Jackson v. Estelle's Place, LLC

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-1700
TANYA JACKSON; MICHAEL AGYEMAN; THOMAS GEORGE; ISAAC ASAVE,
on behalf of themselves and on behalf of all others
similarly situated,
Plaintiffs - Appellants,
v.
ESTELLE’S PLACE, LLC; JIREH PLACE, LLC; OUR PLACE, LLC;
DESTINY PLACE, LLC; DEBRA ROUNDTREE; MARY BELL,
Defendants – Appellees.
--------------------------------------
METROPOLITAN WASHINGTON EMPLOYMENT LAWYERS ASSOCIATION;
WASHINGTON LAWYERS’ COMMITTEE FOR CIVIL RIGHTS AND URBAN
AFFAIRS,
Amici Supporting Appellants.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Leonie M. Brinkema,
District Judge. (1:08-cv-00984-LMB-TRJ)
Argued: May 14, 2010 Decided: August 12, 2010
Before GREGORY, AGEE, and DAVIS, Circuit Judges.
Affirmed by unpublished per curiam opinion. Judge Gregory wrote
a dissenting opinion.
ARGUED: Nicholas Woodfield, EMPLOYMENT LAW GROUP, PC,
Washington, D.C., for Appellants. Edward S. Rosenthal, RICH
ROSENTHAL BRINCEFIELD MANITTA DZUBIN & KROEGER, LLP, Alexandria,
Virginia, for Appellees. ON BRIEF: R. Scott Oswald, EMPLOYMENT
LAW GROUP, PC, Washington, D.C., for Appellants. Katelin T.
Moomau, Jonathan A. Simms, RICH ROSENTHAL BRINCEFIELD MANITTA
DZUBIN & KROEGER, LLP, Alexandria, Virginia, for Appellees.
Susan E. Huhta, Laura E. Varela, WASHINGTON LAWYERS’ COMMITTEE
FOR CIVIL RIGHTS & URBAN AFFAIRS, Washington, D.C., for Amici
Supporting Appellants.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Appellants Tanya Jackson, Michael Agyeman, Thomas George,
Isaac Asare, Sharon Doss, and Courtney Collins are present and
former employees of several related entities that operate group
homes for the developmentally disabled. Appellees, defendants
below, are those entities and their principals (Estelle’s Place,
LLC; Jireh’s Place, LLC; Our Place, LLC; Destiny’s Place, LLC;
Debra Roundtree, and Mary Bell). Appellants’ claims arose under
the overtime pay provision of the Fair Labor Standards Act, 29
U.S.C. § 201, et seq. (“FLSA”), and state law. Early on, the
parties settled the action, leaving to the district court,
however, determination of the amount of attorney’s fees to be
awarded to Appellants as prevailing parties. See id. at
§ 216(b). Feeling aggrieved by the amount of the district
court’s award of attorney’s fees ($36,000), Appellants filed the
instant appeal. 1 For the reasons set forth below, we affirm.
I.
Appellants Jackson, George, Asare, Doss, and Collins were
compensated on an hourly basis; Appellant Agyeman, on the other
1
Although Appellants noted their appeal only from the
denial of their motion to alter or amend the district court’s
order awarding attorney’s fees, we have jurisdiction to consider
the merits of the underlying order. See, e.g., Brown v. French,
147 F.3d 307, 311 (4th Cir. 1998).
3
hand, though not paid hourly, was nonetheless misclassified as
an exempt employee for overtime purposes. Appellees effected the
underpayments of wages by assigning Appellants to work a total
of more than 40 hours per week, but at different group homes,
while treating work at each group home (owned by a separate but
related corporate entity) as work for a separate employer.
Consequently, Appellees paid Appellants at the straight time
rate rather than at the overtime rate of time-and-a-half for
hours worked beyond 40 per week.
On September 22, 2008, Appellants Jackson, Agyeman, George,
and Asare filed suit in the United States District Court for the
Eastern District of Virginia against Appellees, seeking unpaid
overtime compensation under the FLSA. Appellants Doss and
Collins opted into the litigation as plaintiffs. Meanwhile,
Appellants filed a Motion to Allow Notice to Similarly Situated
Employees and to Approve Interrogatory to Defendants Seeking the
Identity of Similarly Situated Employees. On December 19, 2008,
the district court granted Appellants’ motion. Shortly after the
district court ordered publication of notice of the pendency of
the lawsuit to other employees, but before such notice was
published, the parties negotiated a Confidential Settlement
Agreement and General Release resolving all of Appellants’
claims.
