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DeArmond v. Alliance Energy Services, LLC

United States District Court, E.D. Louisiana

June 1, 2018

DAVID DEARMOND on behalf Of Himself and on Behalf of all Others Similarly Situated
v.
ALLIANCE ENERGY SERVICES, LLC

         SECTION: “I” (4)

          ORDER

          KAREN WELLS ROBY CHIEF UNITED STATES MAGISTRATE JUDGE

         Before the Court is the Plaintiff's Motion for Attorneys' Fees and Cost Pursuant To 29 U.S.C. § 216(b) and the Parties' Settlement Agreement (Rec. Doc. 71), seeking an order for the award of reasonable attorney's fees. The Defendant, Alliance Energy Services, LLC (“Alliance”), opposes the motion. Rec. Doc. 76. The motion was heard on the briefs.

         I. Factual Summary

         This collective action was filed pursuant to the Fair Labor Standards Act (“FLSA”) in which the plaintiff, an oil field worker, and other similarly situated employees, sought compensation for attending mandatory pre-shift meetings. Rec. Doc. 56, p. 2. The defendant self-reported to the Department of Labor (“DOL”) and concluded that it owed all of its employees a total of $43, 382.38 in unpaid overtime, but no liquidated damages.

         A settlement conference took place on January 4, 2018, which resulted in a settlement later that day. As a part of the settlement, the parties agreed to submit the issue of attorney's fees to the undersigned for resolution with a waiver of their right to appeal. Rec. Doc. 63, 70, 71-1. The settlement was approved by the District Judge. Now before the Court is the motion seeking reasonable attorney's fees originally in the amount $107, 925 and costs in the amount $9, 323.14 Rec. Doc. 71. However, the parties submitted further supplemental documentation for attorney fees and cost reflecting an increase in the fees sought from $107, 925.00 to $113, 475 and cost which increased from $9, 323.14 to $10, 768.79 Rec. Doc. 79.

         Alliance opposes the motion. Rec. Doc. 76. According to Alliance: (1) fees and costs are not owed; (2) fees and costs were not properly preserved in the pretrial order; and (3) the fees and costs requested are unreasonable. Alliance further denies plaintiffs' suggestion that it obstructed an earlier resolution. Rather, it contends that the lawsuit was brought with a primary purpose of trying to obtain attorney's fees.

         II. Standard of Review

         Under the FLSA, a prevailing plaintiff is entitled to a reasonable attorney's fee. See 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.”). The Fifth Circuit uses the lodestar method to calculate an appropriate attorney's fee award under the FLSA. See Saizan v. Delta Concrete Products Co., Inc., 448 F.3d 795, 799 (5th Cir. 2006). The “lodestar” is essentially the reasonable number of hours expended on litigation multiplied by a reasonable hourly rate. See Strong v. BellSouth Telecommunications, Inc., 137 F.3d 844, 850 (5th Cir.1998).

         “The most critical factor in determining an attorney's fee award is the ‘degree of success obtained.'” Singer v. City of Waco, Tex., 324 F.3d 813, 829 (5th Cir. 2003) (quoting Hensley v. Eckerhart, 461 U.S. 424, 436 (1983)). Prevailing party status “may say little about whether the expenditure of counsel's time was reasonable in relation to the success achieved.” Hensley, 461 U.S. at 436. “While a low damages award is one factor which the court may consider in setting the amount of fees, this factor alone should not lead the court to reduce a fee award.” Singer, 324 F.3d at 830 (quoting Hollowell v. Orleans Reg'l Hosp., LLC, 217 F.3d 379, 392 (5th Cir. 2000)). In a lawsuit initiated under the FLSA, “an attorney's failure to obtain every dollar sought on behalf of his client does not automatically mean that the modified lodestar amount should be reduced.” Singer, 324 F.3d at 830 (citing Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 558 (7th Cir. 1999)).

         After calculating the lodestar, the Court may decrease or enhance the amount based on the relative weight of the factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). See Saizan, 448 F.3d at 800. The twelve Johnson factors are: (1) the time and labor required; (2) the novelty and difficulty of the question; (3) the skill requisite to perform the legal service; (4) the preclusion of other employment by the attorney due to the acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved 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 professional relationship with the client; and (12) awards in similar cases. Von Clark v. Butler, 916 F.2d 255, 258 n. 3 (5th Cir. 1990) (citing Johnson, 488 F.32d at 717-19).

         The Court may use its “equitable discretion” to arrive at a reasonable fee award by eliminating certain hours related to unsuccessful claims or by reducing the fee award to account for plaintiffs' limited success. Pruett v. Harris County Bail Bond Bd., 499 F.3d 403, 418 (5th Cir.2007). When a plaintiff achieves limited success, “the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount.” Migis v. Pearle Vision, Inc., 135 F.3d 1041, 1048 (5th Cir. 1998). But “an attorney's failure to obtain every dollar sought on behalf of his client does not automatically mean that the modified lodestar amount should be reduced.” Saizan, 448 F.3d at 799.

