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Prestemon v. Echostar Communications

Prestemon v. Echostar Communications
02:15:2007

Prestemon v


Prestemon v. Echostar Communications


 


 


 


 


Filed 1/18/07  Prestemon v. Echostar Communications CA1/4


NOT TO BE PUBLISHED IN OFFICIAL REPORTS


 


California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b).  This opinion has not been certified for publication or ordered published for purposes of rule 977.


IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA


FIRST APPELLATE DISTRICT


DIVISION FOUR







NEIL PRESTEMON et al.,


            Plaintiffs and Respondents;


MICHAEL BOOKER,


            Plaintiff and Appellant,


v.


ECHOSTAR COMMUNICATIONS CORPORATION et al.,


           Defendants and Respondents.


      A113135


      (Alameda County


      Super. Ct. No. 2002053014)



            The settlement of a class action included an agreement that class counsel could seek as much as $658,000 in attorney fees and costs.  After appellant Michael Booker objected to the attorney fees aspect of the settlement, the trial court approved the settlement to the class, ordered an accounting of benefits, and made only a partial distribution of attorney fees.  Ultimately, the trial court awarded class counsel the remaining $200,000 that had been set aside to pay attorney fees.  Booker appeals from the order awarding $200,000 in attorney fees,[1] contending that the trial court erred in awarding this sum to class counsel rather than distributing it to class members.  We affirm the attorney fees order.


I.  FACTS


            In May 2002, respondent Neil Prestemon brought a class action against respondents Echostar Communications Corporation, Echostar Satellite Corporation and WebTV Networks.[2]  The action alleged that class members purchased defective satellite receivers from Echostar.  Echostar contested the allegations of defect and misrepresentation.  It filed demurrers challenging the May 2002 complaint and the September 2002 amended complaint.  The final demurrer was overruled in December 2002.


            Investigation and discovery about the factual and legal merits of the action was undertaken, revealing areas of dispute between the parties.  Echostar also indicated its intent to contest class certification.  After these difficulties surfaced, the parties began formal settlement discussions.  Three separate mediation sessions before a retired judge resulted in an agreement in principle to settle the class action.  After the parties reached an agreement on the substantive terms of the settlement and the relief to be provided to the class, they began discussion of payment of attorney fees and costs to class counsel.


            By April 2004, a formal settlement agreement was submitted to the trial court for approval.  Under the terms of the settlement, specified class members were entitled to receive certificates for pay-per-view movies, credits toward television services or equipment, or a check.  In addition to the benefits to the class, Echostar also agreed not to oppose an application by class counsel[3] for up to $658,000 in attorney fees and costs.


            The trial court gave its preliminary approval to the settlement in April 2004 and notice of the pending settlement was given to class members.  The notice advised the class that Echostar might pay an award of attorney fees and costs to class counsel, but did not specify the amount of the fee.  It stated that any attorney fee that might be paid would not reduce the benefit to the class members.


            The notice provided that the last day for class members to file objections to the proposed settlement was July 31, 2004.  As this was a Saturday,[4] the time for filing any objection was Monday, August 2, 2004.  (See Code Civ. Proc., §§  12-12b.)  On August 2, 2004, appellant Michael Booker filed an objection to the proposed settlement, primarily challenging the attorney fee aspect of the agreement.  He argued inter alia that the final attorney fees award should be linked to actual class participation in the settlement.  Class counsel sought approval of the settlement, including the provision for up to $658,000 in attorney fees, which it argued was fair and reasonable.  The request was supported by a declaration from one class counsel.  Echostar also filed a declaration tending to support the fee application.


            On August 31, 2004, the trial court considered the parties' motion for final approval of the class action settlement.  At that hearing, Booker complained that the class was not properly notified of the amount of the proposed attorney fee, which he argued had exceeded the value of the class benefit from the underlying settlement.  He reasoned that the attorney fee should be viewed as part of the class benefit, not as separate from it.  The trial court disagreed, noting that it was significant that the class members were not paying any of the attorney fees or costs.


