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Harris v. Chipotle Mexican Grill, Inc.

United States District Court, D. Minnesota

January 29, 2018

Marcus Harris, Julius Caldwell, Demarkus Hobbs, and Dana Evenson, on behalf of themselves and all others, similarly situated, Plaintiffs,
v.
Chipotle Mexican Grill, Inc., Defendant. DeShandre Woodards, on behalf of himself and all others similarly situated, Plaintiff,
v.
Chipotle Mexican Grill, Inc., Defendant. Firm/Attorney(s)/ Paralegal(s) Lodestar Before 10% Reduction 10% Reduction Final Lodestar Attorney Paralegal Title Firm Yrs of Exp Rate Per Hr Time Harris Lodestar: Harris Time Wood-ards Lode-star: Woodards TOTAL 6045.95 $2, 931, 716.75 320.8 $160, 858.50

          Adam S. Levy, Law Office of Adam S. Levy LLC, Andrew C. Quisenberry and Jere Kyle Bachus, Bachus & Schanker, LLC, Kent M. Williams, Williams Law Firm, Kevin E. Giebel, Giebel and Associates, LLC, Michael E. Jacobs and Thomas M. Hnasko, Hinkle Shanor LLP, and Robert Joseph Gralewski, Jr., Kirby McInerney LLP, for Plaintiffs.

          Adam M. Royval, Allison J. Dodd, John K. Shunk, Louis M. Grossman, Scott L. Evans, and Spencer Kontnik, Messner Reeves LLP, Jeffrey Sullivan Gleason, Robins Kaplan LLP, and Jennifer M. Robbins, Madel PA, for Defendants.

          MEMORANDUM OPINION AND ORDER

          SUSAN RICHARD NELSON, UNITED STATES DISTRICT COURT JUDGE

         This matter is before the Court on Plaintiffs' Motion for Attorneys' Fees and Expenses, and for Authorization to Deduct Service Awards from an Award of Attorneys' Fees and/or Expenses [Doc. No. 446] and the Joint Motion for Approval of Settlement and to Dismiss Action with Prejudice [Doc. No. 453].[1] For the reasons stated below, Plaintiffs' motion is granted in part and denied in part, and the parties' joint motion is granted.

         I. BACKGROUND

         The facts of these cases are well documented in the Court's September 9, 2014 Order [Doc. No. 101], granting in part and denying in part Plaintiffs' Motion to Certify the Class, and the June 12, 2017 Order denying Defendant's Motion to Decertify the Class, and are incorporated herein by reference.

         This litigation began in June 2013, when Dana Evenson and DeMarkus Hobbs-Named Plaintiffs in the Harris action-filed suit against Defendant Chipotle Mexican Grill, Inc. (“Chipotle”) in the United States District Court for the District of Colorado. (See Shunk Decl. ¶ 14 [Doc. No. 471].) In July 2013, Marcus Harris and Julius Caldwell filed a similar suit against Chipotle in this District, asserting claims on behalf of themselves and all others similarly situated, pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219, and the Minnesota Fair Labor Standards Act, Minn. Stat. §§ 177.21-177.35. (See Consolidated Am. Class Action Compl. [Doc. No. 31] (“Am. Compl.”) ¶ 1.) After the Colorado action was transferred to Minnesota, the Colorado plaintiffs joined Harris and Caldwell as the Named Plaintiffs in the Harris action. (See id.)

         The Named Plaintiffs were all hourly employees at the Chipotle restaurant in Crystal, Minnesota (“the Crystal Restaurant”). (See Supp'l Harris Decl. [Doc. No. 64] ¶¶ 2-3; Supp'l Caldwell Decl. [Doc. No. 63] ¶ 2; Hobbs Decl. [Doc. No. 39] ¶¶ 3-5; Evenson Decl. [Doc. No. 40] ¶¶ 3-5; Gottlieb Decl. ¶¶ 20-23 [Doc. No. 50].) They generally alleged that Chipotle maintained a company-wide unwritten policy of requiring hourly-paid employees to work “off the clock” and without pay, and they sought to recover allegedly unpaid overtime compensation and other wages for themselves and other similarly situated employees. (See Am. Compl. ¶¶ 3-4.) Chipotle denied Plaintiffs' allegations. (See generally Answer to Am. Compl. [Doc. No. 45].)

