Sixth Circuit Remands Consideration of Attorneys Fees in Successful FLSA Settlement

Litigation is not for sissies.  On Friday, the Sixth Circuit remanded for additional consideration an award of attorneys fees of almost $517K where the five plaintiffs each recovered between $2.2K and $58K (for a total of approximately $82K).  Smith v. ServiceMaster Corp., No. 14-5481 (6^th Cir. 11-14-14).  The plaintiffs worked in different states for affiliated national companies.  Some claim to have been shorted overtime pay and some claimed to have been misclassified as exempt.  They sought permission to pursue their claims as a collective (aka class) action. The employer successfully moved to compel arbitration. However, after the arbitrator ruled that the arbitration could proceed as a collective action, but before any such class was certified or the process began to identify and notify other potential class members – the employer made an offer of judgment and paid all of the plaintiffs the entire amount of their claimed wages (and presumably liquidated damages).  The plaintiffs’ attorneys then moved for their attorneys fees as well as almost $19K in costs.   The district court granted the plaintiffs’ request in full and the employer appealed.

As noted by the Court, successful FLSA plaintiffs are entitled to receive reasonable attorneys’ fees in addition to their wages:

The FLSA provides that “[t]he court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.” 29 U.S.C. § 216(b). An award of attorney’s fees under § 216(b) is mandatory.

These are the issues upon which the Court remanded for further consideration:

·        How much of the approximately $3.6K in computer research charges is recoverable.  There was no record about the general practice in the local legal community to bill for computer research.  There was also an insufficient billing description of the charge so that that it was apparent – without more information – that each “charge was reasonably related to the issues raised in the case.”  

We see no reason for an absolute rule that the cost of computer research is or is not recoverable. Any recovery should be for the actual cost of the online access or service. If the lawyer or firm pays a blanket access fee, rather than per search, there is no reason to distinguish the on-line research cost from the cost of the books that at one time lined the walls of legal offices, which was treated as overhead. If distinct charges are incurred for specific research directly relating to the case, and the general practice in the local legal community is to pass those charges on to the client, we see no reason why such properly documented charges should not be included in the recoverable expenses.

·        Whether it was reasonable to charge between $300 – $450/hour for the time of associate attorneys (who were located in San Francisco) when the case was pending in Tennessee and those amounts exceeded the $190-$335/hour charged by local associate attorneys.  While the court is not required to consider only the local attorneys in the venue, there did not seem to be any discussion about why it was departing from this practice.

·        Whether the amount of fees should be reduced based on the unsuccessful challenge of the motion to compel arbitration and pursue collective discovery and litigation.   

“‘[T]he most critical factor’ governing the reasonableness of a fee award ‘is the degree of success obtained.’”  . . . Where “a plaintiff obtains ‘limited success, the district court should award only that amount of fees that is reasonable in relation to the success obtained.’”  . . . However, “where the plaintiff’s claims for relief involve common facts or related legal theories, such that much of counsel’s time will have been devoted generally to the litigation as a whole, the court should focus on the significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.”  . . .  Further, this court has held that attorney’s fees related to a failed effort to pursue collective action can be recovered if “these expenses benefitted the . . . plaintiffs’ individual claims.”

·        Whether the time entries were sufficiently descriptive of the work performed. While the Court had no objection to block billing and cited authority that attorneys were not required to explain how every single minute was explained, it remanded the issue of the time descriptions for elaboration by the district court.

·        Whether the plaintiffs’ attorneys charged $1.7K for performing clerical functions.

·        Whether the plaintiffs’ attorneys should be permitted to charge for duplicative services – such as when several or all attorneys participated in the same meeting or conference call.  Nonetheless, the Court noted that no legal authority was cited showing that this was improper.

·        Whether the attorneys should be permitted to charge $49K  for travel time when they were not also working.  The Court noted that this was generally permissible.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.