Knox v. John Varvatos Enterprises, Inc.
OPINION AND ORDER: re: 367 MOTION for Attorney Fees AND AN AWARD OF ATTORNEYS FEES AND AN INCENTIVE FEE FOR TESSA KNOX AS CLASS REPRESENTATIVE FROM THE PUNITIVE DAMAGES FUND filed by Pamela Kassen, Jena Toback, Laurentina Chaparro, Ruby Romero, Christina Torres, Michelle Ortiz, Joy Fusaro, Tessa Knox, Margret Holcomb, Arissia Tossetti, Alyssa Hickey, Wijdan Shoubaki, Tripti Pandey, Hillary T. Crandle. For the foregoing reasons, plaintiffs motion for attorney's fees and the service pay ment (Docket # 367) is granted. Plaintiffs are awarded a total of $748,321.21 in statutory attorney's fees and costs to be paid by Varvatos, and an additional amount of $105,880.21 in attorney's feesto be paid from the damages aw ard allocated to punitive damages, for a total of $854,201.42 in attorney's fees. Plaintiff Knox is awarded a service payment of $20,000 from the punitive damages award. SO ORDERED. (Signed by Magistrate Judge Gabriel W. Gorenstein on 2/17/2021) (ama) Transmission to Orders and Judgments Clerk for processing.
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
JOHN VARVATOS ENTERPRISES INC.,
17 Civ. 772 (GWG)
OPINION AND ORDER
GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE
Plaintiff Tessa Knox, on behalf of a certified class of female salespeople, along with 13
other plaintiffs, brought this action against John Varvatos Enterprises, Inc., alleging that
Varvatos’s policy of giving a clothing allowance to male salespeople but not female salespeople
violates various federal and state equal pay and anti-discrimination laws. After a six-day jury
trial, the jury returned a verdict in favor of plaintiffs on all claims. Varvatos moved to set aside
the judgment or for a new trial. The Court granted the motion for a new trial on damages but
offered plaintiffs a remittitur, Knox v. John Varvatos Enterprises Inc., --- F. Supp. 3d. ----, 2021
WL 95914 (S.D.N.Y. Jan. 12, 2021), which plaintiffs accepted. Plaintiffs now seek attorney’s
fees of $1,730,304.50 and costs of $14,287.21. 1 They also seek a service payment to Knox of
Motion for Attorney Fees and an Award of Attorneys Fees and an Incentive Fee for
Tessa Knox as Class Representative from the Punitive Damages Fund, filed April 2, 2020
(Docket # 367); Memorandum of Law in Support, filed April 2, 2020 (Docket # 368) (“Supp.
Mem.”); Declaration of Tessa Knox in Support, filed April 2, 2020 (Docket # 369) (“Knox
Decl.”); Declaration of William Dunnegan in Support, filed April 2, 2020 (Docket # 370)
(“Dunnegan Decl.”); Memorandum of Law in Opposition, filed April 24, 2020 (Docket # 383)
(“Opp. Mem.”); Declaration of Amina Hassan in Opposition, filed April 24, 2020 (Docket # 384)
(“Hassan Decl.”); Reply Memorandum of Law in Support, filed May 1, 2020 (Docket # 388)
(“Reply”); Joint Letter, filed January 27, 2021 (Docket # 401) (“Jan. 27 Let.”); Letter from
William Dunnegan, filed February 4, 2021 (Docket # 405).
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$300,000 from the punitive damages award and an additional award of attorney’s fees between
$50,000 and $125,000 from the punitive damages award.
For the reasons stated below, plaintiffs are awarded a total of $748,321.21 in statutory
attorney’s fees and costs to be paid by Varvatos, and an additional $105,880.21 in attorney’s fees
to be paid from the damages verdict allocated to punitive damages, for a total of $854,201.42.
Also, Knox is awarded a service payment of $20,000 from the punitive damages award.
I. PROCEDURAL BACKGROUND
Plaintiffs filed this action on February 1, 2017. (Docket # 1). After discovery and
motion practice, including the granting of a motion for class certification, both parties moved for
summary judgment (Docket ## 177, 185), which the Court denied (Docket # 219). A six-day
trial was held between February 24, 2020, and March 2, 2020. On February 28, 2020, the jury
delivered a verdict in favor of plaintiffs on all claims and awarded all the compensatory damages
sought by plaintiffs (Docket # 334). Several days later, the jury awarded punitive damages under
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (“Title VII”), see 42 U.S.C. §
1981a(b)(1), to plaintiffs eligible for such an award (Docket # 335). The awards of
compensatory and punitive damages were made on a per-plaintiff basis, calculated based on the
amount of time each plaintiff worked at Varvatos. On March 23, 2020, a judgment was entered
on the jury verdict awarding plaintiffs a total of $3,516,051.23 in compensatory and punitive
damages (Docket # 361).
Defendant then moved for judgment as a matter of law, a new trial, or remittitur. (Docket
# 374). In the meantime, Varvatos declared bankruptcy (Docket # 390), though the bankruptcy
court later lifted the automatic stay as to this case (Docket # 391). This Court denied the motion
for a judgment as a matter of law but ordered a new trial on compensatory and punitive damages,
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unless plaintiffs accepted a remittitur of 50% of the total damage award. See Knox v. John
Varvatos Enterprises Inc., --- F. Supp. 3d. ----, 2021 WL 95914 (S.D.N.Y. Jan. 12, 2021).
Plaintiffs accepted the remittitur and an amended judgment of $1,758,025.61 was entered.
(Docket ## 399, 403).
Plaintiffs filed the instant motion for attorney’s fees and costs as well as the service
payment. The motion was served on the plaintiff class. (Docket # 371). Varvatos contests the
motion for statutory attorney fees and takes no position on the request for the service payment
and the request for the extra attorney fee to be taken from the punitive damages award.
II. LEGAL STANDARD
Plaintiffs seek attorney’s fees and costs, pursuant to the federal Equal Pay Act (“federal
EPA”), the New York Equal Pay Act (“NY EPA”), Title VII, and the New York Human Rights
Law (“NYHRL”). A prevailing plaintiff in a federal EPA action is statutorily entitled to “a
reasonable attorney’s fee to be paid by the defendant, and costs of the action.” 29 U.S.C.
§ 216(b). The NY EPA similarly mandates such an award. See N.Y. Lab. Law § 198(1-a) (“In
any action instituted in the courts upon a wage claim by an employee . . . in which the employee
prevails, the court shall allow such employee to recover . . . all reasonable attorney’s fees[.]”).
The Supreme Court has held that under Title VII’s fee-shifting provision, 42 U.S.C. § 1988, “a
prevailing plaintiff ordinarily is to be awarded attorney’s fees in all but special circumstances.”
Christiansburg Garment Co. v. Equal Employment Opportunity Comm’n, 434 U.S. 412, 417
(1978). Similarly, the NYHRL allows the Court to “award reasonable attorney’s fees
attributable to such claim to any prevailing party[.]” N.Y. Exec. Law § 297(10). Varvatos does
not challenge plaintiffs’ status as the prevailing party or claim that special circumstances exist.
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Instead, Varvatos objects that the fees sought “do not meet the reasonableness standard in the
Second Circuit.” Opp. Mem. at 1.
