Dissent Found That Most Of Counsel’s Efforts Were Trivial On Wage Statement Claim, With Most Of Fees Expended On An Unsuccessful Meal/Rest Break Claim.
Just to show you how class actions producing a lack of real-life benefits draw very different judicial reactions, one needs to go no farther than Ebo v. The TJX Companies, Inc., Case No. B285404 (2d Dist., Div. 3 June 28, 2019) (unpublished).
There, a former employee/putative class representative sued clothing retailer TJ Maxx/Marshalls for meal/rest break alleged violations and failure to provide accurate itemized wage statements. Class certification was denied on the meal/rest break claims, but certification on the wage statement claim was granted although limited to non-exempt employees of Marshalls. Ultimately, with the help of a settlement judgment, the action was settled by which the defense agreed to a “clear sailing” provision to not challenge an $85,000 fee award to class counsel, given that the class counsel lodestar was $588,650 (obviously, quite a bit on the meal/rest break claims). The trial court preliminarily approved the settlement agreement, but soon changed courses when the final fee approval hearing came to bat.
Based on the claims experience, where no class member could prove any injury from the wage statement claim, the lower court thought there was zero value to the settlement and only awarded $5,886.50 in fees, a 99% reduction of the $588,650 lodestar.
Plaintiff appealed and, based on a 2-1 opinion, was granted another shot at it. The majority determined there was value in the settlement, given that the defense changed its wage statement policies. It also believed that the final approval fee reduction was contradictory of the prior preliminary approval determination finding the settlement was in good faith and reasonable.
Justice Egerton dissented and would have affirmed the fee award. He observed that a lot of the lodestar time was consumed on the unsuccessful meal/rest break claims. If one did some math on the amounts of the lodestar devoted to the wage statement claim, they supported what the trial court did in awarding fees, according to the dissenting justice. Here are his ending thoughts: “But when courts reward lawyers who file class actions with little or no merit by awarding tens of thousands of dollars in attorney fees, the result will be more class actions with little or no merit. The public will begin to view class actions with skepticism and cynicism. Here, ultimately, the individuals who will pay the $92,500 Ebo and Van Vleck seek [i.e., fees for class counsel and a $7,500 enhancement fee for the class representative] are Marshalls shoppers—the teen buying a dress for the school dance, the single mother outfitting her three children for Easter.”
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