Micrel v. Zinn CA1/1 ( 2021 )

Filed 4/6/21 Micrel v. Zinn CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
MICREL, LLC,
Plaintiff and Appellant,
A157136, A158069
v.
RAYMOND ZINN, (San Mateo County
Super. Ct. No. CIV538785)
Defendant and Appellant.
Plaintiff Micrel, LLC (Micrel) sued defendant Raymond Zinn for breach
of a non-defamation clause in a contract, and it sought approximately
$1.3 million in damages under a liquidated damages provision. After a bench
trial, the trial court found that the provision was unreasonable and
unenforceable under Civil Code1 section 1671, subdivision (b). Since Micrel
did not seek actual damages, the court entered judgment in Zinn’s favor, and
it subsequently awarded him most, but not all, of his attorney fees.
Micrel and Zinn both appeal from the judgment and fees order. Micrel
contends that the trial court erred by focusing on the process by which the
company arrived at the $1.3 million figure instead of on the reasonableness of
the amount itself. We perceive no error. Nor do we agree with Zinn that
1 All statutory references are to the Civil Code.
1
certain inaccuracies in the fees order cast doubt on the court’s discounted
award. Thus, we affirm both the judgment and the fees order.
I.
FACTUAL AND PROCEDURAL
BACKGROUND
In 2014, Micrel, Incorporated (Micrel, Inc.) and Zinn, its chief executive
officer (CEO), entered into a “Change in Control and Severance Agreement”
(change-in-control agreement). This agreement required Micrel, Inc. to pay
Zinn certain benefits, including two years of salary and a pro rata share of
his annual bonus, if the company were acquired.
In May 2015, Micrel, Inc. was acquired by Microchip Technology Inc.
(Microchip) in a two-step merger. In the first step, Micrel, Inc. merged with a
subsidiary of Microchip. In the second step, Micrel, Inc. merged with another
Microchip subsidiary, and Micrel, Inc. was extinguished as an entity and
renamed Micrel, LLC (plaintiff here). Microchip’s CEO, Steve Sanghi,
became Micrel’s CEO. Before Micrel, Inc. was extinguished, it and Zinn
entered into a severance agreement, which was created by Microchip to
terminate Zinn’s employment and set forth his termination benefits and
obligations.
A Microchip employee incorporated the amount of the employee
benefits mentioned in the 2014 change-in-control agreement into the
severance agreement. As a result, in Paragraph 3, titled “Severance Benefit,”
Zinn was promised about $1.3 million: $882,626.26 to reflect two years of
base income, $400,000 to reflect an annual bonus, and additional benefits
such as extended health care coverage and stock benefits.2
2 Early in the litigation, the trial court granted Zinn’s motion to seal
the severance agreement. Nevertheless, the court’s written statement of
decision identifies various details of the agreement, including the amount of
2
The severance agreement contained a non-defamation clause, which
prohibited Zinn from “directly or indirectly, in public or private,
deprecat[ing], impugn[ing,] or otherwise mak[ing] any remarks that would
tend to or be construed to tend to defame Micrel or its reputation.” The
agreement also contained a liquidated damages provision, which required
Zinn to remit almost all of the approximately $1.3 million he received in
severance benefits should he breach the agreement in any respect.
Specifically, Paragraph 20, titled “Consequences of Employee Violation of
Promises,” stated as follows:
“If Employee breaks any of his promises contained within
this Agreement and/or files any lawsuit based on legal claims
that Employee has released, Employee will pay for all costs
incurred by Micrel . . . to enforce any provisions or to defend
against any claim by Employee. Employee also agrees that if
Employee acts in violation of this Agreement, Employee will
remit to Micrel any and all monies paid to Employee under this
Agreement, with the exception of $100.00.”
In a 2016 interview with an electronics publication, Zinn made negative
statements about Microchip’s acquisition of Micrel, Inc., Microchip, Sanghi,
Microchip’s closure of a Micrel, Inc. production facility, and Microchip’s layoff
of numerous Micrel, Inc. employees. Micrel brought this action against Zinn,
alleging that his statements violated the non-defamation clause, and sought
liquidated damages under Paragraph 20.
