CBS Holdings, LLC v. Hexagon US Federal, Inc.:
The Supreme Court of Alabama Demands Transparent, Substantiated Fee Petitions and Explicit Peebles-Factor Findings

1. Introduction

CBS Holdings, LLC v. Hexagon US Federal, Inc. (“CBS II”) is the Supreme Court of Alabama’s second opinion in a protracted commercial-lease saga between a landlord (CBS Holdings) and its tenant (Hexagon US Federal, Inc., “HexFed”). While the first decision (CBS I, Oct. 18 2024) resolved the merits of the lease dispute, the present opinion zeroes in on attorney-fee procedure. Specifically, it addresses how thoroughly a prevailing party must document its fee request when the underlying invoices are heavily redacted for purported attorney-client privilege, and how detailed a trial court’s order must be to survive appellate scrutiny.

The Court reverses a $174,987.45 fee award because (1) HexFed’s proof was inadequate—449 of 458 time-entry descriptions were completely blacked out, thwarting any meaningful review—and (2) the trial court’s one-paragraph order failed to show consideration of all 12 Peebles v. Miley factors. The opinion thus erects a new procedural framework for Alabama fee petitions, balancing the need for confidentiality with the judiciary’s duty to produce transparent, reviewable fee determinations.

2. Summary of the Judgment

• The Court reverses the Madison Circuit Court’s fee order and remands for further proceedings.
• It holds that a party requesting fees under a time-consumed (“lodestar-like”) theory must supply sufficiently detailed billing records to let the trial court—and, on appeal, the Supreme Court—assess reasonableness and necessity.
• The Court re-affirms that the trial court must address all Peebles factors (even if some receive only summary treatment) and must “articulate the decisions made, the reasons supporting those decisions, and how it calculated the attorney fee.”
• Complete redaction of narrative descriptions, without alternative mechanisms such as privilege logs or in camera review, is inadequate.
• On remand, HexFed may resubmit evidence; the trial court may receive additional proof (including unredacted materials for in camera inspection) and issue a detailed order consistent with the new standard.

3. Analysis

3.1 Precedents Cited

The opinion interweaves several authorities:

• Peebles v. Miley, 439 So. 2d 137 (Ala. 1983) – Alabama’s 12-factor test for reasonableness of fees.
• Pharmacia Corp. v. McGowan, 915 So. 2d 549 (Ala. 2004) – Requires trial courts to provide findings permitting meaningful appellate review; first major application of Peebles in modern context.
• Beal Bank, SSB v. Schilleci, 896 So. 2d 395 (Ala. 2004) – Clarifies that even when fee is calculated via time entries, Peebles still governs.
• Eli Global, LLC v. Cieutat, 400 So. 3d 534 (Ala. 2023) – Approves “slightly” redacted invoices but underscores the need for line-item specificity.
• Federal analogues (Hensley v. Eckerhart, 461 U.S. 424 (1983); Oxford Asset Mgmt. v. Jaharis, 11th Cir.) – Used by the Court to show nationwide convergence on the principle that excessive redaction defeats review.

The Court distinguishes these precedents by stressing that here the redactions were total, eliminating any ability to evaluate necessity or apportionment among multiple matters.

3.2 Legal Reasoning

1. Burdens of Production and Proof
   The fee claimant bears the initial burden to justify the request. HexFed’s near-blank invoices could not carry that burden. The Court rejects the notion that privilege automatically permits full redaction, suggesting measures such as partial redaction, privilege logs, or in camera review.
2. Meaningful Appellate Review
   Citing Pharmacia, the Court reiterates that it cannot rubber-stamp a fee award without an intelligible record. The single paragraph reciting that the fees were “reasonable under Peebles” fails to reveal how each factor influenced the calculation.
3. Mandatory Consideration of All Peebles Factors
   The Court clarifies that every factor must at least be acknowledged, though not all will materially affect the result. Failure to indicate consideration is reversible error unless harmless.
4. Interaction with Attorney-Client Privilege
   Privilege does not trump the need to substantiate fee claims; litigants must find a way to give the court enough information while protecting confidences.

3.3 Potential Impact

• Heightened Documentation Standard – Parties in Alabama must now expect to submit detailed, partially unredacted (or in camera) billing records if they seek recovery based on time spent.
• Trial-Court Orders – Judges must draft more robust fee orders, explicitly tying their computation to the Peebles matrix.
• Privilege Management – Firms will likely adopt dual-track billing (public-friendly summary plus sealed detailed backup) to avoid blanket redactions.
• Ripple Effect Beyond Contract Cases – The reasoning applies to statutory fee-shifting, indemnity, guardian-ad-litem fees, and class-action settlements.
• Strategic Considerations on Appeal – Appellants challenging fees can cite CBS II when arguing that opaque invoices or perfunctory orders preclude review.

4. Complex Concepts Simplified

• Attorney-Client Privilege vs. Fee Documentation
  Privilege protects confidential communications, but fee requests require enough disclosure to justify payment. Courts often allow redaction of sensitive substance while leaving non-privileged descriptors (e.g., “drafted summary judgment brief”) intact, or review full invoices privately.
• Lodestar (Time-Consumed) Method
  Multiply reasonable hours worked by a reasonable hourly rate, then adjust up or down based on other circumstances (success, novelty, etc.). Alabama loosely mirrors this via the Peebles factors.
• Peebles Factors
  Twelve variables—ranging from the case’s value to customary local rates—that guide fee reasonableness. Think of them as a checklist the judge must at least glance at.
• In Camera Review
  A judge privately examines unredacted material to determine what can remain sealed while still informing the court’s analysis.

5. Conclusion

CBS Holdings, LLC v. Hexagon US Federal, Inc. crystallizes two imperatives for Alabama litigation: (1) prevailing parties must substantiate fee petitions with intelligible, itemized proof—even when privilege concerns exist—and (2) trial courts must craft fee orders that expressly engage the Peebles framework and reveal their arithmetic. By coupling documentary rigor with transparent judicial reasoning, the decision enhances appellate review, curbs fee inflation, and harmonizes Alabama practice with federal lodestar jurisprudence. Going forward, any party or court that ignores these directives does so at significant peril on appeal.