaimlerChrysler Corp., 34 Cal. 4th 553 (2004) ....................................................................................................................... 4

Grant v. Capital Mgmt. Servs., L.P., No. 10–cv–2471–WQH (BGS), 2014 WL 888665 (S.D. Cal. Mar. 5, 2014) .................................. 17


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iii Johnson v. Triple Leaf Tea Inc., Case No. 3:14-cv-01570


Grant v. Martinez, 973 F.2d 96 (2d Cir. 1992) ............................................................................................................... 13

Greene v. Dillingham Constr. NA., Inc., 101 Cal. App. 4th 418 (2002) .......................................................................................................... 19

Grodensky v. Artichoke Joe’s Casino, 171 Cal. App. 4th 1399 (2009) .......................................................................................................... 5

Harris v. Marhoefer, 24 F.3d 16 (9th Cir. 1994)................................................................................................................ 14

Hayward v. Ventura Volvo, 108 Cal. App. 4th 509 (2003) ............................................................................................................ 3

Hensley v. Eckerhart, 461 U.S. 424 (1983) ................................................................................................................. 5, 6, 13

Heston v. Taser Int’l., Inc., 431 Fed. Appx. 586 (9th Cir. 2011) ................................................................................................... 4

In re Apple Computer, Inc. Derivative Litig., 2008 U.S. Dist. LEXIS 108195 (N.D. Cal. Nov. 5, 2008) ............................................................. 5, 6

In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir. 2011).......................................................................................... 2, 5, 7, 14, 19

In re Equity Funding Corp. Sec. Litig., 438 F. Supp. 1303 (C.D. Cal. 1977) ................................................................................................ 14

In re Lorazapam & Clorazepate Antitrust Litig., 205 F.R.D. 369 (D.D.C. Feb. 1, 2002) ............................................................................................. 23

In re Media Vision Tech. Sec. Litig., 913 F. Supp. 1362 (N.D. Cal. 1996) ................................................................................................ 22

In re Omnivision Techs., Inc., 559 F. Supp. 2d 1036 (N.D. Cal. 2007) ........................................................................................... 19

In re Rite Aid Corp. Sec. Litig., 396 F.3d 294 (3d Cir. 2005) ............................................................................................................. 13

Ingram v. Coca-Cola Co., 200 F.R.D. 685 (N.D. Ga. 2001) ....................................................................................................... 6

Ingram v. Oroudjian, 647 F.3d 925 (9th Cir. 2011).............................................................................................................. 8

Iorio v. Allianz Life Ins. Co. of N. Am., Inc., 2011 U.S. Dist. LEXIS 21824 (S.D. Cal. Mar. 3, 2011).................................................................. 12

Kanter v. Warner-Lambert Co., 265 F.3d 853 (9th Cir. 2001).............................................................................................................. 4

Keith v. Volpe, 501 F. Supp. 403 (C.D. Cal. 1980) .................................................................................................. 20

Ketchum v. Moses, 24 Cal. 4th 1122 (2001) ................................................................................................. 6, 7, 9, 13, 19


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iv Johnson v. Triple Leaf Tea Inc., Case No. 3:14-cv-01570


Kim v. Euromotors West/The Auto Gallery, 149 Cal. App. 4th 170 (2007) ............................................................................................................ 3

Kim v. Space Pencil, Inc., No. 11–03796 LB, 2012 WL 5948951 (N.D. Cal. Nov. 28, 2012)............................................ 17, 23

Lindelli v. Town of San Anselmo, 139 Cal. App. 4th 1499 (2006) .......................................................................................................... 3

Louie v. Kaiser Found. Health Plan, Inc., No. 08cv0795 IEG RBB, 2008 WL 4473183 (S.D. Cal. Oct. 6, 2008) ........................................... 24

Lyons v. Chinese Hosp. Ass’n, 136 Cal. App. 4th 1331 (2006) .......................................................................................................... 4

Margolin v. Regional Planning Comm., 134 Cal. App. 3d 999 (1982) ............................................................................................................ 13

Martin v. AmeriPride Servs., 2011 U.S. Dist. LEXIS 61796 (S.D. Cal. June 9, 2011) .................................................................. 19

Mason v. Heel, Inc., No. 3:12-cv-3056-GPC-KSC, 2014 WL 1664271 (S.D. Cal. Mar. 13, 2014) ................................. 10

Mathis v. Spears, 857 F.2d 749 (9th Cir. 1988)............................................................................................................ 12

Milano v. Interstate Battery Sys. of Am., Inc., 2012 U.S. Dist. LEXIS 93192 (N.D. Cal. July 5, 2012) .................................................................... 3

Moreno v. City of Sacramento, 534 F.3d 1106 (9th Cir. 2008)............................................................................................................ 4

Morris v. Affinity Health Plan, Inc., 859 F. Supp. 2d 611 (S.D.N.Y. 2012) .............................................................................................. 22

Natural Gas Anti-Trust Cases, I, II, III & IV, Case Nos. 4221, 4224, 4226, 4228, 2006 WL 5377849 (Cal. Super. Ct. Dec. 11, 2006) ............... 20

Neary v. Regents of Univ. of Cal., 3 Cal. 4th 273 (1992) ......................................................................................................................... 5

Nicholson v. Barab, 233 Cal. App. 3d 1671 (1991) ............................................................................................................ 5

Nigh v. Humphreys Pharmacal Incorporated, 3:12-cv-02714-MMA-DHB, 2013 WL 5995382 (S.D. Cal. Oct. 23, 2013) .................................... 11

Nightingale v. Hyundai Motor Am., 31 Cal. App. 4th 99 (1994) .............................................................................................................. 13

Parkinson v. Hyundai Motor Am., 796 F. Supp. 2d 1160 (C.D. Cal. 2010) ............................................................................................. 2

Perdue v. Kenny A., 130 S. Ct. 1662 (2010) ....................................................................................................................... 7

Perez v. Asurion Corp., No. 06-201734-CIV, 2007 WL 2591180 (S.D. Fla. Aug. 8, 2007) ........................................... 17, 23


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v Johnson v. Triple Leaf Tea Inc., Case No. 3:14-cv-01570


PLCM Group Inc. v. Drexler, 22 Cal. 4th 1084 (2000) ..................................................................................................................... 9

Rader v. Thrasher, 57 Cal. 2d 244 (1962) ...................................................................................................................... 19

Razilov v. Nationwide Mut. Ins. Co., No. 01-CV-1466-BR, 2006 WL 3312024 (D. Or. Nov. 13, 2006) .................................................. 24

Richardson v. L’Oreal USA, Inc., 951 F. Supp. 2d 104 (D.D.C. 2013) ........................................................................................... 16, 23

Rodriguez v. West Publ’g Corp., 563 F.3d 948 (9th Cir. 2009)...................................................................................................... 22, 23

San Bernardino Valley Audubon Soc’y v. San Bernardino, 155 Cal. App. 3d 738 (1984) ............................................................................................................ 20

Schwarz v. Sec’y of Health & Human Servs., 73 F.3d 895 (9th Cir. 1995)................................................................................................................ 7

Serrano v. Priest, 20 Cal. 3d 25 (1977) .................................................................................................................. 3, 6, 9

Serrano v. Stefan Merli Plastering Co., 52 Cal. 4th 1018 (2011) ................................................................................................................. 3, 4

Serrano v. Unruh, 32 Cal. 3d 621 (1982) ........................................................................................................................ 9

Sheppard v. Consol. Edison Co. of N.Y., Inc., No. 94-CV-0403(JG), 2002 WL 2003206 (E.D. N.Y. Aug. 1, 2002).............................................. 23

Singer v. Becton Dickinson & Co., No. 08-CV-821-IEG(BLM), 2010 WL 2196104 (S.D. Cal. June 1, 2010) ..................................... 24

Sommers v. Erb, 2 Cal. App. 4th 1644 (1992) ............................................................................................................ 13

Steiner v. Am. Broad. Co., Inc., Case No. 05-55773, 2007 WL 2460326 (9th Cir. Aug. 29, 2007) ................................................... 20

SternwestCorp. v. Ash, 183 Cal. App. 3d 74 (1986) .............................................................................................................. 20

Sundance v. Mun. Ct., 192 Cal. App. 3d 268 (1987) .............................................................................................................. 9

Trs. of Cent. States Se. & Sw. Areas Pension Fund v. Golden Nugget, Inc., 697 F. Supp. 1538 (C.D. Cal. 1988) ................................................................................................ 13

Trs. of Const. Indus. & Laborers Health & Welfare Trust v. Redland Ins. Co., 460 F.3d 1253 (9th Cir. 2006)............................................................................................................ 9

United Steelworkers of Am. v. Phelps Dodge Corp., 896 F.2d 403 (9th Cir. 1990).............................................................................................................. 9

Van Vranken v. Atlantic Richfield Co., 901 F. Supp. 294 (N.D. Cal. Aug. 16, 1995) ............................................................................. 23, 24


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vi Johnson v. Triple Leaf Tea Inc., Case No. 3:14-cv-01570


Victoria v. Super. Ct., 40 Cal. 3d 734 (1985) ........................................................................................................................ 5

Villegas v. J.P. Morgan Chase & Co., 2012 U.S. Dist. LEXIS 114597 (N.D. Cal. Aug. 8, 2012) ............................................................... 24

Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002).................................................................................................... 16, 20

Wershba v. Apple Computer, Inc., 91 Cal. App. 4th 224 (2001) ...................................................................................................... 13, 20

Winterrowd v. Am. Gen. Annuity Ins. Co., 556 F.3d 815 (9th Cir. 2009).............................................................................................................. 2

Woodland Hills Residents Ass’n, Inc. v. City Council, 23 Cal. 3d 917 (1979) ........................................................................................................................ 4

Statutes

28 U.S.C. § 1920 .................................................................................................................................. 22

Cal. Civ. Code § 1760 ............................................................................................................................ 3

Cal. Civ. Code § 1780(e).................................................................................................................... 2, 3

Cal. Civ. Proc. Code § 1033.5 .............................................................................................................. 22

Cal. Civ. Proc. Code § 1033.5 (a)(1) ................................................................................................... 22




Cal. Civ. Proc. Code § 1033.5(c) ......................................................................................................... 22

Cal. Code Civ. Proc. § 1021.5 ........................................................................................................ 3, 4, 5

Rules

Fed. R. Civ. P. 23(e)(1)(C) ..................................................................................................................... 2

Fed. R. Civ. P. 23(h) .......................................................................................................................... 1, 2

Fed. R. Civ. P. 52(a), 54(d)(2)(C), 58(a)(3) ........................................................................................... 2

Fed. R. Civ. P. 54 ................................................................................................................................. 22

Fed. R. Civ. P. 54(d) ............................................................................................................................ 22

Fed. R. Civ. P. 54(d)(1) .......................................................................................................................... 2

Treatises

Richard Posner, Economic Analysis of Law (4th ed. 1992) ................................................................. 19

Other Authority

Fed. Judicial Ctr., Manual for Complex Litig. (Fourth) § 14.121 (2004) .............................................. 2


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vii Johnson v. Triple Leaf Tea Inc., Case No. 3:14-cv-01570


Fed. Judicial Ctr., Manual for Complex Litig. (Fourth) § 14.122 (2004) .............................................. 7

Fed. Judicial Ctr., Manual for Complex Litig. (Fourth) § 21.7 (2004) .................................................. 7

Theodore Eisenberg & Geoffrey P. Miller, Incentive Awards to Class Action Plaintiffs: An Empirical Study, 53 U.C.L.A. Rev. 1303 (2006) ....................................................................... 23


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1 Johnson v. Triple Leaf Tea Inc., Case No. 3:14-cv-01570


This Motion comes before the Court pursuant to Rule 23(h) of the Federal Rule of Civil

Procedure, and the Order Preliminarily Approving Class Action Settlement and setting final approval

hearing, entered on June 26, 2015, which set a Fairness Hearing for November 13, 2015 at 9:00 a.m. in

the above-entitled court, including consideration of any separate application for attorney’s fees, costs,

and an incentive award at that same hearing. Dkt. No. 53 (“PA Order”). Accordingly, Plaintiff Eunice

Johnson, on behalf of herself, all others similarly situated, and the general public, by and through her

undersigned counsel, hereby respectfully moves this Court for entry of an order granting Plaintiff an

award of attorneys’ fees to Class Counsel in the amount of $250,000, inclusive of costs of $3,272.22 for

the Law Offices of Ronald Marron; and an incentive award to Class Representative Eunice Johnson in

the amount of $1,500 for her time and effort in this litigation. In support of the Motion, Plaintiff

respectfully submits the following:

I. PRELIMINARY STATEMENT AND SUMMARY OF ARGUMENT

The lodestar analysis applies in this case because there is no common fund. Class Counsel’s fee

was negotiated with Defendant only after settlement of this case along injunctive relief lines, based on

the contours of this case. The fee requested is reasonable, based on hourly rates that have been awarded

by other courts and are also in line with other counsel of similar experience, and supported by detailed

billing records. Class Counsel’s fee is mandated by statute and derives from hours spent investigating,

prosecuting, and negotiating this matter. Class Counsel does not request a multiplier unless the Court

reduces the rates or time spent, in which case a small multiplier should be applied to allow for risk and

the contingent nature of this case. Class Counsel’s cost reimbursement request of $3,272.22 is

supported by statute and includes costs reasonably necessary to successfully prosecute this action. A

separate award of costs is not necessary, unless the Court reduces the fee requested, because the

negotiated fee in the Settlement Agreement is inclusive of costs.

The Court should also, respectfully, award a small incentive payment to Class Representative

Eunice Johnson, who initiated this class action consumer protection lawsuit and assisted with its

successful prosecution, in the nominal amount of $1,500. Incentive awards encourage consumers to

come forward and represent purchasers in small purchase price class actions such as this. The award

requested is in line with those awarded in other injunctive relief-only cases.


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II. STANDARD OF REVIEW

“In a certified class action, the court may award reasonable attorney’s fees and nontaxable costs

that are authorized by law or by the parties’ agreement.” Fed. R. Civ. P. 23(h). The fee awarded must

be “reasonable.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011) [“In re

Bluetooth”]. The decision to award attorneys’ fees “is committed to the sound discretion” of the court,

and should be based on “the unique contours of the case.” Fed. Judicial Ctr., Manual for Complex Litig.

(Fourth) § 14.121 (2004).

In a class action, the court follows Rule 23(h), and the “fundamental focus is the result actually

achieved for class members.” Id. at § 21.71 (citing Fed. R. Civ. P. 23(h) committee note). The judgment

on attorney’s fees and costs must describe the bases for the Court’s order, including findings of fact and

conclusions of law. See id. § 14.232; Fed. R. Civ. P. 52(a), 54(d)(2)(C), 58(a)(3) (a separate judgment

for fees is not required).

Notice to the class of an attorney’s fees motion is required, which is ordinarily accomplished in a

settlement class by including information about the hearing and motion within the class notice itself.

See Fed. R. Civ. P. 23(e)(1)(C). Counsel for the class may also move for costs, if they are a prevailing

party. See Fed. R. Civ. P. 54(d)(1).

III. PLAINTIFF IS ENTITLED TO FEES UNDER GOVERNING CALIFORNIA LAW

“An award of attorneys’ fees incurred in a suit based on state substantive law is generally

governed by state law.” Champion Produce, Inc. v. Ruby Robinson Co., 342 F.3d 1016, 1024 (9th Cir.

2003) (citation omitted). “The task of a federal court in a diversity action is to approximate state law

[regarding attorneys’ fee awards] as closely as possible in order to make sure that the vindication of the

state right is without discrimination because of the federal forum.” Farmers Ins. Exch. v. Sayas, 250

F.3d 1234, 1236 (9th Cir. 2001) (quoting Gee v. Temeco, Inc., 615 F.2d 857, 861 (9th Cir. 1980)).

Accordingly, “California substantive law determines the availability and amount of attorney’s fees in

this diversity case.” Winterrowd v. Am. Gen. Annuity Ins. Co., 556 F.3d 815, 829 (9th Cir. 2009)

(citation omitted); see also Parkinson v. Hyundai Motor Am., 796 F. Supp. 2d 1160, 1169 (C.D. Cal.

2010). Here, Plaintiff invokes the fee-shifting provisions of California’s Consumers Legal Remedies

Act (“CLRA”), Cal. Civ. Code § 1780(e), and Private Attorney General Statute, Cal. Code Civ. Proc. §


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1021.5, which “are designed to incentivize counsel to pursue consumer interests through publicly

beneficial litigation.” Milano v. Interstate Battery Sys. of Am., Inc., 2012 U.S. Dist. LEXIS 93192, at *2

(N.D. Cal. July 5, 2012).

A. The CLRA Requires Fees be Awarded to a “Prevailing Plaintiff”

The CLRA provides that the “court shall award court costs and attorney’s fees to a prevailing

plaintiff in litigation filed pursuant to this section.” Cal. Civ. Code § 1780(e) (emphasis added). “The

legislative policy to allow prevailing plaintiffs reasonable attorneys’ fees is clear. Section 1780

provides remedies for consumers who have been victims of unfair or deceptive business practices. The

provision for recovery of attorney’s fees allows consumers to pursue remedies in cases . . . where the

compensatory damages are relatively modest.” Hayward v. Ventura Volvo, 108 Cal. App. 4th 509, 512

(2003) (internal citation omitted). This provision is “integral to making the CLRA an effective piece of

consumer legislation, increasing the financial feasibility of bringing suits under the statute,” Broughton

v. Cigna Healthplans, 21 Cal. 4th 1066, 1086 (1999), and must “be liberally construed and applied to

promote [the statute’s] underlying purposes, which are to protect consumers against unfair and

deceptive business practices and to provide efficient and economical procedures to secure such

protection.” See Cal. Civ. Code § 1760; accord Hayward, 108 Cal. App. 4th at 512-13 (“section 1760

expressly directs [courts] to liberally construe section 1780 to protect consumers”). A fee award to a

prevailing plaintiff in a CLRA action is thus mandatory, even when resolved before trial. Kim v.

Euromotors West/The Auto Gallery, 149 Cal. App. 4th 170, 178-79, 181 (2007).

B. The Private Attorney General Statute Separately Entitles a “Successful Party” to Fees in

Public Interest Cases

California Code of Civil Procedure “section 1021.5 authorizes an award of attorney fees to a

‘private attorney general,’ that is, a party who secures a significant benefit for many people by enforcing

an important right affecting the public interest.” Serrano v. Stefan Merli Plastering Co., 52 Cal. 4th

1018, 1020 (2011) [“Stefan”]. Consistent with the policies underlying the statute, the entitlement

belongs to both the litigant and her counsel. Lindelli v. Town of San Anselmo, 139 Cal. App. 4th 1499,

1509 (2006); see also Serrano v. Priest, 20 Cal. 3d 25, 44 (1977) [“Priest”] (purpose of fee-shifting

statutes is to “award . . . substantial attorney fees to those public-interest litigants and their attorneys . . .


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who are successful in such cases” and thereby incentivize “representation of interests of similar

character in future litigation”); accord Moreno v. City of Sacramento, 534 F.3d 1106, 1111 (9th Cir.

2008).

“Although the section ‘is phrased in permissive terms . . . the discretion to deny fees to a party

that meets its terms is quite limited,’ and generally requires a full fee award unless special circumstances

would render such an award unjust.” Fitzgerald v. City of Los Angeles, 2009 U.S. Dist. LEXIS 34803,

at *9-10 (C.D. Cal. Apr. 7, 2009) (quoting Lyons v. Chinese Hosp. Ass’n, 136 Cal. App. 4th 1331, 1344

(2006)). Fees are awarded when: (1) the action “has resulted in the enforcement of an important right

affecting the public interest,” (2) “a significant benefit, whether pecuniary or nonpecuiary, has been

conferred on the general public or a large class of persons . . .”, and (3) “the necessity and financial

burden of private enforcement . . . are such as to make the award appropriate . . . .” Stefan, 52 Cal. 4th

at 1026 (quoting Cal. Code Civ. Proc. § 1021.5, and citing Woodland Hills Residents Ass’n, Inc. v. City

Council, 23 Cal. 3d 917, 935 (1979)). “The key question is ‘whether the financial burden placed on the

party [claiming fees] is out of proportion to its personal stake in the lawsuit.’” Heston v. Taser Int’l.,

Inc., 431 Fed. Appx. 586, 589 (9th Cir. 2011) (quoting Lyons, 136 Cal. App. 4th at 1352). Here,

Defendant’s diet tea products typically retail for around $2, so buyers could not possibly have a stake

adequate to litigate. Further, the extensive health benefits and “elimination of allegedly false

representations . . . confer[] a benefit on both the class members and the public at large.”) See Brazil v.

Dell Inc., 2012 U.S. Dist. LEXIS 47986, at *4 (N.D. Cal. Apr. 4, 2012). Thus, Plaintiff has acted as true

attorney general and, as discussed below, is the successful party.

C. Plaintiff is “Prevailing” and “Successful” Under the CLRA and Private Attorney General

Statute

Courts treat the terms “prevailing plaintiff” in the CLRA, and “successful party” in section

1021.5, synonymously, because “[t]he language in the two provisions is not materially different.”

