Phoenix Lighting Group, L.L.C. v. Genlyte Thomas Group, L.L.C. (Slip Opinion) , 2020 Ohio 1056 ( 2020 )

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Phoenix Lighting Group, L.L.C. v. Genlyte Thomas Group, L.L.C., Slip Opinion No. 2020-Ohio-
1056.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
advance sheet of the Ohio Official Reports. Readers are requested to
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
South Front Street, Columbus, Ohio 43215, of any typographical or other
formal errors in the opinion, in order that corrections may be made before
the opinion is published.
SLIP OPINION NO. 2020-OHIO-1056
PHOENIX LIGHTING GROUP, L.L.C., ET AL., APPELLEES, v. GENLYTE THOMAS
GROUP, L.L.C., APPELLANT, ET AL.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Phoenix Lighting Group, L.L.C. v. Genlyte Thomas Group,
L.L.C., Slip Opinion No. 2020-Ohio-1056.]
Tort—Punitive damages—Attorney fees—A strong presumption exists that the
reasonable hourly rate multiplied by the number of hours worked, the
“lodestar,” is the proper amount for an attorney-fee award—
Enhancements to a lodestar should be granted rarely—Enhancements are
appropriate when an attorney produces objective and specific evidence that
enhancement is necessary to account for a factor not already subsumed in
the lodestar calculation—A trial court has discretion to modify the
presumptive calculation of attorney fees (the reasonable hourly rate
multiplied by the number of hours worked), but any modification must be
accompanied by a rationale justifying the modification.
(No. 2018-1076—Submitted September 10, 2019—Decided March 25, 2020)
SUPREME COURT OF OHIO
Appeal from the Court of Appeals for Summit County, No. 28082,
2018-Ohio-2393.
__________________
SYLLABUS OF THE COURT
1. There is a strong presumption that the reasonable hourly rate multiplied by
the number of hours worked, which is sometimes referred to as the
“lodestar,” is the proper amount for an attorney-fee award. Enhancements
to the lodestar should be granted rarely and are appropriate when an attorney
produces objective and specific evidence that an enhancement of the
lodestar is necessary to account for a factor not already subsumed in the
lodestar calculation. (Perdue v. Kenny A., 559 U.S. 542, 130 S. Ct. 1662,
176 L. Ed. 2d 494 (2010), followed; Bittner v. Tri-County Toyota, Inc., 58
Ohio St. 3d 143, 569 N.E.2d 464 (1991), modified.)
2. A trial court has discretion to modify the presumptive calculation of
attorney fees—the reasonable hourly rate multiplied by the number of hours
worked—but any modification must be accompanied by a rationale
justifying the modification.
__________________
STEWART, J.
{¶ 1} Appellees, Phoenix Lighting Group, L.L.C., and Jack Duffy and
Associates, Inc. (collectively, “Phoenix”), were awarded a jury verdict against
appellant, Genlyte Thomas Group, L.L.C., a.k.a. Daybrite, Capri, Omega (“DCO”),
for compensatory and punitive damages, prejudgment interest, treble damages, and
litigation costs and expenses that totaled $5,518,335. When a party is awarded
punitive damages, a trial court has the discretion to order the losing party to pay
the prevailing party’s attorney fees. The beginning point for determining the award
of attorney fees is the reasonable hourly rate multiplied by the number of hours
worked, a calculation that is sometimes referred to as the “lodestar.” The trial court
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established a lodestar of $1,991,507. The trial court then doubled the attorney fees
because of the complexity and length of the case and the success achieved. The
enhancement resulted in an award of $3,983,014 in attorney fees. The court of
appeals affirmed the award.
{¶ 2} We accepted jurisdiction over this appeal to consider the
circumstances that warrant enhancement to the lodestar. We reaffirm our holding
in Bittner v. Tri-County Toyota, Inc., 58 Ohio St. 3d 143, 569 N.E.2d 464 (1991),
syllabus, to the extent that it held that a lodestar can be modified, but we hold,
consistent with the decision of the United States Supreme Court in Perdue v. Kenny
A., 559 U.S. 542, 130 S. Ct. 1662, 176 L. Ed. 2d 494 (2010), that the lodestar is
presumptively reasonable and that enhancements to the lodestar should be rarely
granted and allowed only when the prevailing party has presented evidence that
enhancement is necessary to provide reasonable compensation, that is, if the
lodestar does not take into consideration any factor that may be properly considered
in determining a reasonable fee.
