Kunze v. Baylor: Discretionary Lodestar Adjustments in FLSA Fee Awards, Strict § 1920 Cost Taxation, and No Appellate Fees for Unsuccessful Fee-Only Cross-Appeals

Court: United States Court of Appeals for the Fifth Circuit
Date: March 5, 2026
Disposition: District court’s fee and cost awards affirmed; plaintiffs’ request for appellate fees denied (unpublished).
Parties: Hospital employees (plaintiffs/appellants/cross-appellees) v. Baylor Scott & White Health and HealthTexas Provider Network (defendants/appellees/cross-appellants).

1. Introduction

Kunze v. Baylor arises from a Fair Labor Standards Act (“FLSA”) collective action brought by hospital employees alleging unpaid overtime. Before suit, defendant HealthTexas Provider Network (“HealthTexas”) discovered a timekeeping issue affecting a small number of employees, audited its system, and issued corrected wage payments. Despite that remediation, plaintiffs filed suit the following year against HealthTexas and Baylor Scott & White Health.

Plaintiffs ultimately obtained summary judgment against HealthTexas (but not against Baylor Scott & White Health). The parties resolved remaining merits issues by settlement, leaving only attorneys’ fees and costs for judicial determination. Plaintiffs sought over $3 million in attorneys’ fees and nearly $101,000 in costs; the district court reduced fees to $919,000 and reduced costs to approximately $16,519, limiting recovery to categories allowed by 28 U.S.C. § 1920. Both sides appealed: plaintiffs argued the award was too low; defendants argued it was too high.

Key Issues

• Fee reasonableness and lodestar adjustment: Whether the district court abused its discretion in reducing the requested FLSA fee award.
• Taxable costs: Whether the district court correctly limited costs to those enumerated in 28 U.S.C. § 1920.
• Appellate attorneys’ fees: Whether plaintiffs should receive additional fees for work on appeal under the FLSA.

2. Summary of the Opinion

The Fifth Circuit (per curiam) affirmed across the board. Applying abuse-of-discretion review to the fee award and clear-error review to supporting fact findings, the court held the district court’s findings on hours and rates were not clearly erroneous and that it “adequately applied” the governing standards for FLSA fees and costs. The panel also denied plaintiffs’ request for appellate attorneys’ fees because both parties appealed and both were unsuccessful, and because the appeal involved straightforward disputes about the fee and cost award rather than merits issues.

3. Analysis

3.1 Precedents Cited (and How They Shaped the Decision)

A. Standards of review for fee awards

• Cruz v. Maverick Cnty., 957 F.3d 563 (5th Cir. 2020)
  The panel invoked Cruz for the core appellate posture: fee awards are reviewed for abuse of discretion, with fact findings reviewed for clear error. Cruz also supplied the formulation that the appellate court asks whether the district court “sufficiently considered the appropriate criteria” when adjusting the lodestar.
• Combs v. City of Huntington, 829 F.3d 388 (5th Cir. 2016)
  Combs provided the tripartite abuse-of-discretion framework: reliance on clearly erroneous facts, erroneous law, or misapplication of law to facts. This framing effectively narrowed the appellate inquiry to whether the district court stayed within recognized doctrinal lanes.
• Gagnon v. United Technisource, Inc., 607 F.3d 1036 (5th Cir. 2010)
  The panel used Gagnon both for the definition of “clear error” and, separately, for the proposition that appellate fees may be awarded in FLSA cases when the appellate court deems them appropriate—emphasizing discretion rather than entitlement.

B. Lodestar adjustment and Johnson-factor application in the Fifth Circuit

• Gurule v. Land Guardian, Inc., 912 F.3d 252 (5th Cir. 2018)
  Gurule underwrote two key ideas: (1) district courts possess “leeway in adjusting the lodestar,” and (2) their “superior understanding of the litigation” warrants deference. The panel relied on this deference to reject both parties’ competing narratives that the district court’s number was too high or too low.
• Rodney v. Elliott Security Solutions, L.L.C., 853 F. App'x 922 (5th Cir. 2021)
  Rodney was cited for a specific Johnson factor application: how “preclusion from other employment” may be considered in adjusting the lodestar. The panel approved the district court’s handling of this factor as consistent with circuit practice.
• Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974)
  Although not cited in the per curiam portion, Johnson is central to the district court’s methodology as described by the panel (“considered the Johnson factors”). The panel accepted the district court’s use of proportionality as a way to approximate the magnitude of reduction suggested by those factors, reflecting an institutional tolerance for pragmatic (rather than formulaic) adjustments.

C. Appellate attorneys’ fees in fee-only appeals

• Cruz v. Maverick Cnty., 957 F.3d 563 (5th Cir. 2020) and Gagnon v. United Technisource, Inc., 607 F.3d 1036 (5th Cir. 2010)
  The panel treated these as establishing permissive authority: prevailing FLSA plaintiffs may receive appellate fees when appropriate, not as an automatic add-on.
• Cooper v. Asplundh Tree Expert Co., 836 F.2d 1544 (10th Cir. 1988)
  Used by analogy to justify denial of appellate fees where the cross-appealing plaintiff did not prevail on its cross-appeal; the Fifth Circuit extended that reasoning to a posture in which both sides appealed and neither improved its position.
• Saglimbene v. Venture Indus. Corp., 895 F.2d 1414, 1990 WL 10709 (6th Cir. 1990)
  Cited for the pragmatic consideration that when appellate issues are not particularly complex—here, “straightforward questions” about fee and cost propriety—an additional appellate fee award is not warranted.

