Graham v. Daimler Chrysler

Filed 12/6/02 Graham v. Daimler Chrysler CA2/1
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication or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
SECOND APPELLATE DISTRICT
DIVISION ONE
ROBERT GRAHAM et al.,
Plaintiffs and Respondents,
v.
DAIMLERCHRYSLER CORPORATION
et al.,
Defendants and Appellants.
B152928
(Super. Ct. No. BC 21564 )
APPEAL from an order of the Superior Court of Los Angeles County. Bruce E.
Mitchell, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Affirmed.
________
Bryan Cave, Sheldon Eisenberg, Charles A. Newman and John W. Rogers for
Defendants and Appellants.
Law Offices of Richard M. Pearl and Richard M. Pearl; Kemnitzer, Anderson,
Barron & Ogilvie, Andrew J. Ogilvie, Mark F. Anderson, and Bryan A. Kemnitzer for
Plaintiffs and Respondents.
_________

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Robert Graham, Truman Trekell, and Daniel Hawkins (plaintiffs) bought 1999
Dakota R/T trucks from DaimlerChrysler Corporation (Chrysler). Chrysler temporarily
incorrectly marketed its 1999 Dakota R/T truck as able to tow 6,400 pounds when it
actually could tow only 2,000 pounds. When plaintiffs learned of their trucks’ actual
towing capacity, they, like other such truck owners, complained to Chrysler. Plaintiffs
later sued Chrysler for warranty breach. When plaintiffs filed suit, Chrysler already had
acknowledged the error and begun responding to related customer complaints.
Moreover, the California Attorney General and Santa Cruz County District Attorney
already had told Chrysler they had started investigations of the marketing error as a
potential consumer fraud.
Shortly thereafter, Chrysler offered to buy back or replace with new vehicles all
Dakota R/Ts sold during the erroneous marketing campaign, including those sold to
plaintiffs. Chrysler then obtained a mootness dismissal of plaintiffs’ case with prejudice.
The propriety of that ruling is not before us.
However, after protracted litigation, the trial court awarded plaintiffs $762,830 in
private attorney general attorney fees. (Code Civ. Proc., § 1021.5; all further
undesignated section references are to the Code of Civil Procedure.)
Chrysler appeals from the fee order. Chrysler contends plaintiffs failed to satisfy
any of the elements required to entitle them to such attorney fees. Alternatively, Chrysler
contends that even if plaintiffs were entitled to fees, the court gave them excessive fees.
We reject these contentions and affirm the fee award.

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FACTS
Chrysler incorrectly marketed its 1998 and 1999 Dakota R/Ts as having a 6,400-
pound towing capacity when it actually could tow only 2,000 pounds. The error occurred
because the Dakota R/T was a sporty version of an existing truck model which could tow
6,400 pounds. However, to obtain a sporty design, Chrysler lowered the suspension on
the Dakota R/T, thus reducing its towing capacity.
The reduced towing capacity was a potential risk factor. The lowered suspension
meant that towing more than 2,000 pounds would cause the suspension to bottom out,
stressing the frame and increasing fatigue and wear. The Chrysler response team
considered this a potential safety issue.
Buyers who wanted to tow more than 2,000 pounds were told they could do so
only if their Dakota R/T was modified with a trailer hitch costing $300. The factory
installed some of these hitches, while other buyers who wanted to tow had dealer-
installed or after-market hitches attached.
Nationwide, Chrysler sold or leased fewer than 7,000 of the Dakota R/Ts in the
two relevant years. Fewer than 1,000 affected R/Ts were sold in California during the
two years.
By February of 1999, Chrysler set up a response team to address the problem. By
June 1999, Chrysler had replaced the incorrect marketing materials, owners manuals, and
engine and door labels for not-yet sold Dakota R/Ts. Chrysler also had notified existing
buyers of the error, told them not to attempt to tow more than 2,000 pounds, and provided

