U.S. District Judge Pauley III Has Provided Some Guidance on FLSA Fee Awards.
FLSA litigation has been proliferating, constituting 9% of the filings for the 2014 S.D.N.Y. federal civil docket and paralleling a 400% increase in nationwide filings since 2001. U.S. District Judge William Pauley III, in Fujiwara v. Sushi Yasuda, No. 12cv8742 (S.D.N.Y. Memorandum and Order Nov. 12, 2014), reduced a requested FLSA class action fee award, but also warned the bar and fellow judicial colleagues to not rely that much on plaintiff-crafted fee orders in FLSA cases later used to justify future fee awards.
District Judge Pauley III had before him an initial fee request of $800,000 in a $2.4 FLSA class action settlement, which would have translated to $1,200 hourly rate and 2.8 multiplier (one-third of the settlement fund). Class counsel voluntarily dropped the request to $600,000, but the district judge reduced this to $480,000—20% of the settlement fund and 1.75 multiplier from counsel’s stated hourly rates.
Here are cautionary remarks in his order, which we link to here: “[T]here is a reason to be wary of much of the caselaw awarding attorney’s fees in FLSA cases in [the Second] Circuit” because “many of the authorities cited by Plaintiffs’ counsel in support of their fee application are in fact proposed orders drafted by the class action plaintiffs’ bar and entered with minimal, if any, edits by judges.” Under these circumstances, he said, it is “no wonder that caselaw is so generous to plaintiffs’ attorneys” — since “by submitting proposed orders masquerading as judicial opinions, and then citing to them in fee applications, the class action bar is in fact creating its own caselaw on the fees it is entitled to.” This judge further reasoned that “approval of class action settlements and fee applications [in FLSA cases] is precisely where judicial scrutiny, not judicial deference, is most needed.”
Sixth Circuit Affirms District Judge Reduction of Social Security Claimant’s Attorney’s Fee Request, Finding $733.80 Hourly Rate Way Out of Line.
In Lasley v. Commissioner of Social Security, No. 14-3044 (6th Cir. Nov. 4, 2014) (published), a district court (in line with a Commissioner’s thinking) reduced a Social Security claimant’s lawyer’s request to be awarded fees of $26,049.73 under a 25% contingency agreement for helping obtained past due benefits. (42 U.S.C. §406(b)(1)(A) does allow a prevailing claimant to recover fees not exceeding 25% of the total of past due benefit payments. Contingency fee arrangements are permissible, with hypothetical hourly rates less than twice the standard rate being deemed per se reasonable in the Sixth Circuit, and hypothetical hourly rates equal to or greater than the twice standard rate may be being reasonable in nature.)
Both the district and appellate court agreed that the 25% contingency request was way too high, effectively resulting in a $733.80 hourly rate almost four times higher than the $165-180 rates endorsed in the S.D. Ohio. In affirming the $12,780 award to claimant’s attorney, the Sixth Circuit agreed with the district court that the case was relatively simple and attorney’s representation was relatively brief in nature (35.5 hours).