Under Second Circuit case law, the “most useful starting point for determining the
amount of a reasonable fee is the number of hours reasonably expended on the litigation
multiplied by a reasonable hourly rate.” Arbor Hill Concerned Citizens Neighborhood Ass’n v.
Cty. of Albany, 522 F.3d 182, 186 (2d Cir. 2008) (quoting Hensley v. Eckerhart, 461 U.S. 424,
433 (1983)). This calculation yields a “presumptively reasonable fee,” id. at 183, and is
commonly referred to as the “lodestar,” id. The lodestar figure “includes most, if not all, of the
relevant factors constituting a reasonable attorney’s fee,” Perdue v. Kenny A. ex rel. Winn, 559
U.S. 542, 553 (2010) (citation and quotation marks omitted).
Varvatos challenges both the reasonableness of the rates and the reasonableness of the
hours billed by plaintiffs’ counsel. Before addressing those issues, we address Varvatos’s
argument that the requested fees should be reduced based on the plaintiffs’ allegedly reduced
“degree of success.”
A. Degree of Success
Now that the plaintiffs have accepted the proposed remittitur and the jury verdict has
been reduced by half, Varvatos argues that this outcome reflects on the plaintiffs’ “degree of
success.” See Jan. 27 Let. at 2. Varvatos points to case law holding that “the most critical factor
in determining the reasonableness of a fee award is the degree of success obtained,” Fisher v. SD
Prot. Inc., 948 F.3d 593, 606-07 (2d Cir. 2020), and argues that because of the 50% reduction in
damages, plaintiffs’ success at trial was correspondingly reduced, and thus “the attorney’s fees
awarded must also be reduced.” Jan. 27 Let. at 2. It further argues that because plaintiffs’
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requested fees “almost equal the amount of damages awarded” following the reduction, this fact
alone renders the requested fees excessive. Id.
The Court rejects both arguments. First, the plaintiffs achieved exactly what they set out
to achieve. While Varvatos prevailed in its efforts to reduce the amount of damages recovered,
plaintiffs are still left with the largest possible compensatory award they could have achieved.
And even though the punitive damages award was reduced, it is still a significant amount. These
results do not reflect a lack of success. Rather, they reflect astounding success. That plaintiffs’
damages were reduced to comply with the amount that could legally be awarded to them does
not alter the fact that plaintiffs completely succeeded on every claim brought against Varvatos.
Thus, no reduction for lack of success is warranted. Because plaintiffs have “obtained excellent
results” — indeed, the best possible results they could have obtained — their “attorney should
recover a fully compensatory fee.” Hensley, 461 U.S. at 435.
Varvatos also points out that, because the verdict has been reduced, the fees plaintiffs
seek are about the same amount as the verdict rather than half that amount, as had been true
before the remittitur. See Jan. 27 Let. at 2. This appears to be an argument that the requested fee
award is excessive because it is disproportionate to the verdict. Any such argument, however, is
foreclosed by Second Circuit precedent rejecting “the notion that a fee may be reduced merely
because the fee would be disproportionate to the financial interest at stake in the litigation.”
Kassim v. City of Schenectady, 415 F.3d 246, 252 (2d Cir. 2005) (citation omitted). Thus,
“attorneys’ fee awards well in excess of the amount recovered by plaintiffs are routinely
permitted.” Douglas v. Anthem Productions, LLC, 2020 WL 2631496, at *7 (S.D.N.Y. May 26,
2020) (citation omitted); accord Reiter v. Metro. Transp. Auth. of New York, 2004 WL 2072369,
at *1 (S.D.N.Y. Sept. 10, 2004) (“Because there is no rule that limits attorney’s fees to a
Case 1:17-cv-00772-GWG Document 406 Filed 02/17/21 Page 6 of 31
proportion of the damages ultimately awarded, the fee award may exceed the amount of
damages.”) (citation omitted). And a review of case law reveals that awards of attorney’s fees in
excess of damages are common. See, e.g., Hui Luo v. L & S Acupuncture, P.C., 649 Fed. App’x
1, 3 (2d Cir. 2016) (affirming attorneys’ fees award of $64,038 where plaintiff recovered
$4,130.75 under the Fair Labor Standards Act (“FLSA”)); Boutros v. JTC Painting & Decorating
Corp., 2014 WL 3925281, at *8 (S.D.N.Y. Aug. 8, 2014) (awarding $82,531.25 in attorneys’
fees in FLSA action where two plaintiffs collectively settled for $66,000); Bridges v. Eastman
Kodak Co., 102 F.3d 56, 57-58, 60 (2d Cir. 1996) (upholding a fee award of $753,202.99 in a
Title VII case where $117,429.27 in damages was recovered).
B. Reasonable Hourly Rates
In determining whether the hourly rate is reasonable, “the burden is on the fee applicant
to produce satisfactory evidence . . . that the requested rates are in line with those prevailing in
the community for similar services by lawyers of reasonably comparable skill, experience and
reputation.” Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984); accord Savoie v. Merchants Bank,
166 F.3d 456, 463 (2d Cir. 1999).
To determine an appropriate hourly rate, Arbor Hill directs that a court engage in the
[T]he district court, in exercising its considerable discretion, [is] to bear in mind
all of the case-specific variables that we and other courts have identified as
relevant to the reasonableness of attorney’s fees in setting a reasonable hourly
rate. The reasonable hourly rate is the rate a paying client would be willing to pay.
In determining what rate a paying client would be willing to pay, the district court
should consider, among others, the Johnson factors; it should also bear in mind
that a reasonable, paying client wishes to spend the minimum necessary to litigate
the case effectively. The district court should also consider that such an individual
might be able to negotiate with his or her attorneys, using their desire to obtain the
reputational benefits that might accrue from being associated with the case.
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522 F.3d at 190 (emphasis in original). The “Johnson factors” are those laid out in Johnson v.
Ga. Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). These are:
(1) the time and labor required; (2) the novelty and difficulty of the questions; (3)
the level of skill required to perform the legal service properly; (4) the preclusion
of employment by the attorney due to acceptance of the case; (5) the attorney’s
customary hourly rate; (6) whether the fee is fixed or contingent; (7) the time
limitations imposed by the client or the circumstances; (8) the amount involved in
the case and the results obtained; (9) the experience, reputation, and ability of the
attorneys; (10) the “undesirability” of the case; (11) the nature and length of the
professional relationship with the client; and (12) awards in similar cases.
Arbor Hill, 522 F.3d at 186 n.3 (citing Johnson, 488 F.2d at 717-19).
Arbor Hill specifically identified the following factors to be considered in determining
what a reasonable, paying client would be willing to pay:
[T]he complexity and difficulty of the case, the available expertise and capacity of
the client’s other counsel (if any), the resources required to prosecute the case
effectively (taking account of the resources being marshaled on the other side but
not endorsing scorched earth tactics), the timing demands of the case, whether an
attorney might have an interest (independent of that of his client) in achieving the
ends of the litigation or might initiate the representation himself, whether an
attorney might have initially acted pro bono (such that a client might be aware
that the attorney expected low or non-existent remuneration), and other returns
(such as reputation, etc.) that an attorney might expect from the representation.
Id. at 184.
Importantly, Arbor Hill held that a court must “step[ ] into the shoes of the reasonable,
paying client, who wishes to pay the least amount necessary to litigate the case effectively.” Id.
