GILDEA, Chief Justice.
This case involves an award of $221,499 in attorney fees to respondent Marie Delores Green, a consumer who was successful on her claim against appellant BMW of North America, LLC, under Minnesota's lemon law, Minn.Stat. § 325F.665 (2012).
This action arises from Green's lease of a vehicle from BMW. Green claimed that the leased vehicle was defective and brought suit against BMW. In addition to state law warranty claims, Green alleged that BMW violated Minnesota's lemon law, Minn.Stat. § 325F.665, and the federal Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312 (2006). The total cost of Green's lease was $27,803, and in her prayer for relief, Green asked for damages "including but not limited to the amount of Fifty Thousand Dollars ($50,000), plus incidental and consequential damages, [and] loss of use damages."
The district court conducted a 4-day bench trial on Green's claims. Following the trial, the court issued a verdict in favor of Green on all claims. The court entered judgment in the amount of $25,157, awarding Green, as directed by Minn.Stat. § 325F.665, subd. 4, a full refund of the vehicle's lease price minus a 10 percent statutory allowance for reasonable use plus costs Green had incurred in renting a substitute vehicle. The court based the damages award on Green's claim under Minnesota's lemon law, noting that "[b]ecause the Plaintiff is fully compensated under the damages she has been awarded under Minn.Stat. § 325F.665, the Court awards her no additional damages" for the warranty claims.
After trial, Green brought a motion for an award of attorney fees and litigation costs pursuant to Minnesota's lemon law and the Magnuson-Moss Warranty Act, which both allow successful consumer-plaintiffs to recover costs, including reasonable attorney fees. In her motion, Green sought $231,101 in attorney fees, which included 605.8 attorney hours billed at $350 or $375 per hour, and 10.4 paralegal hours billed at $165 per hour. She also sought $7,565 in litigation costs.
BMW opposed Green's motion. BMW argued that the hourly rates charged by Green's attorneys were unreasonable. BMW also argued that the hours billed were unreasonable in light of all of the relevant circumstances, including the amount involved in the litigation. Specifically, BMW argued that the two attorneys on Green's case had both billed time for performing the same tasks, that the attorneys performed numerous tasks that were better suited to the skills of a paralegal, and that many of the billing entries were too vague to enable the court to determine whether the fees were reasonable. In support of its contentions, BMW highlighted, for example, the unreasonableness of two partners billing 110.3 hours for a total cost of $40,015 to prepare proposed findings of fact and conclusions of law for the district court. BMW also attached an addendum in response to Green's motion, identifying each charge with which it took issue and ultimately suggesting that an award in the range of $75,000 would be reasonable.
The district court awarded Green's counsel $221,499 in attorney fees and $7,565 in litigation costs. In making this award, the court reduced the hourly rate for the 10.4 paralegal hours from $165 to $80, but otherwise made no reductions in either the hourly rates or the number of hours billed. The court determined, based on affidavits submitted by both parties, that the $350 and $375 hourly rates of Green's counsel were reasonable and in line with what other similar lawyers in the community charge for similar consumer protection litigation. The court also found that the time expended by Green's counsel "was reasonable and necessary according to local, experienced and independent counsel," and after carefully reviewing the materials submitted could not
BMW appealed a number of the district court's findings of fact and conclusions of law, including the attorney fees award. The court of appeals unanimously affirmed the district court with respect to BMW's liability for the defective vehicle. Green v. BMW of N. Am., LLC, No. A11-581, 2011 WL 6306657, at *4-6 (Minn.App. Dec. 19, 2011). The court of appeals was divided, however, on the issue of attorney fees. The majority concluded that the district court had not abused its discretion in awarding attorney fees. Id. at *7-8. And, according to the majority, the district court properly declined to consider the amount involved in the litigation in awarding attorney fees. Id. at *8. While the majority determined that "reasonableness implies a certain degree of proportionality," it rejected BMW's argument that "a district court should consider the amount involved in the litigation when awarding attorney fees." Id.
On the issue of attorney fees, the dissent stated that "Green's attorneys did not exercise `billing judgment'" and that "the number of hours for which fees are claimed is unreasonable in light of the nature and limited value of the case." Id. at *9 (Johnson, C.J., concurring in part, dissenting in part). The dissent reasoned that "Minnesota law requires district courts to consider `all relevant circumstances,'" which includes "the relationship between the amount of attorney fees claimed and the amount of the claimant's damages." Id. (quoting Milner v. Farmers Ins. Exch., 748 N.W.2d 608, 621 (Minn. 2008)). Therefore, the dissent concluded that "the district court erred when determining the amount of the award of attorney fees." Id. at *11.