Kanter v. Warner-Lambert Co., 265 F.3d 853, 858 (9th Cir. 2001). “In order to effectuate” the policy

underlying section 1021.5, and consistent with the construction of comparable statutes, the California

Supreme Court has “taken a broad, pragmatic view of what constitutes a ‘successful party.’” Graham v.

DaimlerChrysler Corp., 34 Cal. 4th 553, 565 (2004). “[A] party need not prevail on every claim to be


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considered a successful party within the meaning of the statute.” Grodensky v. Artichoke Joe’s Casino,

171 Cal. App. 4th 1399, 1437 (2009) (citation omitted); see also Graciano v. Robinson Ford Sales, Inc.,

144 Cal. App. 4th 140, 153 (2006) (as with section 1021.5, “[i]t is settled that plaintiffs may be

considered ‘prevailing parties’ for attorney’s fees purposes [under the CLRA] if they succeed on any

significant issue in litigation which achieves some of the benefit the parties sought in bringing the suit.”

(quotation omitted)).

Plaintiff is a prevailing and successful party because the lawsuit “achieved its main litigation

objective”: (1) removing false or deceptive advertising from the Product’s labeling; (2) adding emphasis

to necessary disclaimers and warnings regarding the Product’s use; and (3) Defendant’s enforceable

agreement to refrain from re-introducing the challenged advertising at any time in future, unless

permitted by law. See Settlement Agreement, Sec. 4. Injunctive relief, such as this, that is “‘socially

beneficial’ . . . justif[ies] a fee award under” the CLRA. In re Bluetooth, 654 F.3d at 944.

D. The Settlement Agreement Provides for Attorneys’ Fees, Costs, and Incentive Awards

“A request for attorney’s fees should not result in a second major litigation. Ideally . . . litigants

will settle the amount of a fee.” Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). That is what the

parties have done in the Settlement Agreement. Defendant has agreed to pay a fee plus costs of up to

$250,000 to Class Counsel; Defendant also agreed to pay an incentive award to the Class Representative

of up to $1,500. Settlement Agreement, Sec. 9.1.

Settlements such as these “are highly favored,” in part because they promote efficient resolution

of disputes, and therefore interpretation ought to be made in favor of enforcement wherever possible.

See Neary v. Regents of Univ. of Cal., 3 Cal. 4th 273, 277-78 (1992); Nicholson v. Barab, 233 Cal. App.

3d 1671, 1683 (1991); Victoria v. Super. Ct., 40 Cal. 3d 734, 753, n.8 (1985). Here, the parties are in

agreement as to the appropriate amount of compensation for Class Counsel’s efforts in obtaining the

injunctive relief.

Where, as here, the parties have negotiated an arms’ length settlement, “[a] court should refrain

from substituting its own value for a properly bargained-for agreement.” In re Apple Computer, Inc.

Derivative Litig., 2008 U.S. Dist. LEXIS 108195, at *12 (N.D. Cal. Nov. 5, 2008). In addition, if a fee

award is not made in the amount contemplated by the Settlement, these funds will remain with


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Defendant, since the unopposed amount is wholly independent from the direct class relief. For example,

in Brazil, 2012 U.S. Dist. LEXIS 47986, at *2-3, the court awarded a fee agreed upon between the

parties, which was “approximately equal to their combined lodestar in th[e] case with no multiplier,”

because, like here, “[t]he benefits achieved by Class Counsel are not in the form of a ‘common fund,’

but rather come in the form of structural changes to Dell’s advertising practices . . . [and] the fee

awarded to Class Counsel will be paid directly by Dell.” Where there is no evidence of collusion and no

detriment to the parties, courts “should give substantial weight to a negotiated fee amount, assuming that

it represents the parties’ best efforts to understandingly, sympathetically, and professionally arrive at a

settlement as to attorney’s fees.” Ingram v. Coca-Cola Co., 200 F.R.D. 685, 695 (N.D. Ga. 2001)

(citation omitted).

Here, this case was negotiated with the assistance of a third party neutral mediator – the Hon.

Ronald M. Sabraw (Ret.). Class Counsel negotiated with Defendant for a fee amount that, at the time,

Class Counsel estimated would approximate their lodestar plus a small multiplier. This estimate now

appears reasonable as it did coincide with Class Counsel’s lodestar without any multiplier. Indeed, it

appears Class Counsel will be accepting less than their lodestar when costs and additional work up to

final approval is added.

Importantly, the fee was negotiated separately, only after the parties had reached agreement on

injunctive relief. See In re Apple Computer, Inc., 2008 U.S. Dist. LEXIS 108195, at *12. Moreover,

Class Members have indicated their approval by the absence of any objections as of the time of this

application, after a fair and effective notice that included the amount of fee award that would be sought

via this Motion. Thus, one can fairly say that “all parties” are truly in agreement on the contractual Fee

Award. For the reasons discussed further below, the Court should confirm the agreed-upon amount.

IV. THE COURT SHOULD APPLY THE LODESTAR METHOD TO DETERMINE

CLASS COUNSEL’S REASONABLE FEES

Under California law, “a court assessing attorney fees begins with a touchstone or lodestar

figure, based on the careful compilation of the time spent and reasonable hourly compensation of each

attorney . . . involved in the presentation of the case.” Ketchum v. Moses, 24 Cal. 4th 1122, 1131-32

(2001) (quoting Priest, 20 Cal. 3d at 48); see also Hensley, 461 U.S. at 433 (“The most useful starting


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point for determining the amount of a reasonable fee is the number of hours reasonably expended on the

litigation multiplied by a reasonable hourly rate.”); Perdue v. Kenny A., 130 S. Ct. 1662, 1673 (2010)

(lodestar method is usually preferable).

“[T]he ‘lodestar method’ is appropriate in class actions brought under fee-shifting statutes . . .

where the legislature has authorized the award of fees to ensure compensation for counsel undertaking

socially beneficial litigation.” In re Bluetooth, 654 F.3d at 941; see also Manual for Complex Litig.

(Fourth) § 21.7 at p. 334-35 (2004) (“Statutory awards are generally calculated using the lodestar

method.”). As discussed above, the requested fee is based on statute, and thus the lodestar method

applies. See id.

V. CLASS COUNSEL’S RATES AND HOURS EXPENDED ARE FAIR AND

REASONABLE

The Marron Firm Class Counsel’s lodestar of $249,593.50 is summarized in Appendix 1 hereto.

This lodestar is based on 428.5 hours of work (409.5 attorney hours, 18.9 legal assistant/paralegal hours

and .1 law clerk hours) plus 100 hours of post-application work (such as briefing this motion, briefing

the final approval motion, ensuring the Notice Administrator complies with the Prelim. Approval Order

and the final judgment, responding to objectors, if any, and appeals, if any), and is supported by fair and

reasonable rates and hours.

A. Class Counsel’s Rates are Reasonable

Class Counsel’s rates are reasonable because they are in line with hourly rates charged by

attorneys of comparable experience, reputation, and ability for similar litigation. See Ketchum, 24 Cal.

4th at 1133; see also Blum v. Stenson, 465 U.S. 886, 895 (1984). Courts look to prevailing market rates

in the community in which the court sits. Schwarz v. Sec’y of Health & Human Servs., 73 F.3d 895, 906

(9th Cir. 1995); see also Camancho v. Bridgeport Fin., Inc., 523 F.3d 973, 979 (9th Cir. 2008); Manual

for Complex Litig. (Fourth) § 14.122 (“The rate should reflect what the attorney would normally

command in the relevant marketplace.”).

Class Counsel’s requested rates are as follows:


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Attorney Position Hourly Rate

Ronald A. Marron Partner $745

Skye Resendes Senior Associate $475

Alexis Wood Senior Associate $475

Kas Gallucci Senior Associate $450

William Richards Associate $440

Marshall Lurtz Associate $440

Beth Goodman Associate $440

Erin Minelli Associate $440

Danielle Eisner Post Bar Law Clerk $290

Paralegals and Legal Assistants $215

To assist the court in calculating the lodestar, a plaintiff must submit “satisfactory evidence . . .

that the requested rates are in line with those prevailing in the community for similar services by

lawyers of reasonable comparable skill, experience and reputation.” Blum, 465 U.S. at 896 n.11. The

Ninth Circuit has advised that courts are allowed to rely on their own familiarity with the legal market

and subject matter of the lawsuit when awarding attorneys’ fees.” Collado v. Toyota Motor Sales,

U.S.A., Inc., 2011 U.S. Dist. LEXIS 133572, at *14 (C.D. Cal. Oct. 17, 2011) (citing Ingram v.

Oroudjian, 647 F.3d 925 (9th Cir. 2011)).

Here, Class Counsel attaches as Exhibit 1 to the Declaration of Ronald A. Marron filed

concurrently herewith (“Marron Decl.”) the firm’s updated resume; and attaches as Exhibit 2 to the

Marron Declaration portions from the published National Law Journal (NLJ) 2011 Law Firm Billing

Survey; a rate analysis for partners and associates in the Southern California area, compiled by

summarizing the NLJ 2011 Survey only as to Southern California firms; and a Summary reflecting the

market rate increase in Southern California from 2010 to 2011 for partners and associates created by

analyzing the 2010 NLJ Survey to the 2011 NLJ Survey. As this evidence shows, Counsel’s requested

rates for 2013-2014 fall within the average prevailing market rates within the community. See id.


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Class Counsel also attaches as Exhibit 3 to the Marron Declaration the 2014 Report on the State

of the Legal Market put out by The Center for the Study of the Legal Profession at the Georgetown

University Law Center and Thomson Reuters Peer Monitor (Peer Monitor Report). This report shows

that “from the third quarter of 2010 through November 2013 . . . firms increased their standard rates by

11 percent[,] from an average of $429 per hour to $476 per hour.” This average rate, see id., supports

Class Counsel’s hourly rates and their blended rate, discussed infra.

Class Counsel also seeks compensation for its support staff, such as paralegals and law clerks,

which is permitted in this legal community. “The key . . . is the billing custom in the relevant market.

Thus, fees for work performed by non-attorneys such as paralegals may be billed separately, at market

rates, if this is the prevailing practice in a given community . . . . Indeed, even purely clerical or

secretarial work is compensable if it is customary to bill such work separately . . .” Trs. of Const. Indus.

& Laborers Health & Welfare Trust v. Redland Ins. Co., 460 F.3d 1253, 1257 (9th Cir. 2006). In

California, it is customary and reasonable to bill for all non-attorney support staff, even word

processors. Priest, 20 Cal. 3d at 35; Ketchum, 24 Cal. 4th at 1122; PLCM Group Inc. v. Drexler, 22

Cal. 4th 1084 (2000). In Salton Bay Marina Inc. v. Imperial Irrigation Dist., 172 Cal. App. 3d 914

(1985), the Court of Appeals stated that “necessary support services for attorneys, e.g., secretarial and

paralegal services, are includable within an award of attorney fees.” Indeed, even unpaid law clerk

interns can be billed. Sundance v. Mun. Ct., 192 Cal. App. 3d 268 (1987) (“[I]t is now clear that the fact

that services were volunteered is not a ground for diminishing an award of attorneys’ fees . . . . [T]he

amount of the award is to be made on the basis of the reasonable market value of the services rendered,

and not on the salary paid.”) (citing Serrano v. Unruh, 32 Cal. 3d 621 (1982)). Thus, Class Counsel’s

staff hours are also compensable. See id.

Rates Other Courts Have Awarded. Class Counsel’s declaration regarding prevailing fees in

the community and “rate determinations in other cases, particularly those settling a rate for the

plaintiffs’ attorney, are satisfactory evidence of the prevailing market rate.” United Steelworkers of Am.

v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir. 1990); see also Marron Decl. ¶¶ 20-24 & Exs. 1-3.

Most recently, in two cases providing identical relief to this case (injunctive relief-only

settlements for diet Senna Leaf tea products), Class Counsel’s same hourly rates were approved by state


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and federal court judges. The first case was Perry v. Truong Giang Corp., Los Angeles Superior Court

Case No. BC58568, in which the Hon. Kenneth Freeman noted on August 5, 2015 that the hourly rates

requested here were “reasonable,” and that Class Counsel used skill in achieving the result achieved.

See Marron Decl. ¶ 11 & Ex. 4 (noting, inter alia, “this case involved difficult legal issues because

federal and state laws governing dietary supplements are a gray area, and because proving the difference

between the price paid (around $2 per box of tea) and the actual value received would have been

difficult since arguably some value was received (the tea itself). Additionally, the motion argues that the

attorneys displayed skill in researching and settling this case, which provides a benefit not only to Class

Members but to the public at large, and that in so doing, the attorneys undertook significant risk by

spending time on this litigation on a contingency basis.”).

Similarly, on August 7, 2015, in In re Leaf123 (adversary proceeding of Augustine v. Natrol),

Case No. 14-114466, the Hon. Brendan L. Shannon, U.S. Bankruptcy Judge for the District of

Delaware, approved an injunctive relief-only settlement involving diet Senna Lea tea products. See id.,

¶ 12 & Ex. 5 (final order approving settlement and fees). The court found the settlement in that case

“fair, reasonable and adequate,” which settlement included an award of $799,000 in fees and a $1,000

incentive award for the named plaintiff. Judge Shannon approved the same hourly rates requested here.

On July 29, 2014, the Honorable Richard Seeborg of the Northern District of California

approved the following hourly rates for Class Counsel: Ronald Marron at $715, Skye Resendes at $440,

Kas Gallucci at $400, and law clerks at $290 in the case of In re Quaker Oats Litig., No. 5:10-cv-00502-

RS (N.D. Cal.), Dkt. No. 221. See also id. ¶ 13.

On March 13, 2014, the Honorable Gonzalo P. Curiel of the Southern District of California

approved Mr. Marron’s hourly rate of $715 per hour; Ms. Resendes’ rate of $440 per hour; Ms. Wood’s

rate of $425 per hour; Ms. Minelli and Ms. Gallucci’s rates of $400 per hour; Ms. Danielle Eisner’s

post-Bar law clerk rate of $290 per hour; and $215 per hour for legal assistants in Mason v. Heel, Inc.,

No. 3:12-cv-3056-GPC-KSC, 2014 WL 1664271 (S.D. Cal. Mar. 13, 2014). Marron Decl. ¶ 14.

On October 31, 2013, the Honorable Michael M. Anello of the Southern District of California

awarded Mr. Marron fees of $680 per hour, Ms. Resendes fees of $400 per hour, Ms. Wood fees of

$385 per hour, Ms. Minelli fees of $385 per hour, and Ms. Gallucci fees of $385 per hour in a


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homeopathic drug consumer class action case; and also approved $280 per hour for patent agent/post-

Bar law clerk Danielle Eisner; $245 per hour for regular law clerks; and $215 hourly rates for support

staff such as paralegals. Nigh v. Humphreys Pharmacal Incorporated, 3:12-cv-02714-MMA-DHB,

2013 WL 5995382 (S.D. Cal. Oct. 23, 2013). See also Marron Decl. ¶ 15.

On March 13, 2013, the Honorable David O. Carter of the Central District of California awarded

Mr. Marron fees of $680 per hour, Ms. Resendes fees of $400 per hour, and former associate, Maggie

Realin, fees of $375 per hour in a dietary supplement consumer fraud class action case; and also

approved $245 per hour for law clerks and $215 hourly rates for support staff such as paralegals. Bruno

v. Quten Research Inst., LLC, No. 8:11-cv-00173-DOC-E, 2013 WL 990495, at *4-5 (C.D. Cal. Mar.

13, 2013) (“Class Counsel, . . . the Law Offices of Ronald A. Marron displayed competence and

diligence in the prosecution of this action, and their requested rates are approved as fair and

reasonable.”); see also id. at *4 (“The Court notes that, in addition to the monetary relief obtained by

Class Counsel for class plaintiffs, there is a high value to the injunctive relief obtained in this case. New

labeling practices affecting hundreds of thousands of bottles per year, over ten years, bring a benefit to

class consumers, the marketplace, and competitors who do not mislabel their products.”). See also

Marron Decl. ¶ 16.

On October 31, 2012, the Honorable John A. Houston of the Southern District of California

awarded Mr. Marron fees of $650 per hour and Ms. Resendes fees of $385 per hour in a homeopathic

drug consumer fraud class action case. Gallucci, 2012 WL 5359485, at *9 (S.D. Cal. Oct. 31, 2012)

(“The Court finds the [foregoing] hourly billing rates reasonable in light of the complexity of this

litigation, the work performed, Class Counsels' reputation, experience, competence, and the prevailing

billing rates for comparably complex work by comparably-qualified counsel in the relevant market.”).

See also Marron Decl. ¶ 17.

On August 21, 2012, the Honorable Thomas J. Whelan awarded Mr. Marron fees of $650 per

hour, Ms. Resendes at $385 per hour and former associate, Ms. Realin, at $375 per hour, in the

consumer dietary supplement class action of Burton v. Ganeden, No. 11-cv-1471 W (NLS), Dkt. Nos.

52, 48, 45. Marron Decl. ¶ 18.


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On July 9, 2012, the Honorable Marilyn L. Huff awarded Mr. Marron fees of $650 per hour, and

approved the rates of his associate attorneys, Ms. Resendes at $385 per hour, and former associate,

Maggie Realin, at $375 per hour in the consumer food class action of In re Fererro, Case No. 3:11-cv-

00205 H (KSC) (S.D. Cal.), Dkt. No. 127. Judge Huff noted that the fees requested were “appropriate

given the contingent nature of the case and the excellent results obtained for the Class, and because no

enhancement or multiplier was sought above the actual amount of Class Counsel's lodestar. The Court

concludes the billing rates used by Class Counsel to be justified by prior awards in similar litigation and

the evidence presented with their motion showing these rates are in line with prevailing rates in this

District.” Marron Decl. at ¶ 19.

In March 2011, the Honorable Janis L. Sammartino awarded Mr. Marron fees based on a

discounted hourly rate of $595. Iorio v. Allianz Life Ins. Co. of N. Am., Inc., 2011 U.S. Dist. LEXIS

21824, at *31 (S.D. Cal. Mar. 3, 2011). Despite being of similar seniority and experience, Mr. Marron,

at the request of and in deference to his co-counsel, reduced his request to $595. Marron Decl. ¶ 20.

Survey Data. “Courts also frequently use survey data in evaluating the reasonableness of

attorneys’ fees.” B-K Lighting, Inc. v. Vision3 Lighting, 2009 U.S. Dist. LEXIS 111968, at *18 (C.D.

Cal. Nov. 16, 2009) (citing Mathis v. Spears, 857 F.2d 749, 755-56 (9th Cir. 1988)). National Law

Journal surveys confirm that Class Counsel’s rates are reasonable and consistent with the rates charged

by both plaintiff and defense firms, based on survey data from law firms in Southern California and

around the country. See Marron Decl., Ex. 2. The Peer Monitor Report also supports Class Counsel’s

requested rates. See id., Ex. 3.

Blended Rate. The reasonableness of Class Counsel’s rates is further supported by its blended

lodestar, calculated by taking the total lodestar and dividing it by the total hours of all attorney and staff

timekeepers. The blended rate in this case for the Marron Firm is $479.80 ($205,593.00 divided by

428.5 total attorney and staff hours). This compares favorably to the average rate listed in the Peer

Monitor Report. See id. ¶ 20, Ex. 3 at p. 22 (“from the third quarter of 2010 through November 2013 ...

firms increased their standard rates by 11 percent[,] from an average of $429 per hour to $476 per

hour”).


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B. Class Counsel’s Hours Expended are Reasonable

Class Counsel is entitled to be compensated for reasonable time spent at all points in the

litigation. Courts should avoid engaging in an “ex post facto determination of whether attorney hours

were necessary to the relief obtained.” Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992). The issue “is

not whether hindsight vindicates an attorney’s time expenditures, but whether at the time the work was

performed, a reasonable attorney would have engaged in similar time expenditures.” Id.

Here, Class Counsel expended a total of 409.5 attorney hours, .1 law clerk hours, and 18.9

paralegal/legal assistant hours to date, excluding two days of preparing this Motion, the to-be-drafted

Motion for Final Approval, its supporting declarations, and other post-application work, all

conservatively estimated at 100 “post-application” hours at a blended rate. See Marron Decl. ¶¶ 4-5, 24-

25; Mot., App. 1.1

In addition, Mr. Marron’s time, as senior counsel with the most experience and the highest

billing rate, was kept to a minimum (49 hours), with the majority of the fees requested being based on

associate work performed at lesser rates. See App. 1.

Counsel should be compensated for all hours claimed, which are documented and based on

contemporaneous time records. See Marron Decl. ¶ 24; Hensley v. Eckerhart, 461 U.S. 424, 435 (1983)

(prevailing plaintiff’s counsel “should recover a fully compensatory fee. Normally this will encompass

all hours reasonably expended on the litigation” and “should not be reduced simply because the plaintiff

failed to prevail on every contention raised in the lawsuit.”); Ketchum, 24 Cal. 4th at 1133 (fees “should

1 Class Counsel’s actual billing records are voluminous and subject to privilege and work product protection. Class Counsel’s declaration is sufficient to assess the reasonableness of the request, but if the Court desires, the raw timesheets of every timekeeper’s individual entries can be provided for in camera review. See Margolin v. Regional Planning Comm., 134 Cal. App. 3d 999, 1006-07 (1982) (attorney declaration as to number of hours worked by firm members was sufficient); Trs. of Cent. States Se. & Sw. Areas Pension Fund v. Golden Nugget, Inc., 697 F. Supp. 1538, 1558-59 (C.D. Cal. 1988). The lodestar analysis requires “neither mathematical precision nor bean-counting,” and allows the Court to “rely on summaries submitted by the attorneys and . . . not review actual billing records.” In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 306-07 (3d Cir. 2005). California authorities likewise “permit[] fee awards in the absence of detailed time sheets,” since “[a]n experienced trial judge is in a position to assess the value of the professional services rendered in his or her court.” Wershba v. Apple Computer, Inc., 91 Cal. App. 4th 224, 255 (2001) (citing Sommers v. Erb, 2 Cal. App. 4th 1644, 1651 (1992); Dunk v. Ford Motor Co., 48 Cal. App. 4th 1794, 1810 (1996); Nightingale v. Hyundai Motor Am., 31 Cal. App. 4th 99, 103 (1994)).


