Chipotle Dodges Millions in Legal Fees After Settling Employment Class Action

Posted on July 31st, 2018 by Legal Fee Advisors

By Zachary Kalmbach.

Finding that a massive fee request was vastly disproportionate to a settlement, a Minnesota court slashed plaintiffs request by over 80%. In an FLSA case, plaintiffs attempted to certify a nationwide class, but the court limited the class to employees from only two restaurants. With the parties settling for $62,000, plaintiffs requested $3,236,368.50 in attorneys’ fees and $59,942.86 in costs. Largely due to the disproportionality of the request in relation to the settlement, the Court reduced fees by 81% and costs by 22%.

First, the Court reduced the requested hourly rates for all timekeepers, resulting in a $143,793.25 reduction. The Court found that the requested rates were above the prevailing local rate for comparable work. Further, and most importantly, the requested rates did not sufficiently distinguish between the variance in legal experience at each timekeeper level. For example, every partner billed $600 per hour even though some partners had over 30 years of experience while others had less than 15. This was unacceptable to the Court because “a reasonable rate should account for varying levels of experience.”

As to the number of hours billed, the Court first noted that plaintiffs expended many hours on unsuccessful efforts over the course of the case. Namely, plaintiffs spent over 300 hours pursuing a nationwide class certification that was ultimately denied. The Court held that, while “a fee award should not be reduced merely because a party did not prevail on every theory,” a 10% reduction was necessary to account for work on unsuccessful efforts.

Further, the Court applied a 20% reduction in hours to account for excessive and duplicative work. Though a nationwide class might have warranted staffing of multiple attorneys in different states, the class here was quite limited. Finding that plaintiffs inexplicably added more attorneys to the case after the class was limited, the Court concluded that the decision to continue utilizing multiple law firms in multiple states resulted in duplicative work and more internal communication than would reasonably be expected.

Additionally, the Court reduced the number of hours by 18.15 hours to exclude time an attorney billed for locating, touring, and securing office space and furniture for trial. Finally, as to the number of hours, the Court applied a 5% reduction to account for vague entries and entries lacking a description altogether.

After the above reductions, the Court considered an overall downward adjustment. In so doing, the Court observed that the legal questions in the case were not unusually difficult and that the fee request was particularly high in light of the settlement amount. Accordingly, the Court determined that a 70% downward adjustment was reasonable.

Finally, the Court found that all of the requested costs were reasonable except for expert fees. Noting that the 8th Circuit had not addressed the question of whether expert fees are recoverable in an FLSA action, the Court determined that, because the statute does not expressly provide for expert fees, they were not recoverable. Excluding expert fees resulted in a $11,696.94 reduction.

In conclusion, the Court awarded plaintiffs $600,193.55 in fees and $47,035.92 in costs. This reflected an 81% fee reduction and 22% reduction in costs. In addition to addressing issues such as unreasonably high billing rates, excessive and duplicative work, and vague time entries, this case shows judges’ willingness to reduce fee awards that are disproportionate to the success obtained. Attorneys requesting fee awards should look to this case as a warning against vastly disproportionate requests.

Harris v. Chipotle Mexican Grill, Inc., No. 13-CV-1719 (SRN/SER), 2018 WL 617972 (D. Minn. Jan. 29, 2018)

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