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Garcia v. R.J.B. Properties

July 19, 2010

OSCAR GARCIA, IRENE JIMENEZ, GEORGE OLSON, JOSEPH BROWN, LESLIE MARTIN, SHEILA FLOWERS, MARSHAWN DIXON, JOHN LENGEBIE, ERIC WILLIAMS, BRANDON OFFETT, GREGORY HENDERSON, AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
R.J.B. PROPERTIES, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER

Plaintiffs in this case are employed by R.J.B. Properties, Inc. as custodians at several suburban high schools. Their complaint alleged several violations of the Fair Labor Standards Act: that Defendant had failed in certain instances to pay overtime compensation (Count I); that Defendant failed to include an hourly health benefit allowance as part of Plaintiffs' base pay for purposes of calculating the appropriate overtime rate (Count II); and that in calculating the hours of overtime pay, Defendant failed to combine hours that Plaintiffs worked at multiple work sites (Count III). Defendant was slow in responding to discovery; once it was complete, Plaintiffs voluntarily withdrew Counts I and III.

This court then granted Plaintiffs' motion for summary judgment on Count II, as the law clearly supports this claim: Defendant paid the health benefit to Plaintiffs directly, and Plaintiffs were free to use those funds for any purpose they chose. Thus, excluding the benefit from Plaintiffs' hourly rate violates the Fair Labor Standards Act. The Act, 29 U.S.C. § 207(a)(1), requires employers to pay overtime hours at one-and-one-half times the employees' regular rate of pay, an amount defined as the rate "actually paid the employee" for his normal work hours. See Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424 (1945). When, as in this case, a health insurance allowance is paid directly to the employees, such payments must be included in the regular rate of pay for the purposes of overtime calculations. See Barnes v. Akal Security, Inc., No. 04-1350-WEB, 2005 WL 1459112, *2 (D. Kan. June 20, 2005), citing Local 246 Util. Workers Union v. Southern Cal. Edison Co., 83 F.3d 292, 296 (9th Cir. 1996). Defendant appealed the judgment in favor of Plaintiffs but ultimately withdrew their appeal.

Plaintiffs now seek an award of attorneys fees in the amount of $111,775.52, and an additional $549.12 in costs. The Fair Labor Standards Act contemplates an award of fees to a prevailing party, 29 U.S.C. § 216(b), but Defendant argues that the amount sought is excessive in proportion to the sums ultimately recovered by Plaintiffs. In addition, Defendant objects to one attorney's claimed hourly billing rate and to Plaintiffs' attorneys' practice of billing time in one-quarter-hour increments and "block billing"-that is, listing all of the activities performed on the case in a day with a single hourly total, rather than identifying how much time was devoted to each activity. Finally, Defendant notes its suspicion that this lawsuit was somehow financed by the Service Employees International Union, the union that represents Plaintiffs for collective bargaining purposes. For the reasons set forth here, those objections are largely overruled.

DISCUSSION

Under the Fair Labor Standards Act ("FLSA"), prevailing plaintiffs are entitled to recover reasonable attorneys' fees and costs. 29 U.S.C. § 216(b) ("The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action."); see also Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 550 (7th Cir.1999). The "most useful starting point for determining the amount of a reasonable fee" is the lodestar amount, that is, the figure that results from multiplying the number of hours expended by plaintiff's counsel by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). The determination of the lodestar amount does not end the inquiry, however, because other considerations may militate in favor of adjusting the fee award upward or downward. Id. at 434. Among the additional elements that the court may consider is the crucial factor of "results obtained"; if a plaintiff has achieved only partial or limited success, the district court may reduce the fee award to reflect the degree of success obtained. Id. at 436-37. On the other hand, "[w]hen a plaintiff has obtained an excellent result, his attorney should recover a fully compensable fee (i.e., the modified lodestar amount), and the fee 'should not be reduced simply because the plaintiff failed to prevail on every contention of the lawsuit.'" Spegon, 175 F.3d at 557 (quoting Hensley, 461 U.S. at 435). Success is not measured only by the amount of damages that an individual plaintiff recovers, although that factor is "certainly relevant to the amount of attorney's fees to be awarded." City of Riverside v. Rivera, 477 U.S. 561, 574 (1986). A successful plaintiff also vindicates important statutory rights, and ensures that a statutory violation will not be repeated with other employees.