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be fully compensatory” and, absent “circumstances rendering the award unjust, . . . include

compensation for all the hours reasonably spent”).

VI. CLASS COUNSEL’S REQUESTED FEE IS REASONABLE

Fee awards in class actions encourage and support compliance with federal and state law. “The

guiding principles in determining awards of attorneys’ fees should be to provide compensation sufficient

to stimulate the motive for representation of classes . . .” In re Equity Funding Corp. Sec. Litig., 438 F.

Supp. 1303, 1325 (C.D. Cal. 1977). When determining a reasonable fee in a class action, the lodestar

figure is “presumptively reasonable.” In re Bluetooth, 654 F.3d at 941 (quoting Cunningham v. County

of Los Angeles, 879 F. 2d 481, 488 (9th Cir. 1988)); see also Harris v. Marhoefer, 24 F.3d 16, 18 (9th

Cir. 1994) (the lodestar “presumptively provides an accurate measure of reasonable fees”). Here, the

negotiated fee was based on an estimate of a “presumptively . . . reasonable” lodestar, and in the end

was very close to the actual lodestar. See id.

A. The Results Achieved for the Class

The Settlement represents a positive result for the Class and the general public. First, Class

Counsel negotiated for Defendant to pay all of the cost of mediation and notice, a beneficial result for

the Class. See App. 2 (cost summary). Thus, the settlement terms, including the fee, were achieved

through the efforts of an independent, neutral, third party-mediator.

Second, the Settlement requires twelve levels of injunctive relief:

• The FDA Disclaimer will remain on each Products’ packaging in a legible font size

and will be conspicuously displayed on the package in a readable font color, in comparison to any

background coloring on the package.

• Defendant removed whorled mallow, an ingredient at issue in the Complaint that

could have been dangerous, from each of the Products.

• The statement: “Recently, here in the West, people have discovered the value of this

ancient system which focuses on aiding the body’s own healing mechanisms through restoring harmony

and balance[]” has been, or will be, removed from each of the Products’ labels and packaging.

• The statement: “The Chinese System of herbology has been recorded in ancient texts

which are studied and employed even today[]” has been, or will be, removed from each of the Products’


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labels and packaging.

• The statement: “This time tested knowledge has been passed on from generation to

generation over the centuries[]” has been, or will be, removed from each of the Products’ labels and

packaging.

• The statement: “Remember when dieting to follow a balanced weight loss diet . . .”

has been, or will be, removed from each of the Products’ labels and packaging.

• The warning: “This tea is not intended to be used for chronic constipation or as an aid

to lose weight” has been, or will be, added to each of the Products’ labels and packaging.

• The warning: “Frequent or prolonged use of laxatives may result in dependence on

laxatives” has been, or will be, added to each of the Products’ labels and packaging.

• The warning: “Senna may result in abdominal pain, cramping, and loose or watery

stools” has been, or will be, added to each of the Products’ labels and packaging.

• Defendant has, or will, change the names of two of the three Products. Dieter’s Green

will be changed to Diet Green and Super Slimming will be changed to Super Slim.

• Tor Dieter’s Green, the statement: “Research indicates that green tea’s antioxidants

help promote health metabolism[]” has been, or will be, removed from the Product’s labels and

packaging.

• Defendant will modify its website to comport with the modifications to the Products’

packaging and labeling, as set forth above.

As is evident, Plaintiff achieved all, and more, of the injunctive relief sought by her Complaint

(i.e., Plaintiff did not seek to have whorled mallow removed, but was pleased with Defendant’s offer to

do so). In light of the potential harm this type of allegedly false or deceptive advertising could cause to

a consumer, removal of the representations and the addition of several clear warnings benefits the Class

and the public. In contrast, the case posed difficulties because weight loss can vary amongst class

members, which posed a risk to winning at trial. And, Class members did obtain a tea and it would have

been difficult to prove the amount of premium solely attributable to the diet labeling. As such, the

benefit of the injunctive relief is substantial, by securing all and more that Plaintiff could have obtained

at trial, without the attendant risks. There are also direct monetary savings from providing consumers


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with truthful information that will guide future purchases. Given Defendant’s financial condition and

net worth, Dkt. No. 52 at ¶ 6, pursuing this Defendant to trial would likely have meant no monetary

relief for the class, as the company would have gone out of business, and the cost to administer and mail

premium price refunds of 20-40 cents would have swallowed up any judgment.

While the value of any injunctive relief may be difficult to monetize, the implementation of

these advertising changes, as contemplated by the Settlement, cannot be overlooked. See Brazil, 2012

U.S. Dist. LEXIS 47986, at *4 (“The structural changes to Dell’s marketing practices resulting from this

litigation, particularly Dell’s elimination of allegedly false representations . . . conferred a benefit on

both the class members and the public at large.”) (citing Vizcaino v. Microsoft Corp., 290 F.3d 1043,

1049 (9th Cir. 2002) (“[i]ncidental or nonmonetary benefits conferred by the litigation” are factors in a

fee application)). Indeed, there is intrinsic value in eliminating deceptive advertising. Vizcaino, 290

F.3d at 1047. This is particularly true when viewed in light of recent difficulties in keeping prospective

injunctive relief claims alive in federal court, for lack of Article III standing. See, e.g., Castagnola v.

Hewlett Packard Co., No. C 11-05772 JSW, 2012 WL 2159385, at *5 (N.D. Cal. June 13, 2012). This

case was, after all, about false advertising and not personal injury claims. Therefore, the Settlement

achieves the main result sought by Plaintiff’s Complaint.

Third, even if monetary relief were available to the Class, which it likely was not, such cash

based claims were minimal and fraught with problems. First, a judgment in the amount of Defendant’s

sales would have been small and there were risks regarding Defendant’s ability to pay. Dkt. No. 52 at ¶

6. Second, profit from sales, which was low anyway, id., may not have been available to the Class or

the Plaintiff based on the affirmative defense that Class Members still received a value from their

purchase – the tea itself.

Finally, the fee request itself is in line with that achieved in other injunctive-relief only cases.

See Marron Decl., Ex. 4 (granting final approval to $250,000 in fees and costs for injunctive relief-only

settlement involving sales similar to this case); id., Ex. 5 (granting final approval to $799,000 in fees

and costs for injunctive relief-only settlement involving similar facts but much higher sales, where

manufacturer had filed for bankruptcy and was purchased by a new manufacturer); Richardson v.

L’Oreal USA, Inc., 951 F. Supp. 2d 104, 106-108 (D.D.C. 2013) (granting approval to injunctive relief-


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only settlement involving labeling claims; and finding that “the proposed maximum award of $950,000,

for attorneys’ fees, costs, and expenses, while high, is not outside the range of possible approval given

the parties’ agreement as to the amount. Nor is approval of the full fee figure a condition of the

settlement—pursuant to the agreement’s terms, if the Court finds a reduced fee award appropriate, the

remainder of the settlement will continue to bind the parties and class members.”); Kim v. Space Pencil,

Inc., No. 11–03796 LB, 2012 WL 5948951, at *10 (N.D. Cal. Nov. 28, 2012) (approving a $403,025.50

fee request in injunctive relief-only case litigated for less than a year); Perez v. Asurion Corp., No. 06-

201734-CIV, 2007 WL 2591180, at *8 (S.D. Fla. Aug. 8, 2007) (approving a $1.6 million fee for case

that was litigated for over two years, the settlement resulted in primarily injunctive relief, and the only

monetary benefit to class members were coupons); Grant v. Capital Mgmt. Servs., L.P., No. 10–cv–

2471–WQH (BGS), 2014 WL 888665, at *4 (S.D. Cal. Mar. 5, 2014) (approving injunctive-relief only

settlement with agreement to pay $475,000 in attorney’s fees).

B. The Effort, Skill, and Experience of Class Counsel

Class Counsel has extensive experience handling complex consumer class actions. Marron Decl.

¶¶ 6-20, Ex. 1. Plaintiff respectfully suggests that her counsel’s track record in this case, as well as past

cases, demonstrates their skill. See id. Class Counsel has already devoted 428.5 attorney and staff

hours, plus costs, to litigating this class action, and is committed to overseeing the Settlement and this

litigation through to its successful conclusion. See App. 1. Plaintiff also engaged in substantial

discovery and motion practice, litigating a motion to dismiss in district court (Dkt. Nos. 14, 20, 21), and

months of bargaining to get Defendant to formalize its promise to make labeling changes into a binding

Settlement Agreement. See Marron Decl. ¶¶ 3-4.

C. The Complexity of the Issues

This was not a simple case. The federal Food, Drug, and Cosmetic Act is complex, has been

frequently amended, and has lengthy and technical implementing regulations promulgated by the FDA,

which were at issue in this case. See Dkt. Nos. 14, 20, 21. In addition, California Sherman Law claims

specifically for senna leaf were at issue. The case was also complex because Class Members arguably

did receive a value for their purchases – a tea as a beverage - notwithstanding the diet claims.

Therefore, issues of proving the difference between the price paid and the actual value received would


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have been difficult, in particular because the purchase price was low, around $2 per box, and the amount

at stake small. Had the case been litigated, complex food chemistry issues raised by Plaintiff’s claims

would have been at issue. See Compl. (Dkt. #1).

Only after Plaintiff won a difficult and contentious motion to dismiss in the district court, did

Defendant express its willingness to negotiate. See Dkt. No. 33. Thereafter, the case was not easy to

manage until the signed Settlement Agreement was achieved; rather, months were spent analyzing and

challenging every aspect of the labeling, crafting all details of the Settlement Agreement, reviewing

proposed labeling changes, suggesting and obtaining additional labeling changes, and receiving and

reviewing discovery necessary to satisfy Class Counsel that the relief obtained was in the best interest of

the class. See Marron Decl. ¶¶ 3-5.

D. Risk of Non-Payment, Preclusion of Other Employment, and Ongoing Work

This case posed significant risk for failure to prevail on any of the claims at trial. The Gut

Check campaign, while highlighting the benefits of the Settlement, also highlights some of the problems

of proof this case would have faced on the merits. For example, unlawful diet advertising “appl[ies] to

dietary supplements,” but “[does not] apply to . . . low-calorie foods.” Dkt. No. 48-1 at ECF p. 95. The

teas at issue in this lawsuit are dietary supplements, but also low-calorie foods. Further, while the teas

appear to fall within “Gut Check Claim #4,” as products that purportedly “[b]lock[] the absorption of fat

or calories to enable consumers to lose substantial weight,” the FTC recognizes that “lifestyle changes”

and a “reduced-calorie diet” also contribute to weight loss. Id. at p. 97-98. Thus, individualized

defenses could have jeopardized the case. See id. Further, there was the risk that prospective injunctive

relief would have been denied to Plaintiff at trial, for lack of Article III standing. See Castagnola, 2012

WL 2159385, at *5.

Devoting more than 428.5 attorney and staff hours and costs to this action necessarily precluded

Class Counsel from taking on other employment. See Marron Decl. ¶¶ 24-25; App. 1. And, there was

significant risk that Class Counsel, despite committing these resources, would not have received any

compensation for its services. Class Counsel’s ability to collect compensation was entirely contingent

upon it prevailing. The substantial risk of non-recovery inherent in class action litigation is well-

documented. See Marron Decl. ¶ 26.


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When attorneys undertake litigation on a contingent basis, a fee that is limited to the hourly fee

that would have been paid by a fee-paying client, win or lose, is not a reasonable fee by market

standards. Greene v. Dillingham Constr. NA., Inc., 101 Cal. App. 4th 418, 428-29 (2002). A contingent

fee must be higher than a fee for the same legal services paid as they are performed. The contingent fee

compensates the lawyer not only for the legal services he renders but for the loan of those services. The

implicit interest rate on such a loan is higher because the risk of default (the loss of the case, which

cancels the debt of the client to the lawyer) is much higher than that of conventional loans. Ketchum, 24

Cal. 4th at 1132-1133 (quoting the Hon. Richard Posner’s Economic Analysis of Law (4th ed. 1992));

see also Rader v. Thrasher, 57 Cal. 2d 244, 253 (1962). From the outset of litigation to the present,

Class Counsel litigated this matter on a contingent basis and placed their own resources at risk to do so.

The contingent nature of this case supports the lodestar requested, plus multiplier. See id.

E. Reaction of the Class

To date, no member of the Class has objected to the Settlement or requested exclusion. While

the cutoff date is not until October 16, 2015, “[t]he absence of any objector” thus far “strongly supports

the fairness, reasonableness, and adequacy of the settlement.” Martin v. AmeriPride Servs., 2011 U.S.

Dist. LEXIS 61796, at *21 (S.D. Cal. June 9, 2011); see also In re Omnivision Techs., Inc., 559 F. Supp.

2d 1036, 1043 (N.D. Cal. 2007) (“By any standard, the lack of objection of the Class Members favors

approval of the Settlement.”). In sum, the reaction of the Class to the Settlement, including its fee

provision, supports a finding that the requested fees are fair, reasonable, and adequate.

F. A Multiplier Would Be Reasonable

Class Counsel does not ask for a multiplier because the agreed-upon fee will meet the lodestar

expended, if not fall short of it. If the Court does trim any rates or time expended, however, it should

then apply a multiplier based on the quality of the legal work done, the risk of non-payment, the

preclusion of other fee-paying work, and the complexity of issues presented.

In determining an appropriate multiplier, courts consider “a host of ‘reasonableness’ factors,

‘including quality of representation, the benefit obtained for the class, the complexity and novelty of the

issues presented, and the risk of nonpayment.’” In re Bluetooth, 654 F.3d at 941-42 (quoting Hanlon,

150 F.3d at 1029). The purpose of using the lodestar/multiplier method is to mirror the legal


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marketplace: counsel will not handle cases on straight hourly fees that are payable only if they win, so

an enhancement helps determine a fee that is commensurate with what attorneys could expect to be

compensated for similar services under these circumstances. See San Bernardino Valley Audubon Soc’y

v. San Bernardino, 155 Cal. App. 3d 738, 755 (1984) (award must be large enough “to entice competent

counsel to undertake difficult public interest cases”).

“Multipliers can range from 2 to 4, or even higher.” Wershba, 91 Cal. App. 4th at 255. See also

Natural Gas Anti-Trust Cases, I, II, III & IV, Case Nos. 4221, 4224, 4226, 4228, 2006 WL 5377849, at

*4 (Cal. Super. Ct. Dec. 11, 2006) (“This Court and numerous cases have applied multipliers of between

4 and 12 to counsel’s lodestar in awarding fees.”); SternwestCorp. v. Ash, 183 Cal. App. 3d 74, 76

(1986) (case remanded with directions “to enhance the lodestar award by such factor (two, three, four or

otherwise) that the court, in its discretion shall deem proper”); Vizcaino, 290 F.3d at 1051 (multiplier of

3.65); Steiner v. Am. Broad. Co., Inc., Case No. 05-55773, 2007 WL 2460326, at *2 (9th Cir. Aug. 29,

2007) (multiplier of 6.85); Keith v. Volpe, 501 F. Supp. 403, 414 (C.D. Cal. 1980) (multiplier of 3.5). In

cases where, as here, “a large common fund has been recovered and the hours are relatively small, some

courts reach a reasonable fee determination based on large multiples of 5 or 10 times the lodestar.”

Alba Conte, Attorney Fee Awards (2d ed. 1993), § 2.06 at 39.

Here, Class Counsel requests a total fee award of $250,000, inclusive of costs, which represents

the same or, at final approval time, less than the current lodestar. But should the Court exclude any part

of the hours or costs requested, it should apply a small lodestar because it would be justified in light of

the factors at issue, and is supported by the authority above. See App. 1; citations supra. The quality of

representation is borne out by Class Counsel’s experience, in this case and others, and the number of

injunctive relief terms achieved. See Marron Decl., Exs. 1, 4 & 5. The issues were complex and several

aspects of relief subject to rigorous defenses. See Compl. (Dkt. No. 1); Def.’s Mot to Dismiss and

Strike (Dkt. No. 14, 20, 21). Class Counsel shows skill in rebutting Defendant’s Motion to Dismiss,

which led to the Settlement Agreement at issue.

The Peer Monitor Report highlights the risk of non-payment, even for hourly fee paying work.

For example, billing realization rates, meaning the amount of work actually performed at standard rates

and collected from clients, has dropped over the past three years from 89.12 to 86.74 percent. Marron


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Decl., Ex. 3 at p. 23. Further, the FJC Report highlights the risk of non-payment, or prevailing on the

merits, in class actions generally, with less than one-third success rate. See id. ¶ 26.

The Ninth Circuit has recently established additional guidelines for the Court to consider when

considering a settled fee in a class action case. Allen v. Bedolla, 787 F.3d 1218, 1223 (9th Cir. 2015)

(“[W]e hold district courts to a higher procedural standard when making that determination of

substantive fairness: . . . .”). Prior to class certification, settlements must be scrutinized carefully “for

evidence of collusion or other conflicts of interest than is ordinarily required under Rule 23(e) before

securing the court’s approval as fair.” Id.

From a procedural standpoint, Allen requires that the fee motion be available to Class members

before the objection and opt out deadline. Id. at 1225. That is met here because this Motion will be

filed in early August 2015, the objection deadline is not until October 16, 2015, and this Motion and

supporting papers will be posted on the Settlement Website. PA Order ¶ 9. Thus, this Fee Motion will

be available to Class Members for approximately two months prior to the Objection/Opt Out Deadline.

See id. at 1225-1226 (disapproving of fee motion filed 70 days after notice was sent whereas objections

were due 45 days after notice; and noting with approval In re Mercury, in which the fee motion was

posted one week in advance of the objection deadline).

Further, none of the other indicia of an unfair fee, as was present in Allen, are present here. See

id. at 1224. Class Counsel are not receiving a “disproportionate distribution of the settlement” because

there is no common fund in this case, based on the unique contours of this premium price settlement.

There is no “‘clear sailing’ arrangement” because Defendant agreed to pay a fee certain, based on Class

Counsel’s expected lodestar. Id. Finally, there is no “reverter that returns unclaimed fees to the

defendant,” because no fund was established in light of the premium price at stake (only pennies per box

attributable to false advertising) and Defendant’s financial health condition. Id.

In light of the relabeling results obtained, the efficiency with which the case was litigated, the

experience and reputation of counsel, the risks associated with litigating this action, the complexity and

novelty of the issues presented, the substantial benefit to the class achieved, and the work still to be

performed on the final approval reply papers and hearing, settlement administration and potential

appeals, a nominal multiplier, for a total fee of $250,000, inclusive of costs, is fair and reasonable.


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VII. THE REQUESTED COSTS ARE FAIR AND REASONABLE

Under California Code of Civil Procedure §§ 1033.5 (a)(1), (3), (4), and (7), the Court must

award costs for court fees; deposition costs for transcribing, recording and travel; service of process

fees; and witness fees. In addition, § 1033.5(c) provides discretion to award reimbursement of other

costs if they are “reasonably necessary to the conduct of the litigation, rather than merely convenient or

beneficial to its preparation.” Parkinson, 796 F. Supp. 2d at 1176 (quoting Sci. App. Int’l Corp. v. Super.

Ct., 39 Cal. App. 4th 1095, 1103 (1995)).

In addition to California law, “[t]he reimbursement of taxable expenses in federal litigation is

governed by 28 U.S.C. § 1920 and Fed. R. Civ. P. 54.” In re Media Vision Tech. Sec. Litig., 913 F.

Supp. 1362, 1365-66 (N.D. Cal. 1996). Rule 54(d) “entitles prevailing parties to collect taxable costs.”

Id.; Morris v. Affinity Health Plan, Inc., 859 F. Supp. 2d 611, 624 (S.D.N.Y. 2012) (noting that courts

universally accept that “telephone charges, postage, transportation, working meals, photocopies, and

electronic research, are reasonable and were incidental and necessary to the representation of the

Class”); Fed. R. Civ. P. 54(d) (“Unless a federal statute, these rules, or a court order provides otherwise,

costs—other than attorney’s fees—should be allowed to the prevailing party.”).

Class Counsel has incurred $715.71 in statutorily recoverable costs, and $2,560.51 in costs

reasonably necessary to conduct this litigation, which are summarized in Appendix 2 (notably, Class

Counsel negotiated for Defendant to pay the entire cost of private mediation and notice, an exceptional

result for the Class). All of Counsel’s expenses were reasonable and necessary for the successful

prosecution of this case. Class Counsel also bore a number of its own costs as overhead, and is not

charging all of its costs to the Class. See App. 2. Accordingly, the Court should grant Class Counsel’s

request for reimbursement of costs, which are included in the $250,000 requested. See Cal. Civ. Proc.