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them with the same modified materials. Simultaneously, Chrysler began to address
remedial measures for customers who had bought or leased their Dakota R/Ts under the
incorrect marketing program.
Many Dakota R/T buyers never intended to tow more than 2,000 pounds. When
informed by Chrysler of the error, most of those customers were satisfied with Chrysler’s
offers of cash and merchandise.
Initially, Chrysler offered buyers who had bought the hitches refunds of the $300
cost. By the summer, Chrysler authorized dealers to repurchase or replace Dakota R/Ts
on a case-by-case basis, but only for customers who demanded such a remedy.
On July 29, 1999, the Santa Cruz County District Attorney contacted Chrysler
about the problem, threatened legal action, and requested Chrysler’s input before acting.
On August 10, 1999, the California Attorney General notified Chrysler it had joined the
Santa Cruz County District Attorney. The public agencies requested a response by the
end of August 1999.
Plaintiffs filed their case on August 23, 1999, in Los Angeles County Superior
Court. Plaintiffs alleged they all bought 1999 Dakota R/Ts from various Chrysler
dealers. Only Graham lived and bought his truck in California. Plaintiffs alleged
Chrysler marketed, sold, and warranted their 1998 and 1999 Dakota R/Ts as capable of
towing 6,400 pounds when the trucks actually could tow only 2,000 pounds. Plaintiffs
alleged Chrysler acknowledged the error by letter to all purchasers dated June 16, 1999.
Plaintiffs alleged they notified Chrysler of their 1) trucks’ failure to comply with the

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warranted towing capacity, and 2) revocation of their acceptance of their trucks on
July 19, 1999. Plaintiffs sought (but never obtained) class certification for all who
bought Dakota R/Ts nationwide. Plaintiffs alleged a single breach of express warranty
cause of action. Plaintiffs sought return of their purchase or lease payments,
compensatory damages, and attorney fees.
Also on August 23, 1999, the Detroit News contacted Chrysler’s legal counsel
about plaintiffs’ case. Chrysler’s counsel claimed Chrysler had responded appropriately
to the marketing error, including offering buybacks to customers who requested it.
Plaintiffs faxed their complaint to Chrysler the same day. The next day, August 24,
1999, Chrysler’s employee newsletter ran an article on the plaintiffs’ case.
Chrysler’s response team met throughout August 1999. The team knew about
both public agency inquiries and the response deadline. Indeed, Chrysler wrote the
public agencies that its internal approval process prohibited a response by August 31, but
promised a response by September 8, 1999. When asked later whether they knew about
the class action lawsuit filed in California before Chrysler’s September 10, 1999, letter
offering repurchase or replacement to all Dakota R/T buyers, team members said, “yes.”1
As noted, on September 10, 1999, Chrysler issued its offer to all previous Dakota
R/T buyers of repurchase or replacement. Chrysler demurred to the complaint. Plaintiffs
1 We reject Chrysler’s argument that the team members confused the public agency inquiries (in
which no litigation had begun) with plaintiffs’ class action lawsuit, and actually meant they knew about
the public agency inquiries but not plaintiffs’ case. The trial court rejected that argument and found the
team knew about plaintiffs’ case before Chrysler issued the September 10, 1999, offer. That finding is
supported by substantial evidence.

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filed an amended complaint, acknowledging Chrysler’s offer of, among other remedies,
repurchase or replacement of the trucks for all previous buyers. The trial court sustained
the demurrer without leave to amend and dismissed the case, finding it was moot because
Chrysler already had offered all purchasers the relief plaintiffs sought. In late 2000,
Chrysler settled the public agency investigations by paying a $75,000 fine and agreeing
to continue to assure that the marketing error did not reoccur. The agencies discovered
the erroneous marketing was continuing as late as September 1999.
Nationwide, 2,549 Dakota R/T buyers opted for repurchase or replacement.
Another 3,101 buyers opted for service contracts and parts coupons. The total value of
these offers exceeded $15 million. Less than 1,000 of the R/T buyers were Californians.
Although plaintiffs’ case was dismissed, the parties continued to litigate plaintiffs’
entitlement to attorney fees. Chrysler insisted throughout that plaintiffs were not entitled
to attorney fees, contending plaintiffs had no effect on Chrysler’s recognition of the
problem and decision to offer all buyers repurchase or replacement. Over a year of hotly-
contested discovery and other motions occurred to clarify the facts described above.
The court held three contested hearings on the fee request. On October 18, 2000,
the court held a lengthy evidentiary hearing and made factual findings rejecting
Chrysler’s claim that it had at least decided to offer all buyers repurchase or buybacks
before plaintiffs filed their case. The court found plaintiffs’ case was a catalyst for
Chrysler’s eventual offer. The court approved most of plaintiff’s attorneys’ work hours
and tentatively awarded a 3.0 multiplier to account for risk and success. The court held