            Booker also asked the trial court to approve a sum lesser than $658,000 as a reasonable attorney fee and to award the difference to the class.  Class counsel argued that it was entitled to the full amount of attorney fees as the prevailing party in the action.  It also contended that a class member distribution of the sum set aside for attorney fees and costs would constitute an improper modification of the settlement that the parties did not negotiate.  For its part, Echostar also opposed shifting any of the amount set aside for attorney fees to the class.


            The trial court approved the terms of the settlement to the class, specifically finding that class counsel had fairly and adequately protected the interests of the class in that settlement.  The trial court granted Booker's request for Echostar to provide an accounting of actual benefits received by the class.  It also approved $458,000 of the attorney fees sought by class counsel, setting aside the issue of class counsel's entitlement to the remaining $200,000 in attorney fees until after the accounting.  In October 2004, a judgment entered, approving the settlement to the class, requiring the accounting, and awarding $458,000 in attorney fees to class counsel.


            In October 2005, Echostar submitted the required accounting.  It reported that 10,523 class members submitted claim forms and that 74,243 current customers redeemed pay-per-view certificates.  Nearly 4,000 Echostar customer accounts received interactive television service credits, totaling $92,300.  Of the total of 2,247 equipment certificates issued, retailers had returned only 75 of them to Echostar after the purchase of equipment.


            In November 2005, the trial court held a hearing to consider the accounting and to determine distribution of the disputed $200,000 fund.  Booker calculated the value of these benefits actually received by the class at less than the $658,000 sought in attorney fees.  Class counsel argued that the total value of benefits provided to class members was more than $3 million.


            The trial court overruled Booker's objection and denied his request to distribute the disputed $200,000 to class members.  It found that the parties had made an effort to provide a direct benefit to at least 40 percent of the class of 257,000 current and former Echostar customers.  It noted that the benefits actually received were not inconsequential, that the litigation had been hard-won, and that class counsel had worked hard on the matter.  The trial court also concluded that, under the terms of the settlement, if it awarded less than the full amount of the agreed-upon attorney fee to class counsel, the balance of the $658,000 amount could not be distributed to the class but would revert to Echostar.  It awarded the final $200,000 set aside for attorney fees to class counsel.  In December 2005, the trial court filed a formal order to this effect.


II.  PRELIMINARY MATTERS


            On appeal, Booker argues that in class action cases, when class counsel negotiates an attorney fee with defendants separate from the class recovery, both amounts should be considered as part of the class recovery.  He contends that when class members do not actually receive a cash recovery under the settlement, the trial court should reduce the attorney fees award and apply that reduction to award a class recovery by means of a cy pres distribution.  He urges us to conclude that the trial court misunderstood its authority when it stated that it lacked discretion to distribute the $200,000 set aside for attorney fees to class members instead.


            Prestemon and Echostar both counter that by these arguments, Booker makes an improper attack on the previously approved underlying class settlement, which has already been approved and which Booker failed to challenge either in the trial court or on appeal.  We agree that most of Booker's arguments on appeal attack the fairness of the underlying settlement to the class.  These arguments are improper for two reasons.  First, Booker has not appealed the class settlement--his notice of appeal challenges only the December 2006 order awarding an additional $200,000 in attorney fees to class counsel, not the October 2004 judgment approving the class settlement.


            Second, the issue of the fairness of the underlying settlement in this matter has been finally determined.  In order to prevent fraud, collusion or unfairness to the class, a class action settlement requires court approval.  The trial court must determine if a proposed settlement is fair, adequate and reasonable in order to protect class members whose rights may not have been given due regard by the negotiating parties.  In so doing, it has broad discretion to determine whether the settlement is fair.  (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1800-1801 (Dunk).)  In this matter, the trial court approved the settlement to the class before addressing the application for attorney fees.  In its approval of the class settlement, the trial court specifically found that the settlement was fair.