Code § 1033.5; Fed. R. Civ. P. 54(d).

VIII. THE REQUESTED INCENTIVE AWARD IS FAIR AND REASONABLE

Finally, Plaintiff respectfully requests that the Court approve an incentive award for the Class

Representative, in the amount of $1,500. Incentive awards “are fairly typical in class action cases,”

Rodriguez v. West Publ’g Corp., 563 F.3d 948, 958 (9th Cir. 2009), and “serve an important function in

promoting class action settlements.” Sheppard v. Consol. Edison Co. of N.Y., Inc., No. 94-CV-0403(JG),


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2002 WL 2003206, at *5 (E.D. N.Y. Aug. 1, 2002). Incentive awards for class representatives are

routinely provided to encourage individuals to undertake the responsibilities of representing the class

and recognize the time and effort spent in the case. See In re Lorazapam & Clorazepate Antitrust Litig.,

205 F.R.D. 369, 369 (D.D.C. Feb. 1, 2002); Theodore Eisenberg & Geoffrey P. Miller, Incentive

Awards to Class Action Plaintiffs: An Empirical Study, 53 U.C.L.A. Rev. 1303 (2006) (30% of class

actions include incentive awards to class representatives). Such awards “are intended to compensate

class representatives for work done on behalf of the class, to make up for financial or reputational risk

undertaken in bringing the action, and, sometimes, to recognize their willingness to act as a private

attorney general.” Rodriguez, 563 F.3d at 958-959. Service awards are committed to the sound

discretion of the trial court and should be awarded based upon the court’s consideration of, inter alia,

the amount of time and effort spent on the litigation, the duration of the litigation and the degree of

personal gain obtained as a result of the litigation. See Van Vranken v. Atlantic Richfield Co., 901 F.

Supp. 294, 299 (N.D. Cal. Aug. 16, 1995).

Here, Plaintiff respectfully requests a modest service award of $1,500 for Ms. Eunice Johnson,

in recognition of her contribution toward the successful prosecution of this case. Ms. Johnson has been

actively involved in this litigation and pre-litigation investigation since January 2014, which will be

close to two years of participation by the time of the final approval hearing. Ms. Johnson has been a

significant participant in this action from its inception to settlement, including reviewing court filings;

continuous communications with Class Counsel throughout the litigation, including being on stand-by

during mediation of the action; reviewing and approving the Settlement; and being committed to secure

substantive relief on behalf of the Class.

The proposed award is also in line with those approved in other injunctive-relief only cases. See

Marron Decl., Ex. 4 (approving $1,500 per named plaintiff in diet tea injunctive relief-only case); id.,

Ex. 5 (approving $1,000 for named plaintiff); Perez, 2007 WL 2591180, at *8 (approving $1,500

incentive award in settlement for primarily injunctive relief where the only monetary benefit to class

members were coupons); Richardson, 951 F. Supp. 2d at 106-108 (approving $1,000 incentive award to

each lead plaintiff in an injunctive relief-only, labeling case); Kim, 2012 WL 5948951, at *10

(approving a $2,500 incentive award to each named Plaintiff in an injunctive relief only case).


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The proposed award is also nominal compared to those approved by other Courts in this Circuit.

See, e.g., Villegas v. J.P. Morgan Chase & Co., 2012 U.S. Dist. LEXIS 114597, at *18 (N.D. Cal. Aug.

8, 2012) (“In this District, a $5,000 incentive award is presumptively reasonable.”); Singer v. Becton

Dickinson & Co., No. 08-CV-821-IEG(BLM), 2010 WL 2196104 (S.D. Cal. June 1, 2010) ($25,000

award); Van Vranken, 901 F. Supp. at 300 ($50,000 award); Louie v. Kaiser Found. Health Plan, Inc.,

No. 08cv0795 IEG RBB, 2008 WL 4473183, at *7 (S.D. Cal. Oct. 6, 2008) ($25,000 award); Barcia v.

Contain-A-Way, Inc., No. 07cv938-IEG-JMA, 2009 WL 587844 (S.D. Cal. Mar. 6, 2009) ($12,000

award); Razilov v. Nationwide Mut. Ins. Co., No. 01-CV-1466-BR, 2006 WL 3312024, at *8 (D. Or.

Nov. 13, 2006) (approving $10,000 incentive award for representative whose “only personal benefit . . .

from a successful result in this litigation is the . . . entitlement of any class member . . . together with the

likelihood that any further [statutory] violations . . . would cease”). Thus, the proposed service award of

$1,000 is justified in this case.

IX. CONCLUSION

For all of the foregoing reasons, Plaintiff respectfully requests the Court grant the relief

requested.

Dated: August 15, 2015 Respectfully submitted, /s/ Ronald A. Marron RONALD A. MARRON [email protected] SKYE RESENDES [email protected]

LAW OFFICES OF RONALD A. MARRON 651 Arroyo Drive San Diego, California 92101 Telephone: (619) 696-9006 Facsimile: (619) 564-6665


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I. APPENDIX 1: CLASS COUNSEL’S LODESTAR

FEE LODESTAR (through August 12, 2015 only):

Attorney Hours Hourly Rate Lodestar

Ron Marron 49 $745 $ 36,505.00 Skye Resendes 162.6 $475 $ 77,235.00 Alexis Wood 7 $475 $ 3,325.00 Kas Gallucci 7 $450 $ 3,080.00 William Richards 43.4 $440 $ 19,096.00 Marshall Lurtz 120.7 $440 $ 53,108.00 Beth Goodman .9 $440 $ 396.00 Erin Minelli 18.9 $440 $ 8,756.00 Post Bar Law Clerk/Patent Agent with Clinical Science Background (D. Eisner)

.1 $290 $ 29.00

Paralegals/Legal Assistants (4) 18.9 $215 $ 4,063.50 Subtotal: $205,593.50 Post-Application Hours (Est.)2 100 $440.00 $ 44,000.00 TOTAL: $249,593.50

2 Class Counsel will perform additional work and incur additional costs not included in the above lodestar. For example, due to the need to tabulate fees and costs in advance of drafting, editing and briefing this Motion; drafting and editing the Motion for Final Approval and supporting declarations; and ensuring the Notice Administrator complies with all portions of the Preliminary Approval Order are not included in the actual hours spent. Moreover, after this application is filed, Counsel will have other duties, minimally including attending the Final Approval Hearing, which will involve additional travel costs and attorney time, and responding to objections, which will substantially increase the time spent. To account for the known additional work and the possibility of more if there are objections or an appeal, Class Counsel estimated 100 “post-application hours,” based on their experience of how long it takes to draft final approval papers, respond to objections, if any, and known travel costs and time to attend the final approval hearing. Class Counsel valued these additional hours at the reduced blended rate of $440 per hour, representing the approximate average billing rate of all attorney timekeepers plus one non-attorney staff member, which is also equivalent to the lowest attorney rate at Class Counsel’s office.


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II. APPENDIX 2: CLASS COUNSEL’S EXPENSES

Expenses Recoverable Under Cal. Civ. Proc. Code § 1033.5

Description Amount

Court Filings $400.00

Service of Process Fees $302.75

Certified mail postage to all Defendant and their agents for statutory notice required by CLRA $12.96

Total: $715.71

Additional Expenses Reasonably Necessary to Prosecute Action

Description Amount

Mediation No charge to the Class

Postage Overhead – no charge to the Class

Flat rate charge for case deadline calculations (CompuLaw Deadlines on Demand software) $ 160.00

Flights to out of county hearings $1,366.20

PACER Overhead – no charge to the Class

Mileage and transportation $105.70

Lodging for out of county hearings $570.94

Photocopies $308.25

Westlaw online research Overhead – no charge to the Class

Meals for out of county travel $19.42

Parking $30.00

Total: $2,560.51

GRAND TOTAL: $3,276.22


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Johnson v. Triple Leaf Tea Inc., Case No. 3:14-cv-01570 MARRON DECL. IN SUPPORT OF MOTION FOR ATTORNEY’S FEES, COSTS AND INCENTIVE AWARD

LAW OFFICES OF RONALD A. MARRON, APLC RONALD A. MARRON (SBN 175650) [email protected] SKYE RESENDES (SBN 278511) [email protected] ALEXIS M. WOOD (SBN 270200) [email protected] 651 Arroyo Drive San Diego, California 92103 Telephone: (619) 696-9006 Facsimile: (619) 546-6665 Class Counsel

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

EUNICE JOHNSON, individually, on behalf of all others similarly situated, and the general public,

Plaintiff,

v.

TRIPLE LEAF TEA INC.;

Defendant.

CASE NO.: 3:14-cv-01570 MMC CLASS ACTION DECLARATION OF RONALD A. MARRON IN SUPPORT OF PLAINTIFF’S MOTION FOR ATTORNEY’S FEES, COSTS AND INCENTIVE AWARD (HEARING DATE SET BY ORDER GRANTING PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT [DKT. NO. 53]) Judge: Hon. Maxine M. Chesney Courtroom: 7 (19th Floor)

Date: Nov. 13, 2015 Time: 9:00 a.m.

Case3:14-cv-01570-MMC Document54-1 Filed08/15/15 Page1 of 61

mailto:[email protected]

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MARRON DECL. IN SUPPORT OF MOTION FOR ATTORNEY’S FEES, COSTS AND INCENTIVE AWARD

I, Ronald A. Marron, declare:

1. I am a member in good standing of the State Bar of California, the Southern, Central,

Eastern and Northern Districts of California, and the Ninth Circuit Court of Appeals.

2. I submit this declaration in support of Plaintiff’s Motion for Approval of Attorney’s

Fees, Costs, and an Incentive Award. I make this Declaration based on personal knowledge and if

called to testify, I could and would competently testify to the matters contained herein.

3. The hours billed in this action by my firm are reasonable, reflect the intensity with

which issues were disputed in this case, and the amount of work necessary for this litigation to

culminate in the successful resolution of injunctive relief on behalf of the Class.

4. My firm has contributed a total of 428.5 hours of work, consisting of 409.5 attorney

hours, 18.9 legal assistant/paralegal hours and .1 law clerk hours). Due to the need for a staff person

to tabulate hours, the majority of time spent for preparing this Motion and Declaration is not

included. A reasonable estimate of additional time for post-fee application hours is 100 hours. This

consists of approximately twenty-five hours briefing this motion and preparing this supporting

declaration; approximately fifty hours to brief the final approval motion, ensuring the Notice

Administrator complies with the Prelim. Approval Order and the final judgment, and another twenty-

five hours responding to objectors, if any, and responding to appeals, if any).

5. I reviewed my firm’s time records and made my best effort to allocate the amount of

time spent on work relating to specific aspects of this litigation. Entries were carefully reviewed to

discard erroneous entries and duplicative time.

Qualifications of Class Counsel

6. Class Counsel’s requested rates are as follows:

Attorney Position Hourly Rate

Ronald A. Marron Partner $745

Skye Resendes Senior Associate $475

Alexis Wood Senior Associate $475

Kas Gallucci Senior Associate $450


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William Richards Associate $440

Marshall Lurtz Associate $440

Beth Goodman Associate $440

Erin Minelli Associate $440

Danielle Eisner Post Bar Law Clerk $290

Paralegals and Legal Assistants $215

7. I have practiced civil litigation for over 20 years. Approximately 18 years ago, I

started my own law firm with an emphasis in consumer fraud. Over the years, I have acquired

extensive experience in class actions and other complex litigation and have obtained large settlements

as lead counsel. I have devoted most of my practice to the area of consumer fraud, including false

and misleading labeling of food, nutrition and over-the-counter drug products. Attached hereto as

Exhibit 1 is my firm’s updated resume, supporting the aforementioned rates.

8. Attached hereto as Exhibit 2 are true and correct copies of portions of the published

National Law Journal (NLJ) 2011 Law Firm Billing Survey; a rate analysis for partners and associates

in the Southern California area, compiled by summarizing the NLJ 2011 Survey only as to Southern

California firms; and a Summary reflecting the market rate increase in Southern California from 2010

to 2011 for partners and associates created by analyzing the 2010 NLJ Survey to the 2011 NLJ

Survey. As this evidence shows, Class Counsel’s requested attorney rates for 2013-2014 fall within

the average prevailing market rates within the community.

9. Attached hereto as Exhibit 3 is a true and correct copy of the 2014 Report on the State

of the Legal Market put out by The Center for the Study of the Legal Profession at the Georgetown

University Law Center and Thomson Reuters Peer Monitor (Peer Monitor Report). The Peer Monitor

report shows that “from the third quarter of 2010 through November 2013 . . . firms increased their

standard rates by 11 percent[,] from an average of $429 per hour to $476 per hour.” This average

rate, see id., support’s Class Counsel’s hourly rates and their blended rate.

10. Courts have also recognized that my law firm’s attorney’s hourly rates are reasonable

for counsel with similar experience and expertise within the Southern California area; for example:


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11. On August 6, 2015, the Honorable Kenneth R. Freeman of the Superior Court of

California, County of Los Angeles, approved the following hourly rates for Class Counsel: Ronald

Marron at $745, Skye Resendes at $475, Alexis Wood at $475, Kas Gallucci at $450, William

Richards at $440, Marshall Lurtz at $440, Erin Minelli at $440, law clerks at $290, and legal

assistants at $215 per hour in the case of Perry v. Truong Giang Corp., No. BC59568. A true and

correct copy of Judge Freeman’s final approval Order is attached hereto as Exhibit 4. This case

involved nearly identical facts as this case because it concerned allegedly false labeling of Senna Leaf

teas as diet aids, and a family run company with similar financial condition to the Defendant Triple

Leaf in this action.

12. On August 7, 2015, the Honorable Brendan Linehan Shannon of the United States

Bankruptcy Court for the District of Delaware approved the following hourly rates for Class Counsel:

Ronald Marron at $745, Skye Resendes at $475, Alexis Wood at $475, Kas Gallucci at $450,

William Richards at $440, Marshall Lurtz at $440, Beth Goodman at $440, Erin Minelli at $440, law

clerks at $290, and legal assistants at $215 per hour in the case of In re: LEAF123, INC. (f/k/a

NATROL, INC.), et al., No. 14-11446 (BLS). A true and correct copy of Judge Shannon’s final

approval Order is attached hereto as Exhibit 5. This case involved very similar facts as this case

because it too concerned allegedly false labeling of Senna Leaf teas as diet aids.

13. On July 29, 2014, the Honorable Richard Seeborg of the Northern District of

California approved the following hourly rates for Class Counsel: Ronald Marron at $715, Skye

Resendes at $440, Kas Gallucci at $400, and law clerks at $290 in the case of In re Quaker Oats

Litig., No. 5:10-cv-00502-RS (N.D. Cal.), Dkt. No. 221.

14. On March 13, 2014, the Honorable Gonzalo P. Curiel of the Southern District of

California approved my hourly rate of $715 per hour; Ms. Resendes’ rate of $440 per hour; Ms.

Wood’s rate of $425 per hour; Ms. Minelli and Ms. Gallucci’s rates of $400 per hour; Ms. Danielle

Eisner’s post-Bar law clerk rate of $290 per hour; and $215 per hour for legal assistants in Mason v.

Heel, Inc., No. 3:12-cv-3056-GPC-KSC, 2014 WL 1664271 (S.D. Cal. Mar. 13, 2014).

15. On October 31, 2013, the Honorable Michael M. Anello of the Southern District of

California awarded me fees of $680 per hour, Ms. Resendes fees of $400 per hour, Ms. Wood fees of


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$385 per hour, Ms. Minelli fees of $385 per hour, and Ms. Gallucci fees of $385 per hour in a

homeopathic drug consumer class action case; and also approved $280 per hour for patent agent/post-

Bar law clerk Danielle Eisner; $245 per hour for regular law clerks; and $215 hourly rates for support

staff such as paralegals. See also Nigh v. Humphreys Pharmacal Incorporated, 3:12-cv-02714-

MMA-DHB, 2013 WL 5995382 (S.D. Cal. Oct. 23, 2013).

16. On March 13, 2013, the Honorable David O. Carter of the Central District of

California awarded me fees of $680 per hour, Ms. Resendes fees of $400 per hour, and former

associate, Maggie Realin, fees of $375 per hour in a dietary supplement consumer fraud class action

case; and also approved $245 per hour for law clerks and $215 hourly rates for support staff such as

paralegals. Bruno v. Quten Research Inst., LLC, No. 8:11-cv-00173-DOC-E, 2013 WL 990495, at

*4-5 (C.D. Cal. Mar. 13, 2013) (“Class Counsel, . . . the Law Offices of Ronald A. Marron displayed

competence and diligence in the prosecution of this action, and their requested rates are approved as

fair and reasonable.”); see also id. at *4 (“The Court notes that, in addition to the monetary relief

obtained by Class Counsel for class plaintiffs, there is a high value to the injunctive relief obtained in

this case. New labeling practices affecting hundreds of thousands of bottles per year, over ten years,

bring a benefit to class consumers, the marketplace, and competitors who do not mislabel their

products.”).

17. On October 31, 2012, the Honorable John A. Houston of the Southern District of

California awarded me fees of $650 per hour and Ms. Resendes fees of $385 per hour in a

homeopathic drug consumer fraud class action case. Gallucci, 2012 WL 5359485, at *9 (S.D. Cal.

Oct. 31, 2012) (“The Court finds the [foregoing] hourly billing rates reasonable in light of the

complexity of this litigation, the work performed, Class Counsels' reputation, experience,

competence, and the prevailing billing rates for comparably complex work by comparably-qualified

counsel in the relevant market.”).

18. On August 21, 2012, the Honorable Thomas J. Whelan awarded me fees of $650 per

hour, Ms. Resendes at $385 per hour and Ms. Realin at $375 per hour, in the consumer dietary

supplement class action of Burton v. Ganeden, No. 11-cv-1471 W (NLS), Dkt. Nos. 52, 48, 45.


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19. On July 9, 2012, the Honorable Marilyn L. Huff awarded me fees of $650 per hour,

and approved the rates of my associate attorneys, Ms. Resendes at $385 per hour, and former

associate, Maggie Realin, at $375 per hour in the consumer food class action of In re Fererro, Case

No. 3:11-cv-00205 H (KSC) (S.D. Cal.), Dkt. No. 127. Judge Huff noted that the fees requested were

“appropriate given the contingent nature of the case and the excellent results obtained for the Class,

and because no enhancement or multiplier was sought above the actual amount of Class Counsel's

lodestar. The Court concludes the billing rates used by Class Counsel to be justified by prior awards

in similar litigation and the evidence presented with their motion showing these rates are in line with

prevailing rates in this District.”

20. In March 2011, the Honorable Janis L. Sammartino awarded me fees based on a

discounted hourly rate of $595. Iorio v. Allianz Life Ins. Co. of N. Am., Inc., 2011 U.S. Dist. LEXIS

21824, at *31 (S.D. Cal. Mar. 3, 2011). Despite being of similar seniority and experience, at the

request of and in deference to my co-counsel, I reduced my requested rate to $595.

21. Similarly, several California district courts have approved specific fee rates similar to

those of Class Counsel. These rates are consistent with the prevailing rates for attorneys of similar

experience, skill and reputation. For example, several courts in this district have approved fee ranges

into which Class Counsel’s rates easily fall. For example, in Hartless v. Clorox Co., 273 F.R.D. 630,

644 (S.D. Cal. 2011), the Honorable Cathy Ann Bencivengo affirmed the rate of “$675 for an

experienced partner’s time.” Id. at 644.1

22. Other California district courts have approved even higher attorney fee rates. For

example, in CLRB Hanson Indus., LLC v. Weiss & Assocs., PC, 2012 WL 20539 (N.D. Cal. Jan. 5,

2012), the court found the hourly rates of two top billers reasonable at $1100 and $850. Case No.

C05-03649, Dkt. No. 342. Even though the defendants appealed the attorneys’ fees award, the Ninth

Circuit affirmed the district court’s finding that the requested fees were justified. CLRB Hanson

Indus., LLC v. Weiss & Assocs., PC, 2012 WL 20539, at * 1.

1 See Hartless v. Clorox Co., No. 06-cv-2705-CAB (S.D. Cal.), Dkt. Nos. 82, 84-85, 87-88 (declarations in support of motion for attorney’s fees).


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23. Finally, my firm’s law clerk rate of $290 and legal assistant/paralegal rate of $215 is

in a range commonly approved by other courts in this district. See, e.g., Craft v. County of San

Bernardino, 624 F. Supp. 2d 1113, 1122 (C.D. Cal. 2008) (finding $200 hourly rate reasonable for

law clerks and up to $225 hourly rate reasonable for paralegals); Vasquez, 2011 U.S. Dist. LEXIS

83696, at *6 (approving rates between $160 and $210 for paralegals); Iorio, 2011 U.S. Dist. LEXIS

21824, at *32 (finding $195 rate reasonable for paralegals) (S.D. Cal); Create-A-Card, 2009 WL

3073920, at *2 (approving rates of $150-$235 for paralegals) (N.D. Cal); Quten, 2013 WL 990495, at

*4-5 (approving $215 rate for paralegals and legal assistants and $245 for law clerks); Gallucci, 2012

WL 5359485, at *9 (approving $215 rate for paralegals and legal assistants and $245 for law clerks).

