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Judge Trims Fee Request in Apple Bag Check Class Settlement

July 7, 2022 | Posted in : Fee Request

A recent Law 360 story by Bonnie Eslinger, “Alsup Cuts 33% Apple Bag-Check Deal Atty Fee Ask to 30%” reports that U.S. District Judge William Alsup said the lawyers who represented workers in a bag-search case against Apple that settled for $30.5 million can get 30% for their fees, but not the one-third requested, noting Thursday that the hours counsel said they spent on the case are "staggering" and likely "inflated."

At a morning hearing in San Francisco, Judge Alsup initially told counsel for the certified class of 14,000 workers that he was inclined to award 28% of the settlement fund for their legal fees, a few percentage points higher than the federal court's 25% benchmark.

"I don't agree with the one-third, but I agree that you get more than 25% because I think you did do above average work," the judge said.

Counsel for the class, Lee Shalov of McLaughlin and Stern LLP, told the court that the lawyers collectively racked up 11,400 hours of work on the case, a total the judge said seemed excessive, even with the case going to the state's high court at one point.

"It's staggering," the judge said.

Another lawyer for the class, Kimberly Kralowec of Kralowec Law PC, urged the court to grant the one-third cut requested, arguing that California law governs the calculation of the fee award where there are state law claims, citing cases where the Ninth Circuit approved a higher amount.

Judge Alsup shot back that if counsel was not happy with his 28% offering, perhaps he should look into whether the number of hours the lawyers claimed they put into the case showed that their work was inefficient.

"What I'm thinking about doing is appointing one of these auditors who will come in and scrutinize your lodestar [hours], which I believe is inflated," the judge said. "You can either take the 28% or we'll go back and do it the hard way."

The judge also said he was trying to ensure the most amount of money went to the class members.

He added that a higher percentage might be justified with a smaller settlement amount.

"But in a case where you are collecting vast amounts, like $30 million, then instead of getting more you should get less in my view," the judge said, explaining that "25% of a huge number is a lot more than 25% of a smaller number."

Kralowec told the court that she was arguing for the sake of making a record, but the class would go along with the court's decision.

"I appreciate that you've decided to award something above the 25% benchmarked by the Ninth Circuit," she said.

Shalov chimed in and told the court that counsel had secured every dollar for the workers that they should have been paid.

Judge Alsup said that was not a convincing argument.

"That money belongs to the class, it doesn't belong to you," the judge said. "However, I'm going to raise it to 30%."

Thursday's decision comes in the wake of nine years of heavily contested litigation in the case in the district court, the Ninth Circuit and the California Supreme Court.

In a motion filed in March, the workers said their lawyers deserved a one-third cut because of the amount of work it took to litigate the case.

The original suit, filed in July 2013, alleged Apple illegally underpaid workers by requiring them to clock out before checking their bags to ensure no products were stolen by employees. These checks sometimes took longer than an hour, the workers alleged.

But by 2015, it looked like workers were going to lose their case as Judge Alsup awarded Apple summary judgment, ruling that bag checks could have been avoided if employees did not bring bags to work. But the suit was subsequently brought before the California Supreme Court, which found the time spent checking bags was compensable under the state's Wage Order 7, which dictates that all hours worked need to be paid, whether the time is directly related to job duties or not.

As a result, the Ninth Circuit reversed Judge Alsup's ruling in 2020, finding any time spent on an employer's property should be compensated based on Wage Order 7.

The suit was remanded to the district court and Judge Alsup awarded summary judgment to the workers in 2021. The workers secured a $29.9 million deal with Apple in November.

Shalov told the judge on Thursday that lawyers for the class recovered an average award of $1,300 per class member.

He also told the court that in the weeks following the preliminary approval order, Apple discovered that about 203,000 shifts had not been accounted for. After counsel insisted that class members be compensated for those shifts, the tech company agreed to add another $570,000 to the total settlement amount, pushing it to about $30.5 million.

"Class members will be getting hundreds if not thousands of dollars in compensation for the time they spent working in Apple retail stores," Shalov said. "A more successful outcome in a wage and hour class action would be difficult to find."