         The parties engaged in protracted discovery and frequent motion practice. Plaintiffs contend that Chipotle “dragged its feet” in discovery, (Williams Decl. ¶ 23 [Doc. No. 450]), failing to produce responses to discovery propounded in December 2013 until September 2014, and failing to produce any further discovery until the Court issued a scheduling order in March 2015. (Id.) Even after that, they contend that Chipotle did not complete the majority of its document production until February 2016. (See id. ¶ 26.) Plaintiffs further assert that in contrast to their own narrow scope of discovery, Chipotle's discovery requests were unnecessarily wide-ranging, seeking written discovery of every member of the collective and noticing the depositions of 20 members. (See id. ¶¶ 27-28.) And as to Chipotle's responsive discovery, Plaintiffs assert that they were forced to cull through “tens of thousands of Chipotle documents to find about 130 that were the most relevant to the case.” (Pls.' Mem. Supp. Mot. for Attys' Fees (“Pls.' Mem.”) at 9 [Doc. No. 448].)

         Chipotle, however, asserts that it “engaged in discovery necessary to adequately defend against nationwide collectives and statewide classes encompassing potentially hundreds of thousands of plaintiffs and untold millions in damages.” (Def.'s Opp'n Mem. at 12 [Doc. No. 470.) It contends that it produced tens of thousands of documents at the request of Plaintiffs' counsel, “despite numerous warnings” from Chipotle of the high volume of documents. (See Shunk Decl. ¶ 39.) Chipotle also argues that before the Court limited the Harris collective to the Crystal Restaurant, Plaintiffs sought extensive discovery related to all hourly employees, spanning periods of several years. (See id.)

         The Harris Plaintiffs moved to conditionally certify the collective on October 23, 2013. (See Williams Decl. ¶ 12.) While the motion was pending, Chipotle conducted an internal investigation into the labor practices at the Crystal Restaurant. (See Shunk Decl. ¶ 13.) One of its Apprentice Managers acknowledged that he had required employees to work off the clock, leading to internal discipline. (See Williams Decl. ¶¶ 18, 44.) Chipotle also paid its then-current employees back wages. (Id.) Plaintiffs contend, however, that Chipotle made no effort to compensate former employees who had also worked off the clock. (See Pls.' Mem. at 7.)

         On April 10, 2014, Magistrate Judge Rau recommended the conditional certification of a nationwide collective of closing-shift employees. (See April 10, 2014 R&R at 33-34.) On September 9, 2014, this Court adopted the R&R in part, limiting the scope of the conditional collective to Chipotle's Crystal Restaurant.[2] (Sept. 9, 2014 Order at 21-22.) Plaintiffs moved for the certification of an interlocutory appeal of this ruling to the Eighth Circuit, (see Pls.' Mot. Interlocutory Appeal [Doc. No. 104], which the Court denied. (Nov. 14, 2014 Order [Doc. No. 128].) Ultimately, 26 additional employees joined the litigation. (See Pls.' Mem. at 7.)

         In October 2014, Plaintiff Woodards, a former Chipotle employee at its restaurant in Golden Valley, Minnesota, filed his complaint. (See Shunk Decl. ¶ 31.) Like the Named Plaintiffs in Harris, he initially sought to represent a nationwide collective. (Id.) In April 2016, Woodards filed an amended complaint, withdrawing any collective or class claims and pursuing an individual action under the FLSA and the Minnesota FLSA. (Woodards, 14-cv-4181 (SRN/SER), Am. Compl. ¶ 1 [Doc. No. 81].)

