Low damages, high fees in FLSA case -- no reversible error

The Court of Appeals affirms a large attorneys' fees award in a wage-and-hour claim that did not produce a large damages award for the plaintiff.

The case is Caltenco v. G.H. Food, a summary order issued on March 29. After a three-day bench trial, plaintiff won the case and was awarded $7,682.20. Plaintiff's counsel then moved for attorneys' fees. The district court awarded $113,225.88 in attorneys’ fees and $10,869.34 in costs pursuant to 29 U.S.C. § 216(b) [the Fair Labor Standards Act] and N.Y. Lab. L. §§198(1-a), (1-d). Defendant appeals, claiming that's just too much money for a case like this. 

 

Employers are probably not aware of this, but when one of their employees successfully sues for wage-and-hour violations, they will recover attorneys' fees. The lawyer who took the case may have done so on contingency, as the plaintiff may be short on cash since management stole their tips or denied their overtime. So the lawyers will only take good cases that have a chance for recovery of their attorneys' fees. Sometimes those fees greatly exceed the value of the case.

The Court of Appeals (Kearse, Parker and Perez) affirms the attorneys' fees award. "The district court acted within its discretion in determining that the fee award should not be reduced to the extent requested by G.H. Food and Singh because of the limited damages Caltenco ultimately obtained. Our precedent is clear that '[f]ee awards in wage and hour cases should encourage members of the bar to provide legal services to those whose wage claims might otherwise be too small to justify the retention of able, legal counsel.' In order to 'advanc[e] Congress’s goals under the FLSA to ensure a ‘fair day’s pay for a fair day’s work,’ the law cannot be read to impose a proportional limitation based on the perceived complexities of the litigation.'” An attorneys' fees award that is disproportionate to the damages is not per se excessive.

The Court of Appeals notes that "there are procedural tools available to defendants like G.H. Food and Singh to reduce their financial exposure to potential attorneys’ fees in run-of-the-mill FLSA cases." The Court does not identify those procedural tools, but I would be that one such tool is a Rule 68 offer, where the employer makes an "offer of judgment" for a certain amount of money, and if the plaintiff rejects that offer and wins less money at trial, the attorneys' fees are cutoff from the date of the offer of settlement. I guess there was not offer of settlement in this case. I would guess the next such case against this employer will yield such an offer.