(emphasis added); accord Lilly v. City of New York, 934 F.3d 222, 231 (2d Cir. 2019). In other
words, a court awarding statutory attorney’s fees is not called upon to determine merely whether
“the attorneys on this case properly command the rates they seek.” Major League Baseball
Properties, Inc. v. Corporacion de Television y Microonda Rafa, S.A., 2021 WL 56904, at *2
(S.D.N.Y. Jan. 7, 2021). Rather, it must determine the “cheapest hourly rate an effective
attorney would have charged.” O.R. v. N.Y.C. Dep’t of Educ., 340 F. Supp. 3d 357, 364
Case 1:17-cv-00772-GWG Document 406 Filed 02/17/21 Page 8 of 31
(S.D.N.Y. 2018) (emphasis in original). Thus, whether the attorneys on this case actually
command the rates they seek in the marketplace is not dispositive of the rate that they should be
Plaintiffs have requested the following rates for the four lawyers and one paralegal from
the firm of Dunnegan & Scileppi who worked on this case:
Hourly Rate (pre-6/30/17)
Hourly Rate (post-7/1/17)
Dunnegan Decl. ¶ 6.
According to plaintiffs, William Dunnegan has practiced law for 39 years, nearly all of
which has “involved litigation, primarily intellectual property litigation.” Dunnegan Decl. ¶ 11.
He has been lead counsel in 21 federal trials and argued 27 appeals. Id. ¶¶ 12-13. Laura
Scileppi, a partner at the firm, has practiced law for more than 12 years, and tried four cases,
arguing two appeals. Id. ¶ 17. Richard Weiss, an associate, has practiced law for more than
seven years, trying two cases. Id. ¶ 18. Andrew Chung, a former associate, began practicing law
in 2017. Id. ¶ 19. Finally, Jennifer Rafuse, the paralegal, has worked at Dunnegan & Scileppi
since 2007, and assisted with “at least six trials.” Id. ¶ 21. Plaintiffs have cited to cases in this
district where courts have awarded comparable rates to those requested by each attorney in this
case, commensurate with the level of experience each brought to bear. See Supp. Mem. at 9-13.
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Varvatos challenges the requested rates as unreasonable, arguing that the attorneys’ “lack
of experience litigating employment claims and collective and class actions” mandates a
reduction. Opp. Mem. at 4. Defendant cites to a variety of cases in this district where courts
have relied at least in part on an attorney’s lack of experience to reduce the rate requested. See
Opp. Mem. at 4-5. Varvatos offers no suggested amount by which it hopes the rates to be
reduced. Id. at 9.
The Court agrees with Varvatos that the experience of counsel is an important factor for
this Court to look to in determining a reasonable hourly rate. See Arbor Hill, 522 F.3d at 186 n.3
(reciting the Johnson factors, including “the experience, reputation, and ability of the attorneys”).
But Varvatos’s call to focus solely on this factor as a reason to reduce the requested rates is at
odds with Arbor Hill’s requirement that a district court should “bear in mind all of the casespecific variables that we and other courts have identified as relevant to the reasonableness of
attorney’s fees in setting a reasonable hourly rate.” Id. at 190 (emphasis in original). Focusing
solely on one factor among many, to the exclusion of others, would conflict with that obligation.
We therefore look to the other factors as well, though we do not address each factor. See
Lochren v. Cty. of Suffolk, 344 F. App’x 706, 709 (2d Cir. 2009) (“Arbor Hill did not hold that
district courts must recite and make separate findings as to all twelve Johnson factors.”). We
begin by noting that this case involved novel issues of law, that both sides prosecuted the matter
zealously, and that the stakes involved were high. We also accept that plaintiffs’ counsel has
produced evidence that the rates requested are those customarily charged by counsel (see
Dunnegan Decl. ¶ 15), and that other courts in this district have approved similar or higher rates
for experienced counsel in comparable matters, see, e.g., Local 1180, Commc’ns Workers of
Am., AFL-CIO v. City of New York, 392 F. Supp. 3d 361, 380 (S.D.N.Y. 2019) (approving rates
Case 1:17-cv-00772-GWG Document 406 Filed 02/17/21 Page 10 of 31
of $600 for attorney with 22 years’ experience and $350 for an attorney with 10 years’
experience). We are also cognizant of the decision in Fisher v. Aetna Life Ins. Co., 2020 WL
5898788 (S.D.N.Y. Oct. 5, 2020), which found that the rates requested there by Dunnegan &
Scileppi — comparable to the pre-June 2017 rates requested here — were “well within the
common ranges for attorney rates in this district and are thus reasonable.” Id. at *9 (approving
requested rates of $450 for Dunnegan, $225 for Weiss, and $165 for Chung in employee benefits
Of course, Arbor Hill requires that we also consider whether there are other attorneys
who could have effectively litigated this case at a lower price. Case law and the Court’s own
experience suggests that there are effective attorneys at lower prices for experienced litigators.
See Chuk On Chan v. Good Chows Inc., 2017 WL 9538901, at *7 (S.D.N.Y. Mar. 3, 2017)
(“Courts in this District have determined that a fee ranging from $250 to $450 per hour is
appropriate for experienced civil rights and employment law litigators.”) (citation omitted);
Castellanos v. Mid Bronx Cmty. Hous. Mgmt. Corp., 2014 WL 2624759, at *7 (S.D.N.Y. June
10, 2014) (“In labor and employment cases, courts in this district have approved hourly rates of
$300-400 for partners.”) (citation omitted). Less experienced attorneys, including associates, are
commonly awarded fees “of about $200 to $275 per hour.” Siegel v. Bloomberg L.P., 2016 WL
1211849, at *6 (S.D.N.Y. Mar. 22, 2016) (noting that associates with “at least four years of
experience” are commonly awarded fees in the $200 to $275 range) (citation omitted); accord
Baltierra v. Advantage Pest Control Co., 2015 WL 5474093, at *13 (S.D.N.Y. Sept. 18, 2015)
(“Reasonable hourly rates for junior associates in this district vary, but typically are between
$150 and $200 per hour.”) (collecting cases).
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Nonetheless, in considering a reasonable rate, we put great emphasis on the fact that the
performance of the plaintiffs’ attorneys in the courtroom and the quality of the papers they filed
with the Court was extraordinary — far above the abilities displayed by counsel in the usual
labor or employment case. While counsel’s lack of experience in employment and class action
litigation will, as explained in the next section, result in a reduction in the number of hours
awarded, we do not think it should weigh too heavily in the determination of their hourly rate
given their superlative performance.
On the other hand, we believe there were “reputational benefits” that counsel could
expect to “accrue from being associated with the case,” Arbor Hill, 522 F.3d at 190, which
counsels for a rate not at the highest end of permissible rates. We conclude this because the
litigation of this case has positioned counsel to demonstrate expertise in class action and
employment law that did not exist before.
In the end, we have considered all the relevant factors, including the legal experience of
the attorneys, the novel issues in this case, the attorneys’ performance, and the reputational
benefits, and conclude that it would be appropriate to award the attorneys rates commensurate
with those recently awarded in Fisher even though we believe those rates are at the high end of
what are authorized by Arbor Hill — that is, the “cheapest hourly rate an effective attorney
would have charged.” O.R., 340 F. Supp. 3d at 364. We will thus award those rates, except that
in light of Weiss’s experience and excellent performance as an attorney, we find that a rate of
$250 for the entire period is appropriate for his rate. As for Scileppi, whose rate was not at issue
in Fisher, we will award her pre-2017 rate of $325 for the entire period.