            The finding that the settlement was fair was included in the October 2004 final judgment.  Booker did not appeal from that judgment.[5]  On appeal from a postjudgment order, we may not review the underlying judgment from which an appeal might have been--but was not--taken.  (See Code Civ. Proc., §  906; In re Marriage of Weiss (1996) 42 Cal.App.4th 106, 119, cert. den. sub nom. Weiss v. Weiss (1996) 519 U.S. 1007.)  As that judgment is final, we may not entertain any collateral attack on it.  (See In re Marriage of Weiss, supra, 42 Cal.App.4th at p.  119.)  Thus, the only issue before us in this appeal is the propriety of the order awarding the remaining $200,000 in attorney fees to class counsel.


III.  ATTORNEY FEES


            In order to prevail, Booker must demonstrate the trial court's award of attorney fees was an abuse of discretion.  (See Dunk, supra, 48 Cal.App.4th at p.  1809.)  A finding that a settlement is fair is not necessarily dispositive of the issue of the propriety of the attorney fees award.  We must determine whether, at the time that the fee agreement was reached, class counsel were placed in a position that might endanger the fair representation of their clients and whether they will be compensated on some basis other than for the legal services performed.  (Id. at pp.  1808-1809 [common fund case].)  There is no evidence that class counsel failed the class in this manner.  The record demonstrates that the attorney fees aspect of the settlement was not negotiated until after the class benefit was determined.  This timing tends to support the attorney fees award, because it avoids placing class counsel in the position of taking their fee from the class benefit.  The trial court rejected Booker's characterization of the settlement as a failure when it cited its virtues and granted the request for the additional $200,000 in attorney fees.


            Another issue for our review is the propriety of the specific amount of the award.  The amount of an attorney fee award is a matter within the sound discretion of the trial court.  (Contractors Labor Pool, Inc. v. Westway Contractors, Inc. (1997) 53 Cal.App.4th 152, 169.)  On appeal, we review the award of attorney fees for an abuse of discretion.  (Dunk, supra, 48 Cal.App.4th at p. 1809.)  The trial court is the best judge of the value of professional services rendered in his or her court, and while its judgment is subject to our review, we will not disturb that determination unless we are convinced that it is clearly wrong.  (Serrano v. Priest (1977) 20 Cal.3d 25, 49; In re Vitamin Cases (2003) 110 Cal.App.4th 1041, 1052.)  An abuse of discretion is established if the trial court's decision exceeded the bounds of reason.  (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478.)


            The trial court awarded all $658,000 in attorney fees that class counsel sought.  On appeal, we presume that the fee approved by the trial court was reasonable and require Booker, as the objector, to show that the trial court erred in making the award.  (See Dunk, supra, 48 Cal.App.4th at p. 1809.)  To prevail, he must demonstrate that there was no factual or legal basis for the trial court's order.  (See Rebney v. Wells Fargo Bank (1991)232 Cal.App.3d 1344, 1349 [challenge to trial court reduction of compensable hours used in lodestar calculation].)  He has not shown that the fee was excessive, but only complains generally that the benefits actually received by the class members did not warrant attorney fees including the final $200,000 that class counsel was awarded.


            When it awarded the entire $658,000 sought as a reasonable attorney fee for class counsel, the trial court noted the quality of the work done to achieve a â€





Description The settlement of a class action included an agreement that class counsel could seek as much as $658,000 in attorney fees and costs. After appellant objected to the attorney fees aspect of the settlement, the trial court approved the settlement to the class, ordered an accounting of benefits, and made only a partial distribution of attorney fees. Ultimately, the trial court awarded class counsel the remaining $200,000 that had been set aside to pay attorney fees. Appellant appeals from the order awarding $200,000 in attorney fees, contending that the trial court erred in awarding this sum to class counsel rather than distributing it to class members. Court affirm the attorney fees order.
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