After a bench trial, the trial court ruled that Paragraph 20 was
unenforceable. Citing Cellphone Termination Fee Cases (2011)
193 Cal.App.4th 298 (Cellphone Termination), the court explained that the
validity of a liquidated damages provision depends on whether the drafting
the liquidated damages provision, as does Zinn’s publicly filed briefing in this
court. We therefore find it appropriate to do so as well.
3
entity “ ‘actually engaged in some form of analysis to determine what losses it
would sustain from a breach and . . . made a genuine and non-pretextual
effort to estimate a fair average compensation for the losses to be sustained.’ ”
The court found no evidence that any such analysis was undertaken, and it
found no evidence that “the amount of the liquidated damage figure”—
approximately $1.3 million—“bore a reasonable relationship to[ the] damages
[Micrel] would be expected to actually suffer.”
At the request of Micrel, which conceded that it did not “have actual
damages in this case” and was “relying on the liquidated damages clause,”
the trial court entered judgment in favor of Zinn in March 2019. Four
months later, under an attorney fees provision in the severance agreement,
the court awarded Zinn $1,778,500 in attorney fees, approximately $350,000
less than he originally requested. Micrel appealed from the judgment in
No. A157136 and from the order awarding attorney fees in No. A158069, and
Zinn cross-appealed in both cases. We consolidated the appeals.
II.
DISCUSSION
A. The Trial Court Properly Determined that the Liquidated
Damages Provision Was Unenforceable.
Micrel contends that the trial court erred by concluding that
Paragraph 20 was invalid based on its finding that the company “did not
engage in a ‘reasonable endeavor’ to estimate the range of damages that
might flow from” breach of the non-defamation clause. It argues that the
focus of the analysis must be on the amount of liquidated damages, which it
4
contends was reasonable, not the process by which that amount was set. We
conclude there was no error.3
1. Legal background and standard of review
A liquidated damages clause “stipulates a pre-estimate of damages” so
“the parties may know with reasonable certainty the extent of liability” in the
event of breach. (ABI, Inc. v. City of Los Angeles (1984) 153 Cal.App.3d 669,
685.) Under California law, different standards for reviewing the legality of
such a clause apply depending on whether the clause is in a consumer or a
non-consumer contract. Originally, section 1671 provided that a liquidated
damages provision in any type of contract was presumptively invalid, unless
“from the nature of the case, it would be impracticable or extremely difficult
to fix the actual damage.” (Former §§ 1670–1671.) Effective July 1, 1978,
however, the Legislature amended section 1671 to its current form favoring
liquidated damages provisions except in certain contracts and leases,
including contracts for the sale or lease of consumer goods and services.
(Hong v. Somerset Associates (1984) 161 Cal.App.3d 111, 114.)
Now, as a result of the 1978 change, if a liquidated damages provision
is in a non-consumer contract, which the severance agreement concededly is,
the provision “is valid unless the party seeking to invalidate [it] establishes
that [it] was unreasonable under the circumstances existing at the time the
contract was made.” (§ 1671, subd. (b).) But if the provision is in a consumer
contract, it “is void except that the parties to such a contract may agree
therein upon an amount which shall be presumed to be the amount of
damage sustained by a breach thereof, when, from the nature of the case, it
3In light of our conclusion, we need not address Zinn’s claim that the
judgment must be affirmed for the independent reason that the trial court
incorrectly concluded that the severance agreement covered defamatory
statements about Micrel as well as Micrel, Inc.
5
would be impracticable or extremely difficult to fix the actual damage.”
(§ 1671, subds. (c)–(d).) In other words, a liquidated damages provision is
presumed valid if it is in a non-consumer contract but presumed invalid if it
is in a consumer contract. (See Ridgley v. Topa Thrift & Loan Assn. (1998)
17 Cal.4th 970, 977 (Ridgley).) Thus, whereas before 1978 the burden was on
the party seeking to enforce a liquidated damages provision in a non-
consumer contract to prove its enforceability, the burden is now on the party
seeking to avoid the provision to prove its unenforceability.