Varvatos also objected to the rates requested for Dunnegan & Scileppi’s paralegal noting
that “[c]ourts in this district have recently approved lower rates for paralegals, including with
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similar seniority.” Opp. Mem. at 11 (citing cases reducing requested paralegal rate to $75 and
$125). This Court has customarily awarded “the standard paralegal rate” of $75 per hour unless
it has been shown that the paralegal has specialized skills. O.R., 340 F. Supp. 3d at 368; accord
Griffen Sec., LLC v. Citadel Car Alarms, LLC, 2020 WL 3264173, at *4 (S.D.N.Y. June 17,
2020), report and recommendation adopted, 2020 WL 3791869 (S.D.N.Y. July 6, 2020);
Douglas v. Anthem Productions, LLC, 2020 WL 2631496, at *4 (S.D.N.Y. May 26, 2020). The
Court sees no reason to depart from this standard rate, as plaintiffs did not present any evidence
of specialized skills. Thus, the paralegal rate is reduced to $75 an hour. 2
C. Reasonable Hours
Plaintiffs must also establish that the number of hours for which they seek compensation
is “reasonable.” Arbor Hill, 522 F.3d at 188. “Because attorney’s fees are dependent on the
unique facts of each case, the resolution of this issue is committed to the discretion of the district
court.” Clarke v. Frank, 960 F.2d 1146, 1153 (2d Cir. 1992). In exercising this discretion, the
district court should look “to its own familiarity with the case and its experience with the case
and its experience generally as well as to the evidentiary submissions and arguments of the
parties.” Id. (quoting Di Filippo v. Morizio, 759 F.2d 231, 236 (2d Cir. 1985)). Further, as the
Supreme Court notes,
trial courts need not, and indeed should not, become green-eyeshade accountants.
The essential goal in shifting fees (to either party) is to do rough justice, not to
achieve auditing perfection. So trial courts may take into account their overall
sense of a suit, and may use estimates in calculating and allocating an attorney’s
Varvatos also objects to charging the same rate for plaintiffs’ counsel for time entries
that appear to involve travel. Opp. Mem. at 12. Varvatos identifies a total of 5 hours, out of a
claimed 5,035, that present this problem. Id. Given the minuscule number of hours at issue, and
the fact that the Court is not required to scrutinize “each action taken or the time spent on it,”
Aston v. Sec’y of Health & Human Servs., 808 F.2d 9, 11 (2d Cir. 1986), the Court will consider
these charges for purposes of deciding the reduction to the number of hours requested.
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Fox v. Vice, 563 U.S. 826, 838 (2011).
Additionally, it is well-established that “any attorney . . . who applies for court-ordered
compensation in this Circuit . . . must document the application with contemporaneous time
records . . . specify[ing], for each attorney, the date, the hours expended, and the nature of the
work done.” N.Y. State Ass’n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1148 (2d
Cir. 1983). In support of their application, plaintiffs’ attorneys submitted copies of their billing
records showing the date on which services were performed, the hours that were expended, the
attorney involved, and a description of the work done. See Dunnegan Decl., Exh. B (“Billing
Records”). Plaintiffs attest that these records are compiled from contemporaneous time entries.
Dunnegan Decl. ¶ 22. Thus, plaintiffs’ records satisfy the contemporaneous time records
requirement. See, e.g., Hollander Glass Tex., Inc. v. Rosen-Paramount Glass Co., 291 F. Supp.
3d 554, 562-63 (S.D.N.Y. 2018); Cruz v. Local Union No. 3 of Int’l Bhd. of Elec. Workers, 34
F.3d 1148, 1160-61 (2d Cir. 1994).
If a court finds that claimed hours are “excessive, redundant, or otherwise unnecessary,”
it should exclude those hours from its calculation of the presumptively reasonable fee. Hensley,
461 U.S. at 434; accord Quaratino v. Tiffany & Co., 166 F.3d 422, 426 n.6 (2d Cir. 1999).
However, as the Supreme Court noted in Hensley, “[t]here is no precise rule or formula for
making these determinations.” 461 U.S. at 436. Because “it is unrealistic to expect a trial judge
to evaluate and rule on every entry in an application,” Carey, 711 F.2d at 1146, “the court has
discretion simply to deduct a reasonable percentage of the number of hours claimed ‘as a
practical means of trimming fat from a fee application,’” Kirsch v. Fleet Street, Ltd., 148 F.3d
149, 173 (2d Cir. 1998) (quoting Carey, 711 F.2d at 1146). Thus, a district court is not required
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to “set forth item-by-item findings concerning what may be countless objections to individual
billing items.” Lunday v. City of Albany, 42 F.3d 131, 134 (2d Cir. 1994).
Plaintiffs represent that their records show that they spent “at least 5,035 hours litigating
this action to judgment on March 24, 2020.” Supp. Mem. at 14. They have divided the case into
a number of broad tasks and calculated how many hours they spent for nearly all of the tasks.
The attorneys spent 95.5 hours prior to the initial conference on work investigating the case and
drafting the complaint (Dunnegan Decl. ¶ 24), 36.8 hours to defend depositions and prepare for
those depositions (id. ¶¶ 29-32), 89.5 hours on the motion for conditional approval of the
collective action (id. ¶ 33), 125.5 hours on the motion for class certification (id. ¶ 34), 318.6
hours opposing various discovery and other motions made by defendant (id. ¶¶ 35-38), 621 hours
on the two summary judgment motions (id. ¶ 39), 502.2 hours preparing pre-trial submissions
(id. ¶ 42), 160 hours on settlement negotiations (id. ¶ 50), 408.8 hours of trial preparation (id.
¶ 54), 264.2 hours on the trial itself and calculating the judgment (id. ¶¶ 61-62), and 187.9 hours
preparing the fee application, id. ¶ 63. They also state that they engaged in “narrowly focused
discovery” (id. ¶ 25) including “six depositions, some over multiple days,” id. ¶ 27. However,
they do not provide an overall estimate for the time spent on discovery. Altogether, the tasks
identified by plaintiffs’ counsel amount to 2,810 hours, leaving 2,225 hours unaccounted for in
their overall summary, or approximately 44% of the hours requested. We can only assume the
unaccounted time was spent largely on the discovery process inasmuch as this was the one
category for which plaintiffs did not provide an estimate of hours.
Varvatos argues that the total number of hours is unreasonable on its face (Opp. Mem. at
13), that Varvatos should not have to pay for certain specific tasks (id. at 14-25), that plaintiffs’
time entries reflect block billing or are too vague to assess the reasonableness of the claimed
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entries (id. at 26-32), that some entries are inconsistent, (id. at 32-33), that staffing was excessive
(id. at 33-35), and that plaintiffs’ counsel seeks fees at attorney rates for non-attorney and
clerical tasks (id. at 35-38). Plaintiffs respond to all of these arguments in their reply, and also
contend that what they view as the relatively low hourly rates requested “more than
counterbalance any deficiency in the time keeping.” Reply at 18.
