Opinion
14cv02451 (DF)
12-29-2021
KITIPONG RODPRACHA, et al., Plaintiffs, v. PONGSRI THAI RESTAURANT CORP., et al, Defendants.
ORDER
DEBRA FREEMAN, UNITED STATES MAGISTRATE JUDGE
In this action under the Fair Labor Standards Act and the New York Labor Law, which is before this Court on the consent of the parties pursuant to 28 U.S.C. § 636(c), the parties have reached an agreement in principle to resolve the action, and Plaintiffs have now filed a motion seeking Court approval of the proposed settlement agreement, pursuant to Cheeks v. Freeport Pancake House, Inc., 796 F.3d 1999 (2d Cir. 2015) (requiring judicial fairness review of FLSA settlements). (Dkt. 142.) Plaintiffs have also submitted an attorney declaration from their counsel, John Troy, Esq. (“Troy”) of the firm Troy Law, PLLC (“Troy Law”) (Declaration of John Troy in Support of Joint Motion for Settlement Approval, dated Dec. 23, 2021 (Dkt. 145) (attaching the parties' proposed settlement agreement (the “Agreement') (Dkt. 145-1), a damages calculation for each of the Plaintiffs (Dkt. 145-2), and Troy Law's time records (Dkt. 145-3)), and a purported “joint” memorandum of law (Memorandum of Law in Support of Joint Motion for Settlement Approval, dated Dec. 23, 2021 (“Pl. Mem.”) (Dkt. 144), explaining why they believe the proposed settlement agreement is fair, reasonable, and adequate.
The Court notes that, although the motion is styled as a “joint” motion for settlement approval, it was not filed jointly by the parties, but rather was submitted by Plaintiffs.
Again, this memorandum, while ostensibly filed in support of the parties' “joint” motion, was submitted by Plaintiffs, and only bears the name of Plaintiffs' counsel.
The Court has reviewed Plaintiffs' submissions in order to determine whether the Agreement represents a reasonable compromise of the claims asserted in this action, and whether the proposed attorneys' fees and costs are reasonable. Upon that review, and after consideration of the submitted damages calculations, the Court finds that the terms of the Agreement are generally fair, reasonable, and adequate to redress Plaintiffs' claims in this action. The Court also finds, however, that the attorneys' fees requested by Plaintiffs' counsel ($692,006.78, representing one-third of the gross settlement amount of $2,080,000.00, after subtraction of claimed litigation expenses in the amount of $3,979.65) are grossly excessive for a number of reasons and should be reduced.
As a threshold matter, the Court does not take issue with the principle that, in this type of litigation, where individual plaintiffs are often unable to retain counsel except on a contingency-fee basis, it will often be appropriate for plaintiffs' counsel to be compensated based on a percentage of the overall settlement amount. See Hernandez v. Boucherie LLC, No. 18cv7887 (VEC), 2019 WL 3765750, at *4 (S.D.N.Y. Aug. 8, 2019) (noting that contingency-fee awards “have often been found to be fair and reasonable in light of the FLSA's statutory purposes”). Indeed, contingency-fee awards in FLSA cases have often been judicially approved, even where the applied percentage of the recovery results in fees that exceed the presumptively reasonable amount that would result from a “lodestar” calculation (i.e., the attorneys' reasonable hourly rates multiplied by the reasonable number of hours spent on the case). See, e.g., Castillo v. Cranes Express Inc., No. 18 CV 1271 (PKC) (LB), 2018 WL 7681356, at *5 (E.D.N.Y. Dec. 12, 2018) (approving as reasonable attorneys' fees calculated as a percentage of the settlement, even though higher than the lodestar); see also Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany & Albany Cnty. Bd. of Elections, 522 F.3d 182, 183 (2d Cir. 2008) (lodestar creates a “presumptively reasonable fee”). Fees calculated based on a percentage of the plaintiffs' recovery, however - even if not more than the frequently approved one-third contingency fee - are not necessarily reasonable in every case. See Hernandez, 2019 WL 3765750, at *4. To so find would be to abrogate the Court's obligation to scrutinize the reasonableness of the parties' proposed attorneys' fees in each FLSA settlement presented to the Court for Cheeks review. See id.; see also Fisher v. S.D. Protection Inc., 948 F.3d 593, 606 (2d Cir. 2020) (stating that the court's obligation to review FLSA settlements “extends to the reasonableness of attorneys' fees and costs”).