We granted BMW's petition for review on the issue of whether courts are to consider the relationship between the amount of attorney fees claimed and the amount of the claimant's damages when determining a statutorily reasonable fee award.
The district court awarded attorney fees to Green under Minnesota's lemon law, which protects consumers of new motor vehicles that have defects or conditions that substantially impair the use or market value of the motor vehicle. Minn. Stat. § 325F.665, subd. 3. Under the statute, consumers "may bring a civil action to enforce" Minnesota's lemon law and "recover costs and disbursements, including reasonable attorney's fees incurred in the civil action." Minn.Stat. § 325F.665, subd. 9.
Generally, Minnesota courts have used the lodestar method for determining the reasonableness of statutory attorney fees. See Specialized Tours, Inc. v. Hagen, 392 N.W.2d 520, 542 (Minn.1986) (adopting the Supreme Court's lodestar approach to reasonable attorney fees under civil rights statutes as a "sensible and fair approach" to determine reasonable attorney fees under the Minnesota Securities Act (citing Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)). The lodestar method "requires the court to determine the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Milner, 748 N.W.2d at 621 (citations omitted) (internal quotation marks omitted). We have consistently followed the lodestar method to determine reasonable attorney fees in numerous statutory settings. See, e.g., id. at 620-24 (Minnesota Fair Labor Standards Act); Bucko v. First Minn. Sav. Bank, F.B.S., 471 N.W.2d 95, 99 (Minn.1991) (statute prohibiting employee polygraph testing); Anderson v. Hunter, Keith, Marshall & Co., 417 N.W.2d 619, 628-30 (Minn.1988) (Minnesota Human Rights Act); Specialized Tours, 392 N.W.2d at 542 (Minnesota
The attorney fees provision in Minnesota's lemon law, like that in the Magnuson-Moss Warranty Act, apparently "`is designed to make it economically feasible to pursue consumer rights involving inexpensive consumer products.'" Skelton v. Gen. Motors Corp., 860 F.2d 250, 256 n. 7 (7th Cir.1988) (quoting S.Rep. No. 986, at 21 (1971)). We have applied the lodestar method to other statutory grants of attorney fees with similar purposes, such as the Minnesota Human Rights Act, which allows for the recovery of attorney fees to provide Minnesota citizens with the means to pursue legal remedies that may otherwise be unavailable. See Sigurdson v. Isanti Cnty., 386 N.W.2d 715, 722 (Minn. 1986) (explaining that the statutory allowance of attorney fees in the Minnesota Human Rights Act "was to encourage victims of discrimination to bring suit, particularly where the relief sought is not a large money judgment, and to make legal counsel available in these cases"); cf. Quam v. State, 391 N.W.2d 803, 807 n. 4 (Minn.1986) (noting that the attorney fees provisions of the Workers' Compensation Act "are intended to encourage attorneys to represent injured workers"). The parties have identified nothing about the public policy underlying the attorney fees provision in Minnesota's lemon law that would suggest that we should craft a new test, or apply the lodestar analysis differently in this context than we have done in other statutory contexts.
For all of these reasons, we hold that when assessing requests for attorney fees under Minnesota's lemon law, district courts should adhere to the lodestar method.
Under the lodestar method, a court must first determine the number of hours reasonably expended on the litigation and then multiply those hours by a reasonable hourly rate. Anderson, 417 N.W.2d at 628 (citing Hensley, 461 U.S. at 433, 103 S.Ct. 1933). In determining "the reasonable value of the legal services," the district court should consider "all relevant circumstances." State v. Paulson, 290 Minn. 371, 373, 188 N.W.2d 424, 426 (1971). The circumstances that inform a court's "determin[ation of] reasonableness include `the time and labor required; the nature and difficulty of the responsibility assumed; the amount involved and the results obtained; the fees customarily charged for similar legal services; the experience, reputation, and ability of counsel; and the fee arrangement existing between counsel and the client.'" Milner, 748 N.W.2d at 621 (quoting Paulson, 290 Minn. at 373, 188 N.W.2d at 426); see also Hensley, 461 U.S. at 434, 103 S.Ct. 1933 ("The product of reasonable hours times a reasonable rate does not end the inquiry. There remain other considerations that may lead the district court to adjust the fee upward or downward.").