We begin by addressing defendant’s argument that hours attributable to certain motions
should not be compensated at all. Varvatos points to the relatively few motions that plaintiffs
did not win and argues that fees for these motions should be deducted because plaintiffs were
either “unsuccessful” or only partially successful. Opp. Mem. at 17. We reject this argument
because it runs directly counter to Second Circuit case law holding that the reasonableness of
hours claimed is not judged on “whether hindsight vindicates an attorney’s time expenditures,
but whether, at the time the work was performed, a reasonable attorney would have engaged in
similar time expenditures.” Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992) (citation omitted).
Thus, the mere fact that an attorney makes an unsuccessful motion does not justify a reduction in
fees for that motion. Rather, the issue in a review of an attorney’s fee application is whether the
hours spent were “reasonable.” An attorney may act reasonably in pursuing or defending a
motion even though the attorney does not win the motion. See, e.g., Rozell v. Ross-Holst, 576 F.
Supp. 2d 527, 539 (S.D.N.Y. 2008) (declining to reduce fees for motions that “while
unsuccessful, were part of the routine give and take of litigation”); Luciano v. Olsten Corp., 925
F. Supp. 956, 964 (E.D.N.Y. 1996) (declining to “exclude hours expended in preparation of
motions that were not granted, in light of the ultimate success of the plaintiff in this action”); see
also Grant, 973 F.2d at 99 (courts should not engage in “an ex post facto determination of
whether attorney hours were necessary to the relief obtained”).
Case 1:17-cv-00772-GWG Document 406 Filed 02/17/21 Page 16 of 31
Turning to the other challenges by Varvatos, we find that many of them do not justify a
reduction in hours. While Varvatos cites to time entries as “vague” (Opp. Mem. at 26), we do
not view them as so vague as to require their disallowance. For example, where an entry reads
that a certain time period was spent on “Jury instructions,” or “SJ Memo,” one may reasonably
surmise that the entry refers to the preparation of jury instructions or of the memorandum in the
summary judgment briefing. We find the instances of block billing to be minimal. The entries
alleged to be inconsistent (id. at 32-33) appear to be largely instances where one attorney billed
for a “conference” with another attorney but the other attorney did not so bill. Such
inconsistencies are easily attributable to one of the attorneys viewing the “conference” as part of
another task (such as preparation of a memorandum of law or deposition). 3 As to the claim that
plaintiffs’ counsel seeks fees at attorney rates for non-attorney tasks (id. at 35-38), we agree that
billing for such tasks is improper, see Ryan v. Allied Interstate, Inc., 882 F. Supp. 2d 628, 636
(S.D.N.Y. 2012), but find such instances to be few. Rather than separately exclude hours related
to these tasks, they will be considered as part of a percentage reduction of hours.
Varvatos’s remaining arguments ultimately relate to its contention that the overall
number of hours billed is excessive. And on this point, we are in agreement with Varvatos.
We have no doubt that the 5,035 hours were expended by the plaintiffs’ attorneys in a
good faith effort to litigate this case as thoroughly and as carefully as possible. But an attorney’s
understandable desire to pursue every avenue of inquiry and leave no stone unturned cannot
remain unconstrained. And some of the excess is undoubtedly attributable to the attorneys’ utter
lack of experience in either class actions or employment litigation. In the end, the number of
Compare Billing Records at 45 (Dunnegan billing 2.0 hours on 9/5 for meeting with
Weiss on different issues, including “Dep”) with id. at 48 (Weiss billing 3.4 hours on 9/5 for,
among other things, preparing a witness for a deposition).
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hours sought is completely out of line with hours awarded in equivalent cases. Indeed, plaintiffs
do not cite any labor or employment cases that awarded hours anywhere near the number of
hours they seek compensation for here but instead simply attempt to distinguish the cases cited
by Varvatos. Reply at 5-6.
We rely to some degree on our own litigation experience to determine the appropriate
number of hours. But we rely more heavily on case law in this Circuit determining reasonable
hours in labor or employment discrimination suits that went to trial. Our examination of these
cases reflects that in most instances the hours sought or awarded were under 1000 hours
— sometimes well under — which is a fraction of the number of hours sought here. See, e.g.,
Figueroa v. KK Sub II, LLC, 2019 WL 1109864, at *13 (W.D.N.Y. Mar. 11, 2019) (889.25
hours awarded in Title VII sexual harassment case with five day jury trial); Leevson v. Aqualife
USA, Inc., 296 F. Supp. 3d 503, 526 (E.D.N.Y. 2017) (858.25 hours awarded for FLSA case
with four-week jury trial), aff’d in relevant part, 770 F. App’x 577 (2d Cir. 2019); Yue Ping Sun
v. Buffet Star of Vestal Inc., 2017 WL 11296886, at *3 (N.D.N.Y. June 21, 2017) (request for
299.4 hours in FLSA collective action case with jury trial in four day period reduced by 15% due
to billing record deficiencies); Abel v. Town Sports Int’l, LLC, 2012 WL 6720919, at *34
(S.D.N.Y. Dec. 18, 2012) (437.52 hours awarded in race discrimination case with 7-day jury
trial); Lynch v. Town of Southampton, 492 F. Supp. 2d 197, 208 (E.D.N.Y. 2007) (476.75 hours
awarded for five attorneys, two support staff, and what appears to have been “five days of trial”
in 42 U.S.C. § 1983 suit); Blumenschine v. Pro. Media Group, LLC, 2007 WL 988192, at *15
(D. Conn. Mar. 30, 2007) (994.8 hours billed by six attorneys and a paralegal in association with
a six-day sex discrimination jury trial); Petrovits v. New York City Transit Auth., 2004 WL
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42258, at *6 (S.D.N.Y. Jan.7, 2004) (885.22 hours for two attorneys in six-day gender
discrimination jury trial);.
We have been able to find some employment cases in this Circuit where the hours sought
were higher, but even those cases usually came nowhere near the level sought by plaintiffs. See
Olsen v. Cty. of Nassau, 2010 WL 376642, at *6 (E.D.N.Y. Jan. 26, 2010) (1521.21 hours
awarded in three-plaintiff sex discrimination lawsuit with trial held for twenty-five days) (see
Docket Entries of Oct. 6-Nov. 14, 2008 in 05 Civ. 3623); Reiter v. Metro. Transp. Auth. of State
of New York, 2007 WL 2775144, at *18 (S.D.N.Y. Sept. 25, 2007) (1129.71 hours awarded for
three attorneys in six-day trial of employment discrimination suit); Brady v. Wal-Mart Stores,
Inc., 455 F. Supp. 2d 157, 216 (E.D.N.Y. 2006), aff’d, 531 F.3d 127 (2d Cir. 2008) (2345.8
hours awarded in disability discrimination case after four-day trial) (see Docket Entries of Feb.