         In December 2016, Chipotle moved to decertify the Harris collective, (see Def.'s Mot. to Decertify [Doc. No. 244]), and also filed a motion, preemptively, to deny Rule 23 class certification on Plaintiffs' claims arising under Minnesota state law. (See Def.'s Mot. to Deny R. 23 Certification [Doc. No. 258].) Six days after the filing, Plaintiffs elected to dismiss their state law claims in Harris, rendering the Rule 23 motion moot. (See Pls.' Dec. 15, 2016 Letter at 1 [Doc. No. 389].) Chipotle asserts that this was the first time that Plaintiffs' counsel in Harris had indicated that they would not seek class certification under Rule 23, (Def.'s Opp'n Mem. at 10), although Plaintiffs state that they gave notice prior to the filing of Chipotle's Rule 23 motion. (See Pls.' Dec. 15, 2016 Letter at 1.) On June 12, 2017, the Court denied Chipotle's decertification motion. (See June 12, 2017 Order [Doc. No. 423].)

         Shortly before this matter was scheduled for trial, the parties reached a settlement. Under the terms of the settlement, Chipotle agreed to pay Plaintiff Woodards and the 27 members of the Harris collective the gross amount of $62, 000. (See Ex. 1 to Jt. Mot. to Approve Settlement ¶ 6 (Settlement Agmt.) [Doc. No. 455].) Plaintiffs acknowledge that “[t]his [amount] is more than double their total damages at issue in this case, and almost certainly better than any result the Plaintiffs could have obtained at trial.” (Pls.' Mem. at 2.)

         Pursuant to the terms of the settlement agreement-in which the parties agreed to submit the matter of attorneys' fees and costs to the Court, (see Ex. 1 to Jt. Mot. to Approve Settlement ¶ 6 (Settlement Agmt.))-and the fee-shifting provisions of the FLSA, Plaintiffs' counsel now seek a combined total award of attorneys' fees in the amount of $3, 236, 368.50, and costs in the amount of $59, 942.86, for their work in the two cases.[3] (Pls.' Mem. at 3.) Plaintiffs contend that they obtained an “exceptional” settlement-the result of extraordinary effort and enormous investment by their counsel. (Id. at 2-3; 13.) They note that had this matter gone to trial, and had Plaintiffs proven all of their closing shift damages using their expert's methodology, single damages for the Harris collective would have totaled only $20, 425.77, and $733.26 for Woodards. (See id. at 13.) Moreover, while enhanced doubling of damages are permitted under the law, Plaintiffs acknowledge that there was no guarantee of double damages in Harris. (Id.) Under the terms of the settlement agreement, however, Plaintiffs state that every member of the collective will receive more than double the amount of damages that they might have otherwise obtained at trial. (Id.)

         In addition to seeking an award of attorneys' fees, Plaintiffs also seek service awards for the Harris Named Plaintiffs. Specifically, they request $15, 000 each for Harris and Caldwell, $7, 500 for Evenson, and $5, 000 for Hobbs. (Id. at 4-5.)

         Although the parties jointly move for the approval of the settlement, Chipotle disputes the award of attorneys' fees. Chipotle argues that because the matter settled and it has never conceded liability, Plaintiffs cannot be considered “prevailing parties” eligible for a fee award under the FLSA. (Def.'s Opp'n Mem. at 19.) But even if the Court finds that Plaintiffs are eligible as prevailing parties, Chipotle argues that Plaintiffs' counsel is only entitled to a significantly reduced award. (Id. at 20-45.)

         Specifically, Chipotle argues that the hourly billing rates of Plaintiffs' counsel are unreasonable. (Id. at 45-46.) They propose that the attorneys' hourly billing rates be reduced to $450 for partners, $300 for associates, and $160 for paralegals. (Id.) In addition, Chipotle asserts that Plaintiffs' fee request should be reduced to offset unreasonable work, and further adjusted downward by 85% to reflect non-compensable work, resulting in a total award of attorneys' fees of $242, 548.47 for Harris and $11, 088.39 for Woodards. (Id. at 46.) Pursuant to its understanding that any service awards will be deducted from the Court's ultimate attorneys' fees award, Chipotle does not object to the proposed service awards to the Named Plaintiffs. (Id. at 45.) As to costs, Chipotle argues that Plaintiffs are entitled to no costs, (id. at 41), but if the Court finds otherwise, any award must be reduced by $35, 288.27. (Id. at 45.)

