Date: 09-22-2003

Case Style: Tibbetts v. Sight 'n Sound Applicance Centers

Case Number: 2003 OK 72

Judge: Lavender

Court: Oklahoma Supreme Court

Plaintiff's Attorney:

David Humphreys and Luke Wallace of Humphreys Wallace Humphreys, Tulsa, Oklahoma, and Justin LaMunyon of Faulkner & LaMunyon, P.L.L.C., Enid, Oklahoma for Plaintiffs/Appellees.

Defendant's Attorney:

Craig L. Box and Julia C. Rieman of Gungoll, Jackson, Collins, Box & Devoll, P.C., Enid, Oklahoma for Defendant/Appellant.

Description:

1 We decide here if the trial judge erred in awarding $375,000.00 in attorney fees to plaintiffs/appellees in their class action suit brought against defendant/appellant, Sight 'n Sound Appliance Centers, Inc., d/b/a Sight 'n Sound & Cost Warehouse under the Oklahoma Consumer Protection Act (OCPA), 15 O.S.1991, § 751 et seq., as amended.1 We hold the trial judge erred, and the Court of Civil Appeals (COCA), Division I mistakenly affirmed, because the only reasonable attorney fee in this case is no fee, plaintiffs seeking solely money damages, but recovering zero damages (i.e., nothing) via a jury verdict. We also overrule Tibbetts v. Sight 'n Sound Appliance Centers, Inc. (Tibbetts I), 2000 OK CIV APP 47, 6 P.3d 1064 (cert. denied 3-30-00), a prior COCA, Division IV opinion involving the same case, as it wrongly held these private plaintiffs may recover attorney fees in this OCPA case merely by showing a violation of the OCPA without an attendant showing of damages or actual injury.

2 This Court's decision in Walls v. American Tobacco Co., 2000 OK 66, 11 P.3d 626, followed shortly by Patterson v. Beall, 2000 OK 92, 19 P.3d 839, held that for a private plaintiff to have a viable claim under the OCPA the plaintiff must show as an essential element of the claim, actual damages, i.e., injury in fact. To the extent plaintiffs argue Tibbetts I is the law of the case such that the propriety of at least some attorney fee award may not now be challenged as they have been determined to be the prevailing/successful parties by Tibbetts I, we hold an exception to the law of the case doctrine applies as Tibbetts I is palpably erroneous and a gross or manifest injustice would be done were we to allow the award for fees to stand when it is clearly not authorized by law and plaintiffs cannot be deemed to have prevailed because they recovered nothing.

PART I. STANDARD OF REVIEW.

3 What constitutes a reasonable attorney fee is a matter addressed to the sound discretion of the trial court to be decided based on various factors and a judgment awarding attorney fees will not be reversed absent an abuse of discretion. Continental Natural Gas, Inc. v. Midcoast Natural Gas, Inc. , 1996 OK CIV APP 157, 935 P.2d 1185, 1188; see also State ex rel. Burk v. City of Oklahoma City, 1979 OK 115, 598 P.2d 659, 663 (review standard is abuse of discretion when reasonableness of attorney fees awarded is issue on appeal). As a general matter, an abuse of discretion review standard includes appellate examination of both fact and law issues [Christian v. Gray, 2003 OK 10, 43, 65 P.3d 591, 608] and abuse occurs when the ruling being reviewed is based on an erroneous legal conclusion or there is no rational basis in the evidence for the decision. Fent v. Oklahoma Natural Gas, Co., 2001 OK 35, 12, 27 P.3d 477, 481; Abel v. Tisdale, 1980 OK 161, 619 P.2d 608, 612 (reversal for abuse of discretion proper if trial judge makes clearly erroneous conclusion and judgment, against reason and evidence).

4 Further, when an assigned error is one of law a de novo review standard applies [Christian v. Gray, supra, 2003 OK 10, at 43, 65 P.3d at 608], a non-deferential, plenary and independent review of the trial court's legal ruling. Samman v. Multiple Injury Trust Fund, 2001 OK 71, 8 and n. 5, 33 P.3d 302, 305 and n. 5. Though normally when reviewing the reasonableness of an attorney fee award an appellate court affords the trial judge's finding(s) much deference because of the nature of the factual inquiry into the factors delineated in State ex rel. Burk v. City of Oklahoma City, supra, in that here the overriding and critical factor of the results obtained is undisputed and leads to only one rational conclusion as to what a reasonable fee should be (i.e., no fee), the ultimate decision in this case turns on a question of law.

PART II. PROCEDURAL AND FACTUAL BACKGROUND.