D. Concurrence authorities (contextual rather than controlling)

Judge Oldham’s concurrence catalogued historical and doctrinal sources to criticize modern fee-shifting indeterminacy, including: Arcambel v. Wiseman, Whittemore v. Cutter, Boston Mfg. Co. v. Fiske, The Appollon, Internal Imp. Fund Trustees v. Greenough, and modern fee cases like Hensley v. Eckerhart, Perdue v. Kenny A. ex rel. Winn, and Utah Highway Patrol Ass'n v. Am. Atheists, Inc. (as well as examples like Shelby County v. Holder and Gun Owners of Am., Inc. v. Bondi). These citations did not alter the outcome but framed a critique: Fifth Circuit doctrine purports to use a “lodestar” while retaining a highly discretionary Johnson-factor overlay.

3.2 Legal Reasoning

The per curiam opinion is a textbook exercise in appellate restraint:

• Deference to factfinding: The panel found no clear error in the district court’s determinations of reasonable hours and rates.
• Deference to lodestar adjustment: The panel accepted that the district court considered the Johnson factors and used proportionality to calibrate a reduction in the lodestar. It specifically approved the district court’s treatment of the “preclusion from other employment” factor as consistent with Rodney and Gurule.
• Costs limited to statutory categories: The district court reduced costs by allowing only categories “expressly permitted” under 28 U.S.C. § 1920, and the panel found no abuse of discretion in that approach.
• No appellate fees as a matter of discretion: Even assuming plaintiffs were “prevailing” in some abstract sense, the panel held appellate fees were not “appropriate” given (i) both appeals failed and (ii) the appeal concerned only fee/cost mechanics rather than merits.

3.3 Impact

• Reinforces district-court discretion in FLSA fee disputes: The decision signals that when a district court makes a detailed record, applies Johnson-factor considerations, and explains reductions, the Fifth Circuit will be reluctant to second-guess the final number—even where the gap between request and award is large.
• Encourages careful cost-itemization under § 1920: By affirming a sharp reduction to enumerated cost categories, the opinion reinforces that parties seeking costs should expect strict statutory gatekeeping rather than an equitable, open-ended reimbursement model.
• Appellate-fee requests face headwinds in fee-only, non-complex cross-appeals: Parties should not assume that litigating fee amounts on appeal will itself be compensated; the court emphasized “appropriateness,” lack of success, and lack of complexity.
• Doctrinal pressure point (from the concurrence): Judge Oldham’s concurrence adds to a growing internal critique that Fifth Circuit “lodestar” practice is conceptually untethered and unpredictably discretionary due to the Johnson factors. While not precedential, it may be cited by future litigants urging doctrinal simplification or en banc reconsideration.

4. Complex Concepts Simplified

• FLSA collective action: A mechanism allowing similarly situated employees to litigate wage claims together, typically requiring workers to “opt in.”
• Fee-shifting: A statutory exception to the “American rule” (each side pays its own lawyers) requiring the losing defendant to pay the prevailing plaintiff’s “reasonable” attorneys’ fees (here, under 29 U.S.C. § 216(b)).
• Lodestar: A fee-calculation starting point typically computed as reasonable hours × reasonable hourly rate, sometimes adjusted upward or downward based on case-specific considerations.
• Johnson factors: The Fifth Circuit’s twelve considerations (time/labor, difficulty, skill, preclusion, customary fee, etc.) used to evaluate whether the lodestar should be adjusted. The concurrence criticizes these as subjective and indeterminate, but the panel treats them as binding circuit method.
• Taxable costs under 28 U.S.C. § 1920: Only certain litigation expenses (e.g., specified fees for transcripts, printing, witnesses) are recoverable as “costs” from the other side; many out-of-pocket litigation expenses are not taxable unless authorized elsewhere.
• Appellate attorneys’ fees: Additional fees for work done on appeal; in the Fifth Circuit’s FLSA practice, they are discretionary (“when appropriate”), not automatic.

5. Conclusion

Kunze v. Baylor is less about redefining FLSA rights than about institutional roles in fee litigation. The Fifth Circuit reaffirmed that (1) detailed district-court reasoning on lodestar and Johnson-factor adjustments will be upheld absent clear error or legal missteps, (2) recoverable costs are tightly constrained by 28 U.S.C. § 1920, and (3) appellate fees in FLSA cases depend on appropriateness—particularly success on appeal and issue complexity. Judge Oldham’s concurrence, meanwhile, underscores a live fault line: whether Fifth Circuit fee doctrine meaningfully disciplines discretion or perpetuates uncertainty under the banner of “lodestar.”