“A liquidated damages clause [in a non-consumer contract] will
generally be considered unreasonable, and hence unenforceable under
section 1671[, subdivision ](b), if it bears no reasonable relationship to the
range of actual damages that the parties could have anticipated would flow
from a breach. The amount set as liquidated damages ‘must represent the
result of a reasonable endeavor by the parties to estimate a fair average
compensation for any loss that may be sustained.’ [Citation.] In the absence
of such relationship, a contractual clause purporting to predetermine
damages ‘must be construed as a penalty. . . . The characteristic feature of a
penalty is its lack of proportional relation to the damages which may actually
flow from failure to perform under a contract.’ ” (Ridgley, supra, 17 Cal.4th
at p. 977.)
Courts are given wide latitude in evaluating the reasonableness of a
liquidated damages provision. In performing such an evaluation, “ ‘[a] court
should place itself in the position of the parties at the time the contract was
made and should consider the nature of the breaches that might occur and
any consequences that were reasonably foreseeable.’ ” (Krechuniak v.
Noorzoy (2017) 11 Cal.App.5th 713, 722–723, quoting Better Food Mkts. v.
Amer. Dist. Teleg. Co. (1953) 40 Cal.2d 179, 185.) “ ‘All the circumstances
6
existing at the time of the making of the contract are considered, including
the relationship that the damages provided in the contract bear to the range
of harm that reasonably could be anticipated at the time of the making of the
contract. Other relevant considerations . . . include, but are not limited to,
such matters as the relative equality of the bargaining power of the parties,
whether the parties were represented by lawyers at the time the contract was
made, the anticipation of the parties that proof of actual damages would be
costly or inconvenient, the difficulty of proving causation and foreseeability,
and whether the liquidated damages provision is included in a form
contract.’ ” (El Centro Mall, LLC v. Payless ShoeSource, Inc. (2009)
174 Cal.App.4th 58, 63 (El Centro).)
“[I]t is essentially a factual question whether the parties reasonably
estimated foreseeable damages under the prevailing circumstances”
(Krechuniak v. Noorzoy, supra, 11 Cal.App.5th at p. 723), and when “there is
a conflict in the evidence, we review the trial court’s ruling for substantial
evidence supporting it.” (El Centro, supra, 174 Cal.App.4th at p. 62.) But if
“the facts are undisputed and susceptible of only one reasonable
interpretation,” the reasonableness of a liquidated damages provision
“becomes a question of law” that we review de novo. (Krechuniak, at p. 723;
accord Vitatech Internat., Inc. v. Sporn (2017) 16 Cal.App.5th 796, 808.)
2. Analysis
As Micrel recognizes, numerous decisions state that the amount of
liquidated damages “must represent the result of a reasonable endeavor” to
determine the damages that might stem from a breach, including post-1978
decisions addressing non-consumer contracts. (E.g., Ridgley, supra,17 Cal.4th at p. 977; Graylee v. Castro (2020) 52 Cal.App.5th 1107, 1114–
1115; Vitatech Internat., Inc. v. Sporn, supra, 16 Cal.App.5th at pp. 805–806.)
7
In essence, Micrel argues that despite this authority, no “reasonable
endeavor” must actually be made. Rather, according to Micrel, the amount of
liquidated damages “is the principal or sole basis for determining whether
[the provision] is enforceable.” Micrel argues that the trial court therefore
erred in relying on cases, most notably Cellphone Termination, supra,
193 Cal.App.4th 298, to focus on the process of how the amount of liquidated
damages was fixed instead of on whether the amount itself is reasonable. We
are not persuaded.
Micrel primarily relies on Utility Consumers’ Action Network, Inc. v.