5 The Pre-Trial Conference Order (PTO)2 filed in the lower court in August 1997 indicates plaintiffs contended defendant's conduct violated the OCPA, § 753(8), (9) and (12). Subsection 12 details prohibited conduct of bait and switch advertising, accompanied by various forms of behavior concerning not selling or supplying the product advertised. Subsections 8 and 9, respectively, declare unlawful advertising, knowingly or with reason to know, a product with intent not to sell it as advertised or with intent not to supply the reasonably expected public demand unless the ad discloses a limitation of quality.3 Basically, plaintiffs' case, as presented to the jury, centered on the advertising of Magnavox television sets, but then steering the customer to another brand of television, i.e., Goldstar. Tibbetts I, 2000 OK CIV APP 47, at 3, 6 P.3d at 1066-1067.4 Although plaintiffs' initial October 1994 petition had requested injunctive relief to prohibit defendant from continuing to violate the OCPA, the PTO - which controlled the subsequent course of the action - unequivocally sets forth that plaintiffs sought solely monetary relief - i.e., damages - both compensatory and punitive. Two of plaintiffs' attorneys, in effect, voiced their view at the attorney fee hearing held after remand from Tibbetts I, that the OCPA does not permit injunctive relief in a private consumer action and the request for injunctive relief was abandoned.

6 After the case was tried, the jury was instructed on the law and provided three verdict forms: a defendant's verdict form which generally allowed the jury to find the issues in favor of defendant; a plaintiffs' verdict form generally allowing the jury to find in favor of the plaintiffs and to fix the amount of damages to the class as a whole; and a punitive damage verdict form. Nine members of the jury signed the plaintiffs' verdict form, but it unequivocally fixed the amount of damages at zero. The same nine jurors signed the punitive damage verdict form and it fixed the amount of punitive damages at zero. Based on these verdicts we must assume the jury found defendant did engage in some violation of the OCPA, but that plaintiffs failed to carry their burden to show any damages.5 Judgment was entered by the trial judge, awarding plaintiffs nothing. The issue of attorney fees was reserved for proper application.

7 Both sides, plaintiffs and defendant, moved for attorney fees and the trial judge denied both requests. Each side appealed the denials and the COCA, Division IV in Tibbetts I, in effect, decided that language employed in § 761.1(A) of the OCPA allowed plaintiffs to recover attorney fees merely by showing a violation of the OCPA without an attendant showing of damages or actual injury. Tibbetts I remanded for the trial judge to determine the amount of attorney fees. This Court denied defendant's quest for certiorari to review Tibbetts I, the matter returned to the trial court, and after various written submissions of the parties concerning the attorney fee issue and an evidentiary hearing, the trial judge entered the award of $375,00.00 in favor of plaintiffs now before us.6

8 The $375,000.00 fee was arrived at by the trial judge upon a determination that the reasonable amount of plaintiffs' attorneys' time was 3000 hours and that a reasonable hourly rate for the lawyers involved was an average of $125.00 per hour.7 Plaintiffs' attorneys had initially sought over 1 million dollars in attorney fees and the record contains evidence that said attorneys may actually have spent 7000 hours in attorney's time on the case. We also note the record is undisputed that plaintiffs' agreement with their counsel as to attorney fees is a contingency-based agreement, i.e., plaintiffs have no responsibility to pay their counsel attorney fees as nothing was recovered. Further, the Findings of Fact and Conclusions of Law (FF/CL) that accompanied the trial court "Judgement" awarding the fees under review, indicates that the amount in controversy in this case was never clearly established, but would not have exceeded $25.00 per class member, a sum that would not have exceeded $500,000.00 for the class as a whole. Evidence presented at the attorney fee hearing, however, seems to reveal plaintiffs sought about 1 million dollars in compensatory damages from the jury, i.e., apparently about $50.00 per class member.

9 Defendant appealed the award and the COCA, Division I affirmed, though it appeared to recognize that Tibbetts I's holding that plaintiffs were entitled to attorney fees merely because they had shown a violation of the OCPA was no longer good law in light of this Court's decision in Walls, supra, to the effect that an essential element of a private OCPA claim is actual damages. Division I's opinion determined it was powerless to reverse Tibbetts I, essentially in deference to the law of the case doctrine, and decided the amount awarded did not manifest an abuse of discretion.8 We previously granted certiorari and we now vacate the COCA's opinion, reverse the trial court judgment of $375,000.00 attorney fees in favor of plaintiffs and overrule Tibbetts I.

PART III. THE ONLY REASONABLE ATTORNEY FEE IN THIS CASE, WHERE PLAINTIFFS SOUGHT SOLELY MONEY DAMAGES AND RECOVERED NOTHING, IS NO FEE.

