Minnesota Court Cuts Proposed Attorney Fee Award From $3.2 Million to $600,000 in Off-the-Clock Case

by BakerHostetler
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In 2014, five law firms brought a claim for alleged off-the-clock work. As discovery revealed, the claims all arose out of conduct involving a single shift supervisor at a single restaurant, and the conduct was disputed at that. Although the allegations related to a low-level supervisory employee, the plaintiff firms then spent considerable time and expense trying to parlay that isolated set of occurrences into a nationwide collective action, ultimately without success. Faced with a smaller but still disputed wage claim involving less than $25,000, the parties settled for roughly $60,000 plus incentive awards and attorney fees to be determined by the court. The five plaintiff firms then submitted an attorney fee request for $3.2 million as part of the approval of the settlement. Harris v. Chipotle Mexican Grill, Inc., Case No. 14-cv-4181 (SRN/SER).

On Jan. 29, 2018, the District Court of Minnesota approved the settlement, including the award to the affected employees and the incentive awards. In doing so, the court noted that the employees received more money than if they had tried their claims. It severely reduced, however, the amount of attorney fees. The bulk of the court’s 44-page opinion addressed the reasonableness of the fees, but at its heart, the problem identified by the court was the relative simplicity of the issues and the huge disparity between the result for the class members and the massive attorney fee request. This was a straightforward wage and hour case involving the lowest level supervisor at a fast-food restaurant punching employees out before their work was done, not a novel legal or factual issue. Further, under the arrangement proposed by the plaintiffs’ counsel, the attorneys would get more than 98 percent of the funds and the class members less than 2 percent. As the court concluded:

“In consideration of these factors, on balance, the Court is persuaded that due to the relatively straightforward nature of the legal issues here, significantly lower awards in similar cases, the results obtained, and the disproportionate relationship between the amount of damages obtained and the fee request, an overall downward reduction of 70% is reasonable.”

The good news in this case was that the court did not go along with such an excessive fee award, but the amount awarded to the attorneys was still five times that going to the class. Unfortunately, the experience of the employer here is one that is becoming far too typical, with multiple attorneys working on a relatively limited Fair Labor Standards Act case in the hopes of garnering a generous fee. Further, the court uncritically accepted $42,500 paid as “incentive awards” to four class members. Assuming these individuals had been paid $10 per hour at the restaurant, the largest of these awards, $15,000, was the equivalent of 1,500 hours of straight time, or roughly nine months of employment. If the case had proceeded at the outset, as did the one relating to the one supervisor at one location, one can only wonder whether the class members would have received their pay more quickly and far more efficiently than having to wait and assume the risk of several years’ pursuit of a larger class.

The bottom line: Some courts will scrutinize attorney fee awards in FLSA cases, but it still will cost a lot.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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