24. Our firm’s practice is to keep contemporaneous records for each timekeeper and to

regularly record time records in the normal course of business; and we kept time records in this case

consistent with that practice. Moreover, our firm’s practice is to bill in 6-minute (tenth-of-an-hour)

increments. The firm’s billing records are voluminous but shall be provided for in camera review, if

the Court deems it necessary.

25. The total lodestar for the Law Offices of Ronald A. Marron is $249,593.50. This

lodestar is based on 428.5 hours of work (409.5 attorney hours, 18.9 legal assistant/paralegal hours

and .1 law clerk hours) plus 100 hours of post-application work (such as briefing this motion, briefing

the final approval motion, ensuring the Notice Administrator complies with the Prelim. Approval

Order and the final judgment, responding to objectors, if any, and appeals, if any), and is supported

by fair and reasonable rates and hours. The Law Offices of Ronald A. Marron’s lodestar is

summarized in Appendix 1 to Plaintiff’s fee motion. Prior to finalizing the firm’s lodestar, we

carefully reviewed our hours and made cuts for time entry errors, duplications, and instances where

we determined the hours should be reduced or not billed.

26. The Federal Judicial Center published a report in 1996 entitled, Empirical Study of

Class Actions in Four Federal District Courts: Final Report to the Advisory Committee on Civil

Rules (“FJC Report”). The study was requested by the Judicial Conference Advisory Committee on

Civil Rules when it was considering proposals to amend Rule 23 of the Federal Rules of Civil

Procedure. The study is based on 407 class action lawsuits that either settled or went to verdict in the


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two-year period from July 1, 1992 to June 30, 1994 in the following four federal judicial districts: the

Eastern District of Pennsylvania (Philadelphia); the Southern District of Florida (Miami); the

Northern District of Illinois (Chicago); and the Northern District of California (San Francisco).FJC

Report at 3-4, 7-8. For the 407 class actions, the FJC Report reports the following regarding class

certification:

• In 59 cases (14.5%), the class claims were certified for settlement purposes only. Id. at

35.

• In 93 cases (22.85%), the class claims were certified unconditionally. Id.

• Therefore, a total of 152 cases (37.35%) had certified classes, and the other 255

(62.65%) did not. Id.

• In at least 23 of the certified classes, the outcome was unfavorable to the plaintiffs.

This is based on Table 39 of the FJC Report at 179, which lists the following

outcomes adverse to plaintiffs in certified class cases (excluding classes certified for

settlement purposes only): nine dismissals by motion, one stipulated dismissal, one

non-class settlement, and twelve summary judgments. Id. at 179, App. C, Table 39.

Thus, in sum, the successful class claims from the total 407 filed class actions totaled 129 or

less (152 minus 23). Using the number 129/407 to get a percentage, 31.7% or less of the filed cases

resulted in successful class outcomes for plaintiffs. This does not account for degree of success (i.e.,

some cases could have resulted in minimal or partial success and would still be in the successful

claim category).

I declare under penalty of perjury under the laws of the United States that the foregoing is true

and correct. Executed on this 15th day of August 2015 in San Diego, California. /s/ Ronald A. Marron RONALD A. MARRON LAW OFFICES OF RONALD A. MARRON Skye Resendes 651 Arroyo Drive San Diego, CA 92103 Telephone:(619) 696-9006 Facsimile: (619) 564-6665

Class Counsel


EXHIBIT 1


1

LAW OFFICE OF RONALD A. MARRON, APLC 651 Arroyo Drive

San Diego ▪ CA ▪ 92103 Tel.: (619) 696-9006 Fax: (619) 564-6665

Firm Resume

(As of August 12, 2015)

FIRM OVERVIEW

The Law Offices of Ronald A. Marron is a recognized class action and complex litigation firm based out of San Diego, California, representing clients across the nation. Founded in 1998 with an emphasis in consumer and securities fraud, the firm has expanded its practice to include complex cases such as Ponzi schemes and shareholder derivative suits. The firm has skillfully litigated hundreds of lawsuits and arbitrations against investment advisors and stockbrokers, such as Morgan Stanley, LPL Financial, Merrill Lynch, Banc of America Securities, and Citigroup, who placed clients into unsuitable investments, failed to diversify, and who violated the Securities Act of 1933 and/or 1934. Aptly and competently prepared to represent its clients, the firm has taken on cases against the likes of Shell Oil, Citigroup, Wells Fargo, Union Bank of California, American Express Advisors, Morgan Stanley and Merrill Lynch. In recent years, the firm has devoted part of its practice to the area of false and misleading labeling of food, drug and over-the-counter products, as well as seeking to protect consumers from unauthorized and unsolicited telephone calls, SMS or text messages to cellular phones from corporations under the Telephone Consumer Protection Act. The firm employs five attorneys, whose qualifications are discussed in brief below.

THE MARRON FIRM’S ATTORNEYS:

Ronald A. Marron Mr. Marron is a member in good standing of the State Bar of California and the United States District Courts for the Northern, Central, Eastern and Southern Districts of California; and of the United States Court of Appeals for the Ninth Circuit, and has been practicing law for more than 19 years. He was a member of the United States Marine Corps from 1984 to 1990 (Active Duty 1984-1988, Reserves 1988-1990) and thereafter received a B.S. in Finance from the University of Southern California in 1991. While attending Southwestern University School of Law (1992-1994), he interned at the California Department of Corporations with emphasis in consumer complaints and fraud investigations. Mr. Marron has extensive experience in class actions and other complex litigation and has obtained hundreds of millions of dollars on behalf of consumers as lead counsel. Mr. Marron has represented plaintiffs victimized in Ponzi schemes, shareholder derivative suits, and securities fraud cases.

Exhibit 1, Page 1


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Mr. Marron has assisted two United States Senate Subcommittees and their staff in investigations of financial fraud, plus the Senate Subcommittee on Aging relating to annuity sales practices by agents using proceeds from reverse mortgages. Mr. Marron's clients have testified before the United States Senate Subcommittee on Investigations relating to abusive sales practices alleged in a complaint he filed against All-Tech Investment Group. The hearings resulted in federal legislation that: (a) raised the minimum capital requirements, and (b) required written risk disclosure signed by consumer. The civil action resulted in return of client funds and attorneys’ fees pursuant to the private attorney general statute and/or Consumers Legal Remedies Act. Mr. Marron conducted the legal research and co-wrote the brief that resulted in the largest punitive damages award (500%) in NASD history for aggrieved investors against Dean Witter Reynolds in securities arbitration. Mr. Marron's opinion on deferred annuity sales practices targeting the elderly has often been sought by major financial news organizations and publications such as Forbes, the Wall Street Journal, the Kiplinger's Retirement Report, CNN and FOX News affiliates. In addition, he has devoted significant energy and time educating seniors and senior citizen service providers, legislators, and various non-profits (including Elder Law & Advocacy) about deferred annuity sales practices targeting the elderly. Mr. Marron had numerous speaking engagements at both FAST (Fiduciary Abuse Specialist Team) which is an organization devoted to the detection of, prevention and prosecution of elder financial abuse, Adult Protective Services, and Elder Law & Advocacy, a non-profit dedicated to assisting seniors who have been the victims of financial fraud. He has litigated hundreds of lawsuits and arbitrations against major corporations, such as Shell Oil, Citigroup, Wells Fargo, Morgan Stanley and Merrill Lynch. In recent years, Mr. Marron has devoted almost all of his practice to the area of false and misleading labeling of food, dietary supplements and over-the-counter products. Skye Resendes Ms. Resendes has been working in the legal field for over 20 years. Prior to attending law school, she worked as a judicial secretary in the San Diego Superior Court for approximately 6 years, and as a legal assistant at large and mid-sized San Diego firms (such as DLA Piper f/k/a Gray Cary Ware & Freidenrich, and Best, Best & Krieger) for over 15 years. Ms. Resendes is a recipient of the prestigious, national Burton Award for Excellence in Legal Writing, for her published student note on the federal Food, Drug and Cosmetic Act, 32 T. Jefferson L. Rev. 95 (Fall 2009), and graduated from law school summa cum laude in May 2011. Ms. Resendes clerked for the Honorable Jeffrey B. Barton of the San Diego Superior Court and was a Jefferson Fellow Research Assistant during law school. She has received twelve Witkin Awards for Legal Excellence, a national Inns of Court Outstanding Program Award and was editor of Thomas Jefferson Law Review for three years. Her recent briefing in another homeopathic drug false advertising case led to a favorable decision on behalf of the firm’s clients in the face of the recent 9th Circuit decision in Mazza v. American Honda. See Allen v. Hyland’s, Inc., No. CV 12–01150 DMG (MANx), 2012 WL 1656750 (C.D. Cal. May 2, 2012). To our

Exhibit 1, Page 2


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knowledge, the Allen decision is one of only two post-Mazza decisions interpreting that case favorably to plaintiffs. See id. The second favorable decision was in another case in which my firm was co-counsel: Bruno v. Eckhart Corp. (Quten), 2012 U.S. Dist. LEXIS 30873 (C.D. Cal. Mar. 6, 2012), which settled favorably on the eve of trial and was granted final approval on March 14, 2013. Ms. Resendes has lectured on the Food, Drug, and Cosmetic Act and false advertising on behalf of Harris Martin in a CLE-approved course. Since joining my firm in November of 2011, Ms. Resendes has dedicated her practice to the prosecution of plaintiff-side consumer cases. She is a member of the State Bar of California, the Southern, Central and Northern Districts of California, and the Ninth Circuit Court of Appeals. Alexis Wood Ms. Wood graduated cum laude from California Western School of Law in 2009, where she was the recipient of the Dean’s Merit Scholarship for Ethnic & Cultural Diversity and also Creative Problem Solving Scholarships. In addition, during law school, Ms. Wood was the President of the Elder, Child and Family Law Society and participated in the study abroad program on international and comparative human rights law in Galway, Ireland. Ms. Wood interned for the Alternate Public Defender during law school as well as held a judicial externship with the San Diego Superior Court. Upon graduation, Ms. Wood obtained her Nevada Bar license and worked at the law firm Alverson Taylor Mortensen & Sanders in Las Vegas, Nevada where she specialized in medical malpractice. Ms. Wood then obtained her license to practice law in California in 2010 and worked at the bankruptcy firm Pite Duncan, LLP in San Diego, California in which she represented financial institutions in bankruptcy proceedings. Ms. Wood additionally worked for the national law firm Gordon & Rees, LLP as an associate attorney in the professional liability defense and tort & product liability practice groups. Ms. Wood joined the Law Office of Ronald Marron in September of 2012 and has dedicated her practice to consumer advocacy. She is additionally a foster youth advocate with Voices for Children. Kas L. Gallucci Ms. Gallucci graduated cum laude from California Western School of Law in 2012, where she ranked in the top 12% of her graduating class and was listed on the Dean’s Honor List for four terms. During law school, Ms. Gallucci received the highest grade in her Legal Skills and Advanced Legal Research classes. She also participated in the Capitals of Europe Summer Study Abroad Program, where Honorable Samuel A. Alito, Jr. was a Distinguished Guest Jurist. Ms. Gallucci has worked for my firm with a number of years’ experience in consumer fraud cases and is currently prosecuting violations of the Telephone Consumer Protection Act and regularly assists with the firm’s food, drug and cosmetic cases. William B. Richards Jr. Mr. Richards has a track record of distinguished academic excellence and legal experience, acquired through working for a number of small San Diego law firms and recognized

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“Super Lawyers,” including Lisa Damiani of Damiani Law Group, APC and Matthew Butler of The Butler Firm, APC. While employed with Damiani Law Group, APC, Mr. Richards assisted with various employment and criminal law related matters. Subsequent positions with The McMillan Law Firm, APC, followed by The Butler Firm, APC further enhanced his proficiency in employment/labor law and business litigation at both the state and federal levels, including individual and class actions. After earning his B.S. in Business Administration (Management) from San Diego State University, Mr. Richards graduated magna cum laude from Thomas Jefferson School of Law, ranking in the top 9% of his graduating class and making either the Honor Roll or Distinguished Honor Roll list every semester. While attending law school, Mr. Richards was named a Jefferson Fellow and received the highest grade in his Civil Procedure II and Jurisprudence courses, earning him the Witkin Award for Academic Excellence, CALI Excellence for the Future Award, and Jefferson Medal for both courses. To further hone his complex legal research and writing skills, Mr. Richards served as an editor for the Thomas Jefferson Law Review after writing a Student Note titled: Fool Me Once: The Inherent Unconstitutionality of Compelling DNA Abandonment Through Deceit, exploring the Fourth Amendment implications of state-sanctioned warrantless DNA collection and analysis by employing deceit to induce DNA “abandonment.” Mr. Richards was also elected to the Student Bar Association and its Community Events Committee; served as a Teaching Assistant for a Federal Rules of Evidence course for three consecutive semesters; interned for the San Diego Office of the Primary Public Defender; and attended Pepperdine University School of Law for a winter intersession program. After graduating law school, Mr. Richards obtained his California Bar license, California Real Estate Salesperson license, and worked for several plaintiff-oriented law firms specializing in employment/labor law and business litigation. Mr. Richards now dedicates his practice to consumer advocacy as an associate with The Law Offices of Ronald A. Marron, APLC. Mike Houchin, Law Clerk Mr. Houchin is a third-year law student at Thomas Jefferson School of Law, where he ranks in the top 6% of his class and was listed on the Honor Roll for five semesters. During law school, Mr. Houchin has received three Witkin Awards for highest grade achieved in his Legal Writing II, Constitutional Law I, and California Civil Procedure courses. He also serves as an editor on the Thomas Jefferson Law Review and helped prepare a student Note for publication during the spring 2014 semester. Mr. Houchin has worked for the Law Offices of Ronald A. Marron as a law clerk for close to two years and has assisted its attorneys with prosecuting class action lawsuits involving the Telephone Consumer Protection Act and the California Consumers Legal Remedies Act. Support Staff The Marron Firm also employs a number of support staff, including law clerks, paralegals, legal assistants, and other support staff.

Exhibit 1, Page 4


5

EXAMPLES OF MARRON FIRM’S SUCCESSES ON BEHALF OF CONSUMERS Burton v. Ganeden Biotech, Inc., No. 3:11-cv-01471-W-NLS (S.D. Cal.) Action alleging false and deceptive advertising of dietary supplement. On March 13, 2012, my firm settled the case for $900,000 in a common fund plus injunctive relief in the form of labeling changes. Final approval was granted on October 5, 2012. Carr v. Tadin, Inc., No. 3:12-cv-03040-JLS-JMA (S.D. Cal.) An injunctive relief class action settlement, requiring manufacturer of diet teas and other health supplements to re-label their products to avoid alleged consumer confusion, was filed in January 2014 before the Honorable Janis L. Sammartino. The Marron Firm was certified as class counsel and the classwide settlement was granted final approval on December 5, 2014. Clark v. National Western Life Insurance Co., No. BC321681 (L.A. Co. Super. Ct.) Class action involving allegations of elder financial abuse and fraud. After litigating the case for well over six years, including Mr. Marron being appointed class counsel, the case resulted in a settlement of approximately $25 million for consumers. Gallucci v. Boiron, Inc., No. 3:11-cv-2039-JAH (S.D. Cal.) The firm was class counsel for consumers of homeopathic drug products in an action against Boiron, Inc., the largest foreign manufacturer of homeopathic products in the United States, involving allegations that Boiron’s labeling and advertising were false and misleading. We obtained a nation-wide settlement for the class which provided injunctive relief and restitution from a common fund of $5 million. The settlement was upheld by the Ninth Circuit on February 214, 2015. The case also set an industry standard for homeopathic drug labeling. See www.homeopathicpharmacy.org/pdf/ press/AAHP_Advertising_ Guidelines.pdf. Hohenberg v. Ferrero U.S.A., Inc., No. 3:11-CV-00205-H-CAB (S.D. Cal.) This case involved false and deceptive advertising of sugary food product as a healthy breakfast food for children. After successfully defeating a motion to dismiss, Hohenberg, 2011 U.S. Dist. LEXIS 38471, at *6 (S.D. Cal. Mar. 22, 2011), the Hon. Marilyn Huff certified a class on November 15, 2011, resulting in a published decision, In re Ferrero Litig., 278 F.R.D. 552 (S.D. Cal. 2011). A final settlement consisting of injunctive relief labeling and marketing changes, plus a $550,000 common fund for monetary relief to the class was finally approved on July 9, 2012. In re Quaker Oats Labeling Litigation, No. 5:10-cv-00502-RS (N.D. Cal.) False and deceptive advertising case concerning Instant Oats, Chewy Granola Bars and Oatmeal To Go products, including use of partially hydrogenated vegetable oil while also representing the products as healthy snacks. An injunctive relief class action settlement was granted preliminary approval on February 2, 2014, with my firm being appointed Class Counsel. On July 29, 2014, the court granted the settlement final approval.

Exhibit 1, Page 5


6

In re Leaf123 (Augustine v. Natrol), Case No. 14-114466 (U.S. Bankruptcy Court for the District of Delaware) This action involved allegations of false and deceptive advertising of Senna Leaf tea products as dietary aids. Plaintiff alleged Senna Leaf is nothing more than a stimulant laxative which does not aid diets but hinders them. After a strong showing in the district court, and pursuant to other actions against the defendant manufacturer, the defendant filed for bankruptcy. The Marron Firm followed defendant to the federal bankruptcy court and retained bankruptcy counsel to assist. After a full day mediation before a retired federal jurist, and months of follow up negotiations, a settlement was reached. On August 7, 2015, in In re Leaf123 (adversary proceeding of Augustine v. Natrol), , the Hon. Brendan L. Shannon approved an injunctive relief-only settlement, finding it “fair, reasonable and adequate.” In re Qunol CoQ10 Liquid Labeling Litigation, No. 8:11-cv-173-DOC (C.D. Cal.) This case involved false and deceptive consumer advertising of a dietary supplement. My firm was appointed class counsel and successfully defeated defendants’ motion to decertify the class following the Ninth Circuit’s decision in Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012). See Bruno v. Eckhart Corp., 2012 U.S. Dist. LEXIS 30873 (C.D. Cal. Mar. 6, 2012); see also Bruno v. Quten Research Inst., LLC, 2011 U.S. Dist. LEXIS 132323 (C.D. Cal. Nov. 14, 2011). The case settled on the eve of trial (originally scheduled for October 2, 2012) for cash payments to the class and injunctive relief. Iorio v. Asset Marketing Systems, Inc., No. 05cv00633-IEG-CAB (S.D. Cal.) This action involved allegations of elder financial abuse and fraud. Mr. Marron was appointed class counsel on August 24, 2006, and certified a class on July 25, 2006. After nearly six years of intensive litigation, including “challenges to the pleadings, class certification, class decertification, summary judgment,…motion to modify the class definition, motion to strike various remedies in the prayer for relief, and motion to decertify the Class’ punitive damages claim,” plus three petitions to the Ninth Circuit, attempting to challenge the Rule 23(f) class certification, a settlement valued at $110 million was reached and approved on March 3, 2011. Iorio, Dkt. No. 480. In granting final approval to the settlement, the Court noted that class counsel were “highly experienced trial lawyers with specialized knowledge in insurance and annuity litigation, and complex class action litigation generally” and “capable of properly assessing the risks, expenses, and duration of continued litigation, including at trial and on appeal.” Id. at 7:18-22. Martinez v. Toll Brothers, No. 09-cv-00937-CDJ (E.D. Penn.) Shareholder derivative case alleging breach of fiduciary duty, corporate waste, unjust enrichment and insider trading, filed derivatively on behalf of Toll Brothers and against individual corporate officers. Under a joint prosecution agreement, this action was litigated along with other consolidated and related actions against Toll Brothers in a case styled Pfeiffer v. Toll Brothers, No. 4140-VCL in the Delaware Chancery Court. After extensive

Exhibit 1, Page 6


7

litigation, the case settled in September 2012 for $16.25 million in reimbursement to the corporation. Mason v. Heel, Inc., No. 3:12-cv-3056-GPC-KSC (S.D. Cal.) Action alleging false and deceptive advertising of over-the-counter homeopathic drugs. On October 31, 2013, the Hon. Gonzalo P. Curiel granted preliminary approval to a nationwide class settlement of $1 million in monetary relief for the class plus four significant forms of injunctive relief. Final approval was granted on March 13, 2014. See Mason v. Heel, Inc., 3:12-CV-03056-GPC, 2014 WL 1664271 (S.D. Cal. Mar. 13, 2014). Nigh v. Humphreys Pharmacal, Inc., No. 3:12-cv-02714-MMA-DHB (S.D. Cal.) Case involving allegations of false and deceptive advertising of homeopathic over-the-counter drugs as effective when they allegedly were not. On October 23, 2013, a global settlement was granted final approved by the Hon. Michael M. Anello, involving a common fund of $1.4 million plus five significant forms of injunctive relief for consumers. Perry v. Truong Giang Corp., Case No. BC58568 (Los Angeles Superior Court) The plaintiff in this case alleged defendant’s Senna Leaf teas, advertised as diet aids, were falsely or misleadingly advertised to consumers. After an all-day mediation, a class wide settlement was reached. In granting final approval to the settlement on August 5, 2015, the Hon. Kenneth Freeman noted that class counsel’s hourly rates were “reasonable” and stated the Marron Firm’s lawyers used skill in securing the positive results achieved on behalf of the class. The court also noted “this case involved difficult legal issues because federal and state laws governing dietary supplements are a gray area, . . . the attorneys displayed skill in researching and settling this case, which provides a benefit not only to Class Members but to the public at large . . . .” Peterman v. North American Co. for Life & Health Insurance, No. BC357194, (L.A. Co. Super. Ct.), involved allegations of elder financial abuse. This case was litigated for over four years and achieved a settlement of approximately $60 million for consumers. Vaccarino v. Midland Nat’l Life Ins. Co., No. 2:11-cv-05858-CAS(MANx) (C.D. Cal) This action involved allegations of elder financial abuse and fraud. On June 17, 2013, the Honorable Christina A. Snyder appointed the Marron Firm as Class Counsel, and on February 3, 2014, the Court certified a class of annuities purchasers under various theories of relief, including breach of contract and the UCL. On September 22, 2014, the court granted final approval to a class action settlement that achieved a settlement of approximately $5.55 million for consumers, including cy pres relief to the Congress of California Seniors.