{¶ 3} Because the lodestar reflected a reasonable fee based on the prevailing
market rate for the services rendered by Phoenix’s attorneys, we reverse the
judgment of the court of appeals as to the award of attorney fees, and we remand
this cause to the trial court to enter judgment awarding attorney fees in the amount
of the calculated lodestar.
FACTS
{¶ 4} Phoenix, an agency owned by Patrick Duffy, sold lighting products
manufactured by Acuity Brand Lighting. Two Phoenix employees, Jason Brown
and Guy Day, began negotiations with Duffy to buy Phoenix. At the same time
that the employees were negotiating with Duffy, they approached DCO—a direct
competitor of the Acuity Brand Lighting products sold by Phoenix—about starting
their own sales agency and representing Acuity products. Using information they
received from their employment at Phoenix, along with financial assistance from
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DCO, the two employees formed Intelligent Illumination, a sales agency that would
represent products manufactured by DCO. Intelligent Illumination hired several
Phoenix employees. Phoenix eventually went out of business.
{¶ 5} Phoenix filed a lawsuit stating causes of action against DCO for,
among other things, tortious interference with business relationships, tortious
interference with contractual relationships, misappropriation of trade secrets, unfair
competition, civil conspiracy, and frivolous conduct. Brown and Day were also
named as defendants, but they settled during trial. A jury returned a verdict finding
DCO liable for tortious interference with a business relationship, misappropriating
trade secrets, and engaging in a civil conspiracy with Brown and Day. In a separate
proceeding, the jury awarded Phoenix punitive damages and reasonable attorney
fees. In total, Phoenix was awarded $1,680,970 in compensatory damages and
$3,661,940 in punitive damages.
{¶ 6} In a posttrial hearing on attorney fees, the trial court established a
lodestar figure of $1,991,507, finding that that amount “accurately represents the
amount of attorney fees * * * that would have been charged to Phoenix under a
standard hourly rate agreement.” It then considered whether an enhancement of
that amount was warranted. It determined that the case was “quite complex, both
factually and legally,” that the case took up so much of counsel’s time that they
were hindered “from accepting and pursuing other cases and clients,” that
Phoenix’s attorneys “obtained a highly favorable outcome,” that the hybrid hourly
fee and contingent nature of the compensation “forced Phoenix’s counsel to assume
a great financial risk,” and that all of the attorneys involved in this case were “of
high caliber,” were “highly experienced, and maintained excellent reputations.”
Based on these determinations, the trial court applied a multiplier of two and
awarded a total of $3,983,014 in attorney fees.
{¶ 7} The Ninth District Court of Appeals affirmed the verdict and
compensatory-damages award but concluded that the damages relating to the claim
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for conspiracy to misappropriate trade secrets were subject to the punitive-damages
cap in R.C. 1333.63. On the issue of attorney fees, the court of appeals noted that
after a court has calculated the lodestar, the court next should consider whether to
adjust the lodestar. 2018-Ohio-2393, ¶ 69. After considering the factors that the
trial court relied upon as a basis for enhancing the lodestar, the court of appeals
concluded that it could not say that the “trial court abused its discretion in applying
a multiplier of two to the lodestar amount in this case.” Id. at ¶ 71.
{¶ 8} We accepted jurisdiction over the following proposition of law:
Because there is a strong presumption that the lodestar
method yields a sufficient attorney fee, enhancements should be
granted rarely and only where the applicant seeking the
enhancement can produce objective and specific evidence that an
enhancement is necessary to compensate for a factor not already
subsumed within the Court’s lodestar calculation.
ANALYSIS
{¶ 9} Ohio courts generally follow the “American rule” with respect to an
award of attorney fees: each party is responsible for its own attorney fees. Wilborn
v. Bank One Corp., 121 Ohio St. 3d 546, 2009-Ohio-306, 906 N.E.2d 396, ¶ 7. An
exception to the American rule allows an award of attorney fees to the prevailing
party as an element of compensatory damages when the jury finds that punitive
damages are warranted. Zoppo v. Homestead Ins. Co., 71 Ohio St. 3d 552, 558, 644
N.E.2d 397 (1994); New York, Chicago & St. Louis RR. Co. v. Grodek, 127 Ohio
St. 22, 24-25, 186 N.E. 733 (1933) (“facts which justify the infliction of exemplary
damages will also justify the jury in adding the amount of counsel fees to the
verdict, not as a part of exemplary damages, but as compensatory damages”). See
Galmish v. Cicchini, 90 Ohio St. 3d 22, 35, 734 N.E.2d 782 (2000).
