Leigh v. Pepsi Bottling Group, Inc.

Filing 47

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 2/10/12. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
AVARY LEIGH, et al.
:
v.

:

Civil Action No. DKC 10-0218

:
BOTTLING GROUP, LLC
:
MEMORANDUM OPINION
The

parties

to

this

conditionally

certified

collective

action under the Fair Labor Standards Act seek approval of a
proposed class settlement.

The relevant issues have been fully

briefed, a settlement hearing has been held, and no objection to
the settlement has been made.

For the reasons that follow, the

proposed settlement will be approved in part.
I.

Background
On January 27, 2010, Plaintiff Avary Leigh, on behalf of

himself and similarly situated others, filed a complaint against
Defendant

Bottling

Group,

LLC,

seeking

unpaid

regular

and

overtime wages pursuant to the Fair Labor Standards Act of 1938
(“FLSA”), as amended, 29 U.S.C. §§ 201, et seq.

The complaint

alleges that Mr. Leigh was employed by Defendant as a “Relief
Pre-Sell Representative” from approximately September 15, 2008,
to December 8, 2009; that he regularly worked in excess of forty
hours per week without receiving overtime compensation; and that

he was “regularly” required to work “off-the-clock,” after his
(ECF No. 1 ¶ 13).1

regular shifts had ended.

The complaint

further states that Mr. Leigh is similarly situated to other
Relief

Pre-Sell

Representatives

who

“were,

are,

or

will

be

employed by Defendant within three years from the commencement
of this action” and were not, or are not being, compensated for
all hours worked and/or at the overtime rate for hours worked in
excess of forty per week.
Defendant
allegations

answered

and

(Id. at ¶ 37).
the

asserting

complaint,
number

a

denying

affirmative

of

all

material
defenses,

including that “[t]he FLSA overtime requirements do not apply to
Plaintiff

because

Plaintiff

falls

within

exclusions under federal wage and hour law.”

exemptions

and

(ECF No. 7, at 7).

On March 30, 2010, a notice of consent to join the suit was
filed

by

Leonard

W.

Smith,

III.

He

was

added

as

a

named

plaintiff on the same date.
On April 28, 2010, the parties filed a stipulation and
agreement, indicating that they were “discussing resolution of
this matter and desire[d] to maintain the status quo during that
process.”

(ECF No. 18, at 1).

They advised of their agreement

to define a “putative class member” as an individual who was

1

Plaintiffs have since disavowed that Mr. Leigh was made to
work “off-the-clock.”
In fact, they now assert that there was
no clock. (ECF No. 26, at 4).
2

“suffered or permitted to work by Bottling Group in the Position
of Relief Pre-Sell Representative since January 27, 2007,” and
“subject

to

Bottling

Group’s

payroll

policy,

practice

and/or

system which Plaintiffs allege subjected them to working more
than

40

hours

in

a

(Id.

at

2).

After

workweek

without

further

lawful

defining

compensation[.]”

“opt-in

member”

as

“a

putative class member who eventually opts in to the Action and
becomes

represented

by

[Plaintiffs’

counsel],”

the

parties

agreed that “[t]he statute of limitations under the [FLSA] with
respect to the claims of any opt-in member is tolled from April
1, 2010[,] until 30 days after either party gives notice in
(Id.).2

writing that this tolling period is terminated.”

Shortly thereafter, Plaintiffs filed an unopposed motion to
approve

settlement,

attaching,

inter

alia,

stipulation and settlement agreement.

a

fully

executed

(ECF Nos. 19, 20).

In

this agreement, the parties purported to settle not only the
claims of Mr. Leigh and Mr. Smith, but also those of the as-ofyet uncertified class members.
Defendant

was

to

create

a

possible value” of $600,000.

Under the proposed agreement,

settlement

fund

with

(ECF No. 20-1, at 9).

a

“maximum
One-third

of that amount, $200,000, was to be paid to Plaintiffs’ counsel
as

attorneys’

2

fees;

$9,000

was

to

go

No such notice has since been given.
3

to

Mr.

Leigh

as

an

“incentive

award”;

and

claims administrator.

$15,000

would

be

set

aside

to

pay

a

The “Payout Fund” – that is, the portion

of the settlement fund available to compensate class members –
was to have a “maximum possible value” of $376,000.
11).

(Id. at 10-

Rather than notifying the putative class members of their

right to opt-in to the law suit, the parties proposed giving
notice of the right to opt-in to the settlement.
proposed

agreement,

each

opt-in

member

would

Under the
receive

an

individual settlement award calculated by dividing the maximum
“Payout
Positions

Fund”

amount

during

the

by

“all

weeks

Collective

worked

Period

based

in
on

the

Covered

Defendant’s

records” (ECF No. 20-1, at 11), and multiplying by the number of
weeks worked by individual plaintiffs during the relevant time
period.
During a telephone conference, the court expressed concern
about various aspects of the proposed settlement – among them,
the propriety of (1) settling on behalf of a class of plaintiffs
who had not yet been given notice or opted-in to the case, and
(2)

awarding

attorneys’

fees

based

on

a

percentage

of

the

settlement fund rather than according to a lodestar calculation.
Soon thereafter, the parties filed a revised stipulation and
settlement agreement.

(ECF Nos. 25, 26).