BMW argues that the district court erred when it refused to consider the overall
We have consistently held that, in determining an award of reasonable attorney fees, a district court is to consider all relevant circumstances. See Paulson, 290 Minn. at 373, 188 N.W.2d at 426. These circumstances specifically include "the amount involved and the results obtained." Milner, 748 N.W.2d at 621 (citation omitted) (internal quotation marks omitted); see also Watkins v. Bigelow, 96 Minn. 53, 56, 104 N.W. 683, 684 (1905) (explaining that the district court in awarding attorney fees out of a probate estate "properly took into consideration," in addition to other factors, "the amount of money involved"). The "amount involved" language has not, as Green suggests, been confined to a consideration of the amount involved only as it relates to a prevailing party's percentage of success. Rather, we have looked to both the amount involved and the results obtained.
In Asp v. O'Brien, for example, the district court awarded the plaintiff $2,400 in attorney fees under Minnesota's mechanic's lien statutes after the plaintiff recovered slightly more than $4,000 on a mechanic's lien claim. 277 N.W.2d 382, 384 (Minn. 1979). In reducing the award of attorney fees to $1,000, we explained that "we are not inclined to allow the award of the full amount, particularly where the amount of the lien recovered is small in comparison to the attorney's fees assessed." Id. at 385. Asp stands for the proposition that the amount at issue is a relevant consideration in the ultimate determination of the reasonableness of attorney fees.
Moreover, we have looked to the amount involved in litigation in increasing an award of reasonable attorney fees. In a workers' compensation case, we concluded that the workers' compensation court erred when it gave no weight to the amount of benefits involved in the litigation in awarding statutory attorney fees. In re Petition of Attorney Fees, 350 N.W.2d 373, 375-76 (Minn.1984).
Contrary to Green's suggestion, our direction to lower courts to consider the amount involved and the results obtained when awarding reasonable attorney fees does not amount to a "dollar value proportionality rule." The amount involved is merely one factor, among a host of others, that the district court is to consider in awarding reasonable attorney fees. See City of Riverside v. Rivera, 477 U.S. 561, 574, 106 S.Ct. 2686, 91 L.Ed.2d 466 (1986) (concluding that in the civil rights context, fee awards should not "necessarily be proportionate to the amount of damages a civil rights plaintiff actually recovers," but that "[t]he amount of damages a plaintiff recovers is certainly relevant to the amount of attorney's fees to be awarded" (emphasis added)). Green cites to numerous cases that have rejected strict proportionality between damages awarded and attorney fees sought, but those cases are inapposite because BMW does not argue for, and our jurisprudence does not support, such a rule.
It is true that a cap on fees or an examination of the proportionality between the amount of recovery and the fees expended could hamper the ability of consumers to vindicate their rights relative to inexpensive products. But ignoring, as the district court did, the amount involved in the litigation contravenes the principles that underlie statutory attorney fees provisions. In explaining the lodestar method, the Supreme Court has explicitly cautioned that statutory attorney fees should be "adequate to attract competent counsel," but should "not produce windfalls to attorneys." Hensley, 461 U.S. at 430 n. 4, 103 S.Ct. 1933. The Court explained, "In the private sector, `billing judgment' is an important component in fee setting. It is no less important here. Hours that are not properly billed to one's client are also not properly billed to one's adversary pursuant
Our precedent is clear that the amount involved and the results obtained are among the relevant considerations in determining reasonable attorney fees under the lodestar method. Because the district court failed to consider these factors in awarding attorney fees under Minnesota's lemon law, we hold that the district court abused its discretion.
Reversed and remanded for proceedings consistent with this opinion.
15 U.S.C. § 2310(d)(2). Green argues that this statute, by including the phrase "based on actual time expended," provides for a greater recovery of attorney fees than those statutes, like Minnesota's lemon law, which are couched in terms of "reasonable attorney's fees," Minn.Stat. § 325F.665, subd. 9. In other words, Green contends that any time expended by attorneys under the federal act may be reimbursed without regard to reasonableness. Green's argument is unpersuasive. First, contrary to Green's assertion, the language of the federal statute is not at issue in this case because the district court specifically declined to award attorney fees under the federal act, determining instead that Green had been fully compensated under Minnesota's lemon law. Second, even if the federal statute were at issue, our analysis of attorney fees would be the same as the analysis under Minnesota's lemon law, because the federal statute specifically requires that "attorneys' fees based on actual time expended" be "reasonably incurred." 15 U.S.C. § 2310(d)(2) (emphasis added). Because reasonableness remains a consideration under the federal statute, there is no basis to conclude that the outcome of this case would be different if the district court had analyzed attorney fees under the federal statute instead of Minn.Stat. § 325F.665, subd. 9.