10 We first note that our review of the reasonableness of the fee awarded requires no exception to the law of the case doctrine because Tibbetts I did not decide the reasonableness issue. Generally, as applicable here, the law of the case doctrine provides that an appellate court's decision on an issue of law becomes the law of the case once the decision is final, in all subsequent stages of the litigation. Matter of Estate of Severns , 1982 OK 64, 650 P.2d 854, 856. To properly apply the law of the case doctrine the appellate court in the second appeal must decide exactly what the first appellate decision determined expressly or impliedly. Shoemaker v. Estate of Freeman, 1998 OK 17, 15, 967 P.2d 871, 875. Tibbetts I decided that certain language in § 761.1(A) of the OCPA allowed plaintiffs to recover their attorney fees by showing involvement in a covered transaction with defendant and some violation of the OCPA on defendant's part in regard thereto without a showing of any actual damages. Tibbetts I, 2000 OK CIV APP 47, at 9-10, 6 P.3d at 1066-1067. Tibbetts I neither expressly nor impliedly decided what a reasonable attorney fee would be in this case, nor did it direct the trial judge in any particular way as to what weight to give appropriate factors in reaching the reasonableness issue on remand. Furthermore, it must be kept in mind that it is undisputed here that plaintiffs' attorney fee agreement with their counsel was contingency-based, i.e., plaintiffs owe their counsel no attorney fees for bringing this case as nothing was recovered. We now consider the reasonableness issue.

11 This Court has foreshadowed the proper decision in this case for we have recognized the importance of the relationship between the amount sued for in a case seeking only money damages and the results obtained. Southwestern Bell Telephone Co. v. Parker Pest Control, Inc., 1987 OK 16, 737 P.2d 1186, 1188-1189; see also Arkoma Gas Co. v. Otis Engineering Corp., 1993 OK 27, 849 P.2d 392, 394-395 (what is a reasonable attorney fee in each case must be considered in light of the extent to which plaintiff prevailed). Although, of course, there is no mathematical formula which can be applied in every situation as to gauging the reasonableness of a fee when considering the relationship between the amount sued for and the amount recovered, in our view, no rational argument can be made that a $375,000.00 attorney fee award is reasonable when counsel recovers absolutely no monetary relief for the client where the suit seeks approximately 1 million dollars, and only monetary relief is sought. The only reasonable fee here, as a matter of law, is no fee at all.

12 The United States Supreme Court in Farrar v. Hobby, 506 U.S. 103, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992), was faced with a somewhat analogous situation. In Farrar the plaintiff sought 17 million dollars, but was awarded only the nominal amount of one dollar. 506 U.S. at 106-108.9 Attorney fees of $280,000.00 were awarded by the trial court, but the federal Circuit Court reversed. Id. at 107. Upon certiorari review, although the Supreme Court decided that a civil rights plaintiff was the "prevailing party" under the applicable federal attorney fee statute [42 U.S.C. § 1988] because he obtained a one dollar nominal damages award, the reversal of the fee award was affirmed by the Supreme Court.

13 In so doing, the Supreme Court recognized that the most critical factor in deciding the reasonableness of a fee award is the degree of success obtained. Farrar, supra, 506 U.S. at 114 [quoting Hensley v. Eckerhart, 461 U.S. 424, 436, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)]. Although not adopting the view that fees would never be appropriate when a plaintiff recovers only nominal damages, the Supreme Court made it clear that, "[w]hen a plaintiff recovers only nominal damages because of his failure to prove an essential element of his claim for monetary relief . . . the only reasonable fee is usually no fee at all." Farrar, supra, 506 U.S. at 115. Considering the degree of plaintiffs' success in the present case makes it obvious that no fee is warranted, as they were awarded none of the relief they sought, i.e., they sought solely money, but were awarded zero damages. A more poignant example of a lack of success would be hard to imagine.10

14 Although plaintiffs, in effect, argued in the trial court and try to convince us here that they succeeded in this case by achieving the goals of uncovering violation of the OCPA (in fact, obtaining a jury verdict that defendant in some way violated the OCPA) and defendant may have stopped the violative conduct because of the lawsuit, such arguments simply cannot sustain the attorney fee award before us. Plaintiffs' arguments in such regard are a means to assert the OCPA was legislatively intended as a private attorney general statutory scheme and that their suit was a "catalyst" for defendant's voluntary change of conduct. We deal with these arguments more fully in PART IV, infra, because they do point out the stark reality we are faced with in this case that plaintiffs did not prevail and they were not the successful parties in this case. However, a few comments are in order here.