The revised agreement

increased the “maximum possible value” of the settlement fund
from $600,000 to $625,066 – adding the extra $25,066 to the
4

“Payout

Fund”

–

but

otherwise

left

the

material

terms

and

procedure set forth in the original agreement unchanged.
By a memorandum opinion and order issued March 29, 2011,
the court denied the motion for approval of settlement, but
identified a procedure pursuant to which the putative plaintiffs
could be provided notice of the proposed settlement and afforded
the opportunity to opt-in and be heard prior to approval.
Nos. 27, 28).

(ECF

Accordingly, the parties were permitted “to amend

and re-file their motion and supporting documents, requesting
conditional

certification

of

the

collective

class

and

facilitation of notice of the proposed settlement to putative
class members.”

(ECF No. 27, at 10).

The court also expressed

“a word of caution” to Plaintiffs’ counsel regarding the fee
award under the proposed settlement:
Plaintiffs’
counsel
is
requesting
approximately one-third of the amount of the
maximum possible value of the settlement
fund, apparently without regard to the size
of the collective class or the actual work
performed on its behalf.
While it remains
to be seen whether a percentage of the fund
award, rather than a lodestar amount, is
appropriate
in
this
case,
the
amount
requested would clearly be subject to a
reasonableness
standard
and
Plaintiffs’
counsel should appear at any settlement
hearing prepared to demonstrate how the
amount he requests is appropriate under that
standard.
(Id. at 12-13).

5

On April 19, the parties jointly filed a document entitled
“Submission of Amended Exhibits Pursuant to Order Dated March
29, 2011,” attaching, inter alia, an amended notice of the FLSA
collective action and proposed settlement, an opt-in claim form,
and

a

proposed

settlement.

order

(ECF

granting

No.

conditional

30).

The

approval

court

of

construed

the
this

“submission” as a motion for collective action certification and
approval

of

the

Specifically,

the

proceed

a

as

settlement,
court

and

permitted

collective

granted

the

action;

case

it

in

part.

conditionally

conditionally

to

appointed

Plaintiff Avary Leigh as the class representative; conditionally
appointed

Plaintiffs’

counsel

as

counsel

for

the

collective

class; approved its own notice and opt-in forms; confirmed Rust
Consulting,

Inc.,

as

the

claims

administrator;

set

certain

deadlines for putative plaintiffs to be notified, opt-in, and/or
object to the proposed settlement; and set a time and date for a
settlement

hearing.

(ECF

No.

34).

The

motion

was

denied,

however, insofar as the parties sought approval of the proposed
settlement.

The court explained that it would “not evaluate the

fairness of the settlement until all Plaintiffs have appeared in
the action and have had an opportunity to object to the terms of
the settlement.”
On

June

7,

(Id. at 6).
2011,

the

claims

administrator

mailed

class

notices to 165 putative plaintiffs, advising them of their right
6

to opt-in to the proposed settlement and to be heard regarding
any

objections.

Two

of

these

notices

were

returned

as

undeliverable, but the administrator was able to obtain current
addresses for these individuals and re-mail them.

The claims

administrator received 57 timely claim forms, two of which were
incomplete.
incomplete

The
forms

two

were

putative
advised

of

plaintiffs
the

who

submitted

deficiencies

and

returned a completed form to the claims administrator.
“56 Claim Forms [were] considered valid and timely.”

one

Thus,

(ECF No.

43, Declaration of Abigail Schwartz, Project Manager for Rust
Consulting, Inc., at ¶ 11).

“[A]pproximately 34% of the 165

total [putative] Plaintiffs” opted-in to the suit and “[t]he
number

of

approximately

valid
5,037

and

timely

workweeks

[c]laim

claimed

forms

out

of

represents

approximately

10,787 total workweeks for the Class, which is approximately 47%
of the total workweeks for the Class.”

(Id. at ¶ 12).

The

claims administrator “calculated that each Plaintiff would be
eligible to receive approximately $37.18 per workweek from the
$401,066.00 Payout Fund.”
On

the

morning

(Id. at ¶ 13).

of

the

settlement

hearing,

the

court

received a document entitled “second supplemental memorandum in
support

of

Plaintiff[s’]

supplemental

motion

to

approve

settlement,” in which Plaintiffs argued that “the percentage of
the fund method is common in FLSA attorney’s awards and should
7

be used in the case at bar, but [that] . . . a cross-check
application

of

a

lodestar

calculation

also

attorney’s fees requested by Plaintiff[s].”
2).
No.

supports

the

(ECF No. 44, at 1-

Citing this court’s decision in Lane v. Ko-Me, LLC, Civ.
10-2261,

2011

WL

3880427,

at

*3

(D.Md.

Aug.

31,

2011),

Plaintiffs noted that the court “might use the lodestar method”
to assess the reasonableness of the fee award (id. at 4), and
set forth in an accompanying declaration a table purporting to
demonstrate the approximate number of hours worked prior to the
settlement hearing by four attorneys and one paralegal, their
respective billing rates, the “total value” of their work, and
the costs incurred.

(ECF No. 44-1 ¶ 3).

Based on this summary,

and without providing supporting documentation establishing the
reasonableness of the number of hours and the hourly rates,
Plaintiffs’

counsel

$60,076.00.

