Attorney fee awards have historically presented unique challenges in the U.S. civil justice system. In large part, this is due to the default application of the “American Rule,” which provides that attorneys’ fees are not to be awarded absent an authorizing statute, a specific contractual agreement, or a finding of egregious conduct that merits the award of punitive damages. Where such awards are permitted, many courts have adopted the “lodestar” method: the number of hours reasonably expended on the case multiplied by a reasonable hourly rate. While there are always issues concerning the “reasonableness” of hours spent and rates charged, there is also the question of whether an enhanced award exceeding the lodestar is ever justified.
The Ohio Supreme Court just issued a decision
tackling that issue in Phoenix Lighting Group, employed the L.L.C. v. Genlyte Thomas Group, L.L.C.,
2020-Ohio-1056. After a jury verdict awarding punitive damages and recovering attorneys’ fees, a trial court initially made a lodestar determination of $1.9 million. The trial court then decided to double the lodestar amount of fees. The trial court concluded that such an enhancement was justified given the complexity of the case, the highly favorable outcome, the skill and reputation of the attorneys and the fact that attorneys had to forgo other opportunities to commit to the case. The defendants pursued an appeal of the award to the Supreme Court, contending that there was no justifiable basis for an enhanced fee award.
The Ohio Supreme Court unanimously agreed, and reduced the fee award to the original lodestar determination. In doing so, the Court reasoned that the types of factors the trial court considered as “enhancement” factors are really factors that are already baked into the lodestar formula. As such, absent compelling and unique circumstances, the Court concluded that there is a “strong presumption” that the lodestar is the proper measure for an attorney fee award. To justify an enhancement, there must be “objective and specific evidence that an enhancement of the lodestar is necessary to account for a factor not already subsumed in the lodestar calculation.” Further, the trial court is obligated to clearly provide a rationale for any enhancement based on that evidence.
Given the Court’s ruling, it is fair to say that enhanced attorney fee awards will become as rare as hippogriff sightings in Ohio.