Ana Melgar v. OK Foods, 902 F.3d 775

Three employees sued OK Foods in state court (later removed to federal court), bringing state wage claims and later FLSA claims; the case was at one point a certified FLSA collective with over 1,000 opt-ins but was later decertified and reduced to the three plaintiffs' individual claims.
After extensive litigation, including certification, decertification, partial summary judgment, and mediated settlement talks, the parties executed a confidential settlement agreement that included payment of $87,500 in attorneys’ fees to plaintiffs’ counsel.
The parties filed a joint dismissal, but the district court sought more information and then, although approving the settlement amount to plaintiffs, sua sponte refused to enforce the agreed $87,500 fee provision and ordered plaintiffs to file a supported fee motion.
Plaintiffs submitted detailed time records and documentation showing $631,555.30 in fees and costs incurred (far exceeding the $87,500 agreed figure), but the district court awarded only $22,500 without detailed explanation, citing concerns about fee-to-recovery ratio and potential conflicts from parallel state litigation.
The plaintiffs appealed; the Eighth Circuit (Grasz, Melloy, Gruender) concluded that when parties have fairly negotiated an attorneys’ fee provision after extensive litigation and produced supporting documentation, the district court’s review of an agreed fee must be deferential and reversed, instructing the court to award the agreed $87,500.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the district court could reject/enforce an agreed attorneys’ fee provision in an FLSA settlement	The agreed $87,500 fee is part of a negotiated settlement reached after extensive litigation and supported by documentation; court should enforce it	(OK Foods did not contest on appeal per settlement terms)	The court should enforce the agreed fee; district court’s reduction was improper and must be reversed
Standard of review for stipulated fees in settlement	Parties’ agreement merits deference; review should be lighter than contested fee litigation	District court exercised scrutiny over reasonableness and potential conflicts	Where fees are negotiated and supported, district court review is deferential, not a line-item veto
Whether fee-to-recovery ratio alone justifies reducing agreed fees	Ratio alone does not make an agreed fee unreasonable given litigation history and documentation	District court reduced fee based on high fee-to-recovery ratio and conflict concerns	Court held ratio is only one factor; totality of circumstances and parties’ informed agreement control; agreed fee was reasonable

Hensley v. Eckerhart, 461 U.S. 424 (1983) (district courts determine "reasonable" fees; fee requests should not produce a second major litigation)
Quigley v. Winter, 598 F.3d 938 (8th Cir. 2010) (appellate review of fee awards is for abuse of discretion; remand sometimes inefficient)
Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016) (relevant Supreme Court decision affecting collective action evidence and certification questions)
Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015) (district-court or Department of Labor approval required for FLSA settlements—contrast among circuits)
Martin v. Spring Break ’83 Prods., L.L.C., 688 F.3d 247 (5th Cir. 2012) (enforcement of private FLSA settlement without district approval—contrast among circuits)
Sturgill v. United Parcel Serv., Inc., 512 F.3d 1024 (8th Cir. 2008) (de novo review for legal issues related to fee awards)