17-23, 2005, in 03 Civ. 3843); Perdue v. City Univ. of New York, 13 F. Supp. 2d 326, 347
(E.D.N.Y. 1998) (2348 hours sought, 1878 hours awarded after 20% reduction in single plaintiff
Title VII/EPA case that was tried for eight days) (see Docket Entries of Aug. 19-28, 1997, in 93
Civ. 5939). 4
We recognize that this case has some characteristics that distinguish it from the typical
labor or employment matter. But these largely boil down to the fact that many of the legal issues
presented were novel. The novelty of the legal issues would certainly justify more time spent on
One employment case the Court has located that came close to the request here was
Wat Bey v. City of New York, 2013 WL 12082743 (S.D.N.Y. Sept. 4, 2013), which was a sixplaintiff action that had been litigated over a 15-year period and included an appeal to and
remand from the Second Circuit and covered 11 trial days. Id. at *3-4 (see Docket Entries of
Dec. 4-18, 2012, in 99 Civ. 3837). Two attorneys sought fees, one for 4,263.75 hours and the
other for 544 hours. Id. at *32-33. The Court ultimately reduced the hours sought by the first
lawyer by approximately ten percent, after some small voluntary reductions. Id. at *37. We find
this case of limited relevance, however, given the length of the litigation and the appeal.
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legal research for purposes of crafting arguments for the summary judgment motion and for jury
instructions — perhaps vastly more time. But even adding, say, two-and-a-half months of nonstop full-time legal research — that is, adding an extra 400 hours — to the number of hours
typically sought in employment cases would still not come close to reaching the number of hours
We also recognize that this is a class action lawsuit rather than a suit by individuals, as is
true for many of the cases we have cited. But what typically makes class action discovery and
trials complex are the multiple factual issues and damages calculations presented — sometimes
resulting in dozens of depositions, multiple expert reports, and complex expert discovery. None
of that was present in this case. There were no experts. And the factual issues, while presenting
novel legal questions, were actually quite simple with almost no variance in circumstances
among class members.
We have considered plaintiffs’ assertion that some of defendant’s litigation tactics
unnecessarily increased the number of hours they had to expend. See Supp. Mem. at 16-27
(highlighting Varvatos’s “pointless discovery and unnecessary motion practice”). We agree that
some of these tactics needlessly ran up fees in this case including, for example, Varvatos’s
meritless threats of Rule 11 sanctions and ultimately baseless accusations of criminal conduct.
But the total number of hours so identified, (id.), about 560 in all, amounts to only 11% of the
total hours claimed. Moreover, while we agree that many of defendant’s actions identified by
plaintiffs resulted in what proved to be unnecessary litigation, some are common in labor and
employment litigation — such as opposing the conditional approval motion and the class
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certification motion — and thus should not have caused the number of hours claimed by
plaintiffs here to have risen much beyond the level found in other attorney fee applications. 5
In the end, to conform the award here to the reasonable hours awarded in equivalent
cases, and to conform to the Court’s own view as to the reasonable number of hours, we will
reduce the hours sought by each professional by 50%.
The resulting hours, rates, and total amount of fees awarded, after rounding to the nearest
tenth of an hour, are as follows:
Plaintiffs point to the fact that Varvatos’s attorneys have refused to state how much
they charged Varvatos and argue that the amount plaintiffs seek must therefore be “for lower
fees than Varvatos’s counsel charged.” Reply at 1. We do not find this argument helpful
because, unlike a party seeking statutory attorney’s fees, the defendant here is not constrained to
pay its own attorneys the lowest rate that an effective attorney would charge.
This number is 0.1 greater than 50% of the requested hours because of rounding of the
individual hours awarded.
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Varvatos makes no arguments opposing plaintiffs’ requested costs of $14,285.21.
Plaintiffs presented evidence in the form of invoices substantiating these costs, most of which are
related to conducting depositions. See Dunnegan Decl. ¶¶ 3-4; id. Exh. A. In light of the lack of
any objection, the Court awards the entire amount.
E. Knox’s Proposed Service Payment
Plaintiffs also ask that Tessa Knox, the class representative, be awarded a “substantial”
service payment. Supp. Mem. at 28. They argue that without Knox’s initiative, no suit would
ever have been filed. Id. Furthermore, they point out that Knox took on risk by filing the suit, as
it could have damaged her professional reputation, and note that she “incurred substantial
hardship” by being deposed for seven hours, travelling to New York for her deposition and
staying in a hotel at her own expense, and responding to various discovery requests. Id. at 29.
They also note that, because she did not work at Varvatos for a long time, her compensatory
damage award is smaller than those of other plaintiffs. Id.
Service payments — also known by many other names combining the term “service,”
“incentive” or “case contribution” with “fee,” “payment,” “bonus” or “award” — for Rule 23
class representatives are “common in class action cases and serve to compensate plaintiffs for the
time and effort expended in assisting the prosecution of the litigation, the risks incurred by
becoming and continuing as a litigant, and any other burdens sustained by the plaintiffs.”
Beckman v. KeyBank, N.A., 293 F.R.D. 467, 483 (S.D.N.Y. 2013) (citation omitted); accord
Rodriguez v. W. Publg. Corp., 563 F.3d 948, 958-59 (9th Cir. 2009) (service payments are
“intended to compensate class representatives for work done on behalf of the class, to make up
for financial or reputational risk undertaken in bringing the action and, sometimes, to recognize
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their willingness to act as a private attorney general”); see also Strougo ex rel. Brazilian Eq.
Fund, Inc. v. Bassini, 258 F. Supp. 2d 254, 263-64 (S.D.N.Y. 2003) (citing cases approving
The legal basis for such awards, however, has been questioned over the years. See, e.g.,
William B. Rubenstein, 5 Newberg on Class Actions § 17:1 (5th ed. 2020) (“Rule 23 does not
currently make, and has never made, any reference to incentive awards, service awards, or case
contribution awards. The judiciary has created these awards out of whole cloth. . . .”). Recently,
the Eleventh Circuit has held, in light of two nineteenth-century Supreme Court decisions, that
service payments are impermissible. See Johnson v. NPAS Sols., LLC, 975 F.3d 1244, 1259
(11th Cir. 2020). The Second Circuit, however, in upholding a service payment, held that those
same Supreme Court decisions do not prevent the award of a service payment, see Melito v.
Experian Marketing Solutions, Inc., 923 F.3d 85, 96 (2d Cir. 2019). Thus, we conclude that we
are authorized to approve such a payment.
Approval of service payments usually arises in the context of a settlement that is subject
to approval under Rule 23(e) of the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 23(e).
When it comes to a jury verdict, it is less clear what gives a court the power to divert money
awarded by a jury to class members to the representative plaintiff. We do not pause long to
consider this question, however, because it is well settled that a jury’s verdict in a class action
that creates a “common fund” is appropriately the source of an attorney fee award. See, e.g.,
Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). If, as the Second Circuit has seemingly
concluded in Melito, a court has the power to award a service payment from a settlement fund,
and it is black letter law that an attorney may be compensated from a common fund created by a
jury award, we are prepared to accept that a court’s equitable powers also give it the power to
Case 1:17-cv-00772-GWG Document 406 Filed 02/17/21 Page 23 of 31
grant a service payment to a class representative from a jury verdict that creates a common fund.
The principle that underlies using a common fund to make an attorney fee payment — that
“persons who obtain the benefit of a lawsuit without contributing to its cost are unjustly enriched
at the successful litigant’s expense,” Boeing, 444 U.S. at 478 — applies equally to a service
payment to a class representative. We note that a number of cases have made service payment
awards from common funds created by a jury verdict. See, e.g., Baez v. LTD Fin. Servs., L.P.,
2019 WL 2223773, at *7 (M.D. Fla. May 23, 2019); Ridgeway v. Wal-Mart Stores, Inc., 269 F.
Supp. 3d 975, 1003 (N.D. Cal. 2017); Boynton v. Headwaters, Inc., 2012 WL 12546853, at *3
(W.D. Tenn. Mar. 27, 2012).