(Id.).

claimed

a

“total

lodestar”

amount

of

Nevertheless, they requested a fee award of

$200,000, arguing that this amount is “a little less than a
third of the [maximum possible value of the] settlement fund
[i.e., $625,066.00], which is a percentage commonly awarded in
class action settlements.”

(Id. at 8).

The settlement hearing took place on September 19, 2011.
Counsel for both parties confirmed that the total payout amount
to

the

class

members

would

be

$187,275.66

and

that

each

plaintiff would receive $37.18 per workweek, multiplied by the
8

number of weeks he or she worked between January 27, 2007, and
January

1,

2011.

Plaintiffs’

counsel

represented

that,

on

average, the plaintiffs would receive approximately 75 to 80% of
their total claim amounts, and argued that the opt-in rate of
34% was particularly strong for a case of this size.

Further

noting that there was no opposition to the proposed settlement,
he requested approval of the settlement as to the collective
class

members,

and

defense

counsel

joined

that

request.

Regarding the proposed fee award, Plaintiffs’ counsel pointed to
his declaration, attached to the second supplemental memorandum,
as establishing a base lodestar amount of $60,076.

He argued

that courts in similar cases have approved a “multiplier” of
between 2.5 to 4 times the lodestar amount, and that the award
sought in this case, $200,000, was a multiplier of approximately
3.4 times the lodestar amount, which was within an acceptable
range.
The court observed that no member of the collective class
had

objected

to

the

proposed

settlement

or

appeared

at

the

settlement hearing, and stated that it was inclined to approve
the settlement as to all issues other than attorneys’ fees.
further
that

a

found,

however,

$200,000

fee

that
award

Plaintiffs
was

had

reasonable

not
in

It

demonstrated
this

case.

Specifically, the court noted that (1) Plaintiffs’ counsel had
not submitted declarations and supporting records establishing
9

the reasonableness of the claimed lodestar amount; (2) the cases
cited by Plaintiffs in support of awarding a percentage of the
settlement fund as a fee award were class or “hybrid” actions,
not

collective

actions,

and

that

it

was

unknown

whether

principles applicable in common fund cases could apply in the
context of the FLSA; and (3) it was reluctant to approve a
settlement

where

the

total

pay-out

amount

to

the

plaintiffs

($187,275.66) was significantly less than the proposed fee award
($200,000).

The court advised, however, that it would permit

Plaintiffs’ counsel to file an amended declaration, attaching
documentation

in

support

of

a

proposed

fee

award,

within

fourteen days.
On October 3, Plaintiffs’ counsel filed a document entitled
“revised

second

Plaintiffs’

supplemental

supplemental

memorandum

motion

to

in

approve

support

of

settlement,”

attaching, inter alia, an expanded declaration in support of the
requested

award

of

attorneys’

voluminous time records.

fees

and

(ECF No. 46).

costs,

as

well

as

Plaintiffs’ counsel

continues to seek an award of attorneys’ fees of $200,000.
II.

Standard of Review
Under the FLSA, “there is a judicial prohibition against

the unsupervised waiver or settlement of claims.”

Taylor v.

Progress Energy, Inc., 493 F.3d 454, 460 (4th Cir. 2007) (citing
D.A.

Schulte,

Inc.

v.

Gangi,

328
10

U.S.

108,

114–16

(1946)).

Nevertheless, “[c]laims for FLSA violations can . . . be settled
when the settlement is supervised by the [Department of Labor]
or a court.”
(4th

Taylor v. Progress Energy, Inc., 415 F.3d 364, 374

Cir. 2005).

While the Fourth Circuit has not directly

addressed the factors to be considered in deciding motions to
approve FLSA settlements, district courts in this circuit have
typically applied the considerations set forth in Lynn’s Food
Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982).
As this court stated in Lopez v. NTI, LLC, 748 F.Supp.2d 471,
478 (D.Md. 2010):
Lynn’s Food Stores suggests that an FLSA
settlement
should
be
approved
if
the
settlement
“does
reflect
a
reasonable
compromise
over
issues,
such
as
FLSA
coverage or computation of back wages, that
are actually in dispute.” [Lynn’s Food
Stores,
679
F.2d
at
1354];
see
also
Lomascolo v. Parsons Brinckerhoff, Inc., No.
1:08cv1210, 2009 WL 3094955, at *8 (E.D.Va.
Sept. 28, 2009) (“If [a] proposed settlement
reflects
a
reasonable
compromise
over
[issues actually in dispute, then approval
by a district court promotes the policy of
encouraging
settlement
of
litigation”])
([citing] Lynn’s Food Stores, 679 F.2d at
1354). . . . Lynn’s Food Stores and similar
cases recognize a role for less-than-fullvalue compromise in the FLSA settlement
process. . . . These compromises reflect the
“many factors [that] may be in play as the
parties negotiate,” including disagreements
over “the number of hours worked by the
plaintiff, the plaintiff’s status as an
exempt employee, or the defendant’s status
as a covered employer.”
Bonetti v. Embarq
Mgmt.
Co.,
715
F.Supp.2d
1222,
1227
(M.D.Fla. 2009).
11