15 First off, the record in this appeal is not at all clear that defendant stopped any offending conduct by virtue of this lawsuit. Surely, nothing we glean from the record mandates defendant's future conduct one way or the other.11 Second, merely showing some violation of the OCPA cannot be deemed success in any conventional sense when the only relief sought was money and nothing was recovered, i.e., merely showing violation without damages was, in our view, nothing more than a hollow, technical victory at best. Plaintiffs' arguments in such regard do not justify this attorney fee award or transform it into a reasonable award. Again, the only reasonable award in view of plaintiffs' lack of success is no fee.

PART IV. AN EXCEPTION TO THE LAW OF THE CASE DOCTRINE IS APPLICABLE HERE AND WE OVERRULE TIBBETTS I AS INCONSISTENT WITH WALLS AND PATTERSON, SUPRA.

16 Even when the law of the case doctrine is applicable, it will not be applied, i.e., there is an exception, if the prior decision is palpably erroneous and this Court is convinced that failure to reverse it will result in a gross or manifest injustice. Cinco Enterprises, Inc. v. Benso, 1999 OK 80, 11, 995 P.2d 1080, 1085; Severson v. Roberts, 1946 OK 94, 168 P.2d 615, 617. Further, exception to application of the law of the case doctrine based on gross or manifest injustice may be warranted where an award of attorney fees is clearly not authorized by any law. C & L Enterprises, Inc. v. Citizen Band Potawatomi Tribe of Oklahoma, 2002 OK 99, 20-21, 72 P.3d 1, 6. We believe Tibbetts I is palpably erroneous and a gross or manifest injustice would be done were we to use the law of the case doctrine to uphold this attorney fee award based on Tibbetts I.

17 The ultimate reality is that plaintiffs did not prevail and they were not the successful parties in this case because they failed to show an essential element of their claim, i.e., damages. Walls, supra, primarily based on the meaning of the term "aggrieved consumer" contained in § 761.1(A), the plain import of the words "damages" and "actual damages" also contained therein, and a historical analysis of amendment to § 761.1(A) after our decision in Holbert v. Echeverria, 1987 OK 99, 744 P.2d 960 (that rejected the notion the then existent version of the OCPA allowed a private individual cause of action under the Act), held that actual monetary damages, i.e., actual injury, was an essential element of the private right of action under the OCPA. Walls, 2000 OK 66, at 10-13, 11 P.3d at 629-630.12 Walls made it abundantly clear that the language in § 761.1(A), using the term "aggrieved consumer" as the person having been given the right to bring a private right of action for damages under the OCPA, requires the consumer to show something more than a violation of the Act; instead for a viable private claim under the OCPA the consumer must show actual damages as a necessary element of a claim. 2000 OK 66, at 9-13, 11 P.3d at 629-630; see also Patterson, supra, 2000 OK 92, at 30-31, 19 P.3d at 846 (third element of a plaintiff's private action under the OCPA is that consumer suffered an injury in fact; private right of action granted only to "an aggrieved consumer", thus, to be aggrieved a consumer must sustain damages as a result of defendant's unlawful practice). The jury verdict here conclusively manifests a failure of plaintiffs on such front.

18 Where a plaintiff fails to show an essential element of a claim in a suit for damages it cannot reasonably be asserted that the plaintiff has been successful. We so ruled in Sloan v. Owen, 1977 OK 239, 579 P.2d 812, a negligence action, where we held that based on a jury verdict similar to that here - i.e., finding for the plaintiffs but fixing the amount of plaintiffs' recovery at zero damages - plaintiffs were not entitled to recover their costs under 12 O.S.1971, § 928 as they could not be deemed the successful parties on the claim as they necessarily failed to establish actionable negligence because they did not show an essential element of the claim, injury proximately resulting from defendant's breach of duty. Sloan v. Owen, supra, 579 P.2d at 813-814. In our present case, it would put form over substance to actually consider plaintiffs to be the prevailing or successful parties as they recovered nothing from defendant.

19 In essence, the plaintiffs contend that the OCPA is a "private attorney general" statutory scheme that allows the recovery of attorney fees merely upon a showing of a violation of the Act (even though no damages are shown) and that the Legislature sanctioned such recovery of attorney fees in favor of private litigants who implement the public policy behind the OCPA and thereby encourage private litigation to benefit a legislatively recognized public interest.13 In other words, plaintiffs contend the Legislature in § 761.1(A) authorized the award of attorney fees, without the showing of any damages or the award of any other tangible relief, based on the view a private litigant by bringing to light conduct violative of the OCPA provides a general benefit to the public at large. We do not read the statute in such a way and plaintiffs' theory in such regard is inconsistent with our pronouncements in both Walls, supra and Patterson, supra.