Here, Knox seeks an award of $300,000. See Supp. Mem at 1. She states that she seeks
the amount only from the portion of the punitive damages verdict attributable to those class
members who were not also FLSA opt-ins. Id. at 3, 30.
In support of this request, plaintiffs point to one case in which a service payment of as
much as $300,000 was awarded to a class representative: Ingram v. The Coca-Cola Co., 200
F.R.D. 685, 694 (N.D. Ga. 2001), which awarded $300,000 each to four class representatives.
See Supp. Mem. at 30. But Ingram involved a $103.5 million settlement fund, Ingram, 200
F.R.D. at 694 n.11. Moreover, the plaintiffs in Ingram presented a “great deal of evidence . . . to
the Court regarding the unique and extraordinary contribution these four individuals made to the
investigation, prosecution, and settlement of this case.” 200 F.R.D. at 694. The recovery here is
about 1.75% of the recovery in Ingram, suggesting that a service payment more in the nature of
$5000 in this case would be appropriate. In any event, while Knox was the sine qua non of the
case’s existence and obviously made contributions to its success, we cannot say that she made
“extraordinary” contributions. Id. Knox deserves to be recognized for the travel to and
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attendance at her deposition and for whatever assistance she gave to counsel. But Knox was one
of three plaintiffs deposed in this case. Dunnegan Decl. ¶ 31; ¶¶27-28. Knox did not testify at
trial or even attend it, even though one of the other plaintiffs did testify at trial. Id. ¶ 28; Knox
Decl. ¶ 26. There is no evidence of extraordinary demands on her time. We have greater
sympathy for the argument that, in light of the power of the internet, a prospective employer
might find out about her association with this suit, making it harder to find a job. Nonetheless,
the amount she requests is “disproportionately large” in relation to Knox’s contribution to the
case and the amount recovered. Romero v. La Revise Associates, L.L.C., 58 F. Supp. 3d 411,
422 (S.D.N.Y. 2014).
We believe that an award of $20,000 is far more in keeping with the awards of other
courts in similar circumstances. We reach this conclusion based on our review of case law,
which reflects that an award of $15,000 (or less) is within the range of awards commonly made
for a verdict of the size awarded here. See, e.g., Manley v. Midan Rest. Inc., 2017 WL 1155916,
at *13 (S.D.N.Y. Mar. 27, 2017) ($15,000 service award out of $912,500 fund for plaintiff who
“assisted counsel’s investigation and prosecution of the claims by providing factual information,
producing documents, reviewing defendants’ document production, appearing for all depositions,
responding to defendants’ discovery requests, assisting with preparation for the mediation and
attending the mediation”); Karic v. Major Auto. Companies, Inc., 2016 WL 1745037, at *8
(E.D.N.Y. Apr. 27, 2016) (service awards of $20,000 each for named plaintiffs who “contributed
significant time and effort to the case,” including appearing for depositions, out of $5.5 million
settlement fund); Sierra v. Spring Scaffolding LLC, 2015 WL 10912856, at *7 (E.D.N.Y. Sept.
30, 2015) (service award of $10,000 out of $560,000 settlement fund to named plaintiff deposed
in action); Willix v. Healthfirst, Inc., 2011 WL 754862, at *7 (E.D.N.Y. Feb. 18, 2011) (service
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awards of $30,000, $15,000, and $7,500 in FLSA claim out of $7,675,000 settlement fund) (see
07 Civ. 1143, Docket # 311, ¶ 26); Torres v. Gristede’s Operating Corp., 2010 WL 5507892, at
*7 (S.D.N.Y. Dec. 21, 2010) (service award of $15,000 to each named plaintiff in the settlement
of their FLSA overtime claim where total recovery was $3,530,000) (see 04 Civ. 3316, Docket
# 368, Exhibit G at 9); Mentor v. Imperial Parking Sys., Inc., 2010 WL 5129068, at *1-2
(S.D.N.Y. Dec. 15, 2010) (service award of $15,000 in class settlement of $690,000 for a
plaintiff who reviewed documents, spoke to current and former employees, and traveled to New
York during the pendency of the class FLSA claim); Khait v. Whirlpool Corp., 2010 WL
2025106, at *9 (E.D.N.Y. Jan. 20, 2010) ($15,000 service payment to each of five named
plaintiffs and $10,000 awards to each of 10 other plaintiffs in FLSA overtime class action with
recovery of $9,250,000); In re Sapiens Sec. Litig., 1996 WL 689360, at *8 (S.D.N.Y. Nov. 27,
1996) (service award of $1500 out of $8.5 million settlement fund for plaintiffs who were
deposed in connection with class certification motion). We increase the amount awarded beyond
$15,000 based on the evidence that this case would never have been brought without Knox’s
As noted, Knox seeks to have her service payment come from the portion of the punitive
damages fund attributable to persons other than herself and those who opted into the FLSA
action. We do see a logic in having the award come from the punitive damages portion of the
award because using this award as the source of funds will prevent any plaintiff from receiving
less than full compensation. We do not see a good reason for excluding the opt-in plaintiffs from
bearing financial responsibility for the award, however.
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Thus, the service payment of $20,000 to Knox shall be taken from the punitive damages
award and shall be borne by each plaintiff receiving such an award (including Knox) in
proportion to her recovery of punitive damages.
F. Counsel’s Proposed Additional Fee
In their original application, plaintiffs requested a fee of “between $100,000 and
$250,000” for their counsel over and above the statutory award to be taken from the punitive
damages fund not attributable to the named plaintiffs. Supp. Mem. at 35. Following the
remittitur, plaintiffs agreed that this amount should be reduced “to account for the 50% reduction
in punitive damages.” Jan. 27 Letter at 2. Thus, plaintiffs seek between $50,000 and $125,000
as an additional payment to counsel.
Counsel justifies this additional request by arguing that “(i) Plaintiffs’ counsel took the
risk, and continue to take the risk, that a judgment would prove unenforceable as a result of
Varvatos’s financial condition, and (ii) Plaintiffs’ counsel had to endure Varvatos’s accusations
that plaintiffs’ counsel engaged in criminal conduct.” Supp Mem. at 32. As to the latter point,
while the Court believes that defendant’s precipitous suggestion that plaintiffs’ counsel might
have engaged in criminal conduct to have been rebarbative and unnecessarily confrontational,
the episode was a brief, one-time event and would not move us to transfer payments from the
plaintiff class to its counsel.
The first point, however, does have significant force. A court may not enhance the
statutory lodestar fee — usually done by using a “multiplier” — to compensate for the risks of
the litigation because that approach has been foreclosed, except in exceptional circumstances not
alleged to be present here, by the Supreme Court’s decision in City of Burlington v. Dague, 505
U.S. 557, 563 (1992). But the Second Circuit has held that Dague’s presumption against
Case 1:17-cv-00772-GWG Document 406 Filed 02/17/21 Page 27 of 31
adjusting a lodestar to compensate for risk does not apply to fees generated from a “common
fund.” See Fresno County Employees’ Ret. Assn. v. Isaacson/Weaver Fam. Tr., 925 F.3d 63, 69
(2d Cir. 2019).
