Law Updates

$56,430 In Attorney’s Fees Awarded For $11,500 Settlement Of FLSA Case

Theophilus Spencer, et al. v. Central Services, LLC, et al.,
Civ. No. CCB-10-03469 (D. Md.) (January 13, 2012) |
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(January 4, 2012) Kevin M. Cox, Associate.

For more information, contact Paul Farquharson

Plaintiff, Theophilus Spencer, filed suit against Defendants, Central Services, LLC, and It Works Learning Center, Inc. (“Defendants”) in the Circuit Court for Baltimore City. The Defendants removed the case to Federal Court, and Plaintiff filed several amendments, including adding Plaintiffs, Calvert Ziegler and Elmer Lewis, who also had Fair Labor Standards Act (“FLSA”) and related claims against Defendants. All three (3) Plaintiffs had previously worked for Defendants on an hourly basis performing debt collection services. They alleged that Defendants, which they characterized as joint employers, failed to pay them overtime and minimum wage for work performed.

The parties settled in May 2011. According to the terms of the settlement, Plaintiff Spencer was awarded $6,000.00, and Plaintiffs Ziegler and Lewis were each awarded $2,750.00. The settlement did not, however, address the Plaintiffs’ costs and/or attorney’s fees.

In an action under the FLSA, “[t]he court . . . shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow reasonable attorney’s fee to be paid by the defendant, and costs of the action.” 29 U.S.C. § 216(b). Payment of attorney’s fees and cost to employees who prevail on FLSA claims is mandatory; however, the amount is within the discretion of the court.

The first step in determining reasonable attorney’s fees is to calculate the lodestar – that is, “the number of hours reasonably expected on the litigation times a reasonable hourly rate” Enhancements to the lodestar figure “may be awarded in rare and exceptional circumstances.” Courts have also historically assessed the reasonableness of fee petitions with respect to the following, known as the Johnson factors:

(1) the time and labor required in the case, (2) the novelty and difficulty of the questions presented, (3) the skill required to perform the necessary legal services, (4) the preclusion of other employment by the lawyer due to acceptance of the case, (5) the customary fee for similar work, (6) the contingency of a fee, (7) the time pressures imposed in the case, (8) the award involved and the results obtained, (9) the experience, reputation, and ability of the lawyer, (10) the “undesirability” of the case, (11) the nature and length of the professional relationship between the lawyer and the client, and (12) the fee awards made in similar cases.

Although, the Supreme Court has recently shed doubt on the reliability of this approach and described it as an “alternative” to the lodestar method, it appears that courts continue to consider the Johnson factors in determining attorney’s fees.

Plaintiffs sought $71,840.00 in attorney’s fees, which represents 179.6 hours billed at a rate of $400.00 per hour. Under the Local Rules of the District Court for the District of Maryland, however, the presumptive lodestar fee range is $225.00 to $300.00 per hour for attorneys who have been admitted to the bar for nine (9) to fourteen (14) years. Plaintiffs argued, however, that an enhancement was appropriate due to the particular skill required to prevail on the argument that the two (2) corporate defendants formed a single enterprise and should have born liability as joint employers, the undesirability of the case because the primary Defendant, Central Services, LLC, was inoperative at the time the suit was filed, and the favorable results achieved for Plaintiffs.

In support of their contention of entitlement to an enhancement, Plaintiffs argued that the presumptive lodestar range is not “adequate to attract competent counsel,” and submitted declarations from four (4) attorneys who handled similar cases attesting that the case was “risky” and would have been “particularly unattractive and undesirable” for many attorneys. Moreover, Plaintiffs noted that the formula for hourly rates in the local rules is based entirely on number of years of bar admission, and that the Supreme Court has held that an enhancement may be appropriate under such circumstances.

Defendants challenged Plaintiffs’ claim to a $400.00 hourly billing rate, arguing that no enhancement was warranted. They disputed the difficulty of the case and the degree of Plaintiffs’ success on their claims. They also argued that Plaintiffs “over litigated” the case and that a reasonably hourly total would be 105.8 hours. Therefore, Defendants contended that $31,740.00 was the most that should have been awarded – representing 105.8 hours at a $300.00 hourly rate.

The Court was generally satisfied with the number of billable hours claimed by Plaintiffs (179.6 hours). In calculating the lodestar, the Court made two modifications to the total hours billed. First, the Court granted Plaintiffs’ claim for an additional 13.1 hours to account for their preparation of the Reply to Defendants’ Opposition to the Motion for Attorney’s Fees and Costs. Second, 4.6 hours were reduced because Plaintiffs traveled to file documents with the Court, which could have been filed by mail. Accordingly, the Court found that 188.1 hours constituted a reasonable total. With respect to the hourly rate, the Court declined to apply an enhancement to the presumptive rate of $300.00 per hour. The Court considered Supreme Court law and the Johnson factors. Accordingly, the Court awarded attorney’s fees to the Plaintiffs in the amount of $56,430.00, which represented 188.1 hours at a rate of $300.00 per hour. The Court declined to grant pre-judgment interest, because the case was resolved reasonably expeditiously.