It

follows

approval

of

information

a
for

logically,
proposed
the

court

then,

that

settlement
to

examine

parties

“must
the

requesting

provide

bona

fides

enough
of

the

dispute”:
The parties’ motion (or presentation at a
hearing) must describe the nature of the
dispute (for example, a disagreement over
coverage, exemption, or computation of hours
worked or rate of pay) resolved by the
compromise. Parties wishing to compromise a
coverage or exemption issue must describe
the employer’s business and the type of work
performed by the employee. The employer
should articulate the reasons for disputing
the employee’s right to a minimum wage or
overtime, and the employee must articulate
the reasons justifying his entitlement to
the disputed wages. If the parties dispute
the computation of wages owed, the parties
must provide each party’s estimate of the
number of hours worked and the applicable
wage. In any circumstance, the district
court must ensure the bona fides of the
dispute; implementation of the FLSA is
frustrated if an employer can extract a
disproportionate discount on FLSA wages in
exchange
for
an
attenuated
defense
to
payment.
Dees v. Hydradry, Inc., 706 F.Supp.2d 1227, 1241–42 (M.D.Fla.
2010).
The

court

must

also

assess

proposed award of attorneys’ fees.
decided
District

by
of

the

United

Florida,

States
relying

the

of

the

A number of recent cases

District
upon

reasonableness

Court

Lynn’s

for

Food

the

Middle

Stores,

have

described the court’s task in this regard as assuring “‘both
12

that counsel is compensated adequately and that no conflict of
interest taints the amount the wronged employee recovers under a
settlement agreement.’”

Dees, 706 F.Supp.2d at 1243 (quoting

Silva v. Miller, 307 Fed.Appx. 349, 351 (11th Cir. 2009)).
if

the

motion

demonstrates

that

the

proposed

fee

Thus,

award

was

“agreed upon separately and without regard to the amount paid to
the plaintiff, then, unless . . . there is reason to believe
that

the

plaintiff’s

recovery

was

adversely

affected

by

the

amount of fees paid to his attorney, the Court will approve the
settlement without separately considering the reasonableness of
the

fee

to

be

paid

to

F.Supp.2d at 1228.
words,

that

counsel

does

so

counsel.”

Bonnetti,

715

These cases appear to suggest, in other

long

not

plaintiff’s

as

the

affect

amount

the

amount

paid
paid

to
to

the
the

plaintiffs’
plaintiffs

themselves, the fee award need not be reasonable.
Section
addition

to

216(b)
any

expressly
judgment

provides,

awarded

to

however,
the

that

plaintiff

“in
or

plaintiffs,” the court must “allow a reasonable attorney’s fee
to be paid by the defendant, and costs of the action.”
U.S.C. § 216(b).

29

Thus, where judgment is entered in favor of

the plaintiffs on their FLSA claims, an award of “reasonable”
attorneys’ fees is mandatory.

Of course, in the context of a

settlement, judgment is not entered in favor of either party –
in fact, the defendants typically deny that any FLSA violation
13

has occurred, as does the defendant in this case.
little

sense

to

require

the

amount

of

fees

It would make
awarded

to

be

reasonable where the plaintiffs prevail on the merits, but to
abandon that requirement altogether where the parties agree to
settle the case.

Moreover, from a practical standpoint, any

time that plaintiffs would receive less than the full value of
their claims in a settlement, there is a strong likelihood that
the amount paid to the plaintiffs would be adversely affected by
an exorbitant award of attorneys’ fees.

See Cisek v. National

Surface Cleaning, Inc., 954 F.Supp. 110, 110 (S.D.N.Y. 1997)
(plaintiffs’ counsel “should have perceived that every dollar
the defendants agreed to pay [the attorneys] was a dollar that
defendants would not pay to the plaintiffs”).
the

extent

that

the

plaintiffs’

claims

in

an

Accordingly, to
FLSA

case

are

compromised by a proposed settlement, the reasonableness of the
fee award must be independently assessed, regardless of whether
there is any suggestion that a “conflict of interest taints the
amount

the

agreement.”

wronged

employee

recovers

under

a

settlement

Dees, 706 F.Supp.2d at 1243.

III. Analysis
The

parties’

proposed

settlement

is

divided

into

four

parts: (1) the benefits to Plaintiffs, (2) the payment of an
incentive fee to Mr. Leigh, (3) the claims administration fee,
and (4) the award of attorneys’ fees to Plaintiffs’ counsel.
14

The court’s assessment of the fairness of the parties’ proposed
settlement as to each of these categories, in turn, is provided
below.
A.

Benefits to Plaintiffs

As the court suggested at the settlement hearing, it is
satisfied that the proposed agreement represents a reasonable
compromise of contested issues as to the plaintiffs.
Food Stores, 679 F.2d at 1354.

See Lynn’s

The parties assert, and the

court accepts as true, that genuine disputes exist regarding (1)
whether the plaintiffs were exempt from coverage under the FLSA,
(2) whether any violation could be deemed willful, and (3) the
proper computation of applicable hours and rates of pay.

The

parties represent that the opt-in plaintiffs will receive, on
average, approximately 75 to 80% of the value of their claims
under the proposed agreement.

To the extent that Plaintiffs’

claims are compromised, such compromise is offset by the facts
that (1) “the [p]arties entered into a [s]tipulation tolling the
statute of limitations with respect to the claims of any opt-in
member

from

[s]ettlement

April
is

1,

2010,”

structured

(ECF
to

No.

