Federal Judge in Tennessee Substantially Reduces Attorney’s Fees in Wage and Hour Case

A federal court in Tennessee’s ruling on attorney’s fees should be of concern to anyone who wishes to bring a wage and hour lawsuit.  In Stewart v. CUS Nashville, LLC, Judge Trauger of the Middle District of Tennessee found that since the named plaintiff did not succeed in proving all of her claims, her attorneys should receive just 30% of their requested fees.

The case began in 2011, when plaintiff Misty Blu Stewart filed a complaint on behalf of herself and similarly situated employees, both past and current, of the “Coyote Ugly Saloons” nationwide.  She claimed that waitresses and bartenders, as a matter of company policy and in violation of the Fair Labor Standards Act (FLSA), were forced to share their tip pool with security guards, and also to work off of the clock without compensation.  The defendants responded by filing a motion to dismiss the tip pool claims, stating that security guards met the standard of being employees who customarily received tips, and could therefore share in the tip pool.

The case eventually went to trial in April 2013 after an extensive period, during which the court certified a national class of plaintiffs for the tip pool claims and a Tennessee-based class of plaintiffs for the off-the-clock claims.  Stewart also filed an amended complaint that added three retaliation claims under the FLSA’s anti-retaliation provision to the existing claims.

Following the bench trial, the court determined that security guards met the Sixth Circuit’s standard of employees who “customarily and regularly receive tips,” so that their tip pool sharing did not violate the FLSA.  The court also determined that Coyote Ugly managers had willfully altered time records at the Nashville Cayote Ugly Saloons to deny plaintiffs credit for hours that they worked.  Finally, the court ruled in favor of the defendants on the retaliation claims.

After a calculation of unpaid wages, the court found that the 11 Nashville plaintiffs were entitled to unpaid wages for their off-the-clock work, as well as liquidated damages and restitution, for a grand total of $789.50.  Aside from the meager total, this was problematic because for this outcome, Stewart had accrued $168,408.25 in legal fees, for 426.35 hours of work at $395 per hour.

Stewart requested that the court direct the defendants to pay these fees, under section 16(b) of the FLSA, which required that the court “allow a reasonable attorney’s fee to be paid by the defendant.”  The court then set about to determine whether Stewart’s attorneys’ fees were reasonable.  To do that, the court began with the “loadstar” amount, or the amount that is calculated by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate.  Once the loadstar was determined, the court could then adjust it to reflect relevant considerations specific to that particular case.

To determine the proper amount, the court looked at 12 factors under Johnson v. Georgia Highway Express, Inc., including time and labor required, the novelty and difficulty of the questions presented, the customary fee, the reputation of the attorneys involved, and awards in similar cases.  One important factor was the result obtained — if a plaintiff obtained an excellent result, the attorney should get the full fee.

Although the court determined that the hourly rate and amount of work were reasonable, because the plaintiff succeeded on just one claim for a very small amount, the court ended up awarding less than one-third of the total accrued amount, or $54,295.08.  The court reasoned that since this amount was 69 times greater than the plaintiff award, it would not decrease the incentive of plaintiffs’ attorneys to represent them in time-off-the-clock claims.  Yet given how much work Stewarts’ attorneys put into the case over the years for that much-smaller amount, one wonders if they would agree.

Parks, Chesin & Walbert represents plaintiffs in employment matters, including employment discrimination, wage and hour, FMLA, and more.  With offices in Atlanta and Nashville, we offer a client-centered philosophy and strive to accomplish our clients’ goals as if they are our own.  If you live in Georgia or Tennessee and need an experienced Atlanta employment law attorney, contact us today at 404-873-8048.

Related Posts:

Safeguarding Tipped Employees

Waiving Overtime Rights

Overtime and the Fluctuating Work Week


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