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{¶ 10} Our decisions determining what are reasonable attorney fees have
been guided by decisions issued by the United States Supreme Court. For example,
in Bittner, we quoted Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76
L. Ed. 2d 40 (1983), for the proposition that the starting point for determining
attorney fees is the lodestar: “ ‘the number of hours reasonably expended on the
litigation multiplied by a reasonable hourly rate.’ ” Bittner, 58 Ohio St. 3d at 145,
569 N.E.2d 464, quoting Hensley at 433. We agreed with the Supreme Court that
this calculation “ ‘provides an objective basis on which to make an initial estimate
of the value of the lawyer’s services.’ ” Id., quoting Hensley at 433.
{¶ 11} “A reasonable hourly rate is the prevailing market rate in the relevant
community, Blum v. Stenson, 465 U.S. 886, 895, 104 S. Ct. 1541, 79 L. Ed. 2d 891
(1984), given the complexity of the issues and the experiences of the attorney
* * *.” State ex rel. Harris v. Rubino, 156 Ohio St. 3d 296, 2018-Ohio-5109, 126
N.E.3d 1068, ¶ 4. “[T]he prevailing market rate can often be calculated based on a
firm’s normal billing rate because, in most cases, billing rates reflect market rates,
and they provide an efficient and fair short cut for determining the market rate.”
Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp., 995 F.2d 414, 422 (3d
Cir.1993).
{¶ 12} When the Supreme Court considered the calculation, it stated that
“[t]he product of reasonable hours times a reasonable rate does not end the inquiry.
There remain other considerations that may lead the * * * court to adjust the fee
upward or downward, including the important factor of the ‘results obtained.’ ”
Hensley at 434. We followed this principle in Bittner and held that for an award of
attorney fees made under R.C. 1345.09(F)(2) of the Consumer Sales Practices Act,
R.C. 1345.04 et seq., “the trial court should first calculate the number of hours
reasonably expended on the case times an hourly fee, and then may modify that
calculation by application of the factors listed in DR 2-106(B) [now Prof.Cond.R.
1.5(a)].” Bittner at syllabus. (Prof.Cond.R. 1.5(a) superseded former DR 2-106,
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but the two rules are substantially the same.) Prof.Cond.R. 1.5(a) lists various
factors to be considered in determining the reasonableness of a fee charged by a
lawyer:
(1) The time and labor required, the novelty and difficulty of
the questions involved, and the skill requisite to perform the legal
service properly;
(2) The likelihood, if apparent to the client, that the acceptance of
the particular employment will preclude other employment by the lawyer;
(3) The fee customarily charged in the locality for similar
legal services;
(4) The amount involved and the results obtained;
(5) The time limitations imposed by the client or by the
circumstances;
(6) The nature and length of the professional relationship
with the client;
(7) The experience, reputation, and ability of the lawyer or
lawyers performing the services;
(8) Whether the fee is fixed or contingent.
{¶ 13} In the years after Hensley was decided, the United States Supreme
Court backed away from enhancements based on factors like those contained in
Prof.Cond.R. 1.5(a). For example, in Blum at 898-900, the court held that the
novelty and complexity of the issues, any special skill of counsel, the quality of
representation, and the results obtained, are all accounted for in the initial lodestar
computation. The court rejected the argument that an upward adjustment to the
lodestar is never permissible but stated that when “the applicant for a fee has carried
his burden of showing that the claimed rate and number of hours are reasonable,
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the resulting product is presumed to be the reasonable fee.” Id. at 897. In
Pennsylvania v. Delaware Valley Citizens’ Council for Clean Air, 478 U.S. 546,
566, 106 S. Ct. 3088, 92 L. Ed. 2d 439 (1986), the court stated that the lodestar
accounts for most, if not all, of the relevant factors constituting a reasonable fee
and that it is unnecessary to adjust the fee for an attorney’s superior performance
to serve the statutory purpose of helping plaintiffs to secure legal assistance. And
in Burlington v. Dague, 505 U.S. 557, 563, 112 S. Ct. 2638, 120 L. Ed. 2d 449
(1992), the court rejected enhancements to a fee award based on the contingent
nature of payment, finding that the contingency factor is already incorporated into
the lodestar and that enhancing a fee on that basis would result in “double counting”
that could encourage attorneys to bring meritless claims.