20 Plaintiffs' contention that the OCPA is a private attorney general statutory scheme and that they should be allowed to recover attorney fees here because they somehow vindicated a public right, is simply wrong. Again it is Walls, supra, that reveals the fallacy of plaintiffs' contention. For a private action to succeed the plaintiff must prove damages. Nowhere in § 761.1(A) is it indicated that attorneys are entitled to be compensated for merely showing some violation of the OCPA that caused no damages to their clients. This is particularly true where the clients owe the attorneys nothing because the attorney/client fee agreement is contingency-based [i.e., a percentage of any recovery], and the recovery is zero.14

21 Further, under the OCPA it is the Oklahoma Attorney General or a district attorney that may seek coercive relief, such as an injunction [§ 756.1], to vindicate public rights to see to it that companies do not violate the provisions of the OCPA.15 Plaintiffs' attorneys, in effect, conceded at the attorney fee hearing that the OCPA does not permit injunctive relief in a private action.

22 Were we to allow this attorney fee award to stand based on plaintiffs' private attorney general theory, such a ruling would be completely at odds with Walls, supra, where we made it clear the OCPA requires actual damages be shown as an essential element of a private OCPA claim in order to transform a consumer into an "aggrieved consumer". Our ruling in Walls, if not expressly, necessarily implies that the OCPA is not a statutory scheme that envisions or embodies a private attorney general theory.

23 Plaintiffs also argue entitlement to attorney fees based on the argument that defendant might have changed its conduct because of this lawsuit. In effect, plaintiffs are arguing a "catalyst" theory in support of recovery of attorney fees, without obtaining any enforceable judgment against defendant that changes the legal relationship of the parties. The United States Supreme Court recently rejected the catalyst theory of attorney fee recovery in Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources, 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001). There the Supreme Court held that a party whose lawsuit induced voluntary change in defendant's conduct was not the prevailing party under the attorney fee provisions of the Fair Housing Amendments Act of 1988 (42 U.S.C. § 3601 et seq.) or the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.), because there was no enforceable judgment on the merits or court-ordered consent decree that somehow changed the relationship between the parties in such a way that defendant was actually required to do something by judicial sanction. Although, of course, we are not required to follow the Supreme Court's decision in this State law case under the OCPA, we hold that here without some judgment or judicial decree that has changed the relationship between the parties so that defendant is judicially required to do something, i.e., some enforceable judgment, plaintiffs cannot be said to be the successful or prevailing parties entitled to an award of attorney fees. There is no such enforceable judgment in this case requiring defendant to do anything.

24 Very simply, were we to accept plaintiffs' arguments in support of the affirmance of the fee award, we would be transforming the OCPA into something it is not and would be allowing an attorney fee award not authorized by any law. This is something the OCPA nowhere requires and we decline to rewrite the Act to do so.16

PART V. SUMMARY.

25 Plaintiffs sought solely money damages in their class action lawsuit brought against defendant under the OCPA. Although the jury returned a verdict which indicates some violation(s) of that Act were shown, the jury verdict found zero damages. The only reasonable attorney fee in this case, where plaintiffs' attorney fee agreement with their counsel was contingency-based, i.e., plaintiffs owe their attorneys no fees because there was no recovery, is no fee at all.

26 Tibbetts I, in effect, held that plaintiffs were entitled to recover attorney fees merely by showing defendant violated the OCPA in some way, even though they recovered zero damages and showed themselves entitled to no other relief. Walls, supra and Patterson, supra make clear that Tibbetts I was wrong in such regard because to be an aggrieved consumer and to have a viable claim under the OCPA, actual damages must be shown. Plaintiffs showed no actual damages to the satisfaction of the jury. To the extent Tibbetts I is claimed by plaintiffs to be the law of the case such that the propriety of at least some attorney fee award may not now be challenged as they have been determined to be the prevailing or successful parties by that decision, we hold an exception to the law of the case doctrine applies as Tibbetts I is a palpably erroneous decision and a gross or manifest injustice would be done were we to allow the award for fees to stand when such is clearly not authorized by law and plaintiffs cannot be deemed to have prevailed because they recovered nothing. Tibbetts I is overruled.

* * *

Click the case caption above for the full text of the Court's opinion.

Outcome: ¶27 Accordingly, the opinion of the Court of Civil Appeals is VACATED and the trial court judgment awarding plaintiffs attorney fees of $375,000.00 is REVERSED.17

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: Digested by Kent Morlan