AT&T Broadband of Southern Cal., Inc. (2006) 135 Cal.App.4th 1023(UCAN), which it describes as the “most important and instructive case for
this Court to consider.” UCAN considered the enforceability of a liquidated
damages provision in a form, mass-consumer contract. The parties conceded
that the amount of liquidated damages—a late fee that “did not exceed
$4.75”—was reasonable, and the plaintiff consumer group did not dispute
that the defendant company had performed a reasonable analysis in arriving
at that amount. (UCAN, at pp. 1025–1026, 1038, fn. 9.) Rather, the issue
presented was whether the reasonable endeavor test required a company to
“sit down and negotiate the late fee amount individually with each customer.”
(Id. at p. 1025.) After exhaustively tracing the history of the reasonable
endeavor test, the Second District Court of Appeal concluded that the test
“looks primarily to the intent of the parties, as determined by the purposes
behind a liquidated damages clause and the relationship between the amount
of liquidated damages and a fair estimate of the actual damages from a
breach of the contract.” (Id. at pp. 1029–1038.) The court determined that
“those standards are not necessarily undermined by nonnegotiated liquidated
damages provisions” in “mass consumer transactions,” and it refused to
8
“requir[e] a large enterprise to negotiate the terms of a late fee provision with
thousands or hundreds of thousands of potential customers . . . even when the
amount selected by the business was designed to do no more than cover its
damages and bore the proper relationship to the amount of such damages.”
(Id. at p. 1038.)
Subsequently, in Cellphone Termination, Division Five of this court
addressed a related issue involving the liquidated damages provision of
another mass-consumer contract, the defendant wireless telephone carrier’s
early termination fee. The decision held that “to establish the reasonable
endeavor required, evidence must exist that the party seeking to impose
liquidated damages ‘ “actually engaged in some form of analysis to determine
what losses it would sustain from [a] breach, and that it made a genuine and
non-pretextual effort to estimate a fair average compensation.” ’ ” (Cellphone
Termination, supra, 193 Cal.App.4th at pp. 322–323, quoting Hitz v. First
Interstate Bank (1995) 38 Cal.App.4th 274, 291.) This court agreed with the
consumer plaintiffs “that the reasonable endeavor test, to have any meaning,
must necessarily focus on those circumstances actually considered in
evaluating a liquidated damage provision, not post hoc rationalization.”
(Cellphone Termination, at p. 326.) Because the evidence “fail[ed] to
establish any endeavor, reasonable or otherwise, to even approximate [the
carrier’s] actual damages flowing from breach . . . , and instead reflect[ed] a
marketing decision made with an entirely deterrent purpose and focus,”
Cellphone Termination affirmed the trial court’s invalidation of the early
termination fee. (Id. at pp. 303, 326.)
We need not determine whether UCAN was correctly decided or resolve
any supposed conflicts between it and Cellphone Termination. This is
because nothing about UCAN or any of the other authorities Micrel cites
9
suggests that courts are prohibited from considering the process by which a
liquidated damages amount is set in determining the reasonableness of the
provision. Thus, while we accept that courts may consider the amount of
liquidated damages as a factor in evaluating reasonableness, we reject
Micrel’s arguments that the amount is necessarily the sole or primary
consideration. Whether an effort to estimate damages was actually made
when a contract was entered is clearly relevant (see El Centro, supra,
174 Cal.App.4th at p. 63), and we see no reason to limit consideration of that
factor just because a liquidated damages provision in a non-consumer
contract is presumed valid.4 Even though the amendment of section 1671
shifted the burden of proof to the party seeking to avoid such a provision,
there is no reason to conclude that the law changed the substantive
standards for determining reasonableness.
Indeed, consideration of whether a reasonable endeavor was actually
made is especially appropriate in cases, such as this one, in which the
liquidated damages amount is not conceded to be reasonable. The facts here
suggest the $1.3 million figure was incorporated into the severance
agreement simply because it was the amount of the change-in-control
agreement’s severance benefit, not because of any consideration of or
connection to potential defamation-related damages. Micrel, Inc.’s board of
directors drafted the change-in-control agreement a year before Microchip
acquired Micrel, Inc. and long before Microchip drafted the severance
4 At oral argument, Micrel insisted that a court is precluded from
considering the process by which the amount of liquidated damages was fixed
under Better Food, the first decision to use the phrase “reasonable endeavor.”