{¶ 14} The court’s most significant adjustment to its lodestar jurisprudence
came in Perdue, 559 U.S. 542, 130 S. Ct. 1662, 176 L. Ed. 2d 494. In that case, a
district court established a lodestar of approximately $6 million for fees in a case
in which attorneys had successfully brought a civil-rights class action against the
state of Georgia. Id. at 547-548. The district court enhanced the lodestar by 75
percent based on the quality of representation, including the contingency of the case
and the fact that counsel had not been paid as the action progressed but had instead
advanced the cost of the litigation. Id. at 548-549. The enhancement increased the
attorney fees to approximately $10.5 million. Id.
{¶ 15} The court acknowledged again that the lodestar could be enhanced
but cautioned that enhancement should be awarded only in rare and exceptional
circumstances. Id. at 552. It reaffirmed the proposition that a court may not
enhance an award based on a factor that is subsumed in the lodestar elements of
hours and rate, noting, as examples, that the complexity of a case is reflected in the
number of billable hours and that the quality of representation is reflected in the
reasonable hourly rate. Id. at 553. In addition, the court stressed that any
enhancement to the lodestar must be based on “specific proof” showing that the
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attorney should be “compensated at the rate that the attorney would receive in cases
not governed by the federal fee-shifting statutes.” Id. at 555.
{¶ 16} Our holding in Bittner—that a court may modify a fee calculation
based on the application of the factors set forth in what is now Prof.Cond.R.
1.5(a)—established the lodestar as an “ ‘initial estimate’ ” of a reasonable fee.
Bittner, 58 Ohio St. 3d at 145, 569 N.E.2d 464, quoting Hensley, 461 U.S. at 433,
103 S. Ct. 1933, 76 L. Ed. 2d 40. But nearly all of those factors are included as part
of the hourly fee used to calculate the lodestar. Perdue at 553.
{¶ 17} It is simple economics that an attorney charges an hourly rate that
takes into account the difficulty of the question involved, the opportunity cost, the
time limitations imposed by the client, the skill requisite to perform a legal service,
the attorney’s professional relationship with the client, and the fee customarily
charged in the jurisdiction for similar legal services. See, e.g., In re Sears, Roebuck
& Co. Front-Loading Washer Prods. Liab. Litigation, 867 F.3d 791, 792 (7th
Cir.2017) (rejecting lodestar enhancement based on the complexity of the case, the
degree of success, and the public interest advanced by the litigation “because
novelty and complexity influence the base fee—the more novel and complex a case,
the more hours will be billed and the higher the hourly billing rates will be”). Thus,
the factors in Prof.Cond.R. 1.5(a), including the results obtained, are subsumed
within the lodestar; they do not enhance the lodestar. Blum, 465 U.S. at 900, 104
S. Ct. 1662, 176 L. Ed. 2d 494 (“Because acknowledgment of the ‘results obtained’
generally will be subsumed within other factors used to calculate a reasonable fee,
it normally should not provide an independent basis for increasing the fee award”).
It is only in the rare and exceptional case that the lodestar may be enhanced and
“only to the extent it can be shown that [superior results] are the result of superior
attorney performance.” Perdue, 559 U.S. at 554, 130 S. Ct. 1662, 176 L. Ed. 2d 494.
Thus, “an enhancement may be appropriate where the method used in determining
the hourly rate employed in the lodestar calculation does not adequately measure
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the attorney’s true market value, as demonstrated in part during the litigation.” Id.
at 554-555.
{¶ 18} However, a trial court’s discretion to enhance the award of attorney
fees is limited:
It is essential that the judge provide a reasonably specific
explanation for all aspects of a fee determination, including any
award of an enhancement. Unless such an explanation is given,
adequate appellate review is not feasible, and without such review,
widely disparate awards may be made, and awards may be
influenced (or at least, may appear to be influenced) by a judge’s
subjective opinion regarding particular attorneys or the importance
of the case.
