A recent NLJ story, “Sushi Restaurant Class Award With Fees Admonition,” reports that a federal judge has approved a $2.4 million wage-and-hour settlement between plaintiffs and a New York sushi restaurant, but only after the class counsels’ fees were cut in nearly half and a caution about rubber-stamped proposed orders to plaintiffs’ attorneys and judges. 

U.S. District Judge William Pauley III of the Southern District of New York used the occasion of the settlement of Fujiwara v. Sushi Yasuda to warn that an “explosion” of Fair Labor Standard Act (FLSA) litigation, accompanied by too little oversight by judges, is resulting in a payday heyday for plaintiffs’ lawyers.

The problem, Pauley wrote in approving the deal, is that plaintiffs’ attorneys have free rein to set their fees in FLSA cases, without adversarial counterbalance from defendants who care only about the bottom line settlement amount, from class members, who may be unsophisticated in the ways of litigation; or from class representatives, who can be beholden to the plaintiffs’ counsel for their cut.  And judges, Pauley wrote, can be more interested in clearing dockets than parsing settlements deals line-by-line.

As a result, “(T)he vacuum created by the proposed FLSA class action settlements has permitted plaintiffs’ attorneys to write much of the law on what constitutes a reasonable attorney’s fee.  Those fees, effectively paid by the class, at times provide lawyers with more than a fair day’s pay for a fair day’s work.”

Pauley focused particular concern on rubber-stamping by judges of proposed orders crafted by plaintiffs’ counsel, and self-perpetuating citation to those same proposed orders as precedent for orders to come, many of which get little more than cursory vetting by judges.

“By submitting proposed orders masquerading as judicial opinions, and then citing them in fee applications, the class-action bar is in fact creating its own case law on the fees it is entitled to,” he wrote.  “Approval of class action settlements and fee applications is precisely where judicial scrutiny, not judicial deference, is most needed.”