4
The Settlement Agreement stipulated that Appellants would
be paid additional wages equal to unpaid overtime compensation
(i.e., half-time) for all hours or fractions thereof worked in
excess of 40 hours during any one work week (from September 22,
2005, through the date of the settlement), plus an equal amount
in liquidated damages. The parties then stipulated to the
following settlement amounts: Asare ($430.00), Collins
($567.50), Doss ($490.00), George ($4,032.00), Jackson
($1,963.50), and Agyeman ($12,471.34). Notably, of the 13 forms
of relief sought in the complaint, nine were not addressed in
the Settlement Agreement and were wholly abandoned by
Appellants. 2 In particular, no injunctive relief was awarded, no
relief was awarded on any state law claim, and Appellees were
not required to alter their method of operation. In any event,
pursuant to the Settlement Agreement, the district court entered
2
These nine prayers for relief were for (1) an order
appointing plaintiffs and their counsel to represent similarly
situated employees as to the FLSA claims, (2) certification of
the breach of contract and quantum meruit classes and
designation of plaintiffs as class representatives and their
counsel as class counsel, (3) a preliminary and permanent
injunction prohibiting the defendants from engaging in the
allegedly unlawful practices, (4) an order awarding declaratory
relief, (5) an order awarding restitution and disgorgement of
profits, (6) a judgment awarding plaintiffs economic,
compensatory damages, liquidated damages, and punitive damages,
(7) pre-judgment interest, (8) equitable relief such as
employment, reinstatement, promotion, or frontpay, and (9)
interest due on unpaid wages.
5
an Agreed Order of Dismissal in Part, dated February 23, 2009,
dismissing all of Appellants’ claims with prejudice, reserving
for itself the issue of attorney’s fees and costs, as the
parties had agreed.
Appellants promptly filed their motion for an award of
attorney’s fees. Following full briefing and a hearing, the
district court issued a Memorandum Opinion and Order granting
attorney’s fees and costs. The district court noted that under
this court’s precedents, a reasonable fee would be calculated by
determining a lodestar fee, followed by any appropriate
reductions. See Grissom v. The Mills Corp., 549 F.3d 313 (4th
Cir. 2008), where we stated:
The parties also agree that after calculating the
lodestar figure, the “court then should subtract fees
for hours spent on unsuccessful claims unrelated to
successful ones.” Johnson v. City of Aiken, 278 F.3d
333, 337 (4th Cir. 2002). “Once the court has
subtracted the fees incurred for unsuccessful,
unrelated claims, it then awards some percentage of
the remaining amount, depending on the degree of
success enjoyed by the plaintiff.” Id.Id. 321 (emphasis added); see also Robinson v. Equifax
Information Services, LLC, 560 F.3d 235, 243 (4th Cir. 2009).
The district court determined the appropriate hourly rates
for counsel for Appellants, ranging from $350.00 per hour for
the most experienced lawyer to $60.00 per hour for the legal
assistant. The district court then determined the total hours
reasonably expended by the four people who worked on the case.
6
Thus, the district court arrived at what it described as a
“lodestar fee” of $47,800. Then, in determining the ultimate
issue of a reasonable fee, the district court noted that only
six plaintiffs joined the lawsuit, and their total recovery
amounted to less than $10,000.00 before it was doubled under
FLSA’s liquidated damage provision. The court further noted
that, of the six awards, four were for less than $1,000.00
before doubling and that Agyeman received the largest recovery,
based only on his misclassification. Thus, the court reasoned
that the $47,800.00 “lodestar fee” should be reduced because
“[a]n attorneys’ fee should bear some reasonable relationship to
the recovery of plaintiffs.” Given the “modest value” of the
successful claims, the court determined that a reasonable fee,
which it also described as a “lodestar,” amounted to $36,000.00.
On May 18, 2009, Appellants filed a Motion to Alter or
Amend the district court’s order granting fees and costs
pursuant to Fed. R. Civ. P. 59(e). On June 9, 2009, the district
court denied Appellants’ motion. Appellants have timely
appealed.
II.
A.
We review a district court’s award of attorney’s fees for
abuse of discretion. Johnson v. City of Aiken, 278 F.3d 333, 336
7
(4th Cir. 2002) (citing McDonnell v. Miller Oil Co., 134 F.3d
638, 640 (4th Cir. 1998); Freeman v. Case Corp., 118 F.3d 1011,
1014 (4th Cir. 1997)). “Our review of the district court’s award
is sharply circumscribed; we have recognized that because a
district court has close and intimate knowledge of the efforts
expended and the value of the services rendered, the fee award
must not be overturned unless it is clearly wrong.” Plyler v.