(Better Food Mkts. v. Amer. Dist. Teleg. Co., supra, 40 Cal.2d at p. 187.)
Whatever that decades-old case has to say about whether an actual effort to
estimate damages is required, it certainly does not say that the absence of
such an effort is irrelevant.
10
agreement’s non-defamation clause and incorporated the severance benefit
figure into the agreement. The change-in-control agreement included neither
a non-defamation clause nor a liquidated damages provision. There is
nothing in these facts to support the notion that $1.3 million was a
reasonable liquidated damages amount as a matter of law.
These circumstances are similar to those in Greentree Financial Group,
Inc. v. Execute Sports, Inc. (2008) 163 Cal.App.4th 495. There, the defendant
settled a contract dispute by agreeing to pay the plaintiff $20,000 in two
installments, a discount from the original $45,000 contract claim. (Id. at
p. 498.) The settlement agreement included a provision that if an installment
was not paid, a stipulated judgment would be entered compelling full
payment of the original $45,000, as well as “prejudgment interest, attorney
fees, and costs.” (Id. at p. 497.) The Fourth District Court of Appeal
concluded that the provision was unenforceable because the amount bore no
reasonable relationship to any range of damages that could actually be
anticipated and the parties “did not attempt to anticipate the damages might
flow from a breach.” (Id. at p. 499.) Instead, they “simply selected the
amount [the plaintiff] had claimed as damages in the underlying lawsuit,
plus prejudgment interest, attorney fees, and costs,” even though the record
“contain[ed] nothing showing [the plaintiff’s] chances of complete success on
the merits of its case.” (Id. at pp. 499−500.)
Micrel concedes that it did not fix the $1.3 million amount by
estimating potential damages from a breach of the non-defamation clause,
but it claims it should be excused from having done so because of the
difficulty in predicting the damages that might arise from a former CEO’s
defamatory remarks. True enough, the difficulty of predicting damages is an
appropriate factor to be considered when assessing the reasonableness of a
11
liquidated damages clause in a non-consumer contract. (See El Centro,
supra, 174 Cal.App.4th at p. 63.) Though we accept that estimating damages
from defamatory statements may be difficult, there was no evidence that
Micrel even attempted to make such an estimate at the time it incorporated
the amount of the severance benefits into the severance agreement.
The evidence also revealed that other, non-CEO executives employed
by Micrel, Inc. had the same liquidated damages provisions in their
severance agreements and that they were created in the same mechanical
manner as was Zinn’s, i.e., by incorporating compensation amounts from
preexisting change-in-control agreements. This evidence provides additional
support for the inference that the amount required to be remitted under
Paragraph 20 was determined without contemplating potential damages
arising from defamatory statements or the difficulty in predicting them. (See
El Centro, supra, 174 Cal.App.4th at pp. 64–65 [liquidated damages provision
applicable in both nationally recognized tenants’ lease and leases for tenants
allegedly lacking national stature gave rise to inference that provision was
arbitrary rather than based on difficulty in estimating damages].)
Moreover, the trial court’s ruling did not rest solely on its finding that
Micrel failed to “actually engage[] in some form of analysis to determine what
losses it would sustain from [a] breach and [did not make] a genuine and non-
pretextual effort to estimate a fair average compensation for the losses to be
sustained.” (Cellphone Termination, supra, 193 Cal.App.4th at pp. 322–323.)
The trial court also found that the $1.3 million amount did not bear a
reasonable relationship to the damages that could have been anticipated to
flow from a breach of the non-defamation provision—thus ruling against
Micrel on the very factor it claims is determinative.
12
Micrel suggests that the $1.3 million figure had a rational relationship
to future damages arising from defamatory statements because the amount
“was very likely to undercompensate Micrel, as the disparaging remarks of a
former CEO about the current CEO might cause millions or even hundreds of
millions of dollars in damage to Micrel.” Micrel’s expert opined at trial that
defamation could have a significant impact on the company, with the amount
of damages falling somewhere between five percent of Micrel’s revenue—$12
million—or five percent of its stock value—$42 million. Sanghi also testified
that the $1.3 million amount was reasonable because the potential damage
could range from losing a few customers, a relatively small loss, to losing
future opportunities to bid on acquisition targets, a loss of potentially
hundreds of millions of dollars.