         In evaluating the ultimate “results obtained” by plaintiffs, this Court may also consider the success of motions decided during the course of the litigation and other factors, such as the social benefit of exposing defendants' activities. See Louisiana Power & Light v. Kellstrom, 50 F.3d 319 (5th Cir. 1995) (Evaluating the results obtained by plaintiffs based on factors tangentially related to plaintiffs' claims, such as social benefit of exposing racketeering activity).

         In addition, plaintiffs seeking attorney's fees are charged with the burden of showing the reasonableness of the hours billed and, therefore, are also charged with proving that they exercised billing judgment. Walker v. City of Mesquite, 313 F.3d 246, 251 (5th Cir. 2002). Billing judgment requires documentation of the hours charged and of the hours written off as unproductive, excessive, or redundant. See Saizan, 448 F.3d at 799; See also Green v. Adm'rs of Tulane Educ. Fund, 284 F.3d 642, 662 (5th Cir. 2002). The proper remedy for omitting evidence of billing judgment does not include a denial of fees but, rather, a reduction of the award by a percentage intended to substitute for the exercise of billing judgment. Walker v. U.S. Dept. of Housing and Urban Development, 99 F.3d 761, 770. (5th Cir. 1996).

         III. Analysis

         A. Prevailing Party Status

         The plaintiffs contend that they are prevailing parties because while the defendant believes that the $14, 189.41 it paid directly to the collection action members via direct deposits and mailed checks with no explanation waived their claims for FLSA entirely. However, the settlement in this matter achieved results whereby the thirty-two class members were able to get notice about their rights and receive $55, 000. See Rec. Doc. 64. The settlement amounts distributed to the claimants ranged from $8, 629.54 to $43.40. See Rec. Docs. 72, 74. Counsel for plaintiffs contend that the average settlement amount per claimant is $1, 666.67, which is about 98 hours' worth of work for these opt-in in plaintiffs. Rec. Doc. 71-1.

         Alliance contends that right after suit was filed it learned about the dispute wherein the claimants alleged that they were due overtime for the pre-work safety meeting. Alliance contends that it immediately sought the assistance of the DOL and self-reported any possible overtime issue and to assist in bringing its payroll practices of its newly acquired divisions in-line with the company's core business. Alliance states it paid the employees past and present as instructed by the DOL. Alliance, also at the instruction of the DOL, did not include the claim of Mr. DeArmond and instead dealt with his attorneys. According to Alliance, it wanted to treat its employees fairly, consistently, and avoid needless litigation, whether the payroll practices of the newly acquired divisions had been legally correct or not. Alliance further contends that although the DOL investigation was thorough it was later discovered that there were a few employees at one of the newly acquired divisions were also paid for what is referred to in the industry as “day rate” bonuses and which were not used in overtime calculations for safety meetings which was probably error because they are not actually bonuses but rather salary. Alliance states that once it learned of the error it agreed to pay, but not fight the issue, which might have eliminated the overtime dispute completely.

         Alliance contends that there are valid exceptions to the award of attorney's fees by law and that if an exception is applicable the award of attorney's fees is not warranted. First, Alliance contends that it acted in good faith and because the safety meetings were pre-work and more for the protection of the employees then the company that the exception should apply. Second, Alliance argues that the meetings fall within an exception for de minimus time (15-30 minutes). Alliances contends that because these two exceptions apply attorney's fees are not owed at all, and that while it settled the claim it did not concede the plaintiffs were prevailing parties. Finally, Alliance contends that plaintiffs' counsel failed to preserve their fee claim by not including it in the pretrial order.

         The Fifth Circuit has held that “while a low damages award is one factor which a district court may consider in setting the amount of attorney's fees, this factor alone should not lead the district court to reduce a fee award.” Singer v. City of Waco, Tex., 324 F.3d 813, 830 (5th Cir. 2003) (quoting Hollowell v. Orleans Reg'l Hosp. LLC, 217 F.3d 379, 392 (5th Cir. 2000)). The Plaintiffs submit that in FLSA cases, it is not uncommon for attorney fee awards to exceed the amount of the judgment. See Howe v. Hoffman-Curtis Partners Ltd., LLP, 215 F.App'x. 341, 342 (5th Cir. 2007) (“Given the nature of claims under the F.L.S.A., it is not uncommon that attorney fee requests can exceed the amount of judgment in the case by many multiples.”). For example, in Howe, the Fifth Circuit affirmed an award of $129, 805.50 in attorneys' fees where the damages award was $23, 357.30. Id.; See Lucio-Cantu v. Vela, 239 F.App'x. 866, 868-69 (5th Cir. 2007) (affirming an award of $51, 750 in attorneys' fees where the damages award was $4, 696.79).