Evatt, 902 F.2d 273, 277-78 (4th Cir. 1990) (internal quotation
marks, citations, and alteration marks omitted).
B.
A prevailing party is entitled to an award of reasonable
attorney’s fees and costs pursuant to the FLSA. See 29 U.S.C. §
216(b). Here, because the parties have agreed that Appellants
are prevailing parties, Appellants are entitled to an award of
attorney’s fees and costs that they establish as reasonable. See
Plyler, 902 F.2d at 277.
Appellants’ challenge to the award in this case is a narrow
one. Although Appellants sought fees and costs in excess of
$87,000, they do not assign error to the district court’s
initial determination that the traditional lodestar amount in
this case (hours worked x appropriate hourly rate) was $47,800.
Rather, they limit their challenge to the district court’s
ultimate determination that a reasonable fee was the traditional
lodestar amount less approximately 25%. Appellants make two
8
arguments in support of their contention that the district court
abused its discretion in reducing the traditional lodestar by
approximately 25% in this case. First, they contend that our
opinion in Grissom does not allow such a reduction. Second, they
contend that even if Grissom could be interpreted to allow such
a reduction, such a reduction is prohibited by City of Riverside
v. Rivera, 477 U.S. 561 (1986), and by the Supreme court’s
recent opinion in Perdue v. Kenny A., 130 S. Ct. 1662 (2010). We
disagree.
1.
We have set forth the Grissom methodology, 549 F.3d at 320,
above, which the district court cited in its order and which
provides in part that a court should “award[] some percentage of
the remaining amount [after reductions for unsuccessful claims],
depending on the degree of success enjoyed by the plaintiff.”
(Emphasis added) Appellants contend that, inasmuch as they
enjoyed “complete success on all claims,” Appellant’s Br. 11,
there should not have been any reduction for their pursuit of
unsuccessful claims and that, therefore, their “degree of
success” under Grissom was effectively one hundred percent.
Thus, according to Appellants, under Grissom, the only
appropriate “percentage” of the traditional lodestar amount that
constituted a “reasonable fee” is one hundred percent.
9
In support of this contention, Appellants seize on the
district court’s statement that “[i]t is unnecessary to subtract
fees incurred for unsuccessful, unrelated claims or award only a
percentage of this amount because plaintiffs settled all of
their claims for full value.” Having carefully reviewed the
district court’s orders, it is clear to us that, in context, the
district court indeed followed Grissom, albeit somewhat
awkwardly. In other words, we agree with Appellants to the
extent that they contend that the methodology followed by the
district court is somewhat less precise than one would hope, but
we reject the contention that the district court deviated from
the core mandate of Grissom in calculating a “reasonable fee.”
Like most (if not all) of the courts of appeals, we have
directed that in deciding what constitutes a reasonable number
of hours and the appropriate hourly rates (i.e., in calculating
the lodestar fee), a district court looks to the following
twelve factors:
(1) the time and labor expended; (2) the novelty and
difficulty of the questions raised; (3) the skill required
to properly perform the legal services rendered; (4) the
attorney’s opportunity costs in pressing the instant
litigation; (5) the customary fee for like work; (6) the
attorney’s expectations at the outset of the litigation;
(7) the time limitations imposed by the client or
circumstances; (8) the amount in controversy and the
results obtained; (9) the experience, reputation and
ability of the attorney; (10) the undesirability of the
case within the legal community in which the suit arose;
(11) the nature and length of the professional
10
relationship between attorney and client; and (12)
attorneys’ fees awards in similar cases.
Barber v. Kimbrell’s Inc., 577 F.2d 216, 226 n.28 (4th Cir.