26,

compensate

at

3);

the

(2)

“the

[p]otential

[p]laintiffs for workweeks encompassed in an additional year and
two months (January 27, 2007 – April 1, 2008) to which they
would

not

be

entitled

under

the

applicable

statute

of

limitations” (id.); and (3) the proposed agreement includes a
15

provision requiring Defendant, as of January 1, 2011, to “modify
the way in which it compensates the individuals in the Covered
Positions to address the concerns raised in the Complaint,” (ECF
No. 25, at 15).

Thus, the settlement allows for recovery by

plaintiffs who might have otherwise been without recourse, pays
the

opt-in

plaintiffs

a

substantial

percentage

of

the

total

value of their claims, and protects against future violations
such

as

those

alleged

here.

Considering

also

the

risk

associated with continued litigation, the court finds that the
proposed settlement award is fair and reasonable with respect to
the benefits inuring to Plaintiffs.
B.

Incentive Fee

The propriety of the incentive fee in this context is not
as clear.

As one court recently explained:
There
is
no
provision
for
a
“representative plaintiff” under the FLSA.
As the Eleventh Circuit has observed, the
collective action provision of the FLSA “is
a fundamentally different creature than the
Rule 23 class action.
Even if the [FLSA]
plaintiff can demonstrate that there are
other plaintiffs ‘similarly situated’ to
him, . . . he has no right to represent
them.”
Cameron-Grant v. Maxim Healthcare
Servs., Inc., 347 F.3d 1240, 1249 (11th Cir.
2003) (per curiam).[3]
Because there is no

3

Cf. Simmons v. United Mortgage and Loan Investment, LLC,
634 F.3d 754, 758 (4th Cir. 2011) (“in a collective action under
the FLSA, a named plaintiff represents only himself until a
similarly-situated employee opts in”) (emphasis added) (citing
Sandoz v. Cingular Wireless, LLC, 553 F.3d 913, 919 (5th Cir.
2008)).
16

“representative
plaintiff”
in
FLSA
collective actions, generally no incentive
payment to a named plaintiff in an FLSA
collective action is warranted.
See, e.g.,
Ayers v. SGS Control Servs., Inc., Nos. 03
Civ. 9078(RMB), 06 Civ. 7111(RMB), 2008 WL
4185813, at * 5-7 (S.D.N.Y. Sept. 9, 2008)
(discussion
[of]
out-of-circuit
cases
involving
incentive
payments
to
named
plaintiffs).
Courts have, however, awarded incentive
fees to named plaintiffs who establish that
they
faced
substantial
risks
by
participating in the lawsuit and incurred
actual expenses during the litigation.
For
example, in Su v. Electronic Arts, Inc., No.
6:05-cv-131-Orl-28JGG, 2006 WL 4792780, at *
5 (M.D.Fla. Aug. 29, 2006), the named
plaintiff testified that he feared that his
career would be adversely affected as a
result of initiating litigation against his
former employer.
He also had to use four
vacation days to travel to attend hearings
in the case. The Court found this evidence
sufficient to support a $10,000.00 incentive
fee recommended by all parties to the
litigation.
. . . In Frank [v. Eastman Kodak Co.,
228 F.R.D. 174, 187 (W.D.N.Y. 2005)], the
[c]ourt found that the named plaintiff had
been actively involved in the litigation of
the case since its inception and provided
counsel with assistance which [led] to a
favorable settlement for the entire class.
The named plaintiff averred that he feared
that
his
role
in
the
case
“could
deleteriously affect his future employment
possibilities.”
Id.
The court determined
that
these
facts
were
“special
circumstances” that supported an award of
$10,523.37 (8.4% of the settlement fund) as
an incentive payment.

17

Heath v. Hard Rock Café Intern. (STP), Inc., No. 6:10-cv-344Orl-28KRS, 2011 WL 5877506, at *5 (M.D.Fla. Oct. 28, 2011).
In support of their position that the proposed incentive
fee is appropriate in this case, Plaintiffs argue that “Mr.
Leigh has provided the impetus for the lawsuit, the commitment
to achieving both a monetary recovery for his co-workers, also
future FLSA compliance by the company[,] both of which goals he
achieved in this settlement.”

(ECF No. 26, at 12).

Moreover,

Mr. Leigh was involved in various aspects of the litigation from
the outset, spending “hours gathering information and meeting
with counsel both in person and telephonically to prepare the
complaint,

engage

in

the

informal

discovery

[participate in] the settlement process.”

process,

(Id.).

and

Plaintiffs

assert that, given “the total value of the settlement[,] . . .
an

incentive

payment

of

$9,000.00

is

customarily awarded in cases such as this.”

within

the

range

(Id.).

While it may be a stretch to characterize the award of an
incentive fee in an FLSA collective action as “customary,” the
court is persuaded that such an award is appropriate in this
case.

Regardless

of

whether

Mr.

Leigh

may

properly

be

considered a “class representative” in the traditional sense, he
clearly has invested significantly more in this case than have
the opt-in plaintiffs.

He took the initiative to commence the

action; he has been personally involved at every stage of the
18

litigation; and, if the settlement is ultimately approved, he
will have achieved a significant result – not only for those
plaintiffs

who

would

receive

a

settlement

check

for

unpaid

overtime wages, but also for future employees working in the
same position.
there

is

no

Unlike the lead plaintiffs in Su and Frank,

suggestion

that

Mr.