I. Plaintiffs are Prevailing Parties

It is undisputed that Plaintiffs won summary judgment in their favor on Count II of their complaint. (As noted, the original complaint included two other claims, but counsel withdrew them after discovery, presumably a conscientious response to the determination that those claims were not supported by the facts.) Defendant nevertheless suggests that Plaintiffs were not prevailing parties because Plaintiffs "are now in a worse position today then [sic] they were prior to filing the lawsuit . . . because plaintiffs will no longer receive a health stipend to minimize the health care costs." (R.J.B. Properties, Inc.'s Response to Plaintiffs' Fee Petition [100] (hereinafter, "Defendant's Response"), at 2.) If the court understands this statement accurately, it means that Defendant has chosen to withdraw a portion of the compensation its workers had been receiving in retaliation for their having prevailed in this lawsuit. Defendant's cynical response to a lawsuit brought to vindicate its workers' statutory rights cannot be a basis on which the court should deny an award of attorneys' fees. The court is satisfied that Plaintiffs are prevailing parties.

II. Plaintiffs' Hourly Billing Rates are Reasonable

Determination of an appropriate award begins with the lodestar, that is, the amount that results from multiplying the number of hours expended by counsel by a reasonable hourly rate. The court turns, first, to the hourly billing rate. Four attorneys (Ryan Haggerty, Margaret Angelucci, Librado Arreola, and Marvin Gittler) worked on the case, as well as a number of law clerks. With respect to the hourly billing rates claimed by these lawyers, Defendant objects only to the $325.00 per hour rate claimed by Mr. Haggerty. In support of that rate, Plaintiffs have submitted Mr. Haggerty's own affidavit, in which he explains his law firm's billing practices, including its practice of representing labor organizations at fixed retainer amounts, resulting in an hourly recovery that varies from project to project. In cases in which he has represented prevailing plaintiffs, Mr. Haggerty has been awarded fees at substantial hourly rates, including an award at the rate of $325 hour by Judge St. Eve of this court. (Declaration of Ryan A. Haggerty, Exhibit 23 to Plaintiffs' Petition for Attorneys' Fees and Costs [98-23], ¶¶ 11, 15.) In addition, Plaintiffs have offered declarations from experienced labor and employment law practitioners (Joc Cotiguala, Douglas Werman, and Jeremy Glenn) attesting to the reasonableness of Mr. Haggerty's claimed rate.

Against this, Defendant offers only the assertion that "the fees should be lowered because of the economic conditions" and that the hourly rates charged by Defendant's own attorneys (unidentified by name, credentials or experience) are lower. (Defendant's Response, at 12.) As Plaintiffs observe, however, changes in the economy are presumably reflected in the appropriate market rate; Defendant has not supported this assertion with evidence that Mr. Haggerty's claimed rate is higher than the market. Defendant bears the burden of rebutting Plaintiffs' claimed hourly rates, People Who Care v. Rockford Bd. of Educ., Sch. Dist. No. 205, 90 F.3d 1307, 1313 (7th Cir. 1996), and has not met that burden. The court will award $325 per hour for time that Mr. Haggerty reasonably devoted to this litigation.

III. Plaintiffs' Recovery Supports a Substantial Award

The number of hours reasonably devoted to this case is also disputed. In this regard, Defendant's central argument is that Plaintiffs' recovery was so modest that it does not justify such a substantial fee award as Plaintiffs are seeking. Defendant presents this argument in several ways: the response brief summarizes Defendant's contentions as including the arguments that "Plaintiffs' . . success is de minimis and insignificant," that "no reasonable attorney would charge a client [so much] to obtain [so little]," and that "[t]he hours billed are not reasonable compared to the success that plaintiffs obtained." (Defendant's Response, at 12, 13.)

The Seventh Circuit has been consistent in acknowledging that "proportionality concerns are a factor in determining what a reasonable attorney's fee is." Moriarty v. Svec, 233 F.3d 955, 967-68 (7th Cir. 2000). "Even if plaintiff is a prevailing party, the district court may deny attorney's fees-on the ground that no amount of fees would be reasonable-if plaintiff's recovery is merely technical or de minimis." Fisher v. Kelly, 105 F.3d 350, 352 (7th Cir. 1997). Moreover, if a party "had incurred attorney's fees that were disproportionate to a reasonable estimate of the value of its claim, it could not recover all those fees, but only the reasonable proportion, which is to say the amount that would have been reasonable to incur had the value of the claim been estimated reasonably rather than extravagantly." Tuf Racing Products, Inc. v. American Suzuki Motor Corp., 223 F.3d 585, 592 ...


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