1978) (adopting factors set forth in Johnson v. Ga. Highway
Express, Inc., 488 F.2d 714 (5th Cir. 1974), abrogated on other
grounds by Blanchard v. Bergeron, 489 U.S. 87 (1989). In this
case, the district court properly assessed the 12 factors and
focused, most heavily, on factor number eight - “the amount in
controversy and the results obtained.” In doing so, the district
court purported to arrive at an “initial” lodestar fee
($47,800), and then, after consideration of factor number eight,
it arrived at its “final” lodestar fee of $36,000. Thus,
although the district court arrived at a reasonable fee as
mandated by Grissom, it took the somewhat circuitous route of
calculating a “final” lodestar by relying on factor eight in the
Kimbrell’s analysis, rather than by expressly taking account of
Appellants’ unsuccessful claims and then taking a “percentage
reduction” from the traditional lodestar, as contemplated by
Grissom. 3
3
The district court described its approach in its order
denying the motion to alter or amend, stating that: “After
arriving at the lodestar figure of $36,000.00, the Court
determined that further reduction [under Grissom] was
unnecessary because plaintiffs had been fully compensated for
the hours they worked. Finding that further reduction was
unnecessary does not support the argument that the earlier
reduction was in error.”
11
Under the circumstances here, we have no hesitation in
leaving undisturbed what the district court did, notwithstanding
that its methodology was not congruent with that contemplated by
Grissom. Plainly, the court was cognizant of the broad scope of
the case as Appellants filed it, see supra page 5 and note 2,
including the presence of state law claims (which were not
“successfully” prosecuted) and the request for broad relief,
compared to the more modest result achieved. We should not and
do not fault the district court for an arguable analytic
imprecision where, substantively, no abuse of discretion is
evident. In so doing, we bear in mind the following reminder
from the Supreme Court:
[W]e have said repeatedly that “[t]he initial estimate
of a reasonable attorney’s fee is properly calculated
by multiplying the number of hours reasonably expended
on the litigation times a reasonable hourly rate.”
Blum v. Stenson, 465 U.S. 886, 888, 104 S.Ct. 1541,
1544, 79 L.Ed.2d 891 (1984). The courts may then
adjust this lodestar calculation by other factors.
Bergeron, 489 U.S. at 95 (emphasis added); and see Burlington v.
Dague, 505 U.S. 557 (1992):
We have [turned to the lodestar model], it must
be noted, even though the lodestar model often
(perhaps, generally) results in a larger fee award
than the contingent-fee model. See, e.g., Report of
the Federal Courts Study Committee 104 (Apr. 2, 1990)
(lodestar method may “give lawyers incentives to run
up hours unnecessarily, which can lead to
overcompensation”).
12
Id. at 566 (brackets added). In sum, despite its imprecise
methodology, the district court plainly acted consonant with our
Grissom mandate. See Hensley v. Eckerhart, 461 U.S. 424, 437
(1983) (noting that a district court may either identify
particular hours to be eliminated or reduce the fee in light of
the limited success in calculating fee award).
2.
Appellants’ arguments relying on City of Riverside v.
Rivera, 477 U.S. 561 (1986), and Perdue v. Kenny A., 130 S. Ct.
1662 (2010), fare no better than their arguments relying on
Grissom. They contend that City of Riverside prohibits a
limitation on an award of attorney’s fees to a proportion of the
damages awarded. As the district court stated, however, City of
Riverside, did not impose a blanket prohibition on the use of
the rule of proportionality. In that case, the Supreme Court
merely “reject[ed] the proposition that fee awards . . . should
necessarily be proportionate to the amount of damages a civil
rights plaintiff actually recovers.” City of Riverside, 477 U.S.
at 565 (emphasis added). The Court emphasized the sui generis
nature of civil rights cases, where plaintiffs “seek[] to
vindicate important civil and constitutional rights that cannot
be valued solely in monetary terms” and fee awards are used to
deter future violations. Id. at 575-76. Nevertheless, the Court
expressly held that “[t]he amount of damages a plaintiff
13
recovers is certainly relevant to the amount of attorney’s fees
to be awarded under § 1988.” Id. at 574. There is no indication
here that the district court relied solely on a proportionality
approach.
Appellants’ reliance on the Supreme Court’s recent decision
in Perdue is similarly unavailing. They contended in their Rule
28(j) submission that Perdue involved a rejection of an
“arbitrary enhancement” of a lodestar fee, and that “if an
arbitrary enhancement of the lodestar is reversible error, an
arbitrary reduction of the lodestar would be . . . an abuse of
discretion and reversible error.” Appellants overstate, if they
do not misstate, the holding in that case. In Perdue, the Court
held that an attorney’s fee based on the lodestar may be
increased due to superior performance, but only in extraordinary
circumstances. 130 S. Ct. at 1674. But while the Court held that
an enhancement to the lodestar fee may be permissible, it found
the justification there inadequate. Indeed, Perdue makes plain
that the lodestar figure, though supported by a “strong
presumption” of correctness, is not invariably the end of the
analysis but, in some classes of cases, only the beginning:
In light of what we have said in prior cases, we
reject any contention that a fee determined by the
lodestar method may not be enhanced in any situation.
