3. Legal and Factual Issues Regarding Substantial Contribution
The key issue in resolving this remaining request for compensation is substantial contribution. In TURN v. PUC, the court did not disturb the Commission's determinations (in response to TURN's June 2004 request) regarding TURN's substantial contribution to the decisions that the court was reviewing.2 Therefore, we do not re-visit those determinations. In today's decision, we address TURN's later (February 2009) request, which concerns the extent of substantial contribution made by TURN's judicial review work occurring after the earlier request.
Regarding TURN's later request, we find that TURN made a substantial contribution only on the issue of hourly rates for outside counsel. As discussed below, our compensation award reflects disallowance of certain amounts claimed by TURN that do not relate to TURN's substantial contribution.
3.1. Legal Standard for Determining Substantial Contribution
An eligible intervenor is entitled to an award of compensation to the extent of the intervenor's reasonably incurred costs and fees related to its "substantial contribution." The Public Utilities Code (Section 1802(i)) defines the latter term as follows:
"Substantial contribution" means that, in the judgment of the commission, the customer's presentation has substantially assisted the commission in the making of its order or decision because the order or decision has adopted in whole or in part one or more factual contentions, legal contentions, or specific policy or procedural recommendations presented by the customer. Where the customer's participation has resulted in a substantial contribution, even if the decision adopts that customer's contention or recommendations only in part, the commission may award the customer compensation for all reasonable advocate's fees, reasonable expert fees, and other reasonable costs incurred by the customer in preparing or presenting that contention or recommendation.3
We must apply this standard to the work covered by TURN's February 2009 compensation request, which includes work performed by TURN's counsel (both in-house and outside counsel) beginning in late 2004 and continuing intermittently in the intervening years up to January 2009. The activities covered by the request all relate to TURN's legal challenge to the compensation we awarded TURN in D.05-04-049. The activities include: TURN's work from its first compensation request up to D.05-04-049 (this work related to the Proposed and Alternate Decisions that preceded D.05-04-049); TURN's application for rehearing of D.05-04-049; its petition to the California Court of Appeal (which granted a writ of review but ultimately upheld the Commission except on the outside counsel issue); and its subsequent petition to the California Supreme Court (which denied the petition and thereby sustained the Court of Appeal's decision).
3.2. TURN's Work to and Including the Application for Rehearing
Regarding TURN's work to and including its application for rehearing, we note that in D.07-03-017, we denied rehearing but extensively revised the reasoning articulated in D.05-04-049. TURN argues, and we agree, that it substantially contributed to D.07-03-017 by the force of some of its criticisms of D.05-04-049 in its application for rehearing. Even though we retained the award made in D.05-04-049, the analytical modifications that we adopted in D.07-03-017 responded in part to TURN's criticisms of D.05-04-049. Because the statute is satisfied by our adopting an intervenor's position only in part, we find that hours claimed by TURN to and including its application for rehearing are compensable.4
3.3. TURN's Work in Obtaining Judicial Review: Hours Allocated to Specific Issues
TURN challenged D.05-04-049 (as modified by D.07-03-017) before the California Court of Appeal, seeking reversal of the Commission's determinations regarding substantial contribution and hourly rates for outside counsel, and of its denial of a multiplier. When the lower court found in favor of TURN only on the hourly rates issue, TURN petitioned the California Supreme Court, which declined to grant any further review.5 We must now determine how much of this work in obtaining judicial review is compensable under the statute.
The Legislature authorized the Commission to compensate intervenors not only for their work in our own proceedings but also for "the fees and costs...of obtaining judicial review" following one of our decisions. See Section 1802(a), defining "compensation" as "payment for all or part, as determined by the commission, of reasonable advocate's fees...and other reasonable costs of preparation for and participation in a proceeding, and includes the fees and costs of obtaining an award under this article and of obtaining judicial review, if any." Bearing in mind this definition, the definition of "substantial contribution, and the guidance of the California Court of Appeal,6 we analyze the judicial review work that is the subject of TURN's later request for compensation.
