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Government to Pay Attorney Fees in FLSA Suit

September 21, 2015 | Posted in : Expenses / Costs, Fee Issues on Appeal, Fee Shifting, Fees as Damages, Fees as Sanctions / Bad Faith

A recent Texas Lawyer story, “Government to Pay $1.5M in Attorney Fees in FLSA Suit,” reports that the U.S. Department of Labor has agreed to pay $1.5 million in attorney fees to Corpus Christi company and its owner after the U.S. Court of Appeals for the Fifth Circuit sanctioned the federal government for bad faith ruled that it owed fees to the company.

The wage and hour division of the U.S. Department of Labor will pay the money to Gate Guard Services and owner Bert Steindorf, according to the settlement agreement.  The money is for attorney fees and expenses.

The Department of Labor alleged in a 2010 complaint that Gate Guard violated overtime laws.  But according to a ruling in July issued by a three-judge Fifth Circuit panel, when the DOL investigated Gate Guard for alleged Fair Labor Standards Act (FLSA) violations, the federal agency violated its own internal procedures and ethical litigation practices.

The Fifth Circuit sanctioned the federal government for bad faith and found that it owed attorney fees and travel expenses to Gate Guard.  But instead of having U.S. District Senior Judge John Rainey of the Southern District of Texas determined that exact amount of fees and expenses, the DOL negotiated a settlement with Pipitone.

Earlier, in April 2014, Rainey had ruled that the DOL owed $565,227 in attorney and paralegal fees and travel expenses to Gate Guard.  In 2013, Rainey granted Gate Guard’s motion for summary judgment and dismissed all claims that the DOL brought against it in the FLSA enforcement action.

Pipitone said the $1.5 million the government is paying covers the $1.3 million in attorney fees Steindorf has paid over the years plus “$200,000 in what I’m going to call essentially an enhancement.”