         II. DISCUSSION

         A. Approval of Settlement & Service Awards

         A district court may approve a FLSA settlement if it “represents a fair compromise of a bona fide wage and hour dispute.” See McInnis v. Ecolab Inc., No. 11-cv-2196 (SRN/JJK), 2012 WL 892187, at *2 (D. Minn. Feb. 17, 2012), adopted, 2012 WL 892192 (D. Minn. Mar. 15, 2012). In making that determination, courts consider whether the settlement “reflects a reasonable compromise over issues actually in dispute as employees may not waive their entitlement to minimum wage and overtime pay under the FLSA.” Netzel v. West Shore Group, Inc., No. 16-cv-2552 (RHK/LIB), 2017 WL 1906955, at * 2 (D. Minn. May 8, 2017), adopted, Doc. No. 36 (D. Minn. May 26, 2017).

         In addition, when determining the fairness and equity of the settlement terms, courts consider factors including: “(1) the stage of the litigation and the amount of discovery exchanges, (2) the experience of counsel, (3) the probability of the plaintiffs' success on the merits, (4) any overreaching by the employer in the settlement negotiations, and (5) whether the settlement is the product of arm's length negotiations between represented parties based on the merits of the case.” Id. (citing King v. Raineri Constr., LLC, No. 4:14-CV-1828 (CEJ), 2015 WL 631253, at *2 (E.D. Mo. Feb. 12, 2015)). Considering all of these factors, the Court is satisfied that the settlement here is for a bona fide wage and hour dispute, and is fair and equitable. The parties reached a settlement after extensive discovery. The settlement resulted from arm's length negotiations undertaken by experienced counsel on both sides. Accordingly, the Court approves the settlement.

         The Court likewise approves the proposed service awards of $15, 000 each for Harris and Caldwell, $7, 500 for Evenson, and $5, 000 for Hobbs. The actions of these Named Plaintiffs in leading the litigation and participating in discovery adequately support a finding that the service awards are warranted and reasonable. See Netzel, 2017 WL 1906955, at * 7 (citations omitted).

         B. Attorneys' Fees

         The FLSA provides for attorneys' fees and costs, stating, “The court . . . 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).

         1. Prevailing Party

         As noted, Chipotle argues that because the resolution of this matter resulted from a settlement in which Chipotle never conceded liability, Plaintiffs cannot be considered “prevailing parties” who are entitled to attorneys' fees. (See Def.'s Opp'n Mem. at 19-20.) The Court disagrees. Even where a FLSA dispute is resolved via settlement, courts have found that as long as the settlement affords the plaintiffs with some benefit, they are prevailing parties, and their attorneys are entitled to compensation for their reasonable fees and costs. See, e.g., Netzel, 2017 WL 1906955, at *8 (“The Court must assess the reasonableness of plaintiffs' attorney fees in a proposed FLSA settlement, even when the fee is negotiated in the settlement rather than through judicial determination.”) (citation omitted); Kahlil v. Original Old Homestead Restaurant, Inc., 657 F.Supp.2d 470, 474 (S.D.N.Y. 2009); (“Where, as here, plaintiffs obtained a favorable settlement, they are entitled to an award of attorneys' fees: ‘[t]he fact that [plaintiff] prevailed through a settlement rather than through litigation does not weaken [plaintiff's] claim to fees.'” (quoting Maher v. Gagne, 448 U.S. 122, 129 (1980)) (alteration in original); see also Stewart v. USA Tank Sales, No. 12-05136-CV-SW-DGK, 2016 WL 7206169, at *2-3 (W.D. Mo. Feb. 3, 2016) (stating, in a case in which the settlement provided for attorneys' fees, “because the [s]ettlement provides Plaintiffs with some benefit, they are the prevailing party and their attorneys are entitled to a reasonable fee.”); Zhou v. Wang's Rest., No. C 05-0279 PVT, 2007 WL 2298046, at *1 (N.D. Cal. Aug. 8, 2007) (finding, in a case involving the settlement of FLSA claims, that an award of reasonable attorneys' fees was mandatory).

         Thus, although Chipotle does not concede liability, its agreement to pay Plaintiffs $62, 000 in exchange for the release of the wage and hour claims provides “some benefit” to Plaintiffs. Accordingly, the Court finds that Plaintiffs are prevailing parties who are entitled to an award of reasonable attorneys' fees and costs under 29 U.S.C. § 216(b).