The lodestar method was never intended to be
conclusive in all circumstances. Instead, there is a
“strong presumption” that the lodestar figure is
reasonable, but that presumption may be overcome in
14
those rare circumstances in which the lodestar does
not adequately take into account a factor that may
properly be considered in determining a reasonable
fee.
Id. at 1673 (emphasis added). In any event, nothing in Perdue
persuades us that the district court’s reduced fee award here
was in any sense “arbitrary” or was otherwise the product of an
abuse of discretion.
III.
For the reasons set forth above, the orders of the district
court are
AFFIRMED.
15
GREGORY, Circuit Judge, dissenting:
The fee award in this case is clearly wrong. After
calculating the initial lodestar fee of $47,800, the district
court stated that based on “the amount involved and the results
obtained,” it was reducing the fee award by twenty-five percent.
J.A. 369. 1 While the majority correctly notes that this is an
appropriate factor to consider under our precedent, we also have
precedent that mandates such consideration occurs by comparing
the relief sought to the relief awarded. Under the latter case
law, I am left with the inescapable conclusion that the court
abused its discretion by focusing on the value of the employees’
claims and thus respectfully dissent.
I.
This Court has recognized that the factor relied on by the
district court to reduce the lodestar fee, “the amount in
controversy and the results obtained,” Barber v. Kimbrell’s
Inc., 577 F.2d 216, 226 n.28 (4th Cir. 1978), is largely
coextensive with the court’s consideration of the employee’s
“degree of success.” Nigh v. Koons Buick Pontiac GMC, Inc., 478
F.3d 183, 190 (4th Cir. 2007). “When considering the extent of
1
Citations herein to “J.A. __” refer to the contents of the
Joint Appendix filed by the parties in this appeal.
16
the relief obtained, we must compare the amount of the damages
sought to the amount awarded.” Mercer v. Duke Univ., 401 F.3d
199, 204 (4th Cir. 2005). This comparison “rests on the idea
that a prevailing plaintiff is less worthy of a fee award when
one or more of his claims lack merit – that is, when he cannot
demonstrate that he deserves the compensation he demanded in his
complaint.” Nigh, 478 F.3d at 190.
The above analysis is consistent with the Supreme Court’s
elucidation of how district courts should account for the
“degree of success.” In Hensley v. Eckerhart, the Supreme Court
stated that in considering the “degree of success,” “[t]he
result is what matters.” 461 U.S. 424, 435-36 (1983) (finding
that in a case where “a plaintiff has achieved only partial or
limited success, the product of hours reasonably expended on the
litigation as a whole times a reasonable hourly rate may be an
excessive amount”). The Court found that although district
courts have discretion in making these judgments, the courts
must consider this success or result “in comparison to the scope
of the litigation as a whole.” Id. at 440. For example, in
Hensley itself, the Court explained that “had respondents
prevailed on only one of their six general claims, . . . a fee
award based on the claimed hours clearly would have been
excessive.” Id. at 436.
17
Following these principles, courts have reduced fee awards
where FLSA plaintiffs recovered only a portion of the amount
actually sought. See, e.g., Saizan v. Delta Concrete Prods.
Co., Inc., 448 F.3d 795, 801 (5th Cir. 2006) (affirming the
district court’s reduction of the lodestar fee due to the
difference between the amount initially sought in the complaint
and the ultimate settlement amount); Spegon v. Catholic Bishop
of Chicago, 175 F.3d 544, 558 (7th Cir. 1999) (affirming the
district court’s reduction of the lodestar fee because the
plaintiff failed to obtain the full overtime pay that was
asserted in the complaint and failed all-together on his claim
for discrimination and its accompanying request for damages).
Courts have also reduced fee awards based on degree of success
when the plaintiffs prevailed on only some of the claims
brought. See, e.g., Spegon, 175 F.3d at 558; Baird v. Boies,
Schiller & Flexner LLP, 219 F. Supp. 2d 510, 523-24 (S.D.N.Y.
2002).
In light of the above case law, the district court’s focus
on the damages awarded as compared to the attorneys’ fee is more
than “analytic imprecision” or “imprecise methodology.” Maj.