Leigh

faces

any

particular

challenges in terms of his current or future job prospects as a
result of his participation in this case, but there is clearly a
risk that he could.
namely,

“to

substandard

Moreover, the policy underlying the FLSA –

protect
wages

certain

and

groups

excessive

of

the

hours

which

population
endangered

from
the

national health and well-being and the free flow of goods in
interstate commerce,” Brooklyn Sav. Bank v. O’Neil, 324 U.S.
697, 706 (1945) – would appear to be served by providing a
modest

incentive

assume such risk.

to

plaintiffs

who

take

such

initiative

and

Given Mr. Leigh’s level of involvement in the

case, that no objection has been made to the proposed award, and
that the amount in question constitutes less than one and onehalf percent of the total settlement fund, the court finds the
proposed incentive fee of $9,000 to be fair and reasonable.
C.
Rust

Claims Administration Fee
Consulting,

Inc.,

the

claims

administrator

in

this

case, has already done substantial work by facilitating the optin process, and appears to have done so in a highly efficient
19

manner.

No objections have been raised regarding its fee, and

the $15,000 amount falls within a range found reasonable by
other courts.
“fair

and

See, e.g., Su, 2006 WL 4792780, at *5 (finding

reasonable”

a

settlement

administration

$20,368.22 for a class of similar size).

fee

of

Accordingly, the court

finds that the proposed claims administration fee is fair and
reasonable.
D.

Award of Attorneys’ Fees

Throughout

the

settlement

approval

process,

the

major

sticking point has related to the proposed award of attorneys’
fees.

The parties initially agreed to a fee award of $200,000,

representing a one-third percentage of the total settlement fund
at that time, without regard to the size of the class or the
amount of work that would be required.
they

revised

their

agreement

overall settlement fund.

by

When the court balked,

increasing

the

size

of

the

This permitted Plaintiffs’ counsel to

argue that his fee award – still $200,000 – was “reduced as a
percentage of the total value of the recovery funds.”
26, at 13).
settlement,

(ECF No.

In denying the initial motion for approval of
the

court

expressed

doubt

as

to

“whether

a

percentage of the fund award, rather than a lodestar amount, is
appropriate.”

(ECF No. 27, at 13).

that,

event,

in

any

“the

amount

The court further asserted
requested

would

clearly

be

subject to a reasonableness standard,” strongly suggesting that
20

the proposed award would not pass muster.

(Id.).

Plaintiffs’

counsel was specifically advised to “appear at any settlement
hearing

prepared

to

demonstrate”

requested fee award.

the

reasonableness

hearing,

purporting

to

the

(Id.).

Unfortunately, he failed to do so.
settlement

of

counsel

establish

a

filed,

inter

lodestar

On the eve of the
alia,

amount

a

of

declaration

$60,076.00

–

including unspecified “expenses” of $3,126.00 – and argued that
the proposed fee award of $200,000 was reasonable because it was
a “multiplier” of 3.4 times the lodestar, which is within the
range approved by most courts in common fund cases.
44, at 2, 7).

(ECF No.

At the hearing, the court explained (1) that it

could not determine the lodestar amount based on the current
record;

(2)

that

it

was

not

persuaded

that

an

award

of

a

percentage of the fund, rather than the lodestar amount, was
appropriate based on the cases cited by Plaintiffs’ counsel; and
(3) that it had serious questions as to how the proposed fee
award could be reasonable, given that it exceeded the total
amount

payable

to

substantial amount.

the

class

of

fifty-six

plaintiffs

by

a

Nevertheless, the court permitted counsel

to address these issues in a post-hearing submission.
In that submission, counsel continues to argue that a fee
award based on a percentage of the common fund is appropriate,

21

citing

non-FLSA

settlement

cases

as

support.4

He

further

contends that the lodestar calculation is useful as a “crosscheck”

for

determining

the

reasonableness

of

the

percentage.

Plaintiffs’ counsel now argues, however, that the “total base
lodestar”
claimed

amount
at

the

in

this

case

settlement

is

no

hearing,

longer
but

$60,076,

$75,275.61.

as

he
The

difference between these figures is due, in part, to the fact
that counsel claims to have spent a total of 27 hours preparing
his “fee petition,” billing $7,350.
46-10, at 12).

(ECF No. 46, at 15; ECF No.

Using this revised lodestar figure as a basis,

he argues that “the actual multiplier at issue, 2.65, is well
within the 2.5 to 4.0 range approved in most cases[.]”

(ECF No.

46, at 10).5

4

He notes that “at least one district court in this Circuit
has applied the percentage-of-the-fund approach to an FLSA
collective action settlement,” citing Kidrick v. ABC Television
& Appliance Rental, Inc., No. 3:97CV69, 1999 WL 1027050
(N.D.W.Va. 1999); however, he recognizes in a footnote on the
same page that the settlement in that case “also included a
normal opt-out class action.”
(ECF No. 46, at 3).
Thus,
Kidrick was a so-called “hybrid” action. See Murillo v. Pacific
Gas & Elec. Co., 266 F.R.D. 468, (E.D.Cal. 2010) (discussing the
propriety of “hybrid” actions).
Courts that have permitted an
FLSA collective action and a Rule 23 class action to proceed in
the same case have routinely awarded attorneys’ fees based on a
percentage of the fund.
See, e.g., Johnson v. Brennan, No. 10
Civ. 4712(CM), 2011 WL 4357376, at *18-19 (S.D.N.Y. Sept. 16,
2011). Notably, the instant case is not a hybrid.
5

With regard to the fee award, one gets the feeling that
the tail is attempting to wag the dog.
Throughout the
settlement approval process, Plaintiffs’ counsel has appeared to
be fixated on justifying the $200,000 fee award originally
22

The case law related to the settlement of FLSA collective
actions

is

different
proposed

somewhat
standards

fee

undeveloped,
in

awards

in

and

determining
that

courts

the

context.

have

applied

reasonableness

See,

e.g.,

Altier

of
v.