         2. Reasonableness

         The starting point for the determination of the amount of reasonable attorneys' fees involves calculating the lodestar, which provides an initial estimate of the value of the attorney's service. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). The lodestar is the product of the number of hours reasonably expended on the litigation multiplied by a reasonable hourly billing rate. Id.

         Plaintiffs here were represented by several law firms (collectively, “the Plaintiff Firms”). The Plaintiff Firms have applied an overall 10% reduction to their lodestar calculations “to account for any possible inefficiency that may have been missed as part of [the] [billing review] process, ” (Pls.' Mem. at 20), resulting in the following request for their work in the Harris action:

Firm/Attorney(s)/ Paralegal(s)
Lodestar Before 10% Reduction
10% Reduction
Final Lodestar

Williams Law Firm (Kent Williams)

$1, 872, 900.00
- $187, 290.00
$1, 658, 610.00

Law Office of Adam S. Levy, LLC (Adam Levy)

$731, 400.00
- $73, 140.00
$658, 260.00

Hinkle Shanor LLP (Thomas Hnasko, Michael E. Jacobs, Julie Sakura, Loren Foy, Sheryl McInnis, Sonya Mares)

$465, 705.00
- $46, 570.50
$419, 134.50

Bachus & Schanker, LLC

(Andrew Quisenberry, Darin Schanker, Karen O'Connor, Sam Scheurich, Steve Johnston, Ghandia Johnson, Chad Brockman)

$161, 665.00
- $16, 266.50
$145, 398.50

Giebel and Associates, LLC

(Kevin Giebel, Breanna Enerson)

$178, 680.00
- $17, 868.00
$160, 812.00

TOTALS

$3, 410, 440.00
- $341, 044.00
$3, 069, 396.00

(Williams Decl. ¶ 50 [Doc. No. 450].) [4]

         Similarly, the same firms present the following calculations for their work in the Woodards action, along with a 10% reduction:

Firm/Attorney(s)/ Paralegal(s)
Lodestar Before 10% Reduction
10% Reduction
Final Lodestar

Williams Law Firm (Kent Williams)

$108, 540.00
- $10, 854.00
$97, 686.00

Law Office of Adam S. Levy, LLC (Adam Levy)

$52, 380.00
- $5, 238.00
$47, 142.00

Hinkle Shanor LLP (Thomas Hnasko, Michael E. Jacobs, Julie Sakura, Loren Foy, Sheryl McInnis, Sonya Mares)

$7, 520.00
- $752.00
$6, 768.00

Bachus & Schanker, LLC

(Andrew Quisenberry, Darin Schanker, Karen O'Connor, Sam Scheurich, Steve Johnston, Ghandia Johnson, Chad Brockman)

$12, 825.00
- $1, 282.50
$11, 542.50

Giebel and Associates, LLC

(Kevin Giebel, Breanna Enerson)

$4, 260.00
- $426
$3, 834.00
TOTALS
$185, 525.00
- $18, 525.50
$166, 972.50

(Id. ¶ 51.)

         a. Reasonable Hourly Rate

         The reasonable hourly rate is the prevailing market rate in the relevant legal community for similar services by lawyers of comparable skills, experience and reputation. See Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984). In determining the reasonable hourly rate, “district courts may rely on their own experience and knowledge of prevailing market rates.” Hanig v. Lee, 415 F.3d 822, 825 (8th Cir. 2005). The party seeking a fee award is responsible for providing evidence of hours worked and the rate claimed. Wheeler v. Mo. Highway & Transp. Comm'n, 348 F.3d 744, 754 (8th Cir. 2003). In determining the reasonable hourly rate for the relevant legal community, courts typically consider the ordinary rate for similar work in the community in which the case is litigated. Emery v. Hunt, 272 F.3d 1042, 1048 (8th Cir. 2001).

         Attorney Kent Williams, based in Long Lake, Minnesota, was the lead attorney on these cases. (See Williams Decl. ¶¶ 52-55.) He is a solo practitioner who has litigated plaintiffs' class actions for over 26 years of his career. (Id. ΒΆΒΆ 2-6.) In addition to his declaration, Mr. Williams submitted billing records and ...


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