258 F. Supp. 3d 380
S.D.N.Y.2017Background
- Plaintiffs brought hybrid FLSA collective and Rule 23 class wage-and-hour claims against Defendant on behalf of workers in multiple states; the case settled for a gross fund of $3,281,250.
- Settlement allocated the fund 23% to FLSA opt-in class (372 opt-ins), 34% to New York Rule 23 class (781 members), and 43% to Florida Rule 23 class (957 members); NY and FL recoveries were claims-made.
- Class Counsel (Outten & Golden) sought 33.3% of the gross fund ($1,093,750) in attorneys’ fees and $34,141.96 in costs; they reported 3,024.25 hours and a lodestar of $1,060,602.50.
- The Court used the percentage-of-fund method (with Goldberger factors) to set a baseline fee, adjusted for reversionary structure and other factors, and cross-checked via lodestar.
- The Court reduced the fee to 21.5% of the gross fund ($705,468.75), awarded the requested costs ($34,141.96), and conditioned the award on payment of an incremental $130,501.33 reversion amount to class members.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Reasonableness of requested attorneys’ fees | Request 33.3% of gross fund ($1,093,750); multiplier ~1.03 of lodestar | Not explicitly framed in record as separate fee argument | Court set a baseline at 26.5% then reduced to 21.5% ($705,468.75) after Goldberger analysis and policy concerns |
| Use of percentage-of-fund vs. lodestar cross-check | Percentage-of-fund appropriate; request consistent with other awards | — | Court used percentage method as primary and applied lodestar cross-check; recalculated lodestar ~$752,473.75 supports awarded fee |
| Effect of reversionary (claims-made) settlement on fee percentage | Fee should be based on gross fund | Reversion favors defendant because unclaimed funds revert; may warrant lower fee | Court reduced fee by 5% from baseline to account for reversionary structure and low non-FLSA participation |
| Reimbursement of litigation costs | Costs of $34,141.96 are reasonable and necessary | — | Costs awarded in full ($34,141.96) |
Key Cases Cited
- Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000) (announcing Goldberger factors for common-fund fee awards)
- McDaniel v. County of Schenectady, 595 F.3d 411 (2d Cir. 2010) (district court as fiduciary; guidance on fee methods)
- In re Colgate-Palmolive Co. ERISA Litig., 36 F. Supp. 3d 344 (S.D.N.Y. 2014) (framework for percentage-of-fund baseline and adjustments)
- In re Bank of Am. Corp. Sec., Derivative, & ERISA Litig., 772 F.3d 125 (2d Cir. 2014) (discussing economies of scale and sliding scale for percentage awards)
- Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423 (2d Cir. 2007) (use of total fund as basis for fees but permitting adjustment to avoid windfall)
- Blum v. Stenson, 465 U.S. 886 (U.S. 1984) (burden on fee applicant to show prevailing community rates)
- Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96 (2d Cir. 2005) (recognizing lower percentage awards in larger common funds)