Op. at 12. Rather, it constitutes error. In its initial
determination of the fee, the court stated that the employees’
“total recovery was less than $10,000 before being doubled under
the liquidated damages provision of the FLSA,” that “of the six
18
awards, four were less than $1,000 before doubling,” and that
“[a]n attorneys’ fee should bear some reasonable relationship to
the recovery of the plaintiffs.” J.A. 369. The court then
stated that it was reducing the lodestar fee by twenty-five
percent “[g]iven the modest value of the plaintiff’s claims.”
J.A. 369. No other explanation was given for the fee reduction
at the time of the determination. No comparison of the relief
sought to the relief awarded was conducted by the court, as
mandated by case law when considering “results” or the “degree
of success.” Nor did the court decide that any claims put
forward by the employees lacked merit. Subsequently responding
to the employees’ objection to the fee reduction, the court’s
main justification for reducing the fee remained its belief that
“the amount of plaintiffs’ claims and their eventual recovery
was quite modest.” J.A. 418.
“A presumptively correct ‘lodestar’ figure should not be
reduced simply because a plaintiff recovered a low damage
award.” Cowan v. Prudential Ins. Co. of America, 935 F.2d 522,
526 (2d Cir. 1991). The size of the damage award carries even
less weight here given that the case arose under the fee-
shifting provision of the FLSA. See Quaratino v. Tiffany & Co.,
166 F.3d 422, 426 (2d Cir. 1999) (“Congress enacted fee-shifting
in civil rights litigation precisely because the expected
monetary recovery in many cases was too small to attract
19
effective legal representation.”); Fegley v. Higgins, 19 F.3d
1126, 1134-35 (6th Cir. 1994) (“The purpose of the FLSA attorney
fees provision is to insure effective access to the judicial
process by providing attorney fees for prevailing plaintiffs
with wage and hour grievances. Courts should not place an undue
emphasis on the amount of the plaintiff’s recovery because an
award of attorney fees here encourage[s] the vindication of
congressionally identified policies and rights.” (alteration in
original) (internal quotation marks and citations omitted).
Thus, by subjectively labeling the employees’ success “modest”
and failing to look at the success of the employees’ claims “in
comparison to the scope of the litigation as a whole,” Hensley,
461 U.S. at 440, the court abused its discretion.
While the court did have discretion to consider the size of
the damages award, that amount was relevant only when compared
to the damages sought. Mercer, 401 F.3d at 204. The district
court itself found that no reduction for “degree of success” was
necessary because the employees “settled all of their claims for
full value.” J.A. 370 (emphasis added). I assume that the
district court meant what it said. Indeed, full success is
supported by the record. The employees negotiated a settlement
that provided them with the maximum monetary relief due under
the FLSA – the full amount of overtime pay owed plus an equal
amount of liquidated damages. When compared to the scope of
20
litigation as whole, which evolved solely around the FLSA
claims, this relief cannot be classified as limited. There was
no other claim that the employees failed to succeed on the
merits, and the majority even agrees that the settlement
agreement “resolv[ed] all of Appellants’ claims.” Maj. Op. at
4. Thus, the full lodestar fee should have been awarded. 2
The majority closes its eyes to the district court’s focus
on the value of the employees’ claims. Beyond repeating the
same mistake made by the district court – judging the result
obtained as “modest” in and of itself, see maj. op. at 12
(describing the employees’ full recovery as a “modest result”) –
the majority seems to assert that the district court correctly
compared the result obtained to the result sought in justifying
the fee reduction. This cannot be the case. The district court
did, only after the employees objected, state that it compared
the relief sought to the relief obtained, and that the employees
“did not receive any of the other forms of relief they sought in
the complaint.” J.A. 418. 3 The court is referring to the prayer
2
This is especially so given the “strong presumption” that
the full lodestar fee is reasonable and owed to prevailing
attorneys. City of Burlington v. Dague, 505 U.S. 557, 562
(1992).
3
The court also claims that the employees obtained limited
success because only six employees joined the lawsuit. It is
unclear how this fact means that the six employees that did opt
in were not successful. The fact that they settled their claims
(Continued)
21
for relief contained in the complaint, which sought punitive
damages, a request for declaratory judgment, and various forms
of injunctive relief. The majority likewise cites to the prayer
for relief, maj. op. at 5, as proof that a fee reduction is
appropriate because the employees failed to obtain every form of
relief requested. In this case, placing such a burden on the
employees in order for them to obtain the full lodestar fee,
which is presumptively reasonable, is unfounded. First, as the
employees and amicus point out, punitive damages and
reinstatement or other injunctive relief are not available for
claims under the FLSA. EEOC v. Gilbarco, Inc., 615 F.2d 985,
987 n.1 (4th Cir. 1980) (finding that only the Secretary of
Labor may bring an action for injunctive relief); Lanza v.
