United States District Court, E.D. Arkansas, Jonesboro Division
KIM PIERCE, on Behalf of All Others Similarly Situated PLAINTIFF
BIG RIVER STEEL LLC DEFENDANT
MARSHALL JR., UNITED STATES DISTRICT JUDGE.
parties want to settle their dispute about unpaid overtime.
That's a good thing, and it is thus with reluctance that
the Court says no. The terms proposed aren't fair or
used to work at Big River's steel mill. She filed this
case, alleging that the mill had shorted her and other
employees in paying overtime. She proposed a collective
action under the Fair Labor Standards Act and a class action
under the parallel Arkansas statute. Pierce and her
colleagues were paid production bonuses. Big River, she
alleged, hadn't included those bonuses in calculating the
correct rate for the overtime everyone routinely worked at
getting the suit papers, Big River investigated. The mill
concluded that it had indeed made the mistake Pierce and her
lawyers asserted. Approximately three weeks after Pierce
filed her case, Big River made its employees whole. It paid
Pierce and her co-workers the difference between the amount
of overtime each had been paid and the amount each person was
owed, plus a 100% match to cover liquidated damages available
under the wage statutes, and interest at 6%. Pierce got $2,
978.68. Big River paid more than $2 million to its workers.
Those workers did not sign any release; and the payments to
them weren't marked "settlement" or conditioned
in any way. Pierce's case wasn't mentioned.
parties' lawyers then started talking settlement. The
case was about a month old. In due course, Big River
answered, explaining its mistake and its fix, and saying it
stood ready to pay Pierce a reasonable attorney's fee.
The parties eventually made a deal. Their proposed settlement
is now before the Court and they seek approval. No. 11;
Lynn's Food Stores, Inc. v. U.S. By & Through U.S.
Department of Labor, Employment Standards Administration,
Wage & Hour Division, 679 F.2d 1350, 1354 (11th Cir.
1982). The parties have, helpfully, responded to questions
and provided documents. N° 18. The Court has
drawn freely on those materials in stating the case.
the proposed deal. Pierce agrees to dismiss this case with
prejudice, release a basket of other potential claims
(reserving those asserted in a pending EEOC charge), and not
to seek or accept employment with Big River in the future.
There's no release of coworkers' claims. Big River
agrees to provide a neutral reference. The parties
acknowledge the $2, 978.68 already paid Pierce for unpaid
overtime, an equal amount of liquidated damages, and
interest. The parties propose that Big River pay Pierce $10,
720 more "representing an incentive award for
settlement[.]" Nol2at2. They also propose that
Big River pay Pierce's lawyers $62, 000 in fees and
expenses. The lawyers are out of pocket $487.49 for the
filing fee, service, and copies. "[T]he agreed amount of
fees[, ]" the parties say in their joint motion to
approve the settlement, "is based primarily on the
results obtained for Plaintiff and her co[-]workers, not the
hours expended by counsel/7 No. 11 at 2. Rounding
for simplicity, Pierce's lawyers worked fifty-one hours,
which generated (at healthy hourly rates ranging from $175 to
$290) an $11, 500 bill.
circumstances favor approving the deal. It was negotiated at
arms-length between adversaries. Able counsel represent each
side. There's not even a hint that Pierce or her
co-workers would be shortchanged. Pierce is made completely
whole for the overtime violation. As the indirect
beneficiaries of Pierce's lawsuit, her co-workers got
made whole, too, and this involved big money.
circumstances, though, weigh against the deal, decisively so,
in this Court's view. First, no collective action or
class has been certified. An incentive award to Pierce and a
non-lodestar attorney's fee reflect group-wide litigation
that didn't really happen. None of the procedural
protections that attend group litigation, such as notice to
those affected and a chance to object, are present. This case
stopped at the door.
the proposed incentive award to Pierce is not fair. The
payment she got for overtime represents a 100% recovery of
everything she could have gained by winning the case. She did
not earn a service fee by giving a deposition, attending
hearings, or being the public face of workers in an extended
dispute with their employer. Filing the case pushed Big River
into investigating the pay issue. But the mill's
immediate fix shows that there was no push back, much less a
real fight. Pierce is merely one step away from all her
co-workers on the overtime point -she sued, and that step
doesn't justify a $10, 720 payment. Perhaps more money
for Pierce could be justified in terms of other things
she's giving up in the deal. The release of many other
potential claims and the no-reapplication terms come to mind.
But these are not the words or the structure of the
parties' agreement, and in terms of the overtime claims
pleaded, this proposed award would be a windfall. The Court
has found no precedent that would support this payment. And
the parties have not cited one.
proposed attorney's fee is unreasonable. To get the
dispute resolved and move on, it's understandable that
Big River would not quibble over hourly rates or the
inefficiencies that come from having many lawyers on a case.
Four main lawyers, with assists from five more, strikes the
Court as too many hands. But, at the threshold this looked
like a big case; a full team was justified. The proposed fee,
though, doesn't simply cover the time billed. It
doesn't go a bit farther, seeking a multiplier of 1, for
example, to reflect the substantial collateral benefits. Even
that step would be novel under precedent, but it would come
much closer to being reasonable. Instead, the parties'
proposal seeks a multiplier of more than 5. In lodestar
terms, the proposal seeks an hourly rate of more than $1200.
That's unreasonable. It is, as the parties note, only
approximately 3% of the total payout to all employees. Ns
18 at 3. But this is not a common fund case.
Compare Keil v. Lopez, 862 F.3d 685 (8th
Cir. 2017). Every precedent cited by the parties, No. 18
at 1-2, involved a collective action or class certified
by the Court with all the usual procedural steps and
protections. E.g., Collins v. Sanderson Farms,
Inc., 568 F.Supp.2d 714, 717 (E.D. La. 2008). Those
cases provide no support here. This suit alerted Big River to
a widespread overtime problem, which the company promptly
fixed before the case launched. Counsel deserves credit, and
probably some reasonable compensation for raising the storm
flag, but approximately $50, 000 more than a generous
hours-based fee is just too much.
motion, No. 11, denied without prejudice. Joint
status report on where the case is going ...