SIDNEY H. STEIN, District Judge.
Elizabeth Nicole Warin, J. Bruce Maffeo, Michael B. De Leeuw, Cozen O'Connor, James Leon Linsey, Linsey Law Firm PLLC, Melissa S. Woods, Meyer, Suozzi, English & Klein, P.C., Tara Lynn Jensen, Walter Michael Kane, Cary Kane LLP, New York, NY, for Plaintiffs.
Kathleen Marie Comfrey, NYC Law Department, Office of the Corporation Counsel, New York, NY, for Plaintiffs/Defendant.
Benjamin Eldridge Stockman, Corporation Counsel, office City of New York, New York, NY, for Defendant.
OPINION & ORDER
SIDNEY H. STEIN, District Judge.
I. Background
In March of this year, the Court approved as fair and reasonable the settlement of this employment discrimination action, which was brought on behalf of a collective of 5,213 individuals employed by the City of New York as School Safety Agents (SSAs), a predominantly female group. (See Dkt. No. 324.) Plaintiffs alleged that by paying them less than Special Officers (SOs), a predominantly male group of City employees who performed similar work, the City discriminated against them in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., the New York State Human Rights Law, N.Y. Exec. Law §§ 290 et seq. , and the Equal Pay Act, 29 U.S.C. §§ 206(d) et seq.
Plaintiffs agreed to settle all claims against the City in exchange for back pay awards ranging from $250 to $7,000 per plaintiff depending upon such factors as their dates and lengths of employment. (See Stipulation of Settlement, Dkt. No. 262–1 ¶ 23.) The parties stipulated and agreed that “the rates of pay for SSAs and SOs shall be equalized according [to] the provisions of Section 6 of the 2010–2018 Memorandum of Agreement” negotiated between the City and the Local 237, International Brotherhood of Teamsters (“the Union”), just prior to the settlement of this action. (Id. ¶ 22; 2010–2018 Memorandum
of Agreement ¶ 6, Ex. H to Decl. of James Linsey dated February 6, 2015.) The settlement agreement also provides for service awards of $18,000 for each named plaintiff. (Stipulation of Settlement ¶ 23(f).) The back pay awards total somewhat more than $32 million. (See Jnt. Mem. of Law in Supp. of Mot. for Prelim. Approval of a Class Action Settlement at 15; LLF Mem. of Law in Supp. of Mot. for Att'y Fees (“LLF Mem. in Supp.”) at 1, Dkt. No. 283–1.) The Court approved this settlement agreement as fair and reasonable on March 26, 2015. (See Dkt. No. 324.)
Plaintiffs' attorneys—the Linsey Law Firm, PLLC (“LLF”)—seek an award of attorney's fees as well as reimbursement of their costs. LLF requests that the Court order the City to pay statutory fees in the amount of $3,830,466 and statutory costs in the amount of $872,082 pursuant to the fee-shifting provision of the Fair Labor Standards Act (FLSA). (See LLF Mem. in Supp. at 1; LLF Updated Billing Summary (“Billing Summary”), Dkt. No. 320–2.) All parties—and the Court—agree that LLF is entitled to reasonable statutory attorney's fees. However, LLF then goes on to ask the Court to place the statutory fees it is entitled to into a “common settlement fund,” which, according to LLF, consists not only of the $32 million in back pay to plaintiffs provided for in the settlement agreement, but also of $43.3 million in accelerated future pay raises to SSAs that were negotiated between the Union and the City and embodied in the 2010–2018 Memorandum of Agreement. Out of that so-called “common fund,” LLF now seeks a total of $11.5 million in fees.
The City and the named plaintiffs—now represented by separate counsel—adamantly oppose LLF's request to be awarded a percentage of what LLF refers to as the “common fund.” The Court has reviewed LLF's request and finds that it is entitled to a reduced award of statutory fees and costs, but not to a percentage of plaintiffs' recovery.