Perdue, 559 U.S. at 558, 130 S. Ct. 1662, 176 L. Ed. 2d 494.
{¶ 19} We agree with the reasoning in Perdue and hold that there is a strong
presumption that the reasonable hourly rate multiplied by the number of hours
worked, which is sometimes referred to as the “lodestar,” is the proper amount for
an attorney-fee award. Enhancements to the lodestar should be granted rarely and
are appropriate when an attorney produces objective and specific evidence that an
enhancement of the lodestar is necessary to account for a factor not already
subsumed in the lodestar calculation. In Perdue, for example, the Supreme Court
explained that an enhancement might be appropriate when “the method used in
determining the hourly rate employed in the lodestar calculation does not
adequately measure the attorney’s true market value, as demonstrated in part during
the litigation.” Id. at 554-555. But to provide a calculation that is “objective and
reviewable,” any adjustment in a case must be made “in accordance with specific
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proof linking the attorney’s ability to a prevailing market rate.” Id. We agree with
this reasoning.
{¶ 20} A party seeking an enhancement to the calculation of attorney fees
based upon the reasonable hourly rate multiplied by the number of hours worked
bears the burden of presenting evidence to establish that an adjustment is
appropriate based on a factor not already subsumed within the lodestar. A trial
court has discretion to modify the presumptive calculation of attorney fees—the
reasonable hourly rate multiplied by the number of hours worked—but any
modification must be accompanied by a rationale justifying the modification. We
therefore modify Bittner to the extent that it could be viewed as allowing
enhancements to the lodestar as a matter of course. And here, we find that Phoenix
did not carry its burden of showing that attorney-fee enhancement was necessary.
{¶ 21} Phoenix argues that DCO waived its right to argue that Perdue
should apply because it did not ask the trial court to apply it. Ordinarily, appellate
courts “will not consider a question not presented, considered or decided by a lower
court.” Kalish v. Trans World Airlines, Inc., 50 Ohio St. 2d 73, 79, 362 N.E.2d 994
(1977). But “new arguments relating to preserved claims may be reviewed.”
(Emphasis deleted.) Pugliese v. Pukka Dev., Inc., 550 F.3d 1299, 1304 (11th
Cir.2008), fn. 3. Once a “claim is properly presented, a party can make any
argument in support of that claim; parties are not limited to the precise arguments
they made below.” Yee v. Escondido, 503 U.S. 519, 534, 112 S. Ct. 1522, 118
L. Ed. 2d 153 (1992). “Offering a new argument or case citation in support of a
position advanced in the district court is permissible—and often advisable.” Secy.
United States Dept. of Labor v. Preston, 873 F.3d 877, 883 (11th Cir.2017), fn. 5.
{¶ 22} There is no question that DCO objected to any enhancement of the
lodestar during the attorney-fee hearing and on appeal. By citing Perdue, DCO is
supplementing its preserved claim that there should be no enhancement of the
lodestar.
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{¶ 23} Phoenix also argues that we should not apply Perdue to all fee-
shifting cases because it removes a trial court’s discretion to tailor an award of fees
to specific facts and circumstances. Phoenix maintains that the facts support its
enhancement because DCO engaged in malicious behavior for an extended period
of time and pursued a litigation strategy meant to “expense Phoenix into
submission.”
{¶ 24} However, Phoenix does not claim that the lodestar did not result in
reasonable compensation. Even if DCO engaged in conduct that drew out the
litigation or made it more complicated, the number of hours that Phoenix’s
attorneys billed should reflect that fact. To the extent that Phoenix seeks a lodestar
enhancement to deter “malevolent behavior” by a party, when attorney fees are
awarded incident to punitive damages, they are nonetheless compensatory
damages. New York, Chicago & St. Louis. RR. Co., 127 Ohio St. at 24-25, 186 N.E.