Sugarland Run Homeowners Ass’n, Inc., 97 F. Supp. 2d 737, 741
(E.D. Va. 2000) (holding that punitive damages are not allowed
under the FLSA). Therefore, the employees argue that the
request for such relief was merely boilerplate language and
should not provide a basis for finding limited success. There
within seven days of the district court’s granting their Motion
to Allow Notice to Similarly Situation Employees would seem to
indicate that the employers settled quickly to avoid a larger
damages award, meaning the employees were successful. If the
court did rely on the number of employees that opted in, this
was legal error. See Estrella v. P.R. Painting Corp., 596 F.
Supp. 2d 723, 727-28 (E.D.N.Y. 2009).
22
is support for this assertion. See Smith v. District of
Columbia, 466 F. Supp. 2d 151, 160 (D.D.C. 2006) (“The District
of Columbia argues that Plaintiff’s degree of success – the
award of $72,000 – should be measured against the ad damnum
clause in her Complaint. That is just plain foolish. Ad damnum
requests, as all judges and litigants know, rarely bear any
relationship to reality or expectations.”). Second,
“[l]itigants in good faith may raise alternative legal grounds
for a desired outcome, and the court’s rejection of or failure
to reach certain grounds is not a sufficient reason for reducing
a fee. The result is what matters.” Hensley, 461 U.S. at 435.
Here, the result was significant and the best possible under the
FLSA, which was the employees’ only stated source of relief. In
“the scope of the ligation as a whole,” id. at 440, the relief
was not limited.
Finally, because the other relief referred to by the
district court and the majority is available only through the
breach of contract or quantum meruit claims, the court must have
necessarily meant that the failure of the employees to prevail
on those claims, in addition to the FLSA claim, merited a
reduction in the lodestar fee. The majority specifically cites
“the presence of state law claims.” Maj. Op. at 12. Yet, it
was impossible for the employees to prevail on both the FLSA
claim and the breach of contract/quantum meruit claims. Quantum
23
meruit was an alternative to the breach of contract claim.
Additionally, the breach of contract claim nowhere relies on
Virginia law and asserts no contractual basis for the claim
other than the FLSA. Thus, the breach of contract duplicates
the FLSA claim and is preempted under this Circuit’s precedent.
See Anderson v. Sara Lee Corp., 508 F.3d 181, 194 (4th Cir.
2007). The court, therefore, relied on an alternative claim on
which the employees had no chance of success.
It is telling that the majority omits discussion of the
district court’s final rationale for reducing the lodestar fee –
that the employees “did not achieve the sort of public benefits
discussed in City of Riverside.” J.A. 418. This assertion is
patently incorrect. As the court itself recited in the same
order, “damages in civil rights cases also serve[] the public
interest, for example, by deterring future civil rights
violations.” J.A. 417 (citing City of Riverside v. Rivera, 477
U.S. 561, 575 (1986)). In City of Riverside, the Supreme Court
stated, “[r]egardless of the form of relief he actually obtains,
a successful civil rights plaintiff often secures important
social benefits that are not reflected in nominal or relatively
small damages awards.” 477 U.S. at 574. Thus, the public
interest promoted by civil rights statutes, such as the FLSA,
“is perhaps most meaningfully served by the day-to-day private
enforcement of these rights, which secures compliance and deters
24
future violations.” Quarantino, 166 F.3d at 426. Therefore,
counsel’s efforts to secure a full recovery in this case is
exactly the type of private enforcement of wage and hour rights
that achieves a public benefit. See Wales v. Jack M. Berry,
Inc., 192 F. Supp. 2d 1313, 1327 (M.D. Fla. 2001) (“It is
recognized that the FLSA is an important piece of social
legislation. Accordingly, the public derived a benefit from the
plaintiffs’ recovery on their FLSA claims.”). Sadly today’s
opinion discounts the public benefit that unquestionably
accompanied counsel’s efforts. 4
II.