II. Discussion
A. LLF is Entitled to Statutory Fees and Costs but is Not Entitled to a Percentage of Plaintiffs' Recovery
The FLSA contains the applicable fee-shifting provision for violations of the Equal Pay Act which provides as follows: “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.” 29 U.S.C. § 216(b). Plaintiffs are the prevailing party for the purposes of the statute “if they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit.” Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). Where plaintiffs obtain a favorable settlement in an
action brought pursuant to the FLSA, they constitute prevailing parties and are entitled to attorney's fees. “The fact that [plaintiffs] prevailed through a settlement rather than through litigation does not weaken [plaintiffs'] claim to fees.” Kahlil v. Original Old Homestead Rest., Inc., 657 F.Supp.2d 470, 474 (S.D.N.Y.2009) (quoting Maher v. Gagne, 448 U.S. 122, 129, 100 S.Ct. 2570, 65 L.Ed.2d 653 (1980)). The Court and the parties agree that plaintiffs are the prevailing party and LLF is therefore entitled to recover reasonable statutory attorney's fees and costs to be paid by the City.
As noted above, LLF argues that it should receive a percentage of what it refers to as the “common fund” in addition to reasonable statutory attorney's fees. For the reasons that follow, LLF's contention is unprecedented, unsupported and unavailing.
“From time immemorial it has been the rule in this country that litigants are expected to pay their own expenses, including their own attorneys' fees, to prosecute or defend a lawsuit.” Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 47 (2d Cir.2000) (citing Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975)). However, there are exceptions to this so-called “American Rule,” where instead of attorney's fees being paid pursuant to a fee agreement between a party and counsel, a court determines a fee award based on statutory requirements or equitable doctrines. These exceptions include fee-shifting statutes such as the FLSA, enacted in order to “encourag[e] the private prosecution of certain favored actions, by requiring defendants who have violated plaintiffs' rights to compensate plaintiffs for the costs they incurred to enforce those rights.” Florin v. Nationsbank of Georgia, N.A., 34 F.3d 560, 562–63 (7th Cir.1994) (citing County of Suffolk v. Long Island Lighting Co., 907 F.2d 1295, 1327 (2d Cir.1990)).
Another exception to the “American Rule” is the “common fund” doctrine, also known as the “equitable fund” doctrine, which LLF seeks to employ. This concept aims to correct the injustice that would result should lead plaintiffs in a class action be solely responsible for paying the entire class's attorney's fees after succeeding in creating a “common fund from which members of a class are compensated for a common injury inflicted on the class.” Goldberger, 209 F.3d at 47. The common fund doctrine states that “the attorneys whose efforts created the fund are entitled to a reasonable fee—set by the court—to be taken from the fund.” Id. All plaintiffs benefiting from the common fund thereby end up contributing to the cost of the lawsuit, “prevent[ing] unjust enrichment” which would occur if only lead plaintiffs were obligated to pay attorney's fees even though all class members shared in the proceeds of the settlement. Id.; see also Staton v. Boeing Co., 327 F.3d 938, 968 (9th Cir.2003).
An equitable doctrine such as the common fund doctrine is normally not invoked in cases such as this one where a defendant pays statutory attorney's fees and therefore “there is no inequity to redress because the defendant, rather than the plaintiffs, ultimately bore the entire cost of litigation.” U.S. ex rel. Bogart v. King Pharm., 493 F.3d 323, 331 (3d Cir.2007) (internal quotation marks omitted); see also Green v. City of New York, No. 05–CV–429, 2009 WL 3063059, at *7 (E.D.N.Y. Sept. 21, 2009) (where “there is nothing to preclude operation of the fee-shifting statutes,” there is “no apparent reason to grant equitable relief”). Although LLF claims that because statutory fees are the entitlement of plaintiffs, not
plaintiffs' counsel, it has “no means through which to recover a reasonable attorneys' fee other than the equitable doctrine,” the retainer agreement in this case specifically assigns any recovery of statutory attorney's fees that plaintiffs may receive to LLF. (See LLF Mem. in Supp. at 25–26; Retainer Agreement ¶ 8, Ex. A to Linsey Deck (Plaintiffs are obligated to “assign any statutory claim to attorney's fees to LLF”)). There is no need to invoke an equitable doctrine where, as here, the governing statute obligates the City to pay the reasonable statutory attorney's fees and costs ordered by the Court.