The situation of an intervenor claiming compensation for its judicial review work is uncommon. Consequently, there are few Commission decisions in which we have interpreted the statute as it relates to such claims. The leading decision, in fact, is D.05-04-049 (as modified by D.07-03-017), the very decision whose determinations regarding substantial contribution were challenged by TURN but upheld successively by the California Court of Appeal and the California Supreme Court.
We will not try to summarize, much less quote verbatim, the lengthy discussions of "substantial compensation" and "judicial review" in D.05-04-049 (as modified by D.07-03-017), SCE v. PUC, or TURN v. PUC. However, the most recent court guidance, in TURN v. PUC, reviewing our leading decision, must be set forth in some detail:
TURN relies heavily on our statement in SCE that, "once a customer makes [the required substantial] contribution to a PUC proceeding, that customer may obtain compensation for the fees and costs of obtaining judicial review, regardless whether that judicial review work made a substantial contribution to the PUC proceeding." (SCE, supra, 117 Cal. App. 4th at pp. 1052-1053.) But this language must be read in the context of our discussion on that point. Neither the statutory language nor our interpretation of it gives entities like TURN carte blanche to do whatever they wish once they have made some sort of contribution to a PUC decision - at least not if they intend to seek to recover their fees. TURN's proposed construction of the statute and SCE would require compensation for any and all later court work once an intervenor has made a contribution to any part of a proceeding, regardless of the value of the court work or whether intervening events have changed the original contribution. TURN's interpretation would mean that the commission's finding of a substantial contribution then would entitle an intervenor to pursue endless court challenges with guaranteed compensation from ratepayers, regardless of the subject matter, value, merits, or outcome of the court challenge. Indeed, if TURN's position were adopted, it could have the unintended consequence of making the PUC reluctant to make substantial contribution determinations, especially where the PUC adopts an intervenor's position only to a limited extent. The PUC then would have to award compensation if the intervenor chose to make a court challenge to the PUC's decision, even if that court challenge were unsuccessful.
TURN v. PUC, 166 Cal. App. 4th at 534.
TURN at that time was arguing to the California Court of Appeal that the Commission erred in denying TURN compensation for TURN's judicial challenge to a settlement the Commission had entered into with a utility. The court stated:
TURN was free to argue against the settlement in the PUC and in court. But it is not entitled, as a matter of law, to an award of compensation for pursuing a position that the PUC, two federal courts, and the California Supreme Court rejected. In short, there was no error in the PUC's determination that the intervenor compensation provisions do not require it to award compensation for any and all judicial proceedings that ensue after an intervenor's contribution in an earlier stage of a PUC proceeding. That construction of the statute "bear[s] a reasonable relation to statutory purposes and language," and we therefore will not disturb it. Nor can we disturb the PUC's judgment that, in this case, TURN's appellate litigation did not result in a substantial contribution to the PUC's proceedings.
Our conclusion does not mean that an intervenor who does not prevail in judicial review proceedings challenging the PUC is never entitled to compensation for those efforts. We are not prescient, nor is the PUC, and the question whether an intervenor's participation "has resulted in a substantial contribution" requires a case-by-case analysis. Unsuccessful appellate litigation efforts challenging the PUC might be found, under some circumstances, to have made a substantial contribution to proceeding of the PUC. [...] In the end, the critical factor is not whether the intervenor's position is for or against the PUC's position; it is whether the intervenor has assisted the PUC in carrying out its statutory mandate to regulate public utilities in the public interest. In this case, we only confirm that a substantial contribution to a PUC decision, for which an intervenor has been compensated, does not automatically entitle that intervenor to compensation for all ensuing judicial proceedings without regard to changed circumstances or results achieved.
TURN v. PUC, 166 Cal. App. 4th at 535 (emphasis in original).
We are in the odd position of now applying the guidance of TURN v. PUC to TURN's work (1) leading up to TURN v. PUC, and (2) petitioning the California Supreme Court to review TURN v. PUC. We will discuss TURN's work in that order.
