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Posted: November 30, 2015

Court Elects Lodestar Over Percentage Method In Awarding Attorneys’ Fees In FLSA Case, While Reducing Lodestar Fee To Account For Overstated Hours And Other Timekeeping Excesses

In Marshall v. Deutsche Post DHL, No. 13-CV-1471 (E.D.N.Y. Sept. 21, 2015), Judge Dearie reduced a claim for $500,000 in attorneys’ fees under the Fair Labor Standards Act, 29 U.S.C. § 216(b), to $370,236.50. The parties settled the case for $1.5 million while plaintiffs’ motion for certification as a collective action was pending. Plaintiffs’ claim for compensatory damages was $1,650,000.

Judge Dearie applied the lodestar method, under which a presumptively reasonable fee is determined by multiplying “a reasonable hourly rate by the reasonable number of hours required by the case.” Slip op. 10. He criticized the percentage-of-settlement method for determining fees sought by plaintiffs’ counsel as dependent on one of the prevailing “amorphous multi-factor tests” that “are often outcome driven”—”‘a list of factors without a rule of decision [that] is just a chopped salad.'” Slip op. 12 (quoting In re Synthroid Mktg. Litig., 264 F.3d 712, 719 (7th Cir. 2001)). The judge explained that “[i]t is almost impossible to know what amount of time, litigation magnitude, complexity, and risk justifies a 20 percent versus 30 percent fee award,” and noted that most of the cases awarding a 33 percent fee in employment class actions are “without persuasive force” because they “cite to ‘proposed orders drafted by the class action plaintiffs’ bar'” that reflect minimal, if any, review by judges. Slip op. 12 (quoting Fujiwara v. Sushi Yasuda Ltd., 58 F. Supp. 3d 424, 436 (S.D.N.Y. 2014)).

In applying the “modified” lodestar method, in which the court considers case-specific factors at the outset to determine the reasonable hourly rate (rather than once the lodestar fee is calculated), see Slip op. 14, the Court rejected plaintiffs’ counsel’s requested hourly rates of $400 to $750 for senior partners, $350 and $400, respectively, for a junior partner and senior associate, $190 and $375 for associates, and $85-$150 for paralegals. Judge Dearie observed that prevailing rates in FLSA cases in the Eastern District are “now well established” at $300 to $400 for partners, $200 to $300 for senior associates, and $100 to $150 for junior associates, though he questioned the wisdom of “treating Brooklyn and Manhattan as separate legal markets,” as the Second Circuit does. Slip op. 15 & n.3.

Regarding the number of hours spent, the Court concluded they were “overstated,” finding that many time entries were “vague and evidence redundant work.” Slip op. 20. The Court criticized the “top heavy” approach reflected in the senior partners having spent most of their time reviewing others’ work and “conferring with each other.” Id. Judge Dearie also criticized the firm’s block billing; billing in quarter hour increments, which “tends substantially to overstate” the time spent since “many tasks require only a short time span to complete,” slip op. 21 (internal quotation marks omitted); and billing travel time at full hourly rates, even though the general rule in the District “is that travel time is compensated at one-half the amount of time billed.” Slip op. 22. To “trim the excess” from the billing entries, Judge Dearie imposed an across the board percentage cut of 10%. Slip op. 22. The resulting fee award was $370,236.50. The Court also awarded the total amount of costs requested, some $33,300. See slip op. 23.

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