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additional hearings on April 23 and June 19, 2001, to address the recent Ketchum v.
Moses (2001) 24 Cal.4th 1122 case.
The trial court found the lodestar fee amount was $329,620 through the October
18, 2000, hearing. The court reduced its multiplier from 3.0 to 2.25 for the fees until the
October 18, 2000, hearing, and applied no multiplier for time thereafter. The court
awarded no fees for work after April 23, 2001. The total award was $762,830.
DISCUSSION
As relevant, section 1021.5 provides: “Upon motion, a court may award
attorneys’ fees to a successful party against one or more opposing parties in any action
which has resulted in the enforcement of an important right affecting the public interest
if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on
the general public or a large class of persons, (b) the necessity and financial burden of
private enforcement . . . are such as to make the award appropriate, and (c) such fees
should not in the interest of justice be paid out of the recovery . . . .” Orders
awarding or denying section 1021.5 attorney fees are appealable. (Williams v. San
Francisco Bd. of Permit Appeals (1999) 74 Cal.App.4th 961, 964; Norman I. Krug Real
Estate Investments, Inc. v. Praszker (1990) 220 Cal.App.3d 35, 46.)
“Section 1021.5 provides for court-awarded attorney fees under a private attorney
general theory. [Citation.] . . . [T]he private attorney general doctrine ‘rests upon the
recognition that privately initiated lawsuits are often essential to the effectuation of the
fundamental public policies embodied in constitutional or statutory provisions . . . .

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[W]ithout some mechanism authorizing the award of attorney fees, private actions to
enforce such important public policies will as a practical matter frequently be infeasible.
[Citations.]’
“The decision as to whether an award of attorney fees is warranted rests initially
with the trial court. [Citation.] ‘[U]tilizing its traditional equitable discretion,’ that court
‘must realistically assess the litigation and determine, from a practical perspective’
[citation] whether or not the statutory criteria have been met. In this case, the trial court
had to evaluate whether plaintiffs’ action: (1) served to vindicate an important public
right; (2) conferred a significant benefit on the general public or a large class of persons;
and (3) imposed a financial burden on plaintiffs which was out of proportion to their
individual stake in the matter. [Citations.]
“Where, as here, a trial court has discretionary power to decide an issue, its
decision will be reversed only if there has been a prejudicial abuse of discretion. ‘“To be
entitled to relief on appeal . . . it must clearly appear that the injury resulting from such a
wrong is sufficiently grave to amount to a manifest miscarriage of justice . . . .”’
[Citation.] However, ‘discretion may not be exercised whimsically and, accordingly,
reversal is appropriate “where no reasonable basis for the action is shown.” [Citation.]’
[Citations.]” (Baggett v. Gates (1982) 32 Cal.3d 128, 142-143, fn. omitted.)
“‘To obtain an award of fees under section 1021.5, one must be a successful party
in an action resulting in the enforcement of an important right affecting the public
interest. A significant benefit, whether pecuniary or nonpecuniary, must have been

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conferred on the general public or a broad class of persons, and the necessity and
financial burden of private enforcement must transcend the litigant’s personal interest in
the controversy. [Citations.]
“‘“Whether a party has met the requirements for an award of fees and the
reasonable amount of such an award are questions best decided by the trial court in the
first instance. [Citations.] That court, utilizing its traditional equitable discretion, must
realistically assess the litigation and determine from a practical perspective whether the
statutory criteria have been met. [Citation.] Its decision will be reversed only if there has
been a prejudicial abuse of discretion. [Citation.] To make such a determination, we
must review the entire record, paying particular attention to the trial court’s stated reasons
in denying or awarding fees and whether it applied the proper standards of law in
reaching its decision.” [Citation.]’ [Citation.]” (Hewlett v. Squaw Valley Ski Corp.
(1997) 54 Cal.App.4th 499, 543-544.)
“The trial court found these elements were met. Its determination may not be
disturbed on appeal absent a showing that the court abused its discretion in awarding
attorney fees, i.e., the record establishes there is no reasonable basis for the award.
[Citations.] ‘The pertinent question is whether the grounds given by the court for its
[grant] of an award are consistent with the substantive law of section 1021.5 and, if so,
whether their application to the facts of this case is within the range of discretion
conferred upon the trial courts under section 1021.5, read in light of the purposes and

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policy of the statute.’ [Citation.]” (Feminist Women’s Health Center v. Blythe (1995) 32
Cal.App.4th 1641, 1666-1667.)
Likewise, in setting the amount of fees, the trial court must make “a careful
compilation of the time spent and reasonable hourly compensation of each attorney . . .
involved in the presentation of the case. . . . Using these figures as a touchstone, the court
then [should take] into consideration various relevant factors, of which some militate[] in
favor of augmentation and some in favor of diminution. Among these factors [are]: (1)
the novelty and difficulty of the questions involved, and the skill displayed in presenting
them; (2) the extent to which the nature of the litigation precluded other employment by
the attorneys; (3) the contingent nature of the fee award, both from the point of view of
eventual victory on the merits and the point of view of establishing eligibility for an
award . . . . [¶] The ‘experienced trial judge is the best judge of the value of professional
services rendered in his court, and while his judgment is of course subject to review, it
will not be disturbed unless the appellate court is convinced that it is clearly wrong.’
[Citations.]” (Serrano v. Priest (1977) 20 Cal.3d 25, 48-49.)
First, we dispose of Chrysler’s arguments that the trial court abused its discretion
in finding the marketing error potentially hazardous, Chrysler did not offer all buyers
repurchase or replacement before plaintiffs filed their case, and Chrysler’s decision to
make the September 10, 1999, global offer was influenced by plaintiffs’ case, not a
response to Chrysler’s own attempts to address the problem. The contention lacks merit.
Before September 10, 1999, Chrysler had only offered repurchase or replacement on a