Exhibit 1, Page 7


8

CURRENT APPOINTMENTS AS CLASS COUNSEL Allen v. Hyland’s, Inc., No. 12-CV-1150 DMG (MANx) Nationwide class of consumers certified for false and deceptive advertising against largest U.S.-based manufacturer of homeopathic drugs, involving ten over-the-counter homeopathic drug products. A nationwide class was certified after two years of vigorous litigation, including Marron firm counsel surviving against two motions to dismiss, a motion for judgment on the pleadings, and a motion to strike punitive damages. See --- F.R.D. ---, 2014 WL 3819713 (C.D. Cal. Aug. 1, 2014). Allen v. Similasan Corp., No. 12-cv-376 BAS (JLB) A California class of consumers alleging false and deceptive advertising of six homeopathic drugs was certified by the Honorable Cynthia A. Bashant on March 30, 2015. Judge Bashant also denied summary judgment on the class’ claims that the drug products were not effective, as advertised, and certified claims under California’s Consumers Legal Remedies Act, Unfair Competition Law, False Advertising Law, breach of express and implied warranty, and violation of the federal Magnuson-Moss Warranty Act. Tabares v. Equitrust Life Ins. Co., No. BC390195 (L.A. Co. Super. Ct.). This case involves allegations of elder financial fraud. Mr. Marron obtained a class certification order and was appointed Class Counsel on July 6, 2011, and has successfully opposed numerous attempts to decertify the class, including a petition to the California Supreme Court. OTHER ACTIONS RESULTING IN BENEFITS TO CONSUMERS Henderson v. The J.M. Smucker Company, No. 2:10-cv-4524-GHK (C.D. Cal.) This action was the catalyst forcing the defendant to reformulate a children’s frozen food production to remove trans fat. On June 19, 2013, the Honorable George H. King held the firm’s client was a prevailing Private Attorney General and entitled to her costs and attorneys’ fees. Red v. Kraft Foods Global, Inc., No. 2:10-1028-GW (C.D. Cal) The firm represents consumers in their action against one of the world’s largest food companies and was appointed lead counsel in a consolidated putative class action. Though not fully settled, the action has resulted in a permanent injunction barring the use of deceptive health claims on Nabisco packaged foods containing artificial trans fat, and the Court has also granted an interim award of attorney fees.

Exhibit 1, Page 8


EXHIBIT 2


Firm Name

Principal or Largest Office

Average fill-time equivalent Attorneys

Firmwide Average Billing Rate

Firmwide Median Billing

Partner Billing Rate: High

Partner Billing Rate: Low

Partner Billing Rate: Average

Partner Billing Rate: Median

Associate Billing Rate: High

Associate Billing Rate: Low

Associate Billing Rate: Average

Associate Billing Rate: Median

Best Best & Krieger

Riverside, CA

195 $358 $360 $575 ($550)

$275 ($310)

$417 $420 $375 ($395)

$205 ($225)

$265 $240

Knobbe, Martens, Olson & Bear

Irvine, CA

268 $439 ($432)

$415 ($415)

$735 ($710)

$415 ($395)

$525 ($511)

$500 ($485)

$495 ($450)

$295 ($285)

$346 ($322)

$345 ($335)

Manatt, Phelps & Phillips

Los Angeles, CA

322 $602 ($568)

$620 ($590)

$850 ($850)

$540 ($525)

$676 ($651)

$670 ($650)

$550 ($525)

$215 ($200)

$464 ($405)

$500 ($410)

Sheppard, Mullin, Ritcher & Hampton

Los Angeles, CA

465 $860 ($820)

$505 ($495)

$635 ($620)

$275 ($270)

* Billing Rates in RED are from the 2010 NLJ Billing Survey

Exhibit 2, Page 9


Firm Name

Principal or Largest Office

Average fill-time equivalent Attorneys

Firmwide Average Billing Rate

Firmwide Median Billing

Partner Billing Rate: High

Partner Billing Rate: Low

Partner Billing Rate: Average

Partner Billing Rate: Median

Associate Billing Rate: High

Associate Billing Rate: Low

Associate Billing Rate: Average

Associate Billing Rate: Median

Best Best & Krieger

Riverside, CA

195 $358 $360 $575 $275 $417 $420 $375 $205 $265 $240

Knobbe, Martens, Olson & Bear

Irvine, CA

268 $439 $415 $735 $415 $525 $500 $495 $295 $346 $345

Manatt, Phelps & Phillips

Los Angeles, CA

322 $602 $620 $850 $540 $676 $670 $550 $215 $464 $500

Sheppard, Mullin, Ritcher & Hampton

Los Angeles, CA

465 $860 $505 $635 $275

Exhibit 2, Page 10


Exhibit 2, Page 11


Exhibit 2, Page 12


Exhibit 2, Page 13


Exhibit 2, Page 14


Exhibit 2, Page 15


Exhibit 2, Page 16


Exhibit 2, Page 17


Exhibit 2, Page 18


EXHIBIT 3


Report on the State of the Legal Market2014Exhibit 3, Page19


The Center for the Study of the Legal Profession at the Georgetown

University Law Center and Thomson Reuters Peer Monitor are pleased

to present this 2014 Report setting out our views of the dominant trends

impacting the legal market in 2013 and key issues likely to influence the

market in 2014 and beyond. 1

Introduction – Is Bigger Always Better?There�is�a�famous�scene�in�the�1975�award-winning�Steven�Spielberg

movie�Jaws,�when�the�Amity�Police�Chief�Martin�Brody�(played�by�Roy

Scheider)�first�catches�a�glimpse�of�the�25-foot�long�great�white�shark�that

has�been�terrorizing�his�community�and�that�he�is�then�chasing�in�a�small

fishing�boat.��Stunned�by�what�he�has�seen,�Brody�backs�into�the�cabin�of

the�boat�and�grimly�remarks�to�Quint,�the�seasoned�shark�hunter,�"You're

gonna�need�a�bigger�boat."

In�an�admittedly�different�context,�one�could�argue�that�this�same�advice

has�been�the�most�prominent�driver�of�law�firm�strategies�over�the�past

decade�or�so.��In�large�measure,�most�law�firm�leaders�--�both�before

and�since�the�Great�Recession�--�have�appeared�fixated�on�building�"a

bigger�boat"�as�the�keystone�of�their�vision�for�moving�their�firms�for-

ward.��Driven�by�a�desire�to�achieve�perceived�economies�of�scale,�to

better�serve�client�needs,�to�mirror�the�actions�of�competitors,�or�to�im-

prove�their�rankings�in�industry�statistics,�law�firms�have�pursued�ag-

gressive�growth�strategies�--�before�2008,�through�ever�increasing�hiring

quotas�and,�since�2008,�primarily�through�lateral�hiring�and�mergers.2

The�past�year�saw�an�overall�continuation�of�this�trend,�although�some

firms�have�begun�to�retrench.��According�to�The National Law Journal,

the�350�largest�U.S.�law�firms�grew�by�only�1.1�percent�during�2012,

as�compared�to�1.7�percent�growth�in�2011.��And,�interestingly,�some

140�firms�on�the�NLJ�350�list�(or�about�40�percent�of�the�group)�actu-

ally�shrank�in�size�as�compared�to�the�prior�year.3� At�the�same�time,

2013�was�a�record�year�for�law�firm�mergers,�and�lateral�acquisitions

continued�apace.

By�early�December,�the�number�of�reported�mergers�involving�U.S.�law

firms�(91)�had�already�surpassed�the�previous�record�(70)�set�in�2008,

and�it�was�widely�expected�that�the�year-end�total�would�be�even�higher.4

1��The�Center�for�the�Study�of�the�Legal�Profession�and�Thomson�Reuters�Peer�Monitor�gratefully�acknowledge�the

participation�of�the�following�persons�in�the�preparation�of�this�Report:��from�the�Center�for�the�Study�of�the�Legal

Profession�--�James�W.�Jones,�Senior�Fellow�(lead�author)�and�Milton�C.�Regan,�Jr.,�Professor�of�Law�and�Co-Direc-

tor;�and�from�Thomson�Reuters�Peer�Monitor�--�Mark�Medice,�Senior�Director�and�Jennifer�Roberts,�Data�Analyst.

2��The�dramatic�growth�in�the�size�of�law�firms�has�been�a�major�feature�of�the�legal�market�for�the�past�50�years.��In

2012,�The National Law Journal's NLJ�350�list�showed�that�the�350th�largest�law�firm�in�the�U.S.�had��112�lawyers.

That�compared�starkly�to�1965,�when�the�largest�law�firm�in�the�U.S.�had�only�125�lawyers.

3��"The�NLJ�350,"�The National Law Journal,�July�6,�2013.

4��"Big�Firm�Tie-Ups�Abroad�Keep�2013�Merger�Mania�Alive,"�The AmLaw Daily,�Dec.�12,�2013.��The�article�also�

describes�high�levels�of�merger�activity�in�the�United�Kingdom,�Canada,�and�South�Africa.

1

Exhibit 3, Page20


While�year-end�figures�on�lateral�moves�among�U.S.�law�firms�are�not�yet�available,�it

is�expected�that�they�will�reflect�a�continuation�of�the�high�level�of�lateral�partner�activ-

ity�that�we�have�seen�in�the�market�in�recent�years.5 In�addition,�in�a�recent�survey�of

leaders�of�AmLaw�200�firms,�The American Lawyer found�that�a�whopping�80�percent

of�respondents�expected�to�make�lateral�partner�hires�in�litigation�related�practice

areas�during�2014.6

Against�this�background,�this�report�will�examine�the�continuing�dominant�role�that

growth�appears�to�play�in�the�strategic�thinking�of�most�U.S.�law�firms.��We�will�ask

whether�building�"a�bigger�boat"�is�always�the�right�strategy�for�firms�and�will�consider

some�of�the�challenges�that�growth�--�particularly�rapid�growth�--�poses�for�law�firm

leaders.��Finally,�we�will�suggest�other�areas�of�focus�that�we�believe�may�be�far�more

relevant�to�the�success�of�law�firms�in�the�future.��The�starting�place�for�our�inquiry,

however,�must�be�a�look�at�the�state�of�today's�legal�market�and�the�ways�in�which

competition�in�the�market�has�changed�fundamentally�since�2008.�

Current State of the Legal Market -By the Numbers

By�most�indicators,�2013�was�another�flat�year�for�economic�growth�in�U.S.�law�firms,

with�continuing�sluggish�demand�growth,�persistent�challenges�of�low�productivity,�on-

going�client�pushback�on�rate�increases,�and�a�continuing�struggle�to�maintain�disci-

pline�on�expenses.��Although�the�performance�of�individual�firms�obviously�differed,�with

some�performing�well�above�market�averages,�on�the�whole�the�financial�performance

of�the�U.S.�legal�market�remained�fairly�lackluster�during�the�year.�

Demand GrowthDemand�for�legal�services�in�2013�declined�slightly�across�the�industry,�as�tracked�in

the�Thomson�Reuters�Peer�Monitor�data�base.7� As�shown�in�Chart�1�below�(which

tracks�performance�on�a�year-to-date�basis�through�November),�after�a�sharp�decline

in�the�first�quarter,8 demand�growth�recovered�somewhat�ending�at�a�slightly�negative

level�of�-1.1�percent�for�the�12-month�period�measured.��While�a�clear�improvement

over�the�collapse�in�demand�growth�seen�in�2009�(when�growth�hit�a�negative�5.1

percent�level),�the�current�demand�growth�rate�has�been�essentially�flat�to�somewhat

negative�for�the�past�three�years.

5��In�February�2013,�in�its�annual�Lateral�Report,�The American Lawyer noted�that�lateral�partner�moves�among�AmLaw�200

firms�jumped�9.7�percent�over�the�prior�year�for�the�12-month�period�ending�September�30,�2012,�and�33.6�percent�over�a

similar�period�in�2010.��Even�taking�into�account�the�fact�that�280�of�the�2,691�lateral�partner�moves�in�2012�were�attributa-

ble�to�the�failure�of�a�single�firm�(Dewey�&�LeBoeuf),�the�increased�level�of�activity�was�noteworthy.��"The�2013�Lateral�Re-

port,"�The American Lawyer,�Mar.�1,�2013.

6��Richard�Lloyd,�"Firm�Leaders�Survey:�Slow�Growth�on�Tap�for�2014,"�The American Lawyer, Dec.�2,�2013.

7��Thomson�Reuters�Peer�Monitor�data�("Peer�Monitor�data")�are�based�on�reported�results�from�130�law�firms,�including�53

AmLaw�100�firms,�38�AmLaw�2nd�100�firms,�and�39�additional�firms.��For�present�purposes,�"demand�for�legal�services"�is

viewed�as�equivalent�to�total�billable�hours�recorded�by�firms�included�in�a�particular�data�base.

8��It�is�worth�noting�that�the�sharp�decline�in�demand�growth�during�the�first�quarter�of�2013�followed�an�upswing�in�demand�in

the�fourth�quarter�of�2012,�an�increase�at�least�partly�attributable�to�the�desire�of�many�clients�to�close�various�corporate

transactions�in�advance�of�new�tax�rules�that�took�effect�on�January�1,�2013.

2

Exhibit 3, Page21


Chart 1 - Growth in Demand for Legal Services

As�shown�in�Chart�2�below,�among�various�practice�areas,�when�measured�on�a�2013

year-to-date�comparative�basis,�real�estate�showed�the�highest�demand�growth,�albeit�at

a�modest�1.2�percent�level,�followed�by�labor�and�employment�at�0.4�percent.��Corporate

practices�were�essentially�flat,�and�all�other�practices�saw�declines.�

Chart 2 - Demand Growth by Practices

ProductivityDuring�2013,�the�number�of�lawyers�in�U.S.�firms�grew�by�about�1�percent.��Given�the

slight�decline�in�overall�demand�growth,�it�is�not�surprising,�therefore,�that�productivity

--�defined�as�the�total�number�of�billable�hours�recorded�by�a�firm�divided�by�the�total

number�of�lawyers�in�the�firm�--�remained�essentially�flat.�

3

Exhibit 3, Page22


As�can�be�seen�in�Chart�3�below,�this�continues�a�trend�that�we�have�seen�for�the�last

several�years.9 What�remains�significant,�however,�is�that�current�levels�of�productiv-

ity�are�still�over�100�billable�hours�per�timekeeper�per�year�lower�than�in�the�pre-re-

cession�period�in�2007.

Moreover,�2013�saw�a�continuation�of�the�familiar�pattern�of�associate�billable

hours�exceeding�those�of�equity�partners�by�some�100-120�hours�per�year,�and�eq-

uity�partner�billable�hours�exceeding�those�of�other�categories�of�lawyers�(including

non-equity�partners,�of�counsel,�senior�counsel,�special�counsel,�etc.)�by�some�300

hours�per�year.��All�of�this�as�shown�in�Chart�3�evidences�an�ongoing�problem�of

under�productivity�in�the�latter�categories�of�lawyers.

Chart 3 - Productivity (Hours per Lawyer) by Category

Rates and RealizationAs�has�been�the�case�since�the�beginning�of�the�Great�Recession�in�2008,�firms�con-

tinued�to�raise�their�rates�during�2013,�albeit�at�a�fairly�modest�level�of�3.5�percent

(well�below�the�6-8�percent�annual�increases�typical�in�the�pre-2008�period).��And,�as

has�also�been�the�case�for�the�past�five�years,�clients�continued�to�push�back�on�rate

increases,�keeping�pressure�on�the�realization�rates�that�firms�were�able�to�achieve.

Chart�4�below�shows�the�rate�progression�as�tracked�in�the�Peer�Monitor�data�base

from�the�third�quarter�of�2010�through�November�2013.��As�can�be�seen,�over�this

three-year�period,�firms�increased�their�standard�rates�by�11�percent�from�an�average

of�$429�per�hour�to�$476�(or�an�average�increase�of�about�3.7�percent�per�year).��At

the�same�time,�however,�the�collected�rates�actually�achieved�by�firms�increased�by

only�8.8�percent�from�an�average�of�$363�per�hour�to�$395�(or�an�average�increase�of

2.9�percent).��

9��There�was�an�uptick�in�productivity�during�October�2013,�but�--�based�on�data�from�prior�years�--�this�appears�to�be�a�fairly

typical�seasonal�anomaly�with�October�hours�generally�being�counterbalanced�by�lower�billable�hours�for�the�remainder�of

the�fourth�quarter.

4

Exhibit 3, Page23


Skye

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Chart 4 - Rate Progression

These�results,�which�reflect�continuing�client�resistance�to�firm�rate�hikes,�are�also�re-

flected�in�firm�realization�rates�over�the�same�period.��As�can�be�seen�in�Chart�5

below,�over�the�three-year�period�from�the�third�quarter�of�2010�through�the�third

quarter�of�2013,�realization�rates�--�i.e.,�the�percentages�of�work�performed�at�a�firm's

standard�rates�that�are�actually�billed�to�and�collected�from�clients�--�have�continued

to�decline.��Billing�realization�dropped�from�89.12�percent�to�86.74�percent,�while�col-

lected�realization�dropped�from�85.32�percent�to�83.49�percent�(a�rate�that�is�slightly

lower�than�the�record�low�rate�of�83.6�percent�seen�in�2012).��What�this�means,�of

course,�is�that�--�on�average�--�law�firms�are�collecting�only�83.5�cents�for�every�$1.00

of�standard�time�they�record.��To�understand�the�full�impact,�one�need�only�consider

that�at�the�end�of�2007,�the�collected�realization�rate�was�at�the�92�percent�level.

Chart 5 - Billed and Collected Rates against Standard

5

Exhibit 3, Page24


Skye

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ExpensesOne�of�the�challenges�of�managing�in�a�slow�growth�economy�is�keeping�a�tight�rein�on

expenses�--�both�direct�and�indirect.10 Prior�to�the�onset�of�the�economic�downturn�in

2008,�by�any�rational�measure�expenses�in�law�firms�were�largely�out�of�control.��In�the

fourth�quarter�of�2007,�for�example,�direct�expenses�of�U.S.�law�firms�(measured�on�a

rolling�12-month�year-over-�year�percentage�change�basis)�were�growing�at�an�average

annual�rate�of�18�percent,�while�indirect�expenses�were�growing�at�10.9�percent.��With

the�beginning�of�the�recession�in�2008,�almost�all�firms�slashed�expenses�across�the

board,�hitting�negative�growth�rates�in�the�second�quarter�of�2010�of�-8.2�percent�for�di-

rect�expenses�and�-2.9�percent�for�indirect.��Those�reduced�levels�of�spending�--�induced

primarily�by�panicked�reactions�to�the�economic�crisis�--�were�not�sustainable�over�the

long�term,�and�expenses�began�to�rise�again�toward�the�end�of�2010.��Since�that�time,�as

shown�in�Chart�6�below,�although�expense�growth�has�increased�--�in�2013�up�to�2.1

percent�for�both�direct�and�indirect�expenses�--�firms�have�done�a�reasonably�good�job�of

managing�their�expenses�effectively.��

Chart 6 - Expense Growth

Profits per PartnerThe�continuing�combination�of�sluggish�demand�growth,�constrained�productivity,�and

low�realization�rates�have�combined�to�keep�profits�per�partner�("PPP")�relatively�flat�over

the�past�three�years.��As�shown�on�Chart�7�below,�while�PPP�in�201311 was�up�slightly�for

all�categories�of�firms�across�the�market,�the�increase�over�2012�was�quite�modest�and,

at�least�in�the�case�of�AmLaw�100�and�mid-sized�firms,�lower�than�levels�in�2011.12

10��Direct�expenses�refer�to�those�expenses�related�to�fee�earners�(primarily�the�compensation�and�benefits�costs�of�lawyers

and�other�timekeepers).��Indirect�expenses�refer�to�all�other�expenses�of�the�firm�(including�occupancy�costs,�technology,

administrative�staff,�etc.).

11��The�PPP�shown�on�Chart�7�for�2013�is�based�on�YTD�October�numbers.

12��It�should�be�noted�that�Peer�Monitor�includes�in�its�"profits�per�partner"�number�all lawyers�listed�by�firms�as�"partners"

(whether�equity�or�non-equity�or�income).��This�approach�facilitates�easier�comparisons�between�firms�than�a�"profits�per

equity�partner"�measure�and�eliminates�questions�about�how�firms�define�"equity�partners."

