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December 15, 2017
Court clarifies application of lodestar awards

Applying a multiplier to contingency fee lodestar awards is not limited to “rare” and “exceptional” circumstances, the Florida Supreme Court has ruled.

The 5-2 decision issued October 19 overturned a ruling from the Fifth District Court of Appeal and distinguished that Florida court cases do not follow the precedents laid out by the U.S. Supreme Court for federal lawsuits.

Justice Barbara Pariente wrote the majority opinion in a case that stemmed from a couple hiring an attorney with a contingency fee after their insurance company failed to pay a claim based on water damage to their home. The couple prevailed, and after holding a hearing, the trial judge determined a lodestar contingency fee and then doubled that award based on Florida Supreme Court rulings in Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985), Standard Guaranty Insurance Co. v. Quanstrom, 555 So. 2d 828 (Fla. 1990), and subsequent cases.

Those rulings set out standards for setting lodestar fees and conditions where multipliers can be awarded.

“Nowhere in Rowe did this court state that the lodestar amount includes ‘a strong presumption’ of reasonableness which may only be overcome in ‘rare and exceptional circumstances. . . .’ Rather, Rowe indicated that the federal lodestar approach provided a ‘suitable foundation,’ that trial courts ‘must consider’ a contingency fee multiplier, and, ‘when appropriate,’ the trial judge may adjust the fee on the basis of a contingency fee multiplier, provided that he or she sets forth specific findings,” Pariente wrote.

She noted after the Rowe and Quanstrom rulings, the U.S. Supreme Court issued opinions restricting the use of multipliers on the theory they encourage meritless litigation. But she added the Florida Supreme Court has never adopted that reasoning.

“To the extent that respondents and their amici ask us to eliminate the contingency fee multiplier in all but the ‘rare’ and ‘exceptional’ case where attorney’s fees are awarded, we decline to adopt the reasoning of the United States Supreme Court. . . . First, this court is not bound, in interpreting state statutes or prevailing party attorney’s fees in contracts, by United States Supreme Court precedent interpreting awards of attorney’s fees in federal statutes,” Pariente wrote.

“Second, with all due deference to the United States Supreme Court, we do not accept the . . . . rationale for rejecting contingency fee multipliers. Justice [Antonin] Scalia, writing for the majority in Dague [Burlington v. Dague, 505 U.S. 557 (1992)], couched his disapproval of contingency fee multipliers by reasoning that the multipliers incentivize nonmeritorious claims, so that those claims are effectively raised as often as meritorious claims . . . .

“To the contrary, the contingency fee multiplier provides trial courts with the flexibility to ensure that lawyers, who take a difficult case on a contingency fee basis, are adequately compensated. We also do not agree that the contingency fee multiplier encourages ‘nonmeritorious claims’ and would, instead, posit that solely because a case is ‘difficult’ or ‘complicated’ does not mean that the case is nonmeritorious. Indeed, without the option of a contingency fee multiplier, those with difficult and complicated cases will likely be unable or find it difficult to obtain counsel willing to represent them.”

Chief Justice Jorge Labarga and Justices Fred Lewis and Peggy Quince concurred in Pariente’s opinion. Justice Ricky Polson concurred in the result only. Justice Charles Canady, joined by Justice Alan Lawson, dissented.

Canady agreed the Fifth DCA erred on the case law on multipliers, but said there was a lack of “competent, substantial evidence” to support the trial court’s use of the multiplier.

He also argued that in light of the Dague decision, the Florida court should reconsider the use of multipliers.

In that case, “the United States Supreme Court unequivocally repudiated the use of the contingency fee multiplier. The majority’s decision here underscores the need for a full re-examination in a future case of our multiplier jurisprudence in light of the reasoning of Dague,” Canady wrote. He went on to list several areas where he saw the majority’s ruling as conflicting with Dague.

The court acted in Joyce, et al., v. Federated National Insurance Company, Case No. SC16-103.

[Revised: 12-13-2017]