Ana Melgar, individually and on behalf of all others similarly situated; Phaythoune Phengsouvanavong, individually and on behalf of all others similarly situated; Ruben Iraburo, individually and on behalf of all others similarly situated Plaintiffs - Appellants
OK Foods; OK Industries, Inc. Defendants - Appellees
Submitted: April 12, 2018
from United States District Court for the Western District of
Arkansas - Ft. Smith
GRUENDER, MELLOY, and GRASZ, Circuit Judges.
MELLOY, Circuit Judge.
of a chicken processing plant filed a lawsuit against their
employer, OK Foods, Inc. and OK Industries, Inc.
(collectively, "OK Foods"), alleging their employer
failed to pay certain wages in violation of Arkansas state
law and the Fair Labor Standards Act of 1938
("FLSA"), 29 U.S.C. § 201 et seq. The
parties eventually settled their dispute out-of-court for a
confidential amount made known to the court. While the
district court approved the parties' settlement agreement
(the "Agreement"), the court declined to award the
agreed-upon $87, 500.00 in attorneys' fees, costs, and
expenses. Instead, the district court, sua sponte,
reduced the fees awarded to $22, 500.00. We reverse in part
and remand with instructions to award Appellants the
2013, Ana Melgar, Phaythoune Phengsouvanavong, and Ruben
Iraburo (together, the "Appellants") filed a class
action lawsuit against OK Foods in state court alleging
unjust enrichment, breach of implied contract, and violations
of the Minimum Wage Act of the State of Arkansas. Ark. Code.
Ann. § 11-4-201, et seq. In June 2013, OK Foods
successfully removed the case to federal court. After the
court denied Appellants' motion for remand, Appellants
amended their complaint to include FLSA claims.
March 2015, the district court certified the case as a
collective action under the FLSA, pursuant to 29 U.S.C.
§ 216(b). Over 1, 000 individuals opted in to the
action. In November 2015, the court stayed the case, pending
the Supreme Court's decision in Tyson Foods, Inc. v.
Bouaphakeo, 136 S.Ct. 1036 (2016).
April 2016, the district court granted OK Foods' motion
to decertify the collective action, in light of the
Court's decision in Tyson Foods, reducing the
case to the individual claims of Appellants. The district
court also granted OK Foods' motion for partial summary
judgment, subsequently limiting certain claims to a two-year
limitations period under the FLSA.
2016, the parties engaged in settlement discussions,
including a full-day conference with a magistrate judge. The
parties eventually agreed to settle for a confidential amount
made known to the court, which Appellants allege was higher
than the parties could have expected to win at trial. The
Agreement also included a provision requiring OK Foods to pay
$87, 500.00 in attorneys' fees. The parties then filed a
joint motion for dismissal with prejudice.
district court denied the joint motion and requested
additional information to evaluate the fairness of the
Agreement. The court expressed concern as to the amount OK
Foods agreed to pay in attorneys' fees, noting there was
"no information provided regarding the fee arrangement
between the Plaintiffs and their counsel or the amount of
time expended on the case." The court also expressed
concern as to the relatively high ratio between the
attorneys' fees and plaintiffs' recovery. The court
noted that "[w]here a plaintiff's attorney receives
a larger fee at the expense of his clients' wage
claims" there could be a potential "conflict of
interests between the attorney and his clients." The
court recognized, however, that the case was "previously
certified as a collective action and . . . ha[d] been
response, the parties provided the district court with the
requested information and filed a joint motion to approve the
settlement. The district court granted the motion as to the
settlement amount but declined to award the agreed-upon
attorneys' fees. Instead, the district court instructed
Appellants to "file a properly-supported motion . . . to
recover fees and costs." The district court also
expressed concern as to the possibility of double-recovery by
Appellants' counsel, as counsel is also involved in an
ongoing state-court class action against OK Foods.
Appellants submitted documentation and filed a third,
uncontested motion requesting that the court order OK Foods
to pay the agreed-upon $87, 500.00. The documents included
hour logs and rates accounting for $536, 810.00 in
attorneys' fees and $94, 745.30 in incurred costs and
expenses, to support fees and costs totaling $631, 555.30.
district court denied the motion to approve the
attorneys' fees, identifying the attorneys' fees
provision of the Agreement and noting the "provision was
severable from the remainder of the settlement
agreement." As such, the court determined Appellants
were "entitled to reasonable fees and costs that reflect
that success," noted the amount Appellants recovered was
lower than the attorneys' fees, and awarded $22, 500.00
in attorneys' fees and costs without providing any
additional explanation for the court's alternative
calculation. Appellants filed a timely appeal of the district
court's order with this court. OK Foods did not oppose