In considering the reasonableness of Plaintiffs' proposed attorneys' fees here, the Court is also mindful of the holding in Fisher that, upon Cheeks review, a district court abuses its discretion if it “rewrit[es] the [parties'] settlement agreement by modifying the allotment of the settlement funds, ” id., at 597. In this particular case, however, the reasoning of Fisher does not preclude this Court from approving the parties' Agreement with a lesser amount of attorneys' fees than that which has been requested. This is because, in their Agreement, the parties expressly contemplated that the Court could do exactly that, and they stipulated to the following:
This Agreement is not contingent on the Court's approval of Plaintiffs' counsel's request for litigation expenses and attorney fees. Thus, even if the Court approves lesser amounts for litigation expenses and attorney fees than Plaintiffs' counsel requested, and otherwise approves this Agreement, this Agreement will remain fully enforceable.(Agreement ¶ 1(b).) Accordingly, in the case-specific circumstances presented here, the Court may approve a lesser amount of fees than that requested by Troy Law, without undermining the parties' intent.
With respect to the reasonableness of the fees requested by Troy Law in this case, a significant reduction of those fees is warranted for two reasons. First, as laid out in an Order To Show Cause issued by the Court on February 11, 2021 (Dkt. 125), and the Court's subsequent Order of March 22, 2021 (by which the Court found Troy Law inadequate to serve as Rule 23 class counsel in this action either for purposes of settlement or trial) (Dkt. 127), Troy Law has, over a lengthy period of time, demonstrated “myriad performance issues” in connection with its work on this matter (id.). While the Court finds that the settlement that was ultimately negotiated by Troy Law on behalf of the named plaintiffs and those who sought to proceed as opt-ins to an FLSA collective (together, “Plaintiffs”) will fairly compensate them for the claimed statutory violations, Plaintiffs have been waiting many years for this case to be resolved, and the Court largely attributes the lengthy delays in this action to the inability of Troy Law to advance the case in a diligent manner and to take the Court's guidance when the firm's work product was deficient - as it often was.
Second, the Court finds utterly disingenuous Troy Law's invitation that the Court rely on the firm's submitted lodestar calculation of its fees as a “cross-check” for the supposed reasonableness of the requested contingency fee. Even a cursory review of Troy Law's fee calculation shows that the firm has ratcheted up its billing rates beyond anything that it possibly could have believed was reasonable - presumably to make it appear that its proposed contingency fee is on a par with the fees the firm would have earned, had it been compensated on an hourly basis for the work it performed.
For example, for all of his work on this case (going back to 2014), Troy, who recorded more than twice the number of hours on this case as were recorded by all of the associates and other time-keepers on the matter combined, has assigned to himself a billing rate of $650 per hour - higher than any rate that, to this Court's knowledge, has ever been approved for his work in this District. “‘In this [D]istrict, courts generally award experienced wage-and-hour attorneys between $300 and $400 per hour.'” Hernandez v. Compass One, LLC, No. 20cv7040 (LJL), 2021 WL 4925561, at *4 (S.D.N.Y. Oct. 21, 2021 (quoting Agureyev v. H.K. Second Ave. Rest. Inc., 17cv7336 (SLC), 2021 WL 847977, at *11 (S.D.N.Y. Mar. 5, 2021)); see also De La Cruz v. Trejo Liquors, Inc., No. 16CV4382 (VSB) (DF), 2019 WL 9573763, at *18 (S.D.N.Y. Sept. 10, 2019) (“For partners or heads of small law firms practicing in this area, the Court has usually approved hourly rates in the $300 to $450 range.” (citations omitted)), report and recommendation adopted, No. 16CV4382VSBDF, 2020 WL 4432298 (S.D.N.Y. July 30, 2020).
