AYS v. Chanler

In a proposed statement of decision issued on January 17, 2003, San Francisco Judge Richard Kramer found largely in favor of the prolific Prop 65 enforcer As You Sow in its lawsuit against its former lawyer, the also prolific enforcer Cliff Chanler, in the first phase of trial.

The lawsuit arose from a AYS's claims that Chanler failed to repay, or account for, litigation costs advanced by AYS, and improperly kept those advanced costs when he recovered "attorney's fees and costs" in settlements. Chanler, in turn, argued that AYS had agreed to his reimbursements from defendants, and was fully aware of the terms of all of the settlements when it signed and approved them. The first phase of the trial centered on the interpretation of the fee agreement between AYS and Chanler.

The court determined that AYS was owed all of the "costs" it had advanced for particular cases, and that Chanler would be required to pay all of those "costs" out of the "fees and costs" award in each settlement, because the inability to separate what portion of such awards was "costs" was caused by Chanler, not AYS.

Judge Kramer rejected Chanler's assertion that he was entitled to negotiate whatever attorney's fees that he could obtain from defendants in Prop 65 enforcement actions brought on behalf of AYS, and concluded that all fees "had to be based on hours worked on each particular case" and "were to be based on Chanler's regular rates, whether or not enhanced by a mulitiplier." The court noted that the simultaneous negotiation of the settlement and attorney's fees created a conflict between lawyer and client, and that in the absence of evidence to show that the settlement represented a reasonable balancing of the interests of lawyer and client, there is a presumption that the client was prejudiced. The court held that that attorney, Chanler in this case, bears the burden of showing a reasonable accomodation. This includes the burden to show "that the fees negotiated were in accord with the Fee Agreement as interpreted herein."

The court rejected the argument that AYS's approval of the settlements waived its arguments or consented to the fees obtained by Chanler in any particular case:

One could conclude that AYS was less than diligent in its resolution of the ongoing fee questions, and also . . . was less than prudent in approving settlements given the continuous existence of such questions. Nonetheless, the evidence amply demonstrated that Chanler was far more than an outside litigation counsel for an independent client. He was instrumental in the creation of AYS and was a major designer of its program of Proposition 65 enforcement. He was in strategic control of that pursuit and resolution of AYS' litigation.

The next phase of the trial will apply the Phase I determinations to 298 settlements reached by Chanler on behalf of AYS.

This page last updated 2/23/03