733. In this case, attorney fees were awarded based on DCO’s conduct.
{¶ 25} Phoenix also argues that it was entitled to attorney fees based on the
jury’s finding that DCO violated the Uniform Trade Secrets Act, R.C. 1333.61 et
seq. While it is true that R.C. 1333.64 allows a trial court to award reasonable
attorney fees to the prevailing party when a claim of misappropriation of a trade
secret is made in bad faith or the misappropriation is willful and malicious, the trial
court did not award attorney fees under that statute. The jury’s verdict in the
punitive-damages phase of the trial stated: “Having awarded punitive damages, we
further find that plaintiff, Phoenix Lighting Group LLC shall be entitled to
reasonable attorney fees as determined by the trial court judge.” That award was
confirmed by a jury interrogatory: “Jury Interrogatory No. 3. Having awarded
punitive damages, do you find that reasonable attorney fees should be awarded
against defendant, DCO? Yes.” While Phoenix may have been entitled to attorney
fees for DCO’s violation of the Uniform Trade Secrets Act, attorney fees were not
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awarded on that basis—they were awarded solely because of the punitive-damages
award.
{¶ 26} In this case, the trial court heard evidence relating to “the fee
agreements; the modification of fee agreements; the various hourly rates and
adjustments of hourly rates; the bills generated by other firms and attorneys who
performed work on the matter; and the time, labor, effort and level of difficulty and
expertise required of the attorneys involved in the litigation of this matter.” In
addition, the trial court stated that expert testimony attested to the reasonableness
of both the fees charged and the number of hours billed. Based on this evidence,
the trial court stated that “the lodestar calculation of $1,991,507 accurately
represents the amount of attorney fees, for all five involved firms, that would have
been charged to Phoenix under a standard hourly rate agreement.”
{¶ 27} Having concluded that the lodestar accurately represented the
amount of attorney fees involved, the trial court’s inquiry should have ended.
Instead, the trial court stated that it was “[m]oving beyond the lodestar figure” to
consider the factors in Prof.Cond.R. 1.5(a). With the exception of “overall
success,” all of the factors considered by the trial court—the time and labor
required, the novelty and difficulty of the questions involved, the skill needed to
perform the legal service properly, the likelihood that the acceptance of the
particular employment precluded other employment, the time limitations imposed
by the client or by the circumstances, and the experience, reputation, and ability of
the lawyer—were subsumed within the rates charged and the number of hours
billed.
{¶ 28} The only Prof.Cond.R. 1.5(a) factor not directly included in the
hourly rate charged by Phoenix’s attorneys was Prof.Cond.R. 1.5(a)(4)—the results
obtained. This factor is relevant only when the lodestar does not adequately
measure the attorney’s true market value, as demonstrated in part during the
litigation. Phoenix’s expert considered Prof.Cond.R. 1.5(a)(4) when stating his
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opinion that a $1.9 million attorney-fee award was a “reasonable fee,” testifying
that one of the factors that he considered when arriving at his opinion was “the
result that was achieved” by Phoenix’s attorneys. It follows that Phoenix’s
attorneys were reasonably compensated based on the Prof.Cond.R. 1.5(a) factors,
so there should have been no enhancement to the lodestar. We therefore reverse
the portion of the court of appeals’ judgment affirming the award of attorney fees,
and we remand the cause to the trial court with instructions to issue a final judgment
granting Phoenix attorney fees in the amount of $1,991,507.
Judgment reversed in part
and cause remanded.
O’CONNOR, C.J., and KENNEDY, FRENCH, FISCHER, DEWINE, and
DONNELLY, JJ., concur.
KENNEDY, J., concurs, with an opinion.
FISCHER, J., concurs, with an opinion.
_________________
KENNEDY, J., concurring.
{¶ 29} I concur in the majority opinion regarding the circumstances that
warrant enhancement to the lodestar amount in a trial court’s calculation of an
award of appropriate attorney fees. I fully agree that the factors regarding the
reasonableness of an attorney fee set forth in Prof.Cond.R. 1.5(a) should be
considered in determining the lodestar amount rather than in modifying the lodestar
amount. See State ex rel. Kesterson v. Kent State Univ., 155 Ohio St. 3d 1447, 2019-
Ohio-1852, 122 N.E.3d 209, ¶ 8 (Kennedy, J., dissenting). I write only to address
the role that Prof.Cond.R. 1.5(a) should play in the calculation of reasonable
attorney fees.