Worley Catastrophe Response, LLC, Civil Action Nos. 11-241, 11242, 2012 WL 161824, at *23 (E.D.La. Jan. 18, 2012) (approving
multiplier of 2.17 times the lodestar amount upon agreement of
the parties); Prescott v. Prudential Ins. Co. of America, No.
2:09-cv-00322-DBH, 2011 WL 6662288, at *2 (D.Me. Dec. 20, 2011)
(where there was a “global settlement that included attorney
fees,” the case was “no longer to be treated as a fee-shifting
case,”

and

fees

could

be

awarded

“on

a

percentage

of

funds

basis”); Peterson v. Mortgage Sources, Corp., Civil Action No.
08-2660-KHV, 2011 WL 3793963, at *9 (D.Kan. Aug. 25, 2011) (“The
Tenth

Circuit

uses

a

hybrid

approach

which

combines

the

percentage fee method with the specific factors traditionally
used

to

calculate

the

lodestar.”)

(internal

citations

and

footnote omitted) (citing Gottlieb v. Barry, 43 F.3d 474, 483
(10th Cir. 1994)).

Although the Fourth Circuit has not addressed

the question in a published opinion, it has recently suggested
that a fee award in an FLSA case is properly “calculated by
determining a lodestar fee.”

agreed upon by
reasonable award.

the

Jackson v. Estelle’s Place, LLC,

parties,
23

rather

than

demonstrating

a

391 Fed.Appx. 239, 241 (4th Cir. 2010) (citing Grissom v. The
Mills Corp., 549 F.3d 313, 321 (4th Cir. 2008)).
in this circuit have generally agreed.
1813497,

at

*1

(“As

the

Court

must

District courts

See Poulin, 2010 WL
review

the

proposed

attorney’s fees in this case for reasonableness, it ‘will use
the principles of the traditional lodestar method as a guide’”)
(quoting Almodova v. City and County of Honolulu, No. 07–00378,
2010 WL 1372298, at *7 (D.Hawai’i Mar. 31, 2010)); see also
Gionfriddo v. Jason Zink, LLC, Civil Action No. RDB-09-1733,
2011 WL 2791136, at *2 (D.Md. July 15, 2011).
The lodestar amount is calculated by multiplying the number
of hours reasonably expended by a reasonable hourly rate.

See

Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th
Cir.

2009).

As

the

Supreme

Court

recently

explained,

a

“reasonable fee” is one that is “sufficient to induce a capable
attorney to undertake the representation of meritorious civil
rights case.”

Perdue v. Kenny A., --- U.S. ----, ----, 130

S.Ct. 1662, 1672 (2010).

The lodestar method “yields a fee that

is presumptively sufficient to achieve this objective.”
1673.

Id. at

In “rare and exceptional circumstances,” enhancements to

the lodestar amount may be awarded.

Id.

“A fee applicant bears

the burden of proving the enhancement is necessary and must do
so with reference to ‘specific evidence that the lodestar fee
would not have been adequate to attract competent counsel.’”
24

Spencer v. Central Services, LLC, Civil No. CCB-10-03469, 2012
WL 142978, at *1 (D.Md. Jan. 13, 2012) (quoting Kenny A., 130
S.Ct. at 1674 (internal marks omitted)).

A reduction of the

lodestar

inter

fee

is

also

appropriate

where,

alia,

“[a]n

attorneys’ fee [does not] bear some reasonable relationship to
the recovery of plaintiffs.”

Jackson, 391 Fed.Appx. at 241; see

also Gionfriddo, 2011 WL 2791136, at *3 (citing Jackson, finding
suggestion

of

unreasonableness

in

FLSA

settlement

where

“attorney’s fees account for nearly 87% of the payments made by
the Defendant”).
Here,

Plaintiffs’

$75,275.61,

which

counsel

represents

claims
285.65

a

“total

hours

lodestar”

billed

by

of

four

attorneys and one paralegal at rates ranging from $150 to $350
per hour, plus “expenses” of $3,651.86.
13).

Counsel’s

declaration

(ECF No. 46-10, at 12-

establishes

that

two

of

the

attorneys have been admitted to practice for more than twenty
years (Mr. Crone and Mr. Frederickson), one has been admitted to
practice

for

practicing

more

for

than

over

ten

three

years

years

(Mr.

(Mr.

Webb),

one

has

been

Barnes);

and

that

the

paralegal (Ms. Crone) has over four years of experience.
at ¶ 17).
charged

(Id.

