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Attorney fees in lemon law case miscalculated

The amount at stake in a lemon law case should have been considered in determining the reasonableness of attorney fees to be awarded under the lodestar method, the Minnesota Supreme Court has ruled in reversing a $230,000 fee award.

The plaintiff leased a BMW automobile. Claiming the vehicle was defective, the plaintiff sued BMW for violating state lemon law. After a bench trial, the trial court awarded the plaintiff $25,000 in damages. In addition, the trial court awarded $230,000 in attorney fees and costs, based largely on over 600 hours billed by the plaintiff’s attorneys at $350 to $375 per hour.

BMW argued that the award of attorney fees was unreasonable in light of the $25,000 recovered in the case.

The state Supreme Court first concluded that the lodestar method is the proper approach for determining reasonable attorney fees under state lemon law.

Moreover, the court agreed with BMW that the amount involved in the litigation and the results obtained must be considered when determining fees under the lodestar method.

“It is true that a cap on fees or an examination of the proportionality between the amount of recovery and the fees expended could hamper the ability of consumers to vindicate their rights relative to inexpensive products. But ignoring, as the [trial] court did, the amount involved in the litigation contravenes the principles that underlie statutory attorney fees provisions….

“[Trial] courts, therefore, are directed to exclude from fee awards ‘hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission.’ Because billing judgment is necessarily related to the merits of the case and the amount at issue in a consumer protection case, divorcing an award of attorney fees entirely from the amount at stake in the litigation would relieve attorneys from the need to exercise such judgment,” the court said.

Minnesota Supreme Court. Green v. BMW of North America, No. A11-0581. Feb. 13, 2013. Lawyers USA No. 993-3821.

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