{¶ 30} As the majority relates, this court, in Bittner v. Tri-County Toyota,
Inc., 58 Ohio St. 3d 143, 145, 569 N.E.2d 464 (1991), set forth factors for awarding
attorney fees. In Bittner, we held, “When awarding reasonable attorney fees * * *,
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the trial court should first calculate the number of hours reasonably expended on
the case times an hourly fee, and then may modify that calculation by the
application of the factors listed in [former] DR 2-106(B) [now Prof.Cond.R.
1.5(a)].” Id. at the syllabus. That original calculation is known as the lodestar
amount.
{¶ 31} Prof.Cond.R. 1.5(a) sets forth factors to consider when determining
whether a fee is reasonable:
(1) the time and labor required, the novelty and difficulty of
the questions involved, and the skill requisite to perform the legal
service properly;
(2) the likelihood, if apparent to the client, that the
acceptance of the particular employment will preclude other
employment by the lawyer;
(3) the fee customarily charged in the locality for similar
legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the
circumstances;
(6) the nature and length of the professional relationship with
the client;
(7) the experience, reputation, and ability of the lawyer or
lawyers performing the services;
(8) whether the fee is fixed or contingent.
{¶ 32} This court today modifies Bittner, recognizing that the Prof.Cond.R.
1.5(a) factors are appropriately considered in the determination of the lodestar
amount rather than used to adjust the lodestar amount. This is correct—since the
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lodestar calculation “considers the ‘reasonableness’ of the hours charged, it follows
that the Prof.Cond.R. 1.5(a) factors should be considered when determining what
is reasonable.” State ex rel. Harris v. Rubino, 156 Ohio St. 3d 296, 2018-Ohio-
5109, 126 N.E.3d 1068, ¶ 32 (Kennedy, J., concurring in part and dissenting in
part). But the majority writes that those factors “are subsumed within the lodestar,”
that is, that “[i]t is simple economics that an attorney charges an hourly rate that
takes into account the difficulty of the question involved, the opportunity cost, the
time limitations imposed by the client, the skill requisite to perform a legal service,
the attorney’s professional relationship with the client, and the fee customarily
charged in the jurisdiction for similar legal services.” Majority opinion at ¶ 17. My
concern is that the majority’s statements will encourage trial courts to assume that
the Prof.Cond.R. 1.5(a) factors are already incorporated into an attorney’s hourly
rate. Instead, I would make clear that a trial judge determining an attorney-fee
award should specifically and individually take into account the relevant factors set
forth in Prof.Cond.R. 1.5(a) to determine the reasonableness of the attorney’s
hourly rate and time expended. See, e.g., Harris at ¶ 80-87 (Kennedy, J., concurring
in part and dissenting in part). A methodical application of the Prof.Cond.R. 1.5(a)
factors provides the structure for an appropriate award of attorney fees. And a
properly calculated lodestar amount will only in rare cases require modification by
the trial court.
_________________
FISCHER, J, concurring.
{¶ 33} I agree with the majority that the lodestar is the presumed proper
amount for an attorney-fee award and that enhancements to the lodestar should be
granted rarely and are appropriate only when an attorney produces objective and
specific evidence that an enhancement is necessary to account for a factor not
already subsumed in the lodestar calculation. I write separately to identify the time
value of money as an additional factor that may be considered, in addition to the
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Prof.Cond.R. 1.5(a) factors that are not subsumed in the lodestar calculation, when
evaluating whether an enhancement to the lodestar is necessary.
{¶ 34} The lodestar generally accounts for the relevant factors constituting
a reasonable attorney fee. However, the lodestar may not adequately factor in the
time value of money, especially in cases that take years to resolve and in cases that
involve contingent-fee agreements or hybrid-fee agreements (hybrid-fee
agreements are agreements that contain elements of various types of attorney-fee
agreements, including contingent, hourly, or flat agreements, see Gilson v. Am. Inst.
of Alternative Medicine, 2016-Ohio-1324, 62 N.E.3d 754, ¶ 127 (10th Dist.), fn. 2).
{¶ 35} Various courts have noted that the time value of money is a relevant
factor in considering an enhancement to the lodestar calculation, especially in cases
involving contingent-fee agreements. See Ohio-Sealy Mattress Mfg. Co. v. Sealy
Inc., 776 F.2d 646, 660 (7th Cir.1985) and cases cited therein. Recognizing the
importance of the time value of money, especially in cases involving contingent
fees, is one of the few ways to ensure that attorney-fee awards function to fully
compensate for the services rendered by the attorney.