6

Exhibit 3, Page25


Chart 7 - Profits per Partner

Changed Basis of Competition in the Legal Market

The�current�trends�described�above�reflect�fundamental�changes�in�the�nature�of

competition�in�the�legal�market,�changes�that�have�been�increasingly�evident�since

2008.��Although�many�factors�have�contributed�to�these�changes,�some�of�them�unre-

lated�to�the�economic�downturn,13 the�onset�of�the�Great�Recession�accelerated�(and,

to�some�extent,�exacerbated)�the�pace�of�change�across�the�market.

The�first�and�perhaps�most�obvious�change�is�that�the�legal�market�has�become

much�more�intensely�competitive�than�it�was�five�years�ago.��This�is�hardly�surprising

since,�for�the�past�five�years,�the�supply�of�legal�services�has�significantly�exceeded

demand,�as�reflected�in�the�ongoing�struggle�of�firms�to�maintain�prior�levels�of�pro-

ductivity.��In�a�market�in�which�supply�exceeds�demand,�the�only�way�in�which�one

supplier�can�expand�its�market�share�is�by�taking�business�from�others,�with�a�result-

ing�increase�in�overall�competition.��And�that�is�precisely�what�has�happened�in�the

legal�market�since�2008.

A�second�and�perhaps�more�lasting�change�is�that�the�market�for�legal�services�has

shifted�from�a�sellers'�to�a�buyers'�market,�a�shift�that�has�serious�long-term�implica-

tions�for�the�leaders�of�all�law�firms.��Prior�to�2008,�the�fundamental�decisions�about

how�legal�services�were�delivered�--�the�myriad�decisions�about�how�matters�were�or-

ganized,�scheduled,�and�staffed;�how�strategies�and�tactics�were�implemented;�and

how�lawyers�charged�for�their�services�--�were�all�essentially�made�by�law�firms�and

not�by�their�clients.��This�is�not�to�suggest�that�clients�were�not�consulted�or�that,�from

time�to�time,�clients�didn't�push�back,�but�by�and�large�all�of�the�key�decisions�relating

to�a�representation�were�made�by�outside�lawyers.��

13� These�unrelated�changes�include�factors�like�the�growing�availability�of�public�information�about�the�legal�market,�the�in-

exorable�drive�toward�commoditization�of�legal�services�enhanced�by�the�growth�of�enabling�technologies,�the�emer-

gence�of�non-traditional�service�providers,�the�changing�role�of�in-house�corporate�counsel,�the�impact�of�globalization,

and�the�collapse�of�an�unsustainable�law�firm�business�and�economic�model�based�largely�on�the�ability�to�raise�rates�6-

8�percent�a�year.��7

Exhibit 3, Page26


8

All of that changed beginning in 2008, when clients -- driven to a large extent by an eco-

nomic imperative to bring down the overall costs of legal services -- took control of all of

these key decisions. That shift, combined with the dynamic of a market in which supply

exceeds demand (as described above), placed clients in control of the relationships with

their outside law firms in ways never before seen in the legal market. And clients have

not been reluctant to exercise their new leverage.

Over the past five years, clients have talked increasingly about enhancing the "value"

they receive for the legal services they purchase,14 and it has become increasingly

clear that what they mean by "value" is efficiency, predictability, and cost effectiveness

in the delivery of legal services, quality being assumed.15 This has led many corporate

law departments to retain more work in-house thereby reducing their reliance on out-

side counsel. Indeed, the 2013 Altman Weil Chief Legal Officer Survey16 found that,

among the 207 CLO respondents, 44 percent indicated that they had shifted work to

in-house lawyers during the previous 12 months, and 30.5 percent said that they had

reduced the total amount of work sent to outside counsel.17 Moreover, some 29 per-

cent of respondents indicated that they intended to decrease their overall use of out-

side counsel in the next 12 months, and only 15 percent said they expected to increase

such use.18 Consistent with these responses, 47 percent of CLOs indicated that they

had decreased their budgets for outside counsel during 2013 (a figure that compares

to 39 percent in 2012 and 25.4 percent in 2011).19

Interestingly, the same client focus on enhanced value in the delivery of legal services

may now be evident in a subtle but potentially important shift in the allocation of business

within the legal market. In a recent survey conducted by AdvanceLaw,20 general counsel

at 88 major companies were asked about their willingness to move high stakes (though

not necessarily "bet the company") work away from "pedigreed firms" (essentially de-

fined as AmLaw 20 or Magic Circle firms) to non-pedigreed firms, assuming a 30 percent

difference in overall cost.21 Of the respondents, 74 percent indicated they would be in-

clined to use the less pedigreed firm, with only 13 percent saying they would not.22 In a

related question, respondents were asked whether, based on their own experiences,

lawyers at the most pedigreed firms were more or less responsive than their counter-

parts at other firms. Some 57 percent of respondents said that they found lawyers at

pedigreed firms less responsive, while only 11 percent said they found them more.23

Similar results were reflected in the Altman Weil CLO Survey, where 40.5 percent of re-

spondents indicated that they had shifted work to lower priced outside law firms in the

preceding 12 months.24

14 This concept was embodied in the "Value Challenge" program launched by the Association of Corporate Counsel in 2008.

See www.acc.com/valuechallenge/.

15 Obviously, corporate general counsel are concerned about the quality of legal advice they receive. Increasingly, however,

quality is viewed as the "table stakes" necessary to play in the game to begin with and not a factor for deciding which firm

should be awarded a particular piece of work. Stated differently, offering high quality legal advice is essential to getting on a

general counsel's list to begin with, but once on the list, it is likely that work will be awarded on the basis of which firm the

general counsel believes can deliver the services most efficiently, predictably, and cost effectively.

16 Alman Weil, Inc., 2013 Chief Legal Officer Survey: An Altman Weil Flash Survey, Nov. 2013 ("Altman Weil CLO

Survey").

17 Id. at p. 10.

18 Id. at p. 4.

19 Id. at p. 17.

20 AdvanceLaw is an organization that vets law firms for quality, efficiency, and client service and shares performance informa-

tion with its membership of some 90 general counsel of major global companies, including the likes of Google, Panasonic,

Nike, eBay, Oracle, Deutsche Bank, Kellogg, Yahoo, 3M, ConAgra, Nestle, and Unilever. See http://www.advancelaw.com.

21 The current cost premium for an AmLaw 20 firm relative to an AmLaw 150 or 200 firm is typically far more than 30 percent.

As of November 2013, based on Peer Monitor data, the spread between the average standard and worked rates of AmLaw

100 firms and those of AmLaw 2nd 100 firms averaged 22 percent. And, of course, the average for all AmLaw 100 firms is

significantly lower than for AmLaw 20 firms alone.

22 The survey question and results are set out at http://hbrblogs.files.wordpress.com/2013/10/badnews-biglaw_580r2.gif.

23 Id.

24 Altman Weil CLO Survey, at p. 10.

Exhibit 3, Page27


9

What these results suggest is that brand value -- in this case the brand value of the

largest and historically most prestigious firms in the legal market -- may be losing

some of its luster as increasingly savvy general counsel select outside law firms

based on considerations of price and efficiency and not on reputation alone. Further

tantalizing evidence for this conclusion is provided in the 2013 CounselLink Enter-

prise Legal Management Trends Report released in October.25 That report compared

the billings of the "Largest 50" U.S. law firms (i.e., firms with more than 750 lawyers)

with those of firms in the 200 to 500 lawyer range, the latter being defined as "Large

Enough" firms.26 The report found that three years ago, "Large Enough" firms ac-

counted for 18 percent of all of the billings in the CounselLink data base, while the

"Largest 50" firms accounted for 26 percent. In 2013, the share of "Large Enough"

firms had risen to 22 percent, while the share of the "Largest 50" firms had declined to

20 percent. 27

Looking at high fee work, the CounselLink Trends Report found a similar pattern, at

least in respect of high fee litigation matters. Based on the past three years of billing

history for litigation matters with total billings of at least $1 million, the report found that

"Large Enough" firms nearly doubled the portion of such work they received, growing

their share from 22 percent in 2010 to 41 percent in 2013. 28

Challenges of Growth as a StrategyAgainst this background, we can return to our initial question -- whether the dominant

role played by growth in the strategic thinking of most law firms continues to make

sense given the significant changes that have occurred in the legal market? The

most common justifications given for a focus on growth include (i) the desire to

achieve "economies of scale", (ii) the necessity of creating an "ever expanding pie" to

provide opportunities for younger lawyers and especially younger partners, (iii) the

need to diversify to protect a firm against cyclical downturns in specific practices, and

(iv) the requirements for a larger market footprint to better serve the needs of clients.

While there is some validity to all of these arguments, they must be balanced against

the potential problems created by growth -- particularly rapid growth.

As to the desire to achieve economies of scale, it must be noted at the outset that this

is a pecuiliar strategic objective for an industry that continues to be largely reliant on

an hourly-billing model. Economies of scale, as an economic concept, are focused on

the creation of efficiencies that allow producers to lower costs and thereby create a

competitive advantage. In the context of the legal industry, however, adding more

lawyers (all of whom bill at ever increasing hourly rates) is the antithesis of what

economies of scale are supposed to produce. Even if we assume, however, that

economies of scale may be important in the legal industry, there are limits on the

benefits that can be derived from growth.

25 CounselLink, "Enterprise Legal Management Trends Report -- 2013 Mid-Year Edition: The Rise of 'Large Enough' Law

Firms," Oct. 2013 ("CounselLink Trends Report"). This report uses data available through the CounselLink Enterprise

Legal Management platform, an e-billing system. Currently, the data base includes 2 million invoices representing more

than $10 billion in legal spend and well over 300,000 matters over the past four years.

26 The report explains that the term "Large Enough" is applied to these firms "because firms of this size generally have full-

service capabilities across a broad array of practice areas and have the capacity to appropriately staff and handle complex

and also high-volume, repetitive legal matters." CounselLink Trends Report, p.4.

27 Id. at p. 5. These figures, and others included in the CounselLink Trends Report, are based on rolling 12-month totals end-

ing on June 30 of each relevant year.

28 Id. at p. 6.

Exhibit 3, Page28


10

Observers of the legal market have commented for some time that the benefits of

scale seem to diminish once a law firm exceeds 100 lawyers or so, and that is particu-

larly true if the law firm has multiple offices.29 Moreover, a comparison of the number

of lawyers in AmLaw 200 firms and the profits per partner of such firms shows that

there is very low correlation between firm size and profitability.30 This conclusion was

recently confirmed by an analysis of Peer Monitor data for some 132 firms reporting

their financial results for 2012. These results showed a very weak relationship be-

tween profits per partner and firm size, as well as overall margin (i.e., profit as a per-

centage of revenue) and firm size. Indeed, firm size had a negative relationship with

reported margin figures. Similarly, a regression analysis using 2013 Peer Monitor data

from 130 firms showed a very low correlation between firm size and office count with

reported expenses per lawyer or with expenses as a percentage of overall firm rev-

enue.31 Additionally, whatever the potential benefits of economies of scale, the size

needed for a firm to achieve such benefits has undoubtedly been lowered in recent

years as a result of substantial improvements in technology which have allowed

smaller firms to "punch above their weight.” 32

From a strategic point of view, however, the real problem with growth in this context

is not just that economies of scale tend to diminish above a certain size. It is rather

that, once a firm achieves a certain size, diseconomies of scale can actually set in.

Large firms with multiple offices -- particularly ones in multiple countries -- are much

more difficult to manage than smaller firms. They require a much higher investment

of resources to achieve uniformity in quality and service delivery and to meet the ex-

pectations of clients (described above) for efficiency, predictability, and cost effective-

ness. They also face unique challenges in maintaining collegial and collaborative

cultures, particularly in the face of rapid growth resulting from mergers or large-scale

lateral acquisitions. In other words, pursuing growth for the purpose of achieving

economies of scale can be a mixed blessing.

A similar analysis can be applied to the use of growth as a primary means of creating

opportunities for younger partners. While it is true that larger firms may have

broader reputations and better name recognition, factors that could be helpful to

younger partners in seeking to develop or expand client relationships, it is also true

(as described above) that the importance of "brand" as a factor that is considered by

clients in selecting outside counsel has diminished in recent years.

29 In 2003, Ward Bower of Altman Weil noted:

For over 30 years, . . . [survey data] has shown, generally, that there are no economies of scale in private law

practice. Larger firms almost always spend more per lawyer on staffing, occupancy, equipment, promotion, malpractice

and other non-personnel insurance coverages, office supplies and other expenses than do smaller firms. This is

counterintuitive, in the sense that larger firms should be able to spread fixed costs across a larger number of lawyers,

reducing per lawyer costs, overall. However, that principle does not take into account the excess plant and equipment

capacity necessary to support growth, or the increases in staff and communications costs as firms become larger.

Ward Bower, "Mining the Surveys: DISeconomies of Scale?" Altman Weil, Inc. report, 2003.

30 Ed Wesemann, "What Is the Optimum Size for a Law Firm?"

http://edweseman.com/articles/profitability/2011/03/16/what-is-the-optimum-size-for-a-law-firm/. Wesemann notes that

profitability does appear to correlate with two other factors, both related to location. First, firms headquartered or having

their largest office in New York, Chicago, Washington, Los Angeles, or San Francisco are generally more profitable than

similar firms in other cities. And, firms with more than one office are generally less profitable than firms of the same size

having only one office, at least until firms exceed 200 lawyers or so in size.

31 Based on analysis by Peer Monitor staff.

32 See Ian Wimbush, "Economies of Scale Needed to Set Up a Firm Have Actually Fallen," The Law Society Gazette,

Sept, 24, 2013. Wimbush notes that "[b]arriers to entry to the legal market have been lowered in recent years, largely due

to advances in technology, for example using Cloud-based IT systems."

Exhibit 3, Page29


11

It would seem that, to maximize new business opportunities for younger partners and

others, it would be wiser for firms to focus their energies less on growth and more on

the issues that clients care about -- responsiveness, efficiency, cost effectiveness,

and the like. We will have more to say about that below.

As to the need for firms to diversify their practices, there is obviously wisdom in the

notion of attempting to diversify risk by having enough practices to weather a tempo-

rary downturn in one or two. That fact, however, does not mean that firms will be

successful in moving into areas that are outside their traditional markets or areas of

competence -- at least not in the short term. Moreover, given the increased willing-

ness of firms in recent years to weed out "underperforming" partners and practices,

the use of risk diversification as a rationale for growth rings somewhat hollow.

Finally, as to the concern about needing a larger market footprint to serve client

needs, this can certainly be a legitimate strategic issue for some firms. A firm fo-

cused on high-end capital market transactions might well need offices in key capital

market centers around the world. An IP firm serving the high tech and biotech indus-

tries might see value in offices in Silicon Valley, Route 128, the Dulles corridor, Re-

search Triangle Park, and Austin. A labor and employment law boutique might well

justify offices in key major employment centers around the country. Or an energy fo-

cused firm might need offices in Houston, Calgary, the Middle East, and Central Asia.

But while it may be important for firms in particular markets to have sufficient size to

handle large, complex, high-volume matters for clients, even this imperative has its

limits. As previously noted, in the CounselLink Trends Report, firms having 200 to

500 lawyers were regarded as "large enough" for these purposes.33

The real point is that a particular firm's decision to grow should be made in the con-

text of a clear strategic vision of a market segment that the firm can realistically ex-

pect to serve. There is nothing wrong with growth per se, and indeed organic,

demand-led growth resulting from a firm's successful expansion of client relationships

can be very healthy. But growth for growth's sake is not a viable strategy in today's

legal market. The notion that clients will come if only a firm builds a large enough

platform or that, despite obvious trends toward the disaggregation of legal services,

clients will somehow be attracted to a "one-stop shopping" solution is not likely a for-

mula for success. Strategy should drive growth and not the other way around. In our

view, much of the growth that has characterized the legal market in recent years fails

to conform to this simple rule and frankly masks a bigger problem -- the continuing

failure of most firms to focus on strategic issues that are more important for their

long-term success than the number of lawyers or offices they may have.

Changing Strategic Focus To address the concerns of clients for more efficient, predictable, and cost effective

legal services, law firms must focus their attention on re-thinking the basic organiza-

tional, pricing, and service delivery models that have dominated the market for the past

several decades. While some firms have engaged in such reviews and launched inno-

vative new models to better compete in the current market environment, most have not.

33 See note 26 supra.

Exhibit 3, Page30


12

In its 2013 Law Firms in Transition Survey report,34 Altman Weil describes the responses

of some 238 managing partners and chairs of U.S. law firms with 50 or more lawyers to a

number of questions about their firms' willingness to change their basic operational mod-

els. Interestingly, the law firm leaders surveyed clearly understand that the legal market

has changed in fundamental ways, with substantial majorities agreeing that permanent

changes in the market include more price competition (95.6 percent), focus on improved

practice efficiency (95.6 percent), more commoditized legal work (89.7 percent),more

non-hourly billing (79.5 percent), and more competition from non-traditional service

providers (78.6 percent).35 And 66.7 percent of respondents indicated that they believe

the pace of change in the legal market will increase going forward.36 And yet, only a mi-

nority of firms has undertaken any significant changes to their basic business models.

More specifically, 44.6 percent of those surveyed indicated that their firms had taken

some steps to improve the efficiency of their legal service delivery,37 mostly in the form

of changing project staffing models to include part-time and contract lawyers and out-

sourcing some (primarily non-lawyer) functions.38 Some 45 percent reported that their

firms had made significant changes in their strategic approach to partnership admis-

sion and retention, primarily in the form of tightening standards or practices for admis-

sion to the equity partner ranks.39 And 29 percent of firm leaders indicated that their

firms had changed their strategic approaches to pricing since 2008.40

When asked to rank their overall confidence level (on a 0 to 10 scale) in their firms' ability to

keep pace with the challenges in the new legal marketplace, the law firm leaders participat-

ing in the survey produced a median rating of 7 (in the "moderate" range), with only 12.9

percent indicating a "high" level of confidence.41 When asked, however, to rate their part-

ners' level of adaptability to change (again on a 0 to 10 scale), the median rating dropped to

5 (in the "low" range), with only 2.2 percent indicating a "high" level of adaptability.42

The law firm leaders participating in the survey were also asked how serious they be-

lieve law firms are about changing their legal service delivery model to provide greater

value to clients (as opposed to just reducing rates). Again using a 0 to 10 scale, re-

spondents produced a median rating of 5 (in the "low" range).43 That compared to a

median rating of 3 given by corporate chief legal officers when asked the same ques-

tion in October 2012.44

The lack of commitment to genuine change reflected in these results seemed con-

firmed by responses to another question posed to survey participants. Asked to list

the greatest challenges their firms face in the next 24 months, the top four answers

from respondents (which constituted just over 50 percent of all responses) were all in-

ternally focused issues aimed at protecting the status quo of the law firm and not at

becoming more responsive to clients.45

34 Thomas S. Clay, 2013 Law Firms in Transition: An Altman Weil Flash Survey, Altman Weil, Inc., May 2013 ("Altman

Weil Report").

35 Id. at p. 1.

36 Id. at p. 3.

37 Id. at p. 9.

38 Id. at p. 26.

39 Id. at p. 18.

40 Id. at p. 8. In a related response, only 31.5 percent of respondents indicated that their firms are primarily proactive in

promoting the use of alternative fee strategies with their clients. Id. at p. 54.

41 Id. at p. 4.

42 Id. at p. 6.

43 Id. at p. 12.

44 Id. at p. 14.

45 Id. at pp. v-vi. The top four priorities listed included increasing revenue (15.2 percent), developing new business (14.6

percent), growth (12.4 percent), and profitability (10.7 percent). Id. at 62.

Exhibit 3, Page31


13

Indeed, adding value for clients was only eighth on the list of twelve items (mentioned

by 5.6 percent of survey participants) and improving efficiency in service delivery was

eleventh on the list (mentioned by only 2.8 percent of respondents).46

Against this background, it is somewhat surprising that a majority of the respondents

to the Altman Weil survey nonetheless believe that growth (in terms of lawyer head-

count) is required for their firms' continued success. Indeed 55.7 percent of those

surveyed responded affirmatively to that question, with only 35.7 percent responding

negatively.47 This is surely puzzling in the wake of five years of tepid demand growth

and stagnant productivity and with little prospects of a quick turnaround in either of

those conditions. One possible explanation is that law firm leaders feel constrained to

articulate some kind of strategic vision to help their firms weather the current storm,

and the message that we need to "build a bigger boat" is more politically palatable

than a message that we need to fundamentally change the way we do our work.

Unfortunately, however, for most law firms, only a commitment to re-think and revise their

basic models for managing their professional talent (partners, associates, and others); for

delivering their legal services; and for pricing their work is likely to produce competitive suc-

cess in the long run. This is particularly true if one considers the possibility that the legal

market may be currently poised for what could be a dramatic reordering based on the same

type of disruptive forces that have reordered many other businesses and industries.