Regarding the issue of "hourly rates for outside counsel," TURN is plainly entitled to compensation on this issue. As a direct result of TURN's petition to the California Court of Appeal, this point of law was clarified, and in D.10-02-008 the Commission followed the court's remand to reconsider these hourly rates. TURN's work on this issue leading up to TURN v. PUC made a substantial contribution by assisting us to carry out our statutory mandate.
Regarding the issue of "substantial contribution," we find TURN is not entitled to compensation on this issue. It is true that the court in TURN v. PUC explained how the earlier precedent of SCE v. PUC would apply to facts not expressly considered in the earlier precedent. However, the court's explanation is fully consistent with arguments presented by the Commission, and the court expressly rejects arguments presented by TURN. The court did not adopt TURN's position in whole or in part. TURN's work did not assist us to carry out our statutory mandate, and accordingly that work is not compensable under the statute.
Regarding our denial of a "multiplier," TURN made no substantial contribution. In denying TURN's application for rehearing, we merely noted settled law on this issue and did not modify D.05-04-049. See D.07-03-017 at 21-23. The court affirmed our denial, stating merely, "Applying the standards of Section 1757, we find no error." TURN v. PUC, 166 Cal. App. 4th at 537. Nothing about TURN's work on this issue assisted us to carry out our statutory mandate. We therefore deny compensation on this issue.
We now take up TURN's petition to the California Supreme Court, in which TURN sought review of TURN v. PUC. The Court denied the petition and thereby affirmed TURN v. PUC. We find there is no aspect of TURN's work in petitioning the California Supreme Court that is compensable. We did not appeal TURN v. PUC, so no aspect of TURN's work on the petition could be considered necessary to defend its success on the "hourly rates" issue. Moreover, the California Supreme Court evidently saw no reason to further elucidate the treatment of the "substantial contribution" or "multiplier" issue by the lower court. In sum, TURN's petition to the California Supreme Court did not assist us to carry out our statutory mandate.
3.4. TURN's Work in Obtaining Judicial Review: Hours not Allocated to Specific Issues
In the immediately preceding section of today's decision, we determined the compensability of those hours that TURN has allocated to the three specific issues for which it sought judicial review. Such hours account for only 167.2 hours out of the more than 600 hours claimed by TURN. About 70% of the total hours appear in the category TURN labels "General."7
TURN describes the "General" category (to which all of TURN's staff attorney time is allocated) as follows:
"General" includes items such as communications with opposing counsel, preparation of pleadings not related to specific issues (such as TURN's successful opposition to the Commission's motion seeking to change venue), and preparation of the portions of pleadings that were not issue-specific (such as the statement of facts in the petition for writ of review).
TURN argues that it should receive full compensation for all hours in the "General" category:
The Commission should recognize that for the entries that TURN has categorized as "general" the amount of time devoted to the underlying activity would likely not have varied with the number of issues for which judicial review was sought. For example, the response to the Commission's motion seeking to change venue, or the preparation of the statements of facts required for the successful petition for writ of review would have required the same number of hours had TURN sought judicial review on the single issue of the correct hourly rates, rather than the three categories of entitlement to compensation, hourly rates and multiplier. If the Commission were to determine that it should compensate TURN for something less than the full amount of hours requested, it should still compensate the full amount of hours designated "General" (to recognize the largely fixed nature of those hours) plus all of the hours designated "Hourly Rates."
We find, as we discuss below, that TURN has not established the full compensability of the over 400 "General" hours. We have two basic reasons for rejecting TURN's arguments regarding this work category.
First, we distinguish TURN's judicial review work from intervenor work in formal proceedings before the Commission, such as rulemakings and utility applications. In formal proceedings, we recognize that an intervenor often must do considerable preparatory work, and other non-issue specific work, including (but not limited to) review of filings that initiate the proceeding, basic subject matter research, and consultation with other parties (especially customer representatives). Such work, which is typically recorded in the "General" category, is needed to spotlight potential issues, develop the intervenor's positions, and avoid unnecessary duplication of other parties' work. For these reasons, once we have established that an intervenor has made a "substantial contribution" to a decision, we typically allow full compensation for a reasonable amount of "General" (i.e., non-issue specific) work.