LLF is correct though, that there are cases brought pursuant to fee-shifting statutes where attorney's fees are awarded at least in part out of plaintiffs' recovery. Those cases, however, are distinguishable from this case in one of two ways. The first set of cases are typical common fund cases where “a settlement fund is created in exchange for release of the defendant's liability both for damages and for statutory attorneys' fees.” Skelton v. Gen. Motors Corp., 860 F.2d 250, 256 (7th Cir.1988); see also Florin, 34 F.3d at 563 (in common fund cases, “the defendant typically pays a specific sum ... in exchange for a release of its liability”). In those cases, statutory attorney's fees are not available because the plaintiffs have waived the defendant's liability for those fees in exchange for the settlement amount. The settlement funds therefore effectively contain attorney's fees. Accordingly, the common fund doctrine is employed to redress the inequity that would result should the lead plaintiffs be solely responsible for paying attorney's fees. See e.g., Florin, 34 F.3d at 564; Skelton, 860 F.2d at 256; In re Fine Paper Antitrust Litig., 751 F.2d 562, 582–83 (3d Cir.1984).
LLF asserts that this is also a case where the settlement agreement “releases Defendant from liability both for damages and for statutory attorneys' fees, making appropriate the use of equitable fund principals [sic].” (LLF Mem. in Supp. at 29.) This assertion is flatly contradicted by the language of the settlement agreement which states that plaintiffs release defendant from liability for “attorney's fees other than the fees and costs awarded by the Court.” (Stipulation of Settlement 46 (emphasis added).) In a transparent attempt to further support its mischaracterization of the settlement as creating a typical common fund, LLF requests that the Court order defendant to pay statutory attorney's fees into “the common settlement fund.” (LLF Mem. in Supp. at 1.) LLF urges the artificial creation by the Court of a common fund where none exists in order for it to claim a portion of plaintiffs' recovery in addition to statutory attorney's fees. The Court has no basis for doing so.
The second set of cases LLF cites in support of its efforts to obtain what is in essence a double recovery are cases where courts have honored contractual rights to percentages of recoveries. See e.g., Venegas v. Mitchell, 495 U.S. 82, 87, 110 S.Ct. 1679, 109 L.Ed.2d 74 (1990) (holding that plaintiff's counsel should recover the percentage of the recovery specified in the contingent-fee agreement because the fee-shifting provision of 42 U.S.C. § 1988 does not “limit civil rights plaintiffs' freedom to contract with their attorneys”); Brunson v. City of New York, No. 94 CIV. 4507, 2000 WL 1876910 (S.D.N.Y. Dec. 22, 2000) (allowing a portion of attorney's fees to be paid from plaintiffs' recovery where the settlement agreement provided that court-awarded fees in excess of $1 million would be paid from the settlement fund). In those cases, courts were simply holding plaintiffs to the terms of their contractual agreements.
Although LLF refers to the retainer agreement between LLF and named plaintiffs as “The Contingent Fee Agreement” and claims that it “provides for a flat 25% of the value of the recovery,” the document itself contains no such provision. (LLF Mem. in Supp. at 2 n. 5.) The retainer agreement provides LLF only the entitlement to apply to the Court for a fee of twenty-five percent of the settlement fund and states explicitly that plaintiffs may oppose such an application, which several of them have done. (See Retainer Agreement ¶ 4 (“[LLF] shall apply for the greater of (a) one quarter of the settlement fund or (b) LLF's full lodestar amount ... Clients will retain their rights ... to approve, oppose, or comment upon any application for reimbursement of costs and award of attorneys' fees.”))
LLF argues that disqualifying the use of the common fund doctrine in this action will discourage attorneys from bringing civil rights cases. Importantly, there is a “strong presumption” that statutory fees determined using the lodestar method are “sufficient to induce a capable attorney to undertake the representation of a meritorious civil rights case.” Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 552, 554, 130 S.Ct. 1662, 176 L.Ed.2d 494 (2010) (internal citation omitted). However, should attorneys require additional incentive to bring cases pursuant to fee-shifting statutes, they need only obtain contingent-fee agreements to be entitled to a percentage of the recovery. See e.g., Venegas, 495 U.S. at 87, 110 S.Ct. 1679. The Court is unpersuaded that, in this case, declining to enforce a nonexistent contingent-fee agreement and declining to create a common fund where none exists will have negative policy implications for the prosecution of civil rights cases.