As Troy well knows, this Court has, itself, previously scrutinized his billing rates, and, in other cases, has determined that his requested rates should be reduced in light of the consistently poor quality of his work and the fact that he often performed work that could have been performed by more junior attorneys, or even by paralegals - something that he has again done here. (See, e.g., Dkt. 143-3, at ECF 2 (Troy time entries for 04/08/14 (“File the Complaint, Summons & Civil Cover Sheet in SDNY”), 04/09/14 (“Provide Scanned Copy to Case Openings”)); ECF 5 (Troy time entry for 10/02/14 (“Coordinate Thai Interpreter”)); ECF 8 (Troy time entry for 11/26/14 (“Cataloguing, Data Entry Dft Document Production Responses”).) In fact, for these reasons, this Court has twice determined, and similarly finds here, that a reasonable billing rate for Troy's work should be set at $325 per hour. See Wen v. Hair Party 24 Hours Inc., No. 15cv10186 (ER) (DF), 2021 WL 3375615, at *1 (S.D.N.Y. May 17, 2021), report and recommendation adopted, 2021 WL 2767152 (S.D.N.Y. July 2, 2021); Lin v. La Vie En Schezuan Rest. Corp., No. 15cv09507 (DF), 2020 WL 1819941, at *5 (S.D.N.Y. Apr. 9, 2020). This, of course, is half of the rate that Troy now proposes to use for purposes of the lodestar, and if the Court were to make no other adjustment to the submitted lodestar, a reduction of Troy's hourly rate to $325 would, alone, result in a nearly $260,000.00 reduction in the calculated fees.
Citations herein with an “ECF” prefix refer to the page numbers affixed to the cited document by the Court's Electronic Case Filing system.
Further, the submitted billing records show grossly inflated billing rates for the others from Troy Law who staffed the matter.
As to Aaron B. Schweitzer, Esq. (“Schweitzer”), whom Troy describes as a “managing associate” with the firm, Troy Law has assigned an hourly rate of $400. (Troy Decl. ¶¶ 67, 80.) Schweitzer received his J.D. in 2016 and became a member of the New Jersey bar in 2017 and the New York bar in 2018. (Id. ¶ 68.) Based on the submitted time records, Schweitzer mostly worked on this case in 2017, in his first year of practice, and then again from 2019 to 2021, when he had two-to-four years of experience. (See generally Dkt. 145-3.) His work was thus mostly performed as a junior associate, which, in this type of case, might generally warrant a rate of from $125 to $200 per hour. See De Los Santos v. Hat Trick Pizza, Inc., No. 16cv6274 (AJN), 2021 WL 4150967, at *2 (S.D.N.Y. Sept. 13, 2021) (finding $150 per hour to be a reasonable rate for work performed by Schweitzer from 2017 to 2019); De La Cruz, 2019 WL 9573763, at *18 (finding that, in wage-and-hour cases, rates approved in this District for junior associates have typically ranged from $125 to $200 per hour, while rates approved for mid-level associates (meaning those with at least four years of experience) have typically ranged from $200 to $275 per hour (citations omitted)). Moreover, as Troy Law knows, the Court repeatedly found significant issues with Schweitzer's work product in this case. Specifically, to the Court's understanding, Schweitzer was largely responsible for drafting the multiple proposed class-action settlements that the Court repeatedly rejected as internally inconsistent and containing errors of fact and law. (See Dkts. 125, 127.) Under the circumstances, the Court finds a reasonable hourly rate for Schweitzer's work in this particular case to be $150/hour.