The trial court rejected this testimony, however, as it was free to do.
(See People ex rel. Brown v. Tri-Union Seafoods, LLC (2009) 171 Cal.App.4th
1549, 1568.) The court found that what matters in reviewing a liquidated
damages amount are the “facts actually considered in evaluating the . . .
amount. [The evaluation] cannot be based upon a post hoc rationalization.”
As a result, the court determined that the opinion of Micrel’s expert “must be
disregarded.” And it rejected Sanghi’s testimony on the damages issue
because “[h]e made no analysis or effort to estimate a fair range of damages
for [Zinn’s] possible breach” but simply relied on his “intuition” that damages
could be high. The court found that in all, “[t]here was a complete lack of any
evidence . . . from which [it] could find that the amount of the liquidated
damage figure bore a reasonable relationship to damages [Micrel] would be
expected to actually suffer.”
In short, the trial court did not err by concluding that Zinn sustained
his burden of demonstrating that the liquidated damages provision was
13
unenforceable, based both on the evidence that Micrel made no reasonable
endeavor to estimate potential damages stemming from Zinn’s breach of the
severance agreement and the lack of evidence that the approximately $1.3
million figure bore any reasonable relationship to those damages.
Accordingly, the judgment must be affirmed.
B. The Trial Court Did Not Abuse Its Discretion in Reducing the
Attorney Fees Award.
Zinn contends that the trial court erred by reducing the amount of
attorney fees he requested—$2,128,534.50—by about 16 percent, for a final
award of $1,778,500. According to him, the reduction was not supported by
the evidence. We are not persuaded.
The trial court found that Zinn was entitled to attorney fees under
section 1717 because he was a prevailing party who had a reciprocal right to
attorney fees under the severance agreement. (§ 1717, subd. (a).) Under that
statute, “[r]easonable attorney’s fees shall be fixed by the court.” (§ 1717,
subd. (a).) Courts have broad authority to determine the amount awarded,
and “ ‘[t]he “experienced trial judge is the best judge of the value of
professional services rendered in his [or her] court.” ’ ” (PLCM Group, Inc. v.
Drexler (2000) 22 Cal.4th 1084, 1095 (PLCM).) Accordingly, we review such
rulings for an abuse of discretion. (Ibid.) Under this standard, reversal is
generally warranted only “ ‘if the amount awarded is so large or small that it
shocks the conscience.’ ” (Calvo Fisher & Jacob LLP v. Lujan (2015)
234 Cal.App.4th 608, 620.)
To determine the appropriate amount of fees to award, the trial court
here calculated the “lodestar,” which is done by multiplying the number of
hours reasonably expended on the litigation by the reasonable hourly rate.
(See PLCM, supra, 22 Cal.4th at p. 1095.) The court also “considered the
difficulty of the litigation, the amount of actual or potential money involved,
14
the skill and experience required of the attorney[,] and the results obtained.”
While the court found that Zinn’s attorneys’ billing rates were reasonable, it
also found that the number of “hours billed in certain instances [was] greater
than reasonable,” and it reduced the total amount requested by $350,034.50.
Here, in finding that the number of hours billed was excessive, the trial
court identified four specific examples: (1) paralegals billed a total of
10 hours or more in a single day “67 times” for pre-trial preparation between
January 8 and January 18, 2019; (2) a paralegal billed 265 hours for time
spent preparing “pretrial pleadings”; (3) about $142,000 was billed for work
on the filing of sanctions motions and motions to compel discovery that were
ultimately withdrawn or denied by the court; and (4) time was billed for work
preparing Zinn’s expert witness on issues that had already been resolved.