{¶ 36} Ohio courts have recognized the importance of the time value of
money as a component of compensatory damages under Ohio common law, see
Federated Mgt. Co. v. Coopers & Lybrand, 10th Dist. Franklin No. 03AP-204,
2004-Ohio-4785, ¶ 12, and as support for awarding postjudgment interest on
attorney-fee awards, Parker v. I&F Insulation Co., Inc., 89 Ohio St. 3d 261, 268,
730 N.E.2d 972 (2000). The purpose of considering the time value of money when
granting these awards is to make the prevailing party truly whole, see Federated at
¶ 12; Parker at 268, and to prevent the losing party from enjoying the use of that
money, see Parker at 268.
{¶ 37} The logic behind considering the time value of money when
awarding compensatory damages and postjudgment interest also applies when
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SUPREME COURT OF OHIO
awarding attorney fees. Prevailing plaintiffs who have paid their attorneys over the
course of the lawsuit and attorneys working on a contingent-fee basis have been
deprived of the use of their money throughout the lawsuit. See Heder v. Two Rivers,
255 F. Supp. 2d 947, 957 (E.D.Wis.2003). Thus, to fully compensate those people
when they are awarded attorney fees, a court must award the present value of the
attorney fees. See id. Considering the time value of money is an effective way to
achieve that goal. See id. at 957 (a “delay enhancement” can be awarded when a
significant amount of time has passed since the fees and costs were incurred in order
to compensate for the time value of money and inflation).
{¶ 38} Therefore, I conclude that courts should consider the time value of
money as a factor in determining whether an enhancement to the lodestar
calculation is necessary, in addition to the Prof.Cond.R. 1.5(a) factors that are not
subsumed in the lodestar. In considering the time-value-of-money factor, courts
should consider the period of time the attorneys worked on the case and any
unreasonable delays caused by the parties, as well as the type of fee agreement
entered into between the attorney and the prevailing party. Considering the time
value of money as a factor in whether to enhance the lodestar when the prevailing
party provides objective and specific evidence necessary to support the
enhancement will help to make the prevailing party whole.
{¶ 39} While the lower courts did not consider the time value of money in
the present case, I would not remand for consideration of that factor, because
appellees, Phoenix Lighting Group, L.L.C., and Jack Duffy and Associates, Inc.
(collectively, “Phoenix”), did not meet the burden of providing objective and
specific evidence to prove that an attorney-fee enhancement was necessary, see
Perdue v. Kenny A., 559 U.S. 542, 553, 130 S. Ct. 1662, 176 L. Ed. 2d 494 (2010).
While Phoenix placed an emphasis on appellant’s, Genlyte Thomas Group, L.L.C.,
a.k.a. Daybrite, Capri, Omega’s, conduct that drew out the litigation and made the
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January Term, 2020
case more complicated than necessary, a fact that is important to the time-value-of-
money factor, the evidence did not demonstrate that the lodestar amount was
unreasonable or did not accurately reflect the fees that would have been charged
under a standard hourly rate agreement. In fact, Phoenix’s expert testified that the
$1.9 million attorney-fee award was a “reasonable fee.” Therefore, I agree with the
majority opinion that Phoenix did not meet its burden, even considering the time
value of money as a factor, to prove that an enhancement to the lodestar was
necessary.
{¶ 40} For these reasons, I respectfully concur fully in the majority opinion
and I encourage courts to consider the time value of money as a relevant factor
when assessing whether enhancements to the lodestar are warranted.
_________________
Witschey, Witschey & Firestine Co., L.P.A., Jeffrey T. Witschey, and Betsy
L.B. Hartschuh, for appellees.
Tucker Ellis, L.L.P., Benjamin C. Sassé, and Michael J. Ruttinger; and Taft,
Stettinius & Hollister, L.L.P., W. Stuart Dornette, Aaron M. Herzig, Bruce J.L.
Lowe, and Julie A. Crocker, for appellant.
The Chandra Law Firm, L.L.C., Subodh Chandra, and Donald P. Screen,
urging affirmance for amicus curiae, Ohio Employment Lawyers Association.
_________________
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