As Plaintiffs’ counsel acknowledges, the hourly rate
by

each

of

these

professionals

falls

within

a

presumptively reasonable range under Appendix B of this court’s
local rules, with the exception of Mr. Barnes and Ms. Crone, who
25

both charge slightly higher rates.

The court accepts counsel’s

representation that their rates are, nevertheless, the “normal
and usual rate[s]” charged by Mr. Barnes and Ms. Crone for work
in their home district.
rates

are

slightly

Moreover, the extent to which these

higher

than

the

presumptively

reasonable

range in this district is offset by the fact that the rates
charged by the other three attorneys in this case are in the
low-to-mid

range

for

attorneys

with

comprable

experience.

Accordingly, the court finds that the hourly rates charged by
Plaintiffs’ counsel are reasonable.
The court is not persuaded that the number of hours claimed
by Plaintiffs, 285.65, is reasonable.

Specifically, it finds

the billing of 27 hours for preparation of what amounts to an
enhanced “fee petition” was excessive, particularly where such
briefing

was

neglected

to

only
follow

necessary
the

court’s

because
prior

Plaintiffs’
direction

counsel

that

he

be

prepared to show the reasonableness of the proposed fee award at
the settlement hearing.

Thus, the lodestar amount claimed by

Plaintiffs will be reduced by $7,350, the value of the 27 hours
billed for the post-hearing filing.

The total lodestar fee

claimed by Plaintiffs must also be reduced by $3,651.86, the
amount

added

as

costs.6

Reducing

6

the

“total

base

lodestar”

Pursuant to 29 U.S.C. § 216(b), where a judgment is
awarded in favor of the plaintiffs, the court must award costs
26

amount, $75,275, by $11,001.86 ($7,350 + $3,651,86), results in
a revised lodestar amount of $64,273.14.

The court finds this

amount to be the product of the reasonable hourly rates charged
by Plaintiffs’ counsel and the reasonable number of hours spent
on the case.
Enhancement of the lodestar amount is not appropriate in
this case.

While the record reflects that Plaintiffs’ counsel

achieved a commendable result for his clients, it also reflects
that

significant

time

and

resources

were

wasted

intransigence on the issue of attorneys’ fees.

due

to

his

The award sought

by counsel ($200,000) amounts to roughly 107% of the combined
total

amount

payable

to

the

plaintiffs

in

this

case

($187,275.66), which is unreasonably disproportionate to either
the plaintiffs’ recovery or the lodestar amount.
391 Fed.Appx. at 241.

See Jackson,

Notably, the lodestar amount determined

by the court ($64,273.14) constitutes just under 35% of the
total amount payable to Plaintiffs.

Thus, although a fee award

based on a one-third percentage of the total settlement amount
is unreasonable, a lodestar fee that roughly equates to onethird

of

the

appropriate.

total

amount

Accordingly,

actually
the

paid

court

to

finds

Plaintiffs

is

an

of

award

of the action in addition to reasonable attorneys’ fees. While
the costs claimed by Plaintiffs are not properly part of the
lodestar equation, this amount is not challenged by Defendant
and will be separately awarded. See Spencer, 2012 WL 142978, at
*4.
27

attorneys’ fees of $64,273.14 to be fair and reasonable in this
case.

Separate and apart from the lodestar amount, Plaintiffs

may also recover costs of $3,651.86.
IV.

Conclusion
For

the

foregoing

reasons,

the

court

will

approve

the

proposed settlement as to the amounts payable to the plaintiffs
($187,275.66),

the

incentive

administration fee ($15,000).
award

of

costs

in

the

fee

($9,000),

and

the

The court will further approve an

amount

of

$3,651.86.

It

does

however, approve the proposed fee award of $200,000.
it

finds

a

lodestar

claims

amount

of

$64,273.14

to

be

not,

Instead,
fair

and

reasonable in this case.
Given that the court does not approve the entire settlement
proposal, the question arises as to how the case should proceed.
There are essentially three options.

First, the parties may

accept the settlement according to the amounts approved in this
opinion.

Second,

settlement

null

and

either
void

party
and

may

elect

declare
to

the

resume

proposed

litigation.

Finally, the parties may agree to present a revised settlement
proposal reallocating the amounts in the current proposal.7

7

The

At the settlement hearing in this case, Plaintiffs’
counsel suggested that the amount that would be paid to the optin plaintiffs represents approximately 75-80% of the full value
of their claims.
If that is true, the parties may elect to
restructure the proposed settlement to pay the plaintiffs full
value – i.e., by taking the remaining 20-25% from the $200,000
28

parties will be directed to submit a joint status report within
fourteen

days

advising

as

to

how

they

wish

to

proceed.

A

separate order will follow.

________/s/_________________
DEBORAH K. CHASANOW
United States District Judge

designated for attorneys’ fees and paying it to the plaintiffs.
As noted previously, if the plaintiffs receive the full value of
their FLSA claims, the court need not assess the reasonableness
of the fee award.
Assuming that such a reallocation would
result in a fee award greater than the lodestar amount without
undoing
the
progress
made
in
the
parties’
settlement
negotiations, this may present a preferable option to both
sides.
Insofar as the opt-in plaintiffs would receive higher
payments than they would under the current agreement, it would
be unnecessary to repeat the opt-in procedure. The court would,
however, require the parties to present a joint affidavit or
declaration attesting to the full value of the opt-in
plaintiffs’ claims.
29