In this case, we agree that there was significant risk in taking on this litigation initially
due to the novel nature of the claims. That risk was magnified before trial when Varvatos told
plaintiffs’ counsel that it was broke. See Dunnegan Decl. ¶ 85. Notwithstanding this
knowledge, counsel continued to trial. Based on the rule in Dague, the defendant cannot be
asked to bear any responsibility for that risk. The question presented by plaintiffs’ request is
whether the plaintiffs may be required to pay for their attorneys’ assumption of that risk: that is,
whether counsel may obtain fees both from a statutory fee application and from some portion of
the common fund created by the judgment.
Case law reflects that such hybrid awards — that is, an award for statutory fees and from
the common fund — have been made where common funds were created by a settlement,
typically in cases under the Employee Retirement Income Security Act of 1974. See, e.g.,
Chesemore v. All. Holdings, Inc., 2014 WL 4415919 (W.D. Wis. Sept. 5, 2014); Sobel v. Hertz
Corp., 53 F. Supp. 3d 1319 (D. Nev. 2014); Savani v. URS Prof’l Sols., LLC, 2014 WL 172503
(D.S.C. Jan. 15, 2014). The Second Circuit has not reached the issue of whether such awards are
permissible but has approved the award of fees to class counsel from a common fund even
though the class would have been entitled to recover fees based on a fee-shifting provision. See
County of Suffolk v. Long Island Lighting Co., 907 F.2d 1295, 1327 (2d Cir. 1990). While the
Seventh Circuit has seemingly barred outright the possibility of obtaining recovery under both a
fee-shifting statute and a portion of a common fund, see Pierce v. Visteon Corp., 791 F.3d 782,
787 (7th Cir. 2015), we find more persuasive the view of the Fourth Circuit in Brundle v.
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Wilmington Tr., N.A., 919 F.3d 763, 783 (4th Cir. 2019), which reached the opposite conclusion.
As explained in Brundel, a
“reasonable” fee payable by a defendant to compensate the prevailing plaintiff’s
counsel is not necessarily identical to a “reasonable” fee owed by a recovering
beneficiary to plaintiff’s counsel, particularly where the contingency risk to
plaintiff’s counsel is substantial.
Id. at 787 (emphasis in original). Brundle emphasized that, because of Dague, the “reasonable”
fee available under a fee-shifting statute “precludes any compensation for contingency risk.” Id.
It noted, however, that “contingent fees serve an important function in providing under-resourced
litigants access to counsel and the courts.” Id. Brundle approved an award of statutory attorney
fees of $1,819,631.11 on top of a $1.5 million payment from a common fund, id. at 783, holding
that the “district court retained discretion to award supplemental attorneys’ fees from the
common fund,” id. at 787. Consistent with Brundle, we too conclude that, in appropriate
circumstances, a court has the power to award both statutory fees for attorney services and
attorney’s fees from a common fund.
Of course, having concluded that we have the power to order the payment of additional
fees from the common fund does not mean that we should do so. It would certainly be simpler to
conclude that plaintiffs’ counsel have been awarded their “reasonable” fee, that they are not
entitled under any statute to more than a “reasonable” fee, and to let that be the end of the matter.
And we imagine that in the typical case that proceeds to trial, we would be unlikely to award fees
from a common fund created by the jury verdict on top of a statutory fee. But this case has two
unusual aspects that convince us that an additional payment is appropriate.
First, the case presented an uncommon level of risk both on the merits and in terms of
collection. As to the merits, the issue presented in the case was truly novel in that no party was
ever able to find a case in which a single-sex clothing store had been sued, let alone found liable,
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for supplying a clothing allowance to one sex and not the other — even though this practice is
apparently routine in the industry. As to collection, the risk was dramatically changed when,
more than a year before trial began, in January 2019, Varvatos informed plaintiffs’ counsel that it
was in “an extremely precarious financial condition and that Varvatos’s insurer, Ironshore, had
disclaimed coverage.” Dunnegan Decl. ¶ 85. This was reiterated a few months later, in April
2019, when a bankruptcy attorney for Varvatos informed plaintiffs that Varvatos “was on the
verge of bankruptcy and that the plaintiffs would receive nothing from Varvatos’s bankruptcy
estate.” Id. ¶ 86. Nonetheless, plaintiffs’ counsel expended many hundreds of hours after that
date dutifully preparing the case for trial, conducting the trial, and opposing defendant’s
extensive motion for a new trial or judgment as a matter of law.
Second, in this case there is a portion of the common fund created by the jury verdict that
is not designed to compensate the plaintiffs at all: that is, the award of punitive damages.
Following remittitur, the punitive damages total $423,520.83. As the Second Circuit has noted,
the “rationale” for awarding fees from a common fund is based on the equitable principle that
“those benefitting from a lawsuit without contributing to its cost” should not be “unjust[ly]
enrich[ed].” Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 47 (2d Cir. 2000). The
class did nothing to create the punitive damages fund. And the equities in favor of the attorneys’
claim to the punitive damages fund are heightened because that fund is not necessary to
compensate the plaintiffs, who in this case have received the maximum compensation permitted.
The purpose of the punitive damages award was to punish “unlawful conduct and deter its
repetition.” BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 568 (1996). Thus, we are presented
with the unusual case where awarding the extra amount of attorney’s fees will not diminish any
plaintiff’s receipt of the compensatory damages awarded by the jury. And taking from the
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punitive damages fund will not affect the purpose of the punitive damages award: to punish the
defendant and deter others.
After considering the equities of the situation, including the excellent performance of
plaintiffs’ counsel, the unusual risk that they took, and the existence of a non-compensatory
element in the damage award, the Court concludes that plaintiffs’ counsel should be awarded
one-quarter of the available punitive damages, or $105,880.21 over and above the recovery of
statutory attorney’s fees. We conclude that the fee should be drawn from the punitive damages
fund rather than the entire fund because of the critical importance the punitive fund played in
causing us to weigh the equities in favor of giving the extra award of fees. The benefit conferred
by the punitive damage award inured to all plaintiffs who are eligible for that award; thus the
fees shall be borne by all plaintiffs eligible for a punitive damages award, including the named
and opt-in plaintiffs.
We note that with this modest augmentation of fees, the lodestar amount has been
increased by 14.4%, resulting in the equivalent of a 1.14 multiplier on the lodestar, well within
the range permitted by Second Circuit case law and certainly appropriate in light of the unusual
risks in this litigation. See, e.g., Fujiwara v. Sushi Yasuda Ltd., 58 F. Supp. 3d 424, 438
(S.D.N.Y. 2014) (surveying the wide range of multipliers permitted by courts).
For the foregoing reasons, plaintiffs motion for attorney’s fees and the service payment
(Docket # 367) is granted. Plaintiffs are awarded a total of $748,321.21 in statutory attorney’s
fees and costs to be paid by Varvatos, and an additional amount of $105,880.21 in attorney’s fees
to be paid from the damages award allocated to punitive damages, for a total of $854,201.42 in
Case 1:17-cv-00772-GWG Document 406 Filed 02/17/21 Page 31 of 31
attorney’s fees. Plaintiff Knox is awarded a service payment of $20,000 from the punitive
Dated: February 17, 2021
New York, New York
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