In an intriguing recent article in the Harvard Business Review, Clay Christensen, Dina

Wang, and Derek van Bever argue exactly that.48 As they note:

In our research and teaching at Harvard Business School, we emphasize the impor-

tance of looking at the world through the lens of theory -- that is, of understanding the

forces that bring about change and the circumstances in which those forces are op-

erative: what causes what to happen, when and why. . . . Over the past year we

have been studying the professional services, especially consulting and law, through

the lens of those theories to understand how they are changing and why. . . .

We have come to the conclusion that the same forces that disrupted so many

businesses, from steel to publishing, are starting to reshape the world of con-

sulting [and law]. The implications for firms and their clients are significant.

The pattern of industry disruption is familiar: New competitors with new business

models arrive;49 incumbents choose to ignore the new players or to flee to

46 Id. at p. 62.

47 Id. at p. 35.

48 Clayton M. Christensen, Dina Wang, and Derek van Bever, "Consulting on the Cusp of Disruption," Harvard Business Re-

view, Oct. 2013, p. 107.

49 It is interesting to note that, in 2013, we continued to see the emergence of a wide variety of non-traditional service

providers vying for market share in the legal space. This was particularly evident in the United Kingdom where sweeping

changes to the regulation of legal practice enacted in 2007 have spawned a variety of "alternative business structure"

("ABS") arrangements that permit outside investments in law firms and the formation of multi-disciplinary partnerships in

which firms owned by a variety of professionals and investors may offer a wide range of services, including legal services.

In two noteworthy developments, DLA Piper announced its investment (along with other private investors) in Riverview

Law, a combined barristers' chambers and solicitors' practice to offer fixed-fee commercial services for small- and medium-

sized companies. See www.riverviewlaw.com/. And British Telecom decided to spin out its motor claims division, commer-

cialize it with an ABS license, and offer claims services to other corporations operating large vehicle fleets. See "BT

Launches Legal Service for Corporate Customers," Fleet News, Apr. 3, 2013, www.fleetnews.co.uk/news/2013/3/4/bt-

launches-legal-service-for-corporate-customers/46362/. Meanwhile, in the United States, non-traditional service providers

also continued to gain ground in the legal market. See Bill Henderson, "Bringing the Disruption of the Legal Services Mar-

ket into the Law School Classroom," The Legal Whiteboard, Law Professor Blogs, LLC, Nov. 23, 2013, listing 16 non-tradi-

tional providers currently working actively in the U.S. market. And, in Singapore, it was recently reported that Ernst &

Young plans to expand its professional services to the legal services area in the Asia Pacific region. See Yun Kriegler,

"E&Y Hires Former HSF Partner as It Mulls Singapore Legal Services Launch," The Lawyer, Dec. 10, 2013.

Exhibit 3, Page32


14

higher-margin activities; a disrupter whose product was once barely good

enough achieves a level of quality acceptable to the broad middle of the mar-

ket, undermining the position of longtime leaders and often causing a "flip" to a

new basis of competition.50

Pointing to the changed and enhanced role of corporate general counsel, the wide-

spread availability of comparative information about law firms and their services, the

trend toward disaggregation of services by in-house counsel, and the emergence of

new service delivery models and businesses, the authors argue that a disruptive

transformation in the legal market may well already be underway. Although acknowl-

edging that the relatively small number of genuinely "bet-the-company" matters may

be immune from most of these pressures, the article concludes that ongoing disrup-

tion is virtually inevitable.

The . . . [professionals] we spoke with who rejected the notion of disruption in their

industry cited the difficulty of getting large partnerships to agree on revolutionary

strategies. They pointed to the purported impermeability of their brands and repu-

tations. They claimed that too many things could never be commoditized in con-

sulting [or law]. Why try something new, they asked, when what they've been

doing has worked so well for so long?

We are familiar with these objections -- and not at all swayed by them. If our long

study of disruption has led us to any universal conclusion, it is that every industry

will eventually face it. The leaders of the legal services industry would once have

held that the franchise of the top law firms was virtually unassailable, enshrined in

practice and tradition -- and, in some countries, in law. And yet disruption of these

firms is undeniably under way. . . .

* * *

[A]lthough we cannot forecast the exact progress of disruption . . ., we can say

with utter confidence that whatever its pace, some incumbents will be caught by

surprise. The temptation for market leaders to view the advent of new competitors

with a mixture of disdain, denial, and rationalization is nearly irresistible. U.S.

Steel posted record profit margins in the years prior to its unseating by the min-

imills; in many ways it was blind to its disruption. As we and others have ob-

served, there may be nothing as vulnerable as entrenched success. 51

ConclusionSo, to end where we began -- is growth important as a dominant law firm strategy? For

some firms, the answer is no doubt yes, but for most firms the answer must surely be

no. Far more important is to focus on those factors that can help reshape the firm to be

more responsive to the needs of clients, to deliver services in a more efficient and pre-

dictable manner, and to develop pricing models that reflect more accurately the value of

the services being delivered. For most firms, in other words, the goal should be not to

"build a bigger boat" but rather to build a better one.

50 Christensen, Wang, and van Bever, note 49 supra, at 107-08.

51 Id. at p. 114.

Exhibit 3, Page33


The Center for the Study of the Legal Profession at Georgetown Law is devoted to promoting interdisciplinary re-

search on the profession informed by an awareness of the dynamics of modern practice; providing students with a so-

phisticated understanding of the opportunities and challenges of a modern legal career; and furnishing members of the

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ous, research-based approach to the development of open enrollment and custom programs on leadership, strategy,

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Peer Monitor® is a dynamic, live benchmarking program that provides any-time access to critical firm assessment in-

formation and allows comparison against selected peers, with details for practice performance. It covers key metrics

such as demand, rates, productivity, and expenses broken out by practice groups, offices, and individual timekeepers,

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levels. Peer Monitor® is a product of Thomson Reuters, the world's leading source of intelligent information for busi-

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For more information, please visit us at peermonitor.thomsonreuters.com

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Report on the State of the Legal Market2014

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EXHIBIT 4


F ! ~ DEPARTMENT 310 - LAW A D M T I N RUUNGS

Case Number: BC58568 Hearing Date: August 06, 2015 Dept: 310

Perry v. Truong Giang Corp. Case No. : BC59568 Auo 062015 Hearing Date: 8/6/2015 Department 310

MOTION FOR FINAL APPROVAL OF CLASS ACTION SETLEMENT, MOTION FOR FEES, COSTS, AND INCENTIVE PAYMENT, AND MOTION TO SEAL PORTIONS OF PLAINTIFF'S MOTION FOR FINAL APPROVAL

Grant Motion to Seal, Motion for Final Approval, and Motion for Attorney's Fees, Costs and Incentive Awards as prayed, contingent upon a supplemental declaration from the Notice Administrator providing up-to-date information regarding response to the Class Notice (opt-outs and objections).

DISCUSSION

I. Background

This is an injunctive relief only class action case involving certain teas marketed by Defendant as having weigh loss benefits. The Complaint alleges causes of action for relief under the CLRA (CC §§1750, et seq.), Unfair Competition Law (B&P Code §§17200, et seq.), False Advertising Law (B&P Code €jCj 17500, et seq.), and Breach of Implied Warranties. The action was settled following mediation with the Honorable Leo S. Papas (Ret.), and additional negotiations thereafter. On March 30, 2015, the Court heard and granted Plaintiff's motion for preliminary approval of the settlement.

11. Notice and Opt Out Process

I n California, the notice must have 'a reasonable chance of reaching a substantial percentage of the class members." (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 251, citing Cartt v. Superior Court (1975) 50 Cal.App.3d 960, 974.) Importantly, however, the plaintiff need not demonstrate that each member of the class has received notice. As long as the notice had a "reasonable chance" of reaching a substantial percentage of class members, i t should be found effective.

Class Action Administration, Inc. ("CAA") was retained to provide notice to the class of the proposed settlement. CAA has submitted evidence demonstrating that the notice procedure provided for in the Section 5 of Settlement Agreement and approved by the Court has been followed. Specifically, the Notice Administrator was required to, and CAA did: (1) create and maintain a class action website; (2) establish a toll-free number for class members to call in order to have questions answered in both English and Spanish; (3) cause Summary Notice to be published in various newspapers; (4) cause banner advertisements to display on Facebook; and (5) mail Notice to the 15 persons who directly purchased product from Defendant. (Declaration of Matthew McDermott, 113-8.) The Court finds that such notice is sufficient as i t had a reasonable chance of reaching a substantial percentage of class members.

As of June 30, 2015, CAA had received no requests for exclusion. (McDermott Declaration, 19.) However, as July 6, 2015 is the last day for opting out, CAA will need to provide supplemental information a t the time of the hearing. Objections .were to be submitted directly to the Court and as of today's date, the Court has not received any objections.

http://cwrtnevTentativeRdin4/U l / m a i n . a s p x s g = M s - + + R u l i s + f o r + C B C w a s + + s s M l y+!&wkCaseNum= B w k . . . 116

Exhibit 4, Page 36


8/5/2015

111. Dunk Factors

I t is the duty of the Court, before finally approving the settlement, to conduct an inquiry into the fairness of the proposed settlement. (California Practice Guide, Civil Procedure Before Trial, The Rutter Group, n14:139.12 (2012).) The trial court has broad discretion in determining whether the settlement is fair. I n exercising that discretion, i t normally considers the following factors: strength of the plaintiff's case; the risk, expense, complexity and likely duration of further litigation; the risk of maintaining class action status through trial; amount offered in settlement; extent of discovery completed and stage of the proceedings; experience and views of counsel; presence of a governmental participant; and reaction of the class members to the proposed class settlement. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801, citing Officers for Justice v. Civil Service Com'n, etc. (9th Cir. 1982) 688 F.2d 615, 625; I n re Microsoft I-V Cases (2006) 135 Cal.App.4th 706, 723.) This list is not exclusive and the Court is free to balance and weigh the factors depending on the circumstances of the case. (Wershba, supra, 91 Cal.App.4th at 244-245.)

The proponent bears the burden of proof to show the settlement is fair, adequate, and reasonable. (7-Eleven Owners for Fair Franchising v. Southland Corp. (2000) 85 Cal .App.4th 1135, 1165-1166; Wershba, supra, 91 Cal.App.4th at 245.) There is a presumption that a proposed fairness is fair and reasonable when i t is the result of arm's-length negotiations. (2 Herbert Newburg & Albert Conte, Newburg on Class Actions 511.41 at 11-88 (3d ed. 1992); Manual for Complex Litigation (Third) 530.42.)

With these standards in mind, the Dunk/Wershba factors are addressed in turn.

1. Strength of the plaintiff's case

Plaintiffs believe that they have evidence demonstrating that Defendant's product labels are deceptive and that the products do not work. Plaintiffs also believe that certification of a class is appropriate. However, they are aware that Defendants have certain defenses and that Plaintiffs may not be able to establish their claims, and/or that the class may not be certified. (Motion at 14:lO-28.)

This factor weighs in favor of final approval.

2. The risk, expense, complexity and likely duration of further litigation.

Had this case not settled, there would have been additional risks and expenses associated with continuing to litigate. Procedural hurdles (e.g., motion practice and appeals) are also likely to prolong the litigation as well as any recovery by the class members.

I n connection with Preliminary Approval, the Court granted a motion to seal certain documents. Now, in connection with this current motion, Plaintiff has filed a Motion to Seal portions of the Memorandum of Points and Authorities in favor of Final Approval. This motion is granted on the basis that the Court has previously ordered sealing of this same material. The redacted matter supports the Plaintiff's contention that Defendant's financial condition was a genuine risk to Plaintiff's success if the litigation were to continue, and that an injunctive relief only settlement is fair, adequate and reasonable.


3. The risk of maintaining class action status through trial

There is always a risk of decertification. (Weinstat v. Dentsply Intern., Inc. (2010) 180 Cal.App.4th 1213, 1226: "Our Supreme Court has recognized that trial courts should retain some flexibility in conducting class actions, which means, under suitable circumstances, entertaining successive motions on certification if the court subsequently discovers that the propriety of a class action is not appropriate.")

Exhibit 4, Page 37


8/5/2015

This factor weighs in favor of final approval. -

4. Amount offered in settlement

As part of the Court's analysis of this factor, the Court takes into consideration the admonition in (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 133.) I n Kullar, objectors to a class settlement argued the trial court erred in finding the terms of the settlement to be fair, reasonable, and adequate without any evidence of the amount to which class members would be entitled i f they prevailed in the litigation, and without any basis to evaluate the reasonableness of the agreed recovery. The Court of Appeal agreed with the objectors that the trial court bore the ultimate responsibility to ensure the reasonableness of the settlement terms. Although many factors had to be considered in making that determination, and a trial court was not required to decide the ultimate merits of class members' claims before approving a proposed settlement, an informed evaluation could not be made without an understanding of the amount in controversy and the realistic range of outcomes of the litigation.

This action settled for injunctive relief only. Paraphrasing the terms of the Settlement Agreement, Defendant: (1) will permanently modify its labels and packaging; (2) add an FDA disclaimer; (3) remove the language, "special formula Dieters' Drink is . . . for those desiring to adjust weight" from its products; (4) remove language that the product is "100% guaranteed herbal drink to help you lose weight without dieting" in both English and Spanish from its products; (5) remove any language stating that the products are "safe to drink whole year round," including language advising Spanish speakers they can drink one cup per day to maintain weight and two cups per day to lose weight; (6) remove any language conveying the message that the products are effective for long-lasting weight loss or are helpful in dieting efforts; (7) ensure that any Chinese language on its packaging is consistent with these modifications; and (8) modify its websites to comport with these label modifications.


5. Extent of discovery completed and stage of the proceedings

Class Counsel engaged in formal and informal discovery, reviewed documents (including Defendant's profit and loss statements), reviewed FDA guidelines, and took the deposition of Defendant's person most knowledgeable. (Motion at 18:16- 19:4.)


6. Experience and views of counsel

As noted at the time of Preliminary Approval, Class Counsel has sufficient class action experience. (Declaration of Ronald Marron, 17, and Exhibit 5, Marron Declaration re: Preliminary Approval, 1112- 28.) It is class counsel's opinion that the settlement is fair, adequate, and reasonable.


7. Presence of a governmental participant

This factor is not applicable here.

8. Reaction of the class members to the proposed class settlement

As of June 20, 2015, there have been no objections or requests for exclusion. However, updated information will need to be provided at the time of the hearing, as the day for doing so is July 6, 2015.

Conclusion on Dunk Factors Exhibit 4, Page 38


On balance, this is a fair settlement that satisfies the Dunk factors, such that final approval is warranted.

IV. Attorneys' Fees, Costs, and Incentive Payments

A. Attorneys' Fees

Class Counsel requests attorney fees and costs in the total amount of $250,000. 1. Determining the Lodestar Amount and Calculating Counsel's Hourly Rate and Fees

The Court employ the lodestars method in awarding fees, as opposed to a percentage of the common fund method. This amount would reflect the actual work performed, plus a multiplier (if applicable) to recognize counsel's efforts.

Class Counsel Ronald Marron states that his f irm has spent at least 457.5 hours on this case. Marron explains that the work performed included investigation of the claims, drafting of pleadings, researching and drafting settlement position papers, drafting discovery and reviewing responses, extensive negotiations and attendance at mediation, drafting disclaimer language, settlement, and release language, ascertaining the scope and breadth of the class and analyzing certification elements, due diligence document review, preparing for and taking Defendant's deposition, preparing motion papers, attending hearings, reviewing and negotiating Class Notice, and the notice plan, and communication and meetings among parties and counsel. (Marron Declaration, 115.) The Court finds that the hours spent are reasonable based on the type of litigation and the length of time this case has been pending. The names and billing rates of all the people at the firm who spent time on this litigation are set forth in paragraph 4 of the Marron Declaration in support of fees and costs. These rates range from $745/hour for Marron, to $475/hour for senior associates, to $290 for law clerks and $215 for paralegals. Marron states that he pays all staff and that none of these are volunteer hours. (Marron Declaration, 118.) Marron also provides evidence of the reasonableness of these hourly rates at paragraphs 5-14 and Exhibits 2 and 3. The Court finds that the hourly rates charged are reasonable. Appendix 1 to the Motion for Fees is a chart setting forth the lodestar calculation, which totals $252,677.22. I t appears that class counsel utilized skill in litigating this case, and by all accounts, have good reputations in the legal community (at the very least, there is no evidence before the Court to indicate that any one of the attorneys has a negative reputation in the legal community). I t also appears that class counsel spent appreciable time on the case, which time could have been spent on other meritorious fee-generating cases.

Marron presents evidence demonstrating that costs in this case amount to $9,313.75. (Marron Declaration, 119.) Adding that to the lodestar, Marron's f irm has fees and costs that total $261,990.97 ($252,677.22 + $9,313.75).

2. The attorney fees and costs requested ($250,000), is less than the lodestar, even before costs are added.

Once the Court has calculated the lodestar figure, i t may consider other relevant factors that could increase or decrease that figure. "The court expresses these factors as a number (or as an equivalent percentage), and the lodestar is multiplied by that number. Thus, the number is referred to as the 'multiplier.'" (Pearl, California Fee Awards (2006 Supp.), 513.1.) Although there are some objective standards governing what factors may be used to decide whether to apply a multiplier, the trial courts have considerable discretion in determining the size of the multiplier, as long as they consider the proper factors. (Ibid.) Indeed, "there is 'no mechanical formula [that] dictate[s] how the [trial] court should evaluate all these factors .... [Citations.]'" (Lealao v. Beneficial Cal., Inc. (2000) 82 Cal.App.4th 19, 41, citing Flannery v. California Highway Patrol (1998) 61 Cal.App.4th 629, 639.)

"[The lodestar] may be adjusted by the court based on factors including ... (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which

Exhibit 4, Page 39


the nature of the litigation precluded other employment by the attorneys, [and] (4) the contingent nature of the fee award. [Citation.] The purpose of such adjustment is to fix a fee at the fair market value for the particular action." (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132, citing Serrano v. Priest (1977) 20 Cal.3d 25, 49.) However, the Court cannot consider the same factors twice when setting the multiplier and the lodestar as i t could amount to double counting. (Ketchum, supra, 24 Cal.4th at 1138; see also Flannery v. CHP (1998) 61 Cal.App.4th 629, 647, reversing the application of a 2.0 multiplier to a fee award, in part because "the skill and experience of counsel" and "the nature of the work performed" factors were duplicative of factors the trial court had explicitly considered in setting the lodestar.)

The motion indicates that a multiplier is not requested if the Court awards the full amount of the fee requested, but that if the Court were to adjust the rates, a multiplier would be justified. I n support of a positive multiplier, the motion points out that this case involved difficult legal issues because federal and state laws governing dietary supplements are a gray area, and because proving the difference between the price paid (around $2 per box of tea) and the actual value received would have been difficult since arguably some value was received (the tea itself). Additionally, the motion argues that the attorneys displayed skill in researching and settling this case, which provides a benefit not only to Class Members but to the public at large, and that in so doing, the attorneys undertook significant risk by spending time on this litigation on a contingency basis.

The Court is not inclined to apply a positive multiplier, but for all the reasons articulated above, finds that the combined fee and cost request of $250,000 is reasonable and awards that amount in full.

3. Cross-check Not applicable.

B. Costs Included in the above calculation.

C. Costs of Administration Neither the Motion for Final Approval nor the Motion for Fees and Incentive Awards prays for recovery of the cost of administration. Examination of the Settlement Agreement demonstrates that Defendant was to pay the Notice Administrator within 10 days of Preliminary Approval. (Settlement Agreement, 75.2.) Thus, i t appears that the Notice Administrator has already been paid. I f this is not correct and if an order directing such payment is required, Class Counsel must so specify and must provide supplemental briefing and evidence in support of any such request.

D. Incentive Payment

Finally, Class Counsel seeks an incentive payment of $1,500 to each of the Class Representatives, Donna Perry and Jacqueline Johnson.

The Court considers the following factors, among others, in determining whether to pay an incentive or enhancement award to the Class Representatives:

Whether an incentive was necessary to induce the class representative to participate in the case; Actions, i f any, taken by the class representative to protect the interests of the class; The degree to which the class benefited from those actions; The amount of time and effort the class representative expended in pursuing the litigation; The risk to the class representative in commencing suit, both financial and otherwise; The notoriety and personal difficulties encountered by the class representative; The duration of the litigation; and The personal benefit (or lack thereof) enjoyed by the class representative as a result of the

litigation. (California Practice Guide, Civil Procedure Before Trial, 114: 146.10 (The Rutter Group 2012), citing Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 804; Bell v. Farmers Ins. Exch. (2004) 115 Cal.App.4th 715, 726; I n re Cellphone Fee Termination Cases (2010) 186

Exhibit 4, Page 40


Cal.App.4th 1380, 1394; Munoz v. BCI Coca-Cola Bottling Co. of Los Angeles (2010) 186 Cal.App.4th 399, 412).

The Court grants an award of $1,500 to each Class Representative for the following reasons: i At the time of Preliminary Approval, each Class Representative submitted a declaration out1 ining the time she had spent on this litigation since January, 2014. (Copies of these declarations may be found at Exhibit 12 of the Marron Declaration.) i Perry and Johnson each purchased Defendant's product and brought this litigation because they believe that diet products should contain truthful labels. i Because of this litigation, the Settlement Class as well as the public at large received a real benefit. i Perry and Johnson each spent time assisting Class Counsel and were available to answer questions during mediation. i The awards are in line with what is traditionally award in injunctive relief only cases.

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