The situation is different where, as here, the intervenor is obtaining judicial review of a Commission decision. TURN itself initiated the judicial process by petitioning for a writ of review. As the initiating party, TURN itself selected the issues, and it did so after developing the record and refining its positions through its application for rehearing at the Commission, before petitioning the court. Consequently, there is far less justification here for the amount of preparation or other non-issue specific work that would be appropriate where TURN is responding in a Commission proceeding started by someone else, or even where TURN is responding in a judicial review process started by someone else.
Second, the examples TURN gives of non-issue specific work in pursuing this judicial review are not persuasive. As one example of such work, TURN cites the statement of facts in its petition for writ of review. We disagree that a statement of facts lacks issue specificity. A statement of facts in a petition or other pleading is very far from a dry, objective recitation. Instead, writ attorneys carefully craft the statement of facts to highlight the issues to which they direct the court's attention and to suggest, as the only logical outcome, the disposition of those issues for which they contend.8
We have also reviewed other activities that TURN lists under "General" but does not mention as examples of that category. We find that many of these activities (such as review of briefs filed by the Commission and preparation for oral argument) are inherently issue-specific. Although the activities may combine two or more issues, it would have been more accurate to allocate the hours spent on these activities among the issues that they covered, rather than do as TURN did and claim all the hours as "General."
For these reasons, we find that TURN's claim for "General" hours is inadequately supported. Also, considering that "General" hours constitute about 70% of the total hours in TURN's request, we find that the claim for "General" hours is excessive. Accordingly, some of the "General" hours should be disallowed.
As we noted above, many of the activities listed under "General" are at least issue-specific. Moreover, these activities appear to be by far the most time-intensive in the "General" category. We therefore refer to our earlier disallowance of issue-specific hours for guidance in determining a reasonable number of "General" hours.
The issues on which we denied compensation (TURN's arguments in support of a "multiplier" and of the compensability of certain judicial review work) account for about 82% of TURN's issue-specific work. If we were to treat all of the claimed "General" hours as in fact issue-specific, then we would compensate only 18% of those hours, corresponding to the time TURN devoted to hourly rates for outside counsel. But such treatment would be too harsh because a substantial part of the claimed hours may fairly be classified as "General" within the meaning of that term here. As a compromise, we will compensate TURN for 60% of its hours claimed under the "General" category.
2 See TURN v. PUC, 166 Cal. App. 4th at 534-35.
3 All statutory references in today's decision are to the Public Utilities Code.
4 In round numbers, TURN's claim shows 110 hours to and including the application for rehearing. TURN attorney Finkelstein (50.5 hours) and outside counsel Strumwasser (56.5 hours) account for almost all of this time. These numbers reflect a correction filed by TURN on August 19, 2009. The correction removes 3.5 hours that resulted from double entries for some of attorney Finkelstein's work in 2007.
5 On November 10, 2008, the California Supreme Court denied TURN's petition for writ of review. We note, regarding this petition, that TURN had filed a Supplemental Notice of Intent, under our Rule 17.1(f), to alert us of its intent to claim compensation for the petition and any subsequent review before the Supreme Court. Also, TURN timely filed its request for compensation after the Supreme Court denied the petition.
6 In addition to TURN v. PUC, the court construed these statutory provisions in relation to an earlier petition (by a utility) in this very proceeding. See Southern California Edison Co. v. Public Utilities Commission et al. (2004) 117 Cal. App. 4th 1039 (hereafter, SCE v. PUC).
7 TURN includes one more work category, namely, hours spent on the February 2009 compensation request. These amount to 19.6 hours (13.5 hours by TURN staff and 6.1 hours by outside counsel). We analyze this work category later in today's decision.
8 TURN's other examples of "General" work (communicating with opposing counsel, opposing the Commission's motion for change of venue) are more plausibly non-issue specific, but they cannot reasonably account for more than a small fraction of the hundreds of hours TURN claims under the "General" category.