Additionally, the majority fails to recognize that although
the court did not run afoul of the Supreme Court’s rejection of
a rule of strict proportionality, see City of Riverside, 477
U.S. at 578, the district court’s emphasis on the size of the
attorneys’ fee and its pro rata reduction of the fee comes
dangerously close to such violation and has been soundly
rejected by other courts. See Simpson v. Merchants & Planters
Bank, 441 F.3d 572, 581 (8th Cir. 2006) (finding in the context
4
The opinion goes further and, in an attempt to affirm the
“imprecise” reasoning of the district court, throws in a quote
suggesting counsel ran up hours in this case, maj. op. at 12, an
allegation of which there is no evidence whatsoever.
25
of an Equal Pay Act case that “a pro rata reduction [in
attorneys’ fees] would not normally be appropriate . . . [and
that the court had] explicitly rejected a ‘rule of
proportionality’ in civil rights cases because tying the
attorney’s fees to the amount awarded would discourage litigants
with small amounts of damages from pursuing a civil rights claim
in court”); Kassim v. City of Schenectady, 415 F.3d 246, 252 (2d
Cir. 2005) (“Reasoning that a rule calling for proportionality
between the fee and the monetary amount involved in the
litigation would effectively prevent plaintiffs from obtaining
counsel in cases where deprivation of a constitutional right
caused injury of low monetary value, we have repeatedly rejected
the notion that a fee may be reduced merely because the fee
would be disproportionate to the financial interest at stake in
the litigation.”).
Even if the majority is correct that some reduction in the
fee award was appropriate, which I do not believe to be the
case, the district court’s method of reducing the award by the
arbitrary figure of twenty-five percent without any explanation
as to how the percentage was arrived at is an abuse of
discretion. It is precisely this subjectivity on the part of
the district court that the lodestar analysis guards against,
making the Supreme Court’s decision in Perdue v. Kenny A. ex
rel. Winn, 130 S. Ct. 1662 (2010), particularly relevant. In
26
Perdue, the Court considered whether a district court abused its
discretion in increasing the lodestar fee by seventy-five
percent based on what the court believed to be extraordinary
results. Id. at 1669. The Court first noted “the lodestar
method is readily administrable” because “the lodestar
calculation is ‘objective,’ and thus cabins the discretion of
trial judges, permits meaningful judicial review, and produces
reasonably predictable results.” Id. at 1672 (citations
omitted). The Court then noted that while “[t]he lodestar
method was never intended to be conclusive in all
circumstances,” “there is a ‘strong presumption’ that the
lodestar figure is reasonable, but that presumption may be
overcome in those rare circumstances in which the lodestar does
not adequately take into account a factor that may properly be
considered in determining a reasonable fee.” Id. at 1673. The
court found only a few exceptional circumstances in which
superior attorney performance would lead to an increased
lodestar fee. Id. at 1674. One such instance was when “an
attorney’s performance includes an extraordinary outlay of
expenses and the litigation is exceptionally protracted.” Id.However, in such a rare case, the Court held that “the amount of
the enhancement must be calculated using a method that is
reasonable, objective, and capable of being reviewed on appeal,
27
such as by applying a standard rate of interest to the
qualifying outlays of expenses.” Id. at 1674-75.
As for the seventy-five percent increase in the lodestar
fee in Perdue, the Court found that “this figure appears to have
been essentially arbitrary. Why, for example, did the court
grant a 75% enhancement instead of the 100% increase that
respondents sought? And why 75% rather than 50% or 25% or 10%?”
Id. at 1675. Thus, although the Court found that an enhanced
fee was possible in some circumstances, it reversed the fee
award because “when a trial judge awards an enhancement on an
impressionistic basis, a major purpose of the lodestar method-
providing an objective and reviewable basis for fees is
undermined.” Id. at 1676 (citation omitted).
Here, the same prohibition of subjectivity should apply
when a judge asks whether a plaintiff’s “results obtained” are
limited. The lodestar fee is presumptively reasonable and while
the district court did have discretion to reduce the fee based
on limited success, the court arbitrarily decreased the lodestar
fee by twenty-five percent even if we assume success was
limited. The court provided no rationale for why the decrease
was not above or below the number it chose, offering no
“objective and reviewable basis,” id. at 1676, for the
percentage decrease. I therefore believe today’s decision
undermines the very purpose of the lodestar approach.
28
III.
Because the district court abused its discretion in
reducing the presumptively reasonable lodestar fee based on its
determination that the value of the employees’ award was
“modest” and in arbitrarily choosing a twenty-five percent
reduction, I would reverse the order of the district court and
remand with instructions to award the full fee of $47,800.
29