January 30, 2018
A recent Law 360 story by Bonnie Eslinger, “’Excessive’ Chipotle Class Fee Cut From $3.2M to $600K,” reports that a Minnesota federal judge slashed an attorneys' fee request of $3.2 million to $600,000 in a class action alleging Chipotle required employees to work off the clock, calling the ask “excessive” in light of the results: a $62,000 settlement for two restaurants' workers.
The decision Monday by U.S. District Judge Susan Richard Nelson to reduce the attorneys' fee request by more than 81 percent marked a withering end to Fair Labor Standards Act litigation that once sought to represent nationwide collectives and statewide classes. That result, Chipotle Mexican Grill Inc. told the court, potentially could have encompassed hundreds of thousands of plaintiffs and “untold millions” of dollars in damages. In the end, the number of class members receiving a share of the settlement was 28.
After more than four years of pursuing their case, counsel for the class urged the court to take their contingency-based fee arrangement into consideration when assessing the reasonableness of their fee request. The judge didn’t find that argument very persuasive.
“The court appreciates the risk undertaken by attorneys representing hourly-paid employees suing their corporate employer under the FLSA,” the judge wrote in her 44-page ruling. “However, even considering the contingency-based arrangement here, the total fee request of $3,236,368.50 is excessive.”
The fee request is particularly high, she said, in light of the amount of damages at stake, plaintiffs’ overall success and the $62,000 result.
The judge added that while the plaintiffs’ law firms initially sought to certify a nationwide class, they were ultimately unsuccessful in that effort.
“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 reduction is reasonable the judge said.
The 81.5 percent reduction of the $3.2 million fee request also incorporated cuts by the judge for hourly billing rates the judge found were above the prevailing rate for comparable work done by other attorneys in the Twin Cities.
Each of the plaintiffs’ law firms billed at hourly rates of $600 for partners, $450 for senior associates with five or more years of experience, $350 for junior associates with less than five years of experience, and $250 for paralegals, the court noted.
Reasonable rates should account for varying levels of experience, the judge said, noting that a partner with 14 years of legal experience billed at the same rate as a partner and lead attorney with three decades under his belt, Kevin Giebel of Giebel and Associates LLC. The court made reductions to most hourly billing rates, including dropping Giebel to $575 per hour and the less-experienced partner to $475.
The judge also shaved the fee request to account for work done by counsel for the plaintiffs involving abandoned claims and unsuccessful efforts to amend the pleadings, for tasks considered administrative or clerical in nature, and for work deemed duplicative or excessive.
The parties reached their settlement during the summer, weeks after Judge Nelson denied a bid by the burrito restaurant chain to decertify the class of employees accusing the company of wage-and-hour violations — and just as the case was set to go to trial.
In rejecting the motion to decertify the class, judge rebuffed Chipotle’s argument that the alleged FLSA violations were attributable to “varied” reasons, including managerial requests to clock out early and continue working, additional cleaning assignments as punishment, “voluntary cleaning parties,” and off-the-clock work to demonstrate loyalty. In her June ruling, she also denied the argument that plaintiffs working as hourly kitchen managers or service managers had a conflict of interest because they were among the employees who directed other plaintiffs to perform off-the-clock work.
The workers were granted conditional collective action certification under the FLSA in September 2014. The suit was first filed in July 2013 against Chipotle by several employees at the restaurant in Crystal, Minnesota. Judge Nelson, however, turned down the employees' request for a nationwide class that would have covered some 100,000 workers, instead certifying a narrower class composed only of workers at the Chipotle in Crystal.
The settlement also resolves the individual claims filed in October 2014 by a former Chipotle employee at its restaurant in Golden Valley, Minnesota.
The cases are Harris et al. v. Chipotle Mexican Grill Inc., case number 0:13-cv-01719, and Woodards v. Chipotle Mexican Grill Inc., case number 0:14-cv-4181, in the U.S. District Court for the District of Minnesota.