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Federal Circuit Upholds Fee Award that Exceed Damages in FLSA Case

January 17, 2019 | Posted in : Expenses / Costs, Fee Award, Fee Issues on Appeal, Hourly Rates / Hourly Billing

A recent Daily Report story by Greg Land, “Panel Upholds $119K Fees/Expenses for $12K Verdict,” reports that a federal appeals panel upheld lawyers receiving $119,000 in fees and expenses in a case where their client, a waitress, received $12,000 in improperly denied tips and wages.  The unpublished per curiam opinion of the U.S. Court of Appeals for the Eleventh Circuit noted that there was “room to quibble” whether the trial judge should have awarded the full amount of fees sought in the case, and that the “fee-to-judgment ratio is large.”  Nonetheless, Judges Jill Pryor, Britt Grant and R. Lanier Anderson held that the trial judge did not abuse his discretion by awarding the fees, particularly after ruling that the hours billed were due to the club-owners’ “obstreperous conduct and the case having gone to trial.”

“We just had to be persistent,” said Kevin Fitzpatrick Jr., who represented the plaintiff with partner Charles Bridgers of DeLong Caldwell Bridgers & Fitzpatrick.  After Judge Mark Cohen of the U.S. District Court for the Northern District of Georgia ordered a mediation, “The other side said they weren’t going to offer any money at all,” he said. “They wanted to fight.”  Mableton solo McNeill Stokes, represented the defendants, Lacura Bar and Bistro, and owners  Alonzo Ross and Lamarcus Allison.  Stokes could not be reached to comment.  

According to court filings, Shatrailia Jackson worked at the Metropolitan Parkway nightspot from 2014 to 2015, working three or fours shifts a week.  She was supposed to be paid $25 per shift plus tips but testified that sometimes she was only paid $20 and was frequently not paid at all.  “Lacura did not record the tips its servers made, did not issue paychecks or paystubs, did not issue tax documents to employees, and did not use a timeclock,” the opinion said.  “It operated as a cash-only business and lacked traditional employment records.”

In March 2015, Jackson filed a putative collective action against Lacura and its owners, asserting counts for failure to pay the minimum wage under the Fair Labor Standards Act, failure to pay other employees similarly situated and retaliatory termination.  According to Lacura’s defense filings, the club fully informed Jackson of its pay and tip policy.  The defense also claimed that the club was not subject to the FLSA because its annual gross receipts were below the $500,000 threshold to trigger the law.

Fitzgerald explained how the plaintiff’s side shot the gross receipts argument.  “First, they showed us figures saying they made like $96,000 a year,” he said.  “We subpoenaed the records of every liquor distributor in town and came up with about $350,000 in liquor costs alone.”  “We added up the lease, employee pay and security and got way over the $500,000 that way,” he said.

At trial, he said, the jury was also shown Facebook and Instagram postings “where they’re swimming in cash and having money drops,” referring to events in which cash was dropped for patrons.  By the time the case went to trial, only Jackson’s FLSA claims remained.  The retaliation claim was dismissed prior to trial, and Fitzpatrick said his team made a strategic decision not to pursue the collective action claim.  Following a two-day trial, a jury awarded her $6,308 in unpaid wages.  After the verdict, Jackson filed a motion for liquidated damages and for attorney fees and expenses of $118,894.  Cohen granted both requests, doubling Jackson’s damages to $12,616 and awarding the full sum sought by her lawyers.

In upholding Cohen’s order, the appellate panel brushed aside Lacura’s arguments that it had acted in good faith in compensating Jackson.  “Lacura barely attempts to demonstrate good faith, opting instead to argue that its violation ‘cannot be willful’ because Jackson ‘was paid more than the minimum wage,’” the opinion said.  “This argument is essentially a denial of liability and amounts to an attempt to relitigate the jury’s verdict.”  “Lacura kept no payroll records, produced no evidence that it sought or relied upon legal guidance, and did not even track how much money its employees were making in tips.”

The outsize fee award relative to the judgment is not too unusual in FLSA cases, Fitzpatrick said.  “People force us to go to trial on low-dollar wage and hour cases all the time,” he said.  “The fee usually greatly exceeds the amount awarded by the jury.”  Noting that Lacura is still obviously a money-making concern, Fitzpatrick nonetheless said collecting the judgment is another matter.  Sounding resigned, he said, “I never know what we’re going to collect.”