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case-by-case basis, and only to customers who insisted on that remedy. Indeed, one of
the plaintiffs maintained Chrysler had refused his request for exactly that remedy.
Moreover, Chrysler had not unequivocally offered that remedy to all buyers who had
purchased tow hitches, and who thus clearly intended to tow more than 2,000 pounds.
Chrysler unquestionably knew about plaintiffs’ case a few weeks before its September
10, 1999, offer. Its response team also admitted knowing about the lawsuit as it
formulated a response to a multi-tiered problem. Chrysler personnel admitted the error
had potential safety hazards. Chrysler’s argument that the trial court abused its discretion
in so finding amounts to nothing more than a request that we reweigh the evidence and
substitute our judgment for that of the trial court. Doing so is not our function. The trial
court’s factual findings are supported by substantial evidence.
In determining the sufficiency of the evidence, “a ‘reviewing court is without
power to substitute its deductions for those of the trial court.’ . . . ‘In resolving the issue
of the sufficiency of the evidence, we are bound by the established rules of appellate
review that all factual matters will be viewed most favorably to the prevailing party
[citations] and in support of the judgment . . . . “In brief, the appellate court ordinarily
looks only at the evidence supporting the successful party, and disregards the contrary
showing.” [Citation.] All conflicts, therefore, must be resolved in favor of the
respondent.’ [Citations.]” (Campbell v. Southern Pacific Co. (1978) 22 Cal.3d 51, 60.)
Second, these trial court findings supported its finding that plaintiffs were a
catalyst for Chrysler’s action, although their case was dismissed and they did not secure a

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favorable judicial ruling. The catalyst theory is well-recognized under California law as
justifying an award under section 1021.5. (Westside Community for Independent Living,
Inc. v. Obledo (1983) 33 Cal.3d 348, 353.) While section 1021.5 is similar to comparable
federal statutes, and federal cases are instructive, the California rule is independent.
(Serrano v. Unruh (1982) 32 Cal.3d 621, 639, fn. 29.) We reject Chrysler’s claim that a
recent U.S. Supreme Court opinion rejecting the catalyst theory for fee awards under a
federal statute (Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health
and Human Resources (2001) 532 U.S. 598, 600) compels us to reject them under our
separate California statute, at least until the California Supreme Court so orders. (Auto
Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.)
Third, we reject Chrysler’s claim that the trial court abused its discretion in
holding plaintiffs’ action vindicated an important public right, despite each individual
plaintiff’s relatively small stake in the overall benefit. Although each plaintiff was
seeking an individual remedy, and although the number of those directly affected was
only a few thousand, plaintiffs’ action vindicated the public’s interest in fair consumer
contracts and the prevention of possible safety hazards. Those interests support the
court’s finding. (Beasley v. Wells Fargo Bank (1991) 235 Cal.App.3d 1407, 1413-1418.)
Fourth, the court did not abuse its discretion in permitting an award of fees for
seeking fees, and calculating a lodestar and a multiplier. This is particularly true where
Chrysler vigorously litigated plaintiffs’ entitlement to any fees. (Ketchum v. Moses,
supra, 24 Cal.4th at pp. 1136-1141; Beasley v. Wells Fargo Bank, supra, 235 Cal.App.3d

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at pp. 1418-1419.) Here, the trial court carefully analyzed the fee request. It only used a
multiplier for the period until plaintiffs’ entitlement to fees was secured, and the court
lowered the multiplier. The court expressly declined to punish Chrysler for its conduct,
but merely noted that Chrysler’s prolonged litigation of whether plaintiffs were entitled to
any fees was responsible for the increase. The court then awarded no fees for the last two
months of work. Chrysler has failed to show the court abused its discretion in calculating
the fee award.
DISPOSITION
We affirm the fee award order. Plaintiffs are entitled to their costs on appeal.
NOT TO BE PUBLISHED.
ORTEGA, Acting P.J.
We concur:
VOGEL (Miriam A.), J.
MALLANO, J.

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