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Judge Increases Lodestar by 50 Percent in FLSA Settlement

September 23, 2013 | Posted in : Contingency Fees / POF, Fee Award, Fee Award Factors, Fee Jurisprudence, Hourly Rates, Litigation Management

A recent Legal Intelligencer story, “Judge Bumps Up Lodestar by 50 Percent in Awarding Fees,” reports that a federal judge had sweeping praise for a million-dollar settlement, a third of which went to attorney fees, in a Fair Labor Standards Act (FLSA) suit that was based on an unusual and complex employment contract.  U.S. District Judge Robert D. Mariani of the Middle District of Pennsylvania approved the settlement between a class of service technicians and their employer, Benco Dental Supply, and gave class counsel more than 50 percent increase to its lodestar billing rate.

“Plaintiffs brought a claim in a complex and little-litigated area of law, where prospects of victory at a jury trial and on appeal remained unclear, and still managed to settle at an amount close to the limits of defendant’s liability,” Mariani said.  “Given the many risks of litigation – including all the imponderable twists and turns that might not become apparent until months or years into the case – this settlement represents a more than reasonable outcome for plaintiffs,” he said in Creed v. Benco Dental Supply.

Nearly 70 technicians are included in the suit, led by Douglas Creed, alleging that they were denied overtime pay under their contracts in violation of the FLSA.  The company had signed Belo agreements with its workers, under which they were paid a flat amount for 60 hours per week, regardless of the number of hours they actually worked, according to the opinion.

A Belo contract is designed to govern the compensation of employees who work irregular hours and provides an exception from some requirements of the FLSA, according to the U.S. Department of Labor.  “Because Belo agreements are rarely used, the central issue in this case – whether the agreements were correctly administered to provide for proper overtime pay – would be difficult to address and would require a significant amount of motion practice, extensive discovery, and would ultimately culminate in a jury trial,” Mariani said.

The judge praised the plaintiffs’ lawyer, Rowdy Meeks, who has a practice in Leawood Kan., as being “skilled and efficient.”  “He has navigated an unclear area of law to produce an award for the class that comes close to the full extent of Benco’s liability and that led to the creation of better employment contracts for all of Benco’s service technicians, whether they opt into the class or not,” Mariani said.  Also, Meeks took on a significant risk by handling the case on a contingency-fee basis, which could have resulted in little-to-no return for him, the judge said.

Meeks had submitted a lodestar billing rate of $625 an hour for himself and $175 an hour for his paralegal.  He worked 311.7 hours on the case and 39.2 in paralegal hours.  “This would amount to a total bill of $201,672, meaning that the settlement agreement gives counsel 1.65 times the lodestar amount,” Mariani said.  However, given the nature, complexity, and potential duration of the case, the court does not believe that a 1.65 multiplier is unreasonable.  He added in a footnote that his decision here should not be taken as an endorsement of that level of legal fees.