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Magistrate Judge Cuts Plaintiffs' Fee Request by 80 Percent

May 20, 2015 | Posted in : Contingency Fees / POF, Fee Award, Fee Award Factors, Fee Calculation Method, Fee Jurisprudence, Fee Reduction, Fee Request, Hourly Rates, Lodestar

A recent New York Law Journal story, “Magistrate Cuts ‘Princely’ Fee Proposal by 80 Percent,” reports that a federal magistrate judge approved a $1.375 million class action settlement on overtime wages but slashed the attorney fee award, saying the “princely sum” was unjustified.  Though Frank & Associates of Farmingdale, NY sought a full one-third of the settlement--$458,333--Eastern District Magistrate Judge Gary Brown cut the fee award to just under $93,000.

With the approximately 80 percent decrease in fees, Brown rejected the firm’s arguments that the percentage method was the norm for class litigation to be followed within the Second Circuit.  In Flores v. Mamma Lombardi’s of Holbrook, 12-cv-3532, Brown said “the purported ‘trend’ among district courts within the circuit to award a flat 33.3 percentage fee in employment common fund class action cases, upon which plaintiffs’ counsel relies, appears to be driven by plaintiffs’ counsel seeking high payouts at the expense of silent class members, and ignores important precedential rulings.”

The magistrate judge said there were issues with the quality of the advocacy, “including the undisclosed participation by an attorney representing the class in the drafting of objections to the very settlement he negotiated on behalf of the class.”

In the underlying suit, restaurant workers sued the operators of several Long Island restaurants in 2012, saying they were unlawfully denied overtime pay, which they were entitled to under the Fair Labor Standards Act.  There were 4,132 class members.

After “significant discovery” in the case, the parties told Brown in June 2013 that they had accepted his settlement proposal.  The parties consented to Brown’s jurisdiction and the magistrate judge preliminarily approved the settlement in July 2014.  Though he gave final certification on the “fair and reasonable” settlement, Brown cut the proposed fee request “in light of the peculiarities of this case.”

Citing nine cases, Frank & Associates said the fee award of one-third was in step with class litigation in the circuit “and what reasonable paying clients pay in contingency employment cases.”  But Brown looked to a decision from Southern District Judge William Pauley, Fujiwara v. Sushi Yasuda, 2014 WL 5840700, which found there was “reason to be wary of much of the case law awarding attorney’s fees in [Fair Labor Standards Act] cases in the circuit.

Instead of a percentage fee award, Brown opted for the lodestar method of determining reasonable attorney fees.  Frank & Associates said its attorneys spent 653 hours on the case, but Brown said a significant amount of time spent was “unnecessary, inappropriate and, in certain instances, antithetical to the efficient and professional resolution of this matter.”

The firm said it was to be paid at hourly rates ranging from $550 to $75.  In the fee application, Romero’s hourly rate was $450.  Brown trimmed Romero’s rate to $200 and said the firm was asking for different rates with some of the same attorneys in similar cases.  He said it would be “unfair to impute [Romero’s] conduct to the other lawyer’s involved” and put the total hourly range between $350 and $75.  He said because a favorable outcome was achieved and “to satisfy the public policy of incentivizing attorneys to accept cases … some fee award is warranted.”