A recent Law 360 story by Linda Chiem, “Atty Fees Trimmed in $1M Telsa Salespeople Settlement” reports that a California federal judge trimmed the fees and costs awarded to attorneys representing a class of former Tesla sales advisers accusing the electric carmaker of overtime and meal and rest break violations, chastising the attorneys for "unreasonable" requests before ultimately approving an overall $1 million settlement. U.S. Magistrate Judge Jacqueline Scott Corley awarded plaintiffs' attorneys at Amartin Law PC and Brennan & David Law Group $160,895 in attorney fees and $13,146.49 in litigation costs, which falls short of the $256,689 in fees and $15,208.91 in costs they had requested in January.
Judge Corley also cut by half the incentive awards for named plaintiffs Brian Wilson, Carrie Hughes and Katia Segal from the requested $10,000 to $5,000 apiece for serving as class representatives in the wage-and-hour action. The judge also signed off on the overall settlement, but not before calling out the class counsel for discrepancies in their filings.
Judge Corley said the class counsel failed to reasonably explain their lodestar calculations and submitted billing records with "numerous excessive and block billing entries" that didn't adequately break down the time spent working on this specific case or included excessive costs for travel or other expenses, according to the order. Attorney fees awarded using the lodestar method count "the number of hours reasonably expended multiplied by [a] reasonable hourly rate" determined by the court.
"The discrepancy with respect to plaintiffs' lodestar and billing records is just the latest example of plaintiffs' counsel's carelessness in the presentation of the settlement to the court," Judge Corley said. "Given the court's concerns, the court finds that the lodestar method, rather than the percentage of the fee method, is the most appropriate method of calculating attorneys' fees in this particular case."
She also ripped the attorneys for trying to collect fees on work the court ordered them to redo after their first motion for preliminary approval was rejected in June 2018 because it didn't explain the logic behind the deal and why it was a good result for both sides. Judge Corley tentatively approved the deal last September after the attorneys reworked their motion in response to her concerns.
"Counsel's request for fees in excess of $36,000 for the work spent redoing the motion for preliminary approval, traveling to the second preliminary approval hearing, responding to the court's request for a status update, and traveling to and from San Francisco for the status conference is thus unreasonable," Judge Corley said.
Additionally, the plaintiffs' request for $10,000 apiece in incentive awards for the named plaintiffs was too much, the judge said, considering that each of the plaintiffs attested to spending between 75 and 90 hours on this action — the equivalent of two 40-hour weeks of work — but none of them were ever deposed or attended the mediation. "Under these circumstances, the court finds that plaintiffs' generic statements regarding how they assisted the attorneys in the litigation fail to justify the requested $10,000 incentive award," Judge Corley said.
"The court is mindful that participation in wage-and-hour actions involves reputational risk, but finds that the risk here is not so great as to justify deviating from the standard $5,000 incentive award," she said. The $1 million deal covers 282 class members, most of whom live in California, who accused Tesla of misclassifying showroom owner advisers and sales advisers as exempt from overtime under California's "commission salesperson exception."
That exemption only applies if sales advisers make at least 1.5 times the minimum wage and if over half of their compensation comes from commissions. The plaintiffs maintained that their commissions failed to make up over half of their income so they should not have been denied overtime or proper meal and rest breaks, according to court documents.