Troy Law has also assigned the rate of $400/hour to George Kibum Byun, Esq. (“Byun”), who, like Schweitzer, is described by Troy as a “managing associate” (Troy Decl. ¶¶ 81, 93), and to associates Jonathan Munro-Hernandez, Esq. (“Munro-Hernandez”) and Bianca Margarita Dano, Esq. (“Dano”) (id. ¶¶ 94, 97, 98, 101). Given the time periods in which they worked on the matter, this partner-level rate is not even close to being reasonable for any of them. Byun received his J.D. in 2015 and was admitted to the New York bar in 2016. (Id. ¶ 82.) Based on the submitted time records, he performed work on this case in 2016, when he was a first-year associate. (See generally Dkt. 145-3.) Munro-Hernandez, who received his J.D. in 2013, was admitted to the New Jersey and New York bars in 2015 (Troy Decl. ¶ 94); the records reflect that the work he performed on the case was in 2015 (see generally Dkt. 145-3) - again, the year of his bar admission. As for Dano, she received her J.D. in 2011, and was admitted to the California bar in 2013. (Troy Decl. ¶ 99.) The work she performed on the case was in 2014 and in the first half of 2015 (see generally Dkt. 145-3), when she was still quite junior. Given their lack of experience at the time their work was performed, the Court finds that an hourly rate of $125 would be reasonable for both for Byun and Munro-Hernandez, and that an hourly rate of $135 would be reasonable for Dano. De La Cruz, 2019 WL 9573763, at *18.
Perhaps most outrageously, Troy Law has calculated the lodestar by using, for the duration of the litigation, a rate of $250/hour for Tiffany Troy, Esq. (See Troy Decl. ¶¶ 102, 108.) Tiffany Troy has just recently become an associate at Troy Law, having graduated from law school and been admitted to the New York bar in 2021. (See id. ¶ 102.) The submitted time records show, however, that she started performing clerical work on this case in 2014 (see generally Dkt. 145-3), when she was presumably only a freshman in college (see Troy Decl. ¶ 102 (stating that she graduated from college in 2018)). Thus, for most of the case, Tiffany Troy was performing work at the level of a paralegal or a clerk (i.e., an unadmitted attorney). In light of this, the Court finds a reasonable overall rate for the work performed by Tiffany Troy in this case to be $100/hour. See Guo v. Tommy's Sushi, Inc., No. 14cv3964 (PAE), 2016 WL 452319, at *5 (S.D.N.Y. Feb. 5, 2016) (finding $100/hour to be appropriate for both paralegal and legal intern, in wage case); but see Lu Wan v. YWL USA Inc., No. 18cv10334 (CS), 2021 WL 1905036, at *6 (S.D.N.Y. May 12, 2021) (awarding $75 per hour for Tiffany Troy). The Court likewise finds that $100/hour is a reasonable rate for the work performed on this matter by office manager Perrthi Kilaru (“Kilaru”); clerks William Lou (“Lou”) and Favin Dass (“Dass”); and paralegals Karyn Beck (“Beck”), Bella Yingchu Ho (“Ho”), and Bingyu Huang (“Huang”).
Although the Troy Declaration also states that Tiffany Troy “has been a NYS Unified Court System-certified Mandarin Chinese interpreter since 2019” (Troy Decl. ¶ 104), there is no indication that she ever performed interpreting services in this case, and, in fact, the only references to interpreter services contained in the submitted records are references to Thai interpreters (see Dkt. 145-3, at ECF 4 (time entries for 09/16/14, 09/17/14), ECF 5 (time entries for 10/02/14), ECF 63 (listing expenses for Thai interpreter).)
As for the reasonableness of counsel's stated hours, the Court finds that Schweitzer's stated time should be reduced by 22.37 hours, representing the time he reportedly spent, from March 23, 2020 to February 2, 2021, repeatedly redrafting the class-action settlement papers that the Court had found deficient in January 2020 (and, with each new draft, introducing new errors). Otherwise, while the Court notes that a handful of counsel's time entries seem questionable with respect to the amount of time expended and that a few are too vague to allow for meaningful review, the Court does not find that further time reductions are warranted. For the most part, the work performed by the attorneys and other staff at Troy Law was recorded in a clear manner; it was not block-billed; and the records generally reflect reasonable amounts of time for the tasks performed.
This 22.37 hours is comprised of the following, as recorded in the time records submitted at Dkt. 145-3: 2.75 hours on 03/23/20; 2.75 hours on 08/21/20; 6.00 hours on 08/23/20; 1.75 hours on 08/24/20; .20 hours on 09/10/2020; 2.17 hours on 09/23/2020; 1.5 hours on 10/11/2020; 1.00 hours on 01/08/2021; 2.00 hours on 01/25/2021, and 2.25 hours on 02/02/2021,
As an example of a questionable time entry, the Court notes an entry where Troy appears to have recorded .20 hours for “consult[ing]” a colleague who, seemingly, did not pick up the phone when Troy called. (See Dkt. 145-3, at ECF 59 (time entry for 09/27/21 (“Consult Colleague for advice about how to proceed by offer of judgment (he didn't pick up)”).)
