Federal Court Dramatically Reduces Attorney-Fee Award to Plaintiffs in FLSA Collective Action Against Chipotle

The United States District Court for the District of Minnesota has dramatically cut an attorney-fee request in a wage-and-hour collective action against Chipotle Mexican Grill Inc. from $3.2 million to $600,000, finding the original amount “excessive” in light of the relatively small $62,000 recovery and straightforward nature of the case. Harris et al. v. Chipotle Mexican Grill Inc., No. 13-CV-1719 (SRN/SER), 2018 WL 617972 (D. Minn. Jan. 29, 2018).

The 81 percent fee reduction marks the end of an almost five-year saga, which began in 2013 as a nationwide putative collective action by employees Marcus Harris and Julius Caldwell. Through the action, Harris and other named plaintiffs, who were employed as hourly workers at Chipotle’s Crystal, Minnesota, restaurant sought unpaid straight time and overtime wages based on allegations that Chipotle forced its non-exempt employees to perform off-the-clock work, 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.

On October 23, 2013, plaintiffs moved to conditionally certify a nationwide collective, which, according to Chipotle, could have encompassed “hundreds of thousands” of current and former employees.¹  Although a federal magistrate judge initially recommended the conditional certification of a nationwide FLSA collective of closing-shift employees, the court ultimately rejected the recommendation, dramatically narrowing the scope of the collective to just 26 named plaintiffs who worked at Chipotle’s Crystal, Minnesota, restaurant.²  Plaintiffs subsequently moved to certify the court’s conditional certification order for interlocutory appeal, which the court denied.³

In December 2016, Chipotle moved to decertify the FLSA collective, and also affirmatively moved to deny certification of plaintiffs’ state law wage-and-hour claims. Plaintiffs voluntarily dismissed their state law claims, thus mooting the motion to deny Rule 23 certification. Then, on June 12, 2017, the court denied Chipotle’s decertification motion.⁴

Following the denial of the decertification motion, the parties settled the entire action for $62,000. Plaintiffs then filed a motion seeking a total of $3,236,368.50 in attorneys’ fees and $59,942.86 in costs. Chipotle opposed the fee request, arguing that the request should be substantially reduced because: (1) the legal questions in the action were not difficult; (2) plaintiffs’ counsel were not precluded from other employment; (3) the fees were excessive in light of the amount of damages at stake and the results obtained; (4) the fees were inconsistent with awards in similar cases; and (5) plaintiffs’ counsel were unsuccessful as a whole given the failed efforts to certify a national collective.

The court agreed. While acknowledging that courts should not place undue emphasis on the proportionality of the amount recovered in an FLSA action relative to the amount in controversy, the court found that the ratio of the attorneys’ fees requested to the amount recovered vastly outstripped the disparity in other similar cases—pointing specifically to a case where plaintiffs recovered $3.2 million in attorneys’ fees after obtaining $533,000 in damages.

Accordingly, the court applied a downward reduction to plaintiffs’ request, taking into account (1) the relatively straightforward nature of the legal issues; (2) significantly lower awards in similar cases; (3) plaintiffs’ unsuccessful certification efforts; and (4) the disproportionate relationship between the amount of damages obtained and the fee request.

Although the result reached by the court in Harris is not surprising, it nevertheless underscores the continued importance of proportionality in FLSA fee requests. To be sure, courts will entertain and grant fee requests that exceed the damages recovered by employees to ensure continued access to the courts in cases with relatively small amounts in controversy. Harris, however, serves as a reminder that this principle is not a carte blanche to plaintiffs, and that lopsided fee requests in cases where the amount recovered is small and the class size vastly reduced could be subject to significant reduction.