S.D.N.Y.: Notwithstanding Defendants’ Disclaimer Of Liability, FLSA Plaintiffs That Accepted OJ Are “Prevailing Party”; Entitled To Reasonable Attorneys’ Fees And Costs

Kahlil v. Original Old Homestead Restaurant, Inc.

Plaintiffs moved for attorneys’ fees and costs following their acceptance of Defendants’ offer of judgment.  The Defendants argued there was no fee entitlement, because their offer contained a disclaimer of liability.  Rejecting this argument, the Court awarded Plaintiffs’ attorneys reasonable attorneys fees and costs.

The Court highlighted the following procedural history:

“Plaintiffs Sayed Kahlil, Wayne Walker, Mohamed Elmahdy and Brian Lahoff were employed as waiters at defendant The Original Old Homestead Restaurant. On January 30, 2007, plaintiffs filed a complaint to resolve wage and hour disputes arising under section 216(b) of the Fair Labor Standards Act of 1938 (“FLSA”) and section 198 of the New York State Labor Law (“NYLL”). 29 U.S.C. § 216(b) (2008); N.Y. Lab. Law § 198 (McKinney 2009). Plaintiffs were represented in this matter by Louis Pechman, a partner at Berke-Weiss & Pechman LLP (“BWP”), and Jaime Duguay, an associate at the same firm. On April 29, 2008, mid-way through the discovery process, defendants submitted an offer of judgment in the amount of $36,000, exclusive of attorneys’ fees, pursuant to Rule 68 of the Federal Rules of Civil Procedure. Plaintiffs accepted the offer of judgment on May 8, 2008, and judgment was entered by the Clerk on May 30, 2008. On June 13, 2008, plaintiffs filed a Motion for Attorneys’ Fees and Costs, pursuant to FLSA § 216(b) and NYLL § 198. Plaintiffs seek $119,737.15 to compensate Pechman and Duguay for labor and costs incurred up to the filing of the motion. Defendants oppose the award of attorneys’ fees and costs on the grounds that plaintiffs did not prevail in the foregoing litigation. In the alternative, defendants contend that the requested fee award should be reduced in light of Pechman’s excessively high hourly rate, the limited nature of plaintiffs’ success, the vagueness of BWP’s time entries, BWP’s small size, excessive hours, billing of clerical tasks at attorney rates, and billing of work completed prior to the filing of the complaint.”

The Court then determined that Plaintiffs were the “prevailing party” as defined by the FLSA:

In an action pursuant to the FLSA, a “prevailing party” must be awarded reasonable attorneys’ fees and costs: “The Court in such action shall … allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.” 29 U.S.C. § 216(b) (emphasis added). Likewise, the NYLL requires that “[i]n any action … in which the employee prevails, the court shall allow such employee reasonable attorney’s fees ….“ § 198(1-a) (emphasis added).

Plaintiffs are the prevailing party for the purposes of the FLSA and NYLL “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 (1983) (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st Cir.1978)). Likewise, to qualify as a prevailing party, a plaintiff must demonstrate a change in the legal relationship between itself and the defendant arising from the resolution of the lawsuit. Texas State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792 (1989).

The judgment in this case suffices to establish plaintiffs as the prevailing party under the FLSA and NYLL. 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.” Maher v. Gagne, 448 U.S. 122, 129 (1980). Defendants contend that the settlement is insufficient to render plaintiffs the prevailing party because the complaint sought monetary, declaratory, and equitable relief, while the offer of judgment provided only monetary relief. The Court finds defendants’ argument unpersuasive. Plaintiffs surely obtained some of the relief sought, and no court in this circuit has indicated that relief obtained in settlement must exactly match relief sought in the complaint. See Lyte v. Sara Lee Corp., 950 F.2d. 101, 104 (2d Cir.1991) (holding that a plaintiff may be considered a prevailing party if the relief obtained through settlement is of the “same general type” as relief requested in the complaint); Koster v. Perales, 903 F.2d 131, 134 (2d Cir.1990) (“A plaintiff may be considered a prevailing party even though the relief ultimately obtained is not identical to the relief demanded in the complaint”); Texas State Teachers Ass’n., 489 U.S. at 791-92 (indicating that a plaintiff’s receipt of some of the benefit sought is enough to “cross the threshold to a fee award of some kind”).

The Court also finds unpersuasive defendants’ argument that the disclaimer of liability in the offer of judgment indicates that the settlement did not change the legal relationship between the parties, and therefore that plaintiffs are not the prevailing party. It is not necessary for a defendant to admit liability in order for a plaintiff to be designated as the prevailing party. In Buckhannon, the Supreme Court indicated that a consent judgment without an admission of liability by the defendant “[is] nonetheless … a court-ordered ‘chang[e][in] the legