No In Camera Review of Bills and Time Entries

John Cu
February 28, 2014

This is the third in our series of recent case reports:

California Civil Code section 1747.08 (Song-Beverly Credit Act of 1971) prohibits retailers from requesting or requiring as a condition of accepting a credit card as payment that the cardholder provide “personal identification information” that is then recorded in some fashion. In Pineda v. Williams Sonoma (2011) 51 Cal.4th 524, 527-528, the Supreme Court held that a person’s ZIP code constitutes “personal identification information” within the meaning of CC section 1747.08.

Shortly after the Pineda decision was published, Stefani Concepcion and others filed a class action lawsuit against Amscan Holdings, Inc., Party City Corporation, and other retailers (collectively, “Party City”) based on alleged violations of section 1747.08. At mediation before formal discovery was conducted, a settlement was reached which involved payment of $3,500 to each of the class representatives. After reaching settlement, class counsel sought an award of $350,000 in attorney fees and over $20,000 in costs. Declarations submitted in support of the request documented the total number of hours spent working on the case, but did not specify how much time was spent on any discrete task. Moreover, no billing records were attached. Party City opposed the fee request, arguing it was overly excessive and included unnecessary and duplicative activity that should be excluded from the lodestar calculation.

The trial court agreed that it was unable to determine from the information in the declarations whether the time expended by the firms was necessary and non-duplicative. The trial court invited class counsel to submit time records for in camera review, and to justify why the time requested by class counsel was not duplicative. Following an in camera review of additional records provided by class counsel, the trial court granted the fee request in its entirety.

The court of appeal reversed, holding that the trial court abused its discretion in awarding attorney fees and costs based on records not made available to Party City. Having concluded that the documentation submitted by class counsel was inadequate to support the fee request, the trial court had discretion to request additional information to allow it to determine the number of hours reasonably worked for inclusion in the lodestar calculation. However, the appellate court held that the trial court did not have discretion to invite an in camera review of time sheets and billing records not made available to Party City and then to award fees without providing an opportunity for further argument based on that supplemental evidence. Class counsel had the burden of proving the reasonable number of hours they devoted to the litigation, whether through declarations or redacted or unredacted time sheets or billing records. Once class counsel presented evidence to support their fee request, Party City was entitled to see and respond to that evidence and to present its own arguments as to why it failed to justify the fees requested.

According to the California Court of Appeal, the trial court’s in camera review of class counsel’s billing records in this case was fundamentally unfair and denied Party City due process.

Lesson learned: Time sheets and/or client bills may be discoverable, especially in a fee dispute. Always be mindful of this possibility when entering time and submitting time entries to clients.