See, e.g., Dkt. 145-3, at ECF 1 (time entry for 03/15/14 (“Research: Lexis Nexis /Legal”); see also D.J. v. City of New York, No. 11cv5458 (JGK) (DF), 2012 WL 5431034, at *7-8 (S.D.N.Y. Oct. 16, 2012) (noting that attorney time entries that merely indicate that “research” was performed are generally considered too vague to justify full recovery), report and recommendation adopted sub nom. Roberts v. City of New York, 2012 WL 5429521 (Nov. 7, 2012).
Applying the hourly rates set out above and the single reduction in Schweitzer's time to the time records submitted by Troy Law yields the following lodestar calculation:
| Time-keeper | Reasonable Hourly Rate | Reasonable Hours | Total | ||
| Troy Schweitzer | $325/hr | x | 797.06 hrs | = | $259,044.50 |
| Byun | $150/hr | x | 78.59 hrs | = | $11,788.50 |
| Munro-Hernandez | $125/hr | x | 5.43 hrs | = | $678.75 |
| Dano | $125/hr | x | 5.82 hrs | = | $727.50 |
| Tiffany | $135/hr | x | 91.42 hrs | = | $12,341.70 |
| Troy | $100/hr | x | 140.31 hrs | = | $14,031.00 |
| Kilaru | $100/hr | x | 5.82 hrs | = | $582.00 |
| Lou | $100/hr | x | 2.70 hrs | = | $270.00 |
| Dass | $100/hr | x | 5.60 hrs | = | $560.00 |
| Beck | $100/hr | x | 5.55 hrs | = | $555.00 |
| Ho | $100/hr | x | 5.36 hrs | = | $536.00 |
| Huang | $100/hr | x | 4.44 hrs | = | $444.00 |
| Total (Lodestar): $301,558.95 |
The Court further finds that, in light of the poor quality of much of the work that Troy Law produced in this case, it would not be appropriate to apply a multiplier to the lodestar. The Court acknowledges that, in many cases, a fee that is a multiple of the lodestar may well be found reasonable, in light of, inter alia, the “performance of the attorneys, ” Zekanovic v. Auguies Prime Cut of Westchester, Inc., No. 19cv8216 (KMK), 2020 WL 5894603, at *5 (S.D.N.Y. Oct. 5, 2020) (internal quotation marks and citation omitted), “the time and labor expended by counsel[, ] the magnitude and complexities of the litigation[, and] the risk of the litigation, ” Hernandez, 2019 WL 3765750, at *7 (citation omitted). Here, Plaintiffs appear to rely on the notion of case “complexity” to justify the Court's approval of an amount greater than the lodestar. (See Pl. Mem., at 6 (arguing that a multiplier is “reasonable in large, complex, multi-plaintiff cases” (citations omitted)).)
The cases on which Plaintiffs rely, however, all involved class-action settlements (see id.), and it should again be noted that, while this case was commenced as a putative class action, the level of deficiency in Troy Law's performance led the Court to take the rather extraordinary step of finding the firm inadequate to represent a plaintiff class (see Dkt. 127). It is still true that the case involved a fairly large number of opt-in plaintiffs, but the mere fact that several damages calculations had to be made, and a settlement negotiated, for a group of plaintiffs instead of one or two does not, in itself, make a wage case so complex that special fee consideration is warranted. Further, while the Court recognizes that the settlement amount is inherently high in this case (over $2 million), this would appear to be more a function of the number of plaintiffs involved and the extent of their claimed damages than of any special demonstration of negotiating skill by Plaintiffs' counsel.
