Ohio Supreme Court Issues Decisions on Attorney’s Fees + Court Costs
April 2, 2020
- The Ohio Supreme Court greatly restricts a trial court’s ability to grant attorney’s fees in excess of the “lodestar” formula.
- The Court identified “results obtained” as the only relevant criterion in awarding “enhanced fees” to a prevailing party.
- The Court also rules that prevailing parties cannot recover costs for deposition transcripts in pursuing a motion for summary judgment.
While our collective focus shifted to the COVID-19 pandemic, the Supreme Court of Ohio quietly issued two opinions of particular importance to litigators and their clients. This article summarizes those opinions.
Court Restricts Discretion of Trial Courts When Calculating Attorney’s Fees
The Court’s decision in Phoenix Lighting Group, LLC v. Genlyte Thomas Group, LLC aligned Ohio with the federal system for calculating attorney’s fees recoverable by prevailing parties in civil lawsuits.
Before Phoenix, Ohio courts calculated recoverable attorney’s fees using the “lodestar method,” which multiplies the reasonable hourly rate of the attorney by the number of hours reasonably expended on the litigation. At their discretion, trial courts could “enhance” the amount of fees calculated by the lodestar formula by considering the factors in the Ohio Rules of Professional Conduct, including:
- the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
- the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
- the fee customarily charged in the locality for similar legal services;
- the amount involved and the results obtained;
- the time limitations imposed by the client or by the circumstances;
- the nature and length of the professional relationship with the client;
- the experience, reputation, and ability of the lawyer or lawyers performing the services; and
- whether the fee is fixed or contingent.
Phoenix held that the lodestar calculation already accounts for these enhancement factors in either the attorney’s hourly rate (factors such as the lawyer’s experience, reputation, and ability) or the reasonable hours expended on the case (factors such as the novelty and difficulty of the case). Now, after Phoenix, trial courts have less discretion to enhance attorney’s fees above the amount calculated by the lodestar method. Trial courts can now enhance fees above the lodestar amount only when an attorney provides objective and specific evidence that the enhancement is necessary for reasons not already taken into account by the lodestar calculation.
At the trial level in Phoenix, plaintiff Phoenix Lighting Group, LLC was awarded a jury verdict against defendant Genlyte Thomas Group, LLC for compensatory and punitive damages. The award of punitive damages gave the trial court discretion to order Genlyte to pay Phoenix’s attorney’s fees. Using the lodestar method, the trial court determined that Phoenix’s attorney’s fees totaled $1,991,507. After considering enhancement factors, however, the trial court ordered Genlyte to pay Phoenix $3,983,014—double the lodestar amount—in attorney’s fees because:
- the case was complex (which prevented Phoenix’s counsel from accepting other work);
- Phoenix’s lawyers obtained a highly favorable outcome for their client;
- the attorneys were highly experienced with excellent reputations; and
- the hybrid hourly-contingent nature of the compensation forced Phoenix’s lawyers to assume great financial risk.
The court of appeals affirmed the award of attorney’s fees because it could not conclude that the trial court abused its discretion in enhancing the fees.
The Supreme Court of Ohio reversed. The Court relied on several decisions of the United States Supreme Court, but primarily the decisions in Blum v. Stenson, 465 U.S. 886 (1984) and Purdue v. Kenny A., 559 U.S. 542 (2010). Consistent with those decisions, the Supreme Court of Ohio held that there is a strong presumption that the lodestar method of calculating attorney’s fees is the proper amount for an award of attorney’s fees. Fees above and beyond those produced by the lodestar method are appropriate only when an attorney provides objective and specific evidence that the enhancement is necessary for reasons not already taken into account by the lodestar calculation. While a trial court has discretion to modify the presumptive calculation produced by the lodestar, any modification must be accompanied by a rationale justifying the modification.
The Court reversed the trial court’s enhancement of attorney’s fees by $1.9 million because all but one of the enhancement factors considered by the trial court were accounted for in the lodestar calculation. The last factor, “results obtained,” is only relevant when the lodestar does not adequately measure the lawyer’s market value and evidence at the trial level from Phoenix’s own expert showed that the lodestar calculation of $1,991,507 was a reasonable fee.
Prevailing Party Cannot Recover Costs of Deposition Transcripts
In Vossman v. AirNet Systems, Inc., the Supreme Court of Ohio said that a prevailing party in a civil lawsuit cannot recover the cost of deposition transcripts as part of its court costs.
Rule 54 of the Ohio Rules of Civil Procedure entitles the prevailing party in a civil lawsuit to recover its court costs. However, under previous decisions of the Court, the costs recoverable under Rule 54 are statutory and therefore must be tied to a particular statute permitting their recovery. The plaintiff in Vossman, as the prevailing party, moved the court to recover its costs, including the costs of obtaining deposition transcripts that the plaintiff used in support of its motion for summary judgment. Plaintiff relied on Ohio Revised Code 2303.21, which states, “When it is necessary in . . . [a] civil action to procure a transcript of a . . . proceeding, . . . the expense of procuring such transcript . . . shall be taxed in the bill of costs and recovered as in other cases.”
So the issue in Vossman became whether or not a deposition is a “proceeding” under R.C. 2303.21. By looking at the statutory history (the statute was enacted in 1859 with only minor modifications since then), dictionary definitions of “proceedings,” and statutory context, the Court concluded that depositions are not “proceedings” in R.C. 2303.21. The Court reasoned that the statute intended to permit recovery of costs related to documenting acts that happened in a court or other adjudicative body and the statute did not permit recovery of costs associated with the general procuring of evidence. Because depositions are conducted outside the presence of a judge, it is not a proceeding within the meaning of the statute. Therefore, “R.C. 2303.21 does not provide statutory authority for a party to recover the cost of deposition transcripts used in support of a motion for summary judgment.”
Saša Trivunić is an associate and trial lawyer at Kegler Brown. He works with businesses primarily in the areas of employment, contract and personal injury litigation, and is a part of the firm’s heralded Professional Responsibility practice. He has been practicing law since 2017 and is licensed to practice in Ohio and before both the U.S. District Court for the Southern District of Ohio and the U.S. Court of Appeals for the 6 th Circuit.
He can be reached at [email protected] or (614) 462-5457.