As Zinn points out, these examples of overbilling are not fully borne out
by the record. For example, paralegals billed 10 or more hours for pre-trial
preparation during the January 2019 period six times, not 67. It appears,
however, that this was a simple typographical error. In addition, the actual
billing entries show that the paralegal who billed 265 hours spent a
significant amount of time on trial and posttrial activities, not just pretrial
pleadings. But Zinn’s own summary of the work she performed stated only
that she “[a]ssisted with pretrial filings and briefs,” even though the
summary described other paralegals as having assisted with work at trial.
We cannot fault the trial court for accepting Zinn’s description of this
paralegal’s work.
Zinn further argues that two, not three, sanction motions and motions
to compel were filed, with varying results. But given that the trial court
already assessed and rejected the same arguments Zinn now makes on
appeal, he fails to demonstrate that the court misunderstood the value of the
15
motions or the impact of its orders. He also argues that the court must have
wrongly assumed that any billing entry that mentioned the motions and
other tasks was entirely for work on the motions. But the entries do not
distinguish the time spent on the motions and time spent on other tasks,
making it difficult to identify the time attributable solely to the motion
practice. (See Jaramillo v. County of Orange (2011) 200 Cal.App.4th 811, 830
[“[B]lock billing is not objectionable ‘per se,’ though it certainly does increase
the risk that the trial court, in a reasonable exercise of its discretion, will
discount a fee request”].)
Even if we were to accept that the trial court mistakenly described
some of its examples of overbilling, we are not persuaded that it abused its
discretion in finding that the number of hours billed was excessive and in
reducing by a relatively moderate sum the amount of requested fees. A court
is not “obligated to calculate exactly how many of the claimed hours the court
believed were not compensable based on the various flaws the court found in
the time entries, then subtract that sum from the total hours claimed to come
up with the number of compensable hours.” (Mountjoy v. Bank of America,
N.A. (2016) 245 Cal.App.4th 266, 280.) Rather, the general rule is that a
“trial court has no sua sponte duty to make specific factual findings
explaining its calculation of the fee award and the appellate courts will infer
all findings exist to support the trial court’s determination.” (California
Common Cause v. Duffy (1987) 200 Cal.App.3d 730, 754–755.)
Zinn claims that even though the trial court was not required to detail
its calculations, the reduction was arbitrary because there is no apparent
relationship between the amounts billed for the four cited instances and the
amount of the reduction. He relies on authority to the effect that “ ‘[w]hen a
trial court makes an award that is inscrutable to the parties involved in the
16
case, and there is no apparent reasonable basis for the award in the record,
the award itself is evidence that it resulted from an arbitrary determination.
It is not the absence of an explanation by the trial court that calls the award
. . . into question, but its inability to be explained.’ ” (Roe v. Halbig (2018)
29 Cal.App.5th 286, 312.) Zinn contends that having offered examples of
overbilling, the court had to provide some “basis for understanding how its
four findings resulted in the reduction amount of $350,034.50.”
In fact, the $350,034.50 figure is very close to the total amount billed
for the four examples of overbilling the trial court identified. According to
Zinn’s fees request, the paralegal who billed 265 hours did $97,598 of work.
And in opposition to the fees request, Micrel submitted charts showing that
(1) $142,068.50 was billed for the challenged discovery-related motions; and
(2) $104,825 was billed for the challenged preparation of Zinn’s expert
witness. The sum of these three numbers is $344,491.50. In turn, the $5,543
difference between that sum and the total reduction is close to the amount of
money the paralegals, who had billing rates between $370 and $400, billed
for the hours exceeding 10 hours per day in the January 2019 period. Given
that the court did not profess to itemize all instances of overbilling, we cannot
say that its decision to reduce the award by what appears to be about the
amount of the four identified instances constituted an abuse of discretion.
III.
DISPOSITION
The judgment and the order awarding attorney fees are affirmed. The
parties shall bear their own costs on appeal.
17
_________________________
Humes, P.J.
WE CONCUR:
_________________________
Margulies, J.
_________________________
Sanchez, J.
Micrel, LLC v. Zinn A157136/A158069
18