         In Saizan, the Circuit Court held that, “where ‘a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount. This will be true even where the plaintiff's claims were interrelated, non-frivolous, and raised in good faith.'” Saizan, 448 F.3d at 801. The Court in Saizan affirmed the reduction in attorneys' fees awarded. In doing so, the Fifth Circuit considered that the settlement agreement did not contain an admission of liability and that the plaintiffs had not convinced the court that they deserved overtime compensation, that the fluctuating work week method should be used to calculate damages, or that liquidated damages were owed. Id.

         In this case, the amount the claim settled for the liquidated damages that were due as a result of the failure to pay for the pre-work safety meeting. While Alliance suggest that the good faith exception should apply to the determination of whether the plaintiffs prevailed, the Court finds that this argument is misplaced. The good faith exception applies to a determination of the applicability of the FLSA and not to the determination of whether the plaintiffs are prevailing parties. The Court finds that the plaintiffs are in fact prevailing parties. This determination is made by the undersigned after being intricately involved in the resolution of this matter and recalling the purpose behind the numbers used in formulating the appropriateness of the settlement. The district also approved the settlement and its terms.

         B. Reasonable Hourly Rate

         Plaintiffs contend that their attorneys' hourly rates are reasonable. In support of their claim, they submit an affidavit from Attorney Robert B. Landry who opines that the hourly rate of $300 for both Beatriz Sosa-Morris and John Neuman are reasonable and are in-line with the New Orleans market. In further support of the application for attorney's fees, the plaintiffs submitted the declarations of the attorneys enrolled in this matter: Sosa-Morris and Neuman.

         1. Beatriz Sosa-Morris Reasonable Rate

         Beatriz Sosa-Morris has been practicing law for over 5 years and has handled FLSA matters exclusively. She graduated magna cum laude from the South Texas College of Law and was a law review member. Sosa-Morris states that she has argued before the Fifth Circuit on FLSA exemption issues, prevailed on numerous conditional certification motions, motions regrading representative discovery, summary judgments on FLSA liability, and on misclassification and off-the-clock claims. Sosa-Morris states that she has settled millions of dollars in FLSA claims and that she is founding partner of Sosa-Morris Neuman, PLLC which was established in January 2017. Sosa- Morris contends that her requested rated of $300 is reasonable based upon her experience in FLSA matters and her educational background.

         Alliance in contrast contends that Sosa-Morris' rate of $300 is excessive for the New Orleans market and that an hourly rate of $150 is more appropriate for someone with her years of experience. In support of their position they submit the affidavits of Jean-Paul Layrisson and Krista M. Eleew. Layrisson, counsel for Alliance in this matter, states that he has 27 years of experience and that his hourly rate is $350.00. He also states that his associate's rate in this market is $150.00 an hour and she has roughly the same years of experience as Sosa-Morris.

         “Hourly rates are to be computed according to the prevailing market rates in the relevant legal market, not the rates that lions at the bar may command.” Hopwood v Texas, 236 F.3d at 281 (quotation omitted) (5th Cir. 2000); accord U.S. ex rel. Cook-Reska v. Cmty. Health Sys., Inc., 641 Fed.Appx. 396 (5th Cir. 2016); McClain v. Lufkin Indus., Inc., 649 F.3d 374, 381 (5th Cir. 2011). The relevant legal market is where the district court sits. The reasonable hourly rate for a particular community is generally established through affidavits of other attorneys practicing there, not the fee-seeker's attorney. “Further, the court need not accept the requested rate-even where it is reasonable and within prevailing market rates-if the court explains why it used a different rate.” U.S. ex rel. Cook-Reska v. Cmty. Health Sys., Inc., 641 Fed.Appx. 396 (5th Cir. 2016).

         Accordingly, the prevailing market rates in New Orleans, Sosa-Morris's range of reasonable rates are from 185.00-$200.00 per hour. See Gahagan v. U.S. Customs & Border Prot., No. 14-2619, 2016 WL 3090216, at *14 (E.D. La. June 2, 2016) ($200 per hour for attorney with 8 years of experience in immigration and Freedom of Information Act cases); Gros v. New Orleans City, No. 12-2322, 2014 WL 2506464, at *8 (E.D. La. June 3, 2014), reconsideration granted in part on other grounds, 2014 WL 3894371 (E.D. La. Aug. 8, 2014) ($185 per hour for associate who has practiced for 6 years and $185 per hour for associate who has practiced for 5 years); Calix v. Ashton Marine LLC, 2016 WL 4194119 (E.D. La. July 14, 2016) (FLSA case where plaintiff's counsel had approximately 5 years of experience or limited experience in the field with no specialized training and reasonable rate of $200). After considering the experience level of Sosa-Morris, the cases in the relevant market, and the supporting affidavit, the Court finds that an hourly rate of $200.00 is reasonable.

         2. ...


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