Moreover, the Court notes that it is evident from counsel's time records that Troy Law never took any steps, whatsoever, to prepare for the trial of this action, should its settlement efforts have proven unsuccessful. Although the Court had set a trial date and a deadline for trial submissions, it is apparent that Plaintiffs' counsel were simply willing to let that deadline lapse and to take the chance that the case could be resolved without trial, without doing anything to protect their clients' interests, should settlement talks fail. Specifically, following the Court's rejection of the parties' proposed class-action settlement, the Court set the case down for trial on July 14, 2021, with pretrial submissions due by May 27, 2021. (Dkt. 127.) Not only did Troy Law fail to make any pretrial submissions by May 27, instead requesting an extension of time just two days before that date, on the grounds that the parties were “optimistic” that a new (non-class-based settlement) could be reached “promptly” (Dkt. 128), but, when, after six months then passed and the Court set a final deadline of December 10 for the submission of a proposed settlement agreement (see Dkt. 138), counsel failed to meet that deadline. Only after the Court informed the parties that, unless it received a proposed settlement agreement from them by December 23, 2021, the case would proceed to trial (see Dkt. 141), did counsel finally submit a proposed settlement.
It appears that, had the case proceeded to trial, Troy Law would have been ill prepared to try the case, as counsel's time records do not indicate that, despite the length of time that the case was pending, counsel ever conducted a single deposition. Nor do the records reflect that Troy Law took any steps to prepare their clients' direct testimony for trial, which the Court informed counsel it would require by affidavit. Nor do the records show that Troy Law took even preliminary steps towards preparing a joint pretrial order. Certainly, not being the slightest bit trial ready, Troy Law did not ultimately negotiate the settlement from a position of strength; rather, it seems from their records that counsel was never interested in fully litigating the case. For all of these reasons, the Court sees no reason why a multiplier of the lodestar would be justified here.
Accordingly, the Court will approve, as reasonable attorneys' fees in this case, the lodestar amount of $301,558.95, and not the higher amount requested by Troy Law.
As for the litigation expenses that Plaintiffs' seek to recover, this Court notes that Troy Law has merely submitted billing records that itemize Plaintiffs' costs, without attaching receipts or invoices to document those costs, as it should have done. See, e.g., Fisher, 948 F.3d at 601-02. As a finer point, the Court takes issue with the firm's references, in its list of itemized expenses, to fees charged by a “Neutral Court-Appointed CPA” (Dkt. 145-3, at ECF 63), given that the Court actually denied the parties' application to “appoint” an accountant to assist them in their settlement discussions (see Dkt. 82). Nonetheless, the Court notes that Troy has submitted a declaration, made under penalty of perjury, in which he specifies the amount of Plaintiffs' litigation expenses (see Troy Decl. ¶ 30), and, for purposes of Cheeks review, the Court will accept this as a sufficient evidentiary ground to support the amount sought. As the Court finds the types and amounts of the itemized expenses to be reasonable, it approves them as part of the parties' Agreement.
Accordingly, it is hereby ORDERED as follows:
1. The parties' Agreement is approved as fair and reasonable in all respects except for the amount of requested attorneys' fees. As to Plaintiffs' attorneys' fees, this Court will only approve, as reasonable, the lesser amount of $301,558.95. It is the Court's understanding, based on the express terms of the parties' Agreement, that they anticipated that the Court might only approve a lesser amount of fees than those sought, and that they agreed to accept any such lesser amount, without the need to renegotiate the overall Agreement.
2. The Court notes that, although the parties have not explicitly requested that the Court retain jurisdiction over this action for the purpose of enforcing their agreement, they have submitted a proposed Stipulation and Order of Dismissal With Prejudice (Dkt. 145-1, at ECF 15) which states that the Court will retain jurisdiction for that purpose. In light of this, and in order to effectuate the evident intent of the parties, this Court will retain jurisdiction over this matter for the sole purpose of enforcing the settlement agreement.
3. As a result of the Court's approval of the parties' executed settlement Agreement (with a lesser amount of fees that, by the parties' express stipulation, does not render the Agreement unenforceable), this action is hereby discontinued in its entirety, with prejudice, without costs or fees to any party, except as set forth herein. The Clerk of Court is directed to close this case on the Docket of the Court.
SO ORDERED.