Labor & Employment – FLSA attorneys’ fee award vacated

Randolph v. PowerComm Const. Inc. (Lawyers Weekly No. 006-001-18, 8 pp.) (Per curiam) No. 16-2370, Oct. 31, 2017; USDC at Greenbelt, Md. (Hazel, J.) 4th Cir. Unpub.

Holding: In awarding attorneys’ fees, the district court failed to exclude time spent for plaintiffs whose claims were time-barred; it also incorrectly determined the percentage of sought damages actually won.

Plaintiff Gregory Randolph brought suit against his former employer, Defendant PowerComm Construction Inc., for federal and state wage-and-hour claims, seeking damages for unpaid wages with interest, economic damages, and attorneys’ fees. The proposed collective action was later joined by 64 additional current and former PowerComm employees. Therefore, Plaintiffs amended their initial disclosures to assert approximately $790,000 in damages, including approximately $263,000 in unpaid overtime wages and $527,000 in liquidated damages.

After dismissing 10 Plaintiffs whose claims were time-barred, the district court certified the collective action unconditionally. The parties then settled the action for $100,000, exclusive of attorneys’ fees. Plaintiffs moved for attorneys’ fees in the amount of $227,577; after Defendants objected, the district court ultimately awarded $183,764. Defendants appealed.

Prevailing party fees

Defendants preserved their right to appeal the award of attorneys’ fees by objecting to the Plaintiffs’ initial request. The FLSA entitles a prevailing plaintiff-employee to an award of “a reasonable attorney’s fee” to be ascertained in three steps.

First, the court must determine the lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate. Second, the court must subtract fees for hours spent on unsuccessful claims unrelated to successful ones. Third, the court should award some percentage of the remaining amount, depending on the degree of success enjoyed by the plaintiff.

Here, the district court erred at steps two and three of the reasonableness analysis. At step two, the district court declined to deduct from the award any time spent by Plaintiffs’ counsel pursuing the claims of the 10 time-barred Plaintiffs. Though the district court cited the general principle that an award need not be reduced for unsuccessful claims that share a common core of facts, it is difficult to imagine how the time-barred claims are intertwined with the successful claims, other than sharing the same defendants and relating to unpaid wages. To the extent that the district court relied on the overall outcome of the litigation to justify not reducing the award for the unsuccessful claims, this was a misapplication of the fee analysis framework, because the relief obtained was more appropriately considered after deducting the time spent by Plaintiffs’ counsel pursuing unrelated, unsuccessful claims.

In addition, at step three, the district court declined to reduce the fee award based on the results obtained because Plaintiffs purportedly received 38 percent of their claimed damages; the court did not want to discourage plaintiffs’ attorneys from reaching reasonable settlements by reducing the fee award. But the 38 percent figure was incorrect. When the settlement amount of $100,000 is divided by the total damages sought – $789,916 – it is apparent that Plaintiffs received only about 13 percent of what they sought. While the district court was not required to proportionally reduce the award based on this disparity, relying on the 38 percent figure was clear error.

Vacated and remanded.