Most wage-hour class actions settle, usually with the lead plaintiff getting an extra sum of money for leading the “good fight.” In any such action, the Judge has to approve the settlement. Well, sometimes a Judge does not like what is in the settlement and will reject it. That is exactly what has happened in a Pennsylvania case. The federal judge has declined to approve a settlement between a former Assistant Manager and his class, who had sued an auto repair shop. The Court found that the proposed settlement was too generous to the named plaintiff and, more tellingly, his attorneys. The case is entitled Hoover et al. v. Mid-Atlantic Lubes Inc. et al, filed in federal court in the Eastern District of Pennsylvania.
The Judge found that the proposed $6,000 incentive award for the named plaintiff, in addition to his money from the actual settlement, would see him receive the amount of the $15,000, which was deemed excessive. The Court also found the $175,512 requested by his counsel for his fees was also excessive. As the Court aptly put it, “the fee award named plaintiff’s counsel seeks is almost 12 times greater than the amount the opt-in collective will receive in total. In these circumstances, I cannot preliminarily approve the settlement.”
The employees alleged that the Company denied proper compensation by throwing out time records and/or editing time entries to reduce or remove hours. The Company also allegedly ordered employees to clock out when they were not assisting customers, although they were required to stay in the store.
The parties sought approval of the settlement in January; every potential class member was going to receive compensation for hours worked but uncompensated. A settlement fund of 15,000 had been established. The class included customer service technicians and assistant managers who worked at the store in Warminster, PA, from January 2014-January 2016.
Counsel for the named plaintiff contended that the $6,000 incentive award requested for Mr. Hoover was fair, as he was actively involved in going to judicial proceedings and court conferences. He also agreed not to seek employment with the Company and asserted that should be worth something. The Judge disagreed and dubbed the incentive award “excessive and unduly preferential.”
The Takeaway
Plaintiff’s counsel stated that, “the parties have worked amicably with one another from the outset of this litigation and we look forward to continuing to work with the defendants to consummate a mutually agreeable resolution.” To that, I say that more reasonableness in the demand for fees would be a good way to work together amicably. From my experience in these matters as an employer’s attorney, plaintiff counsel fee demands (especially the opening number) often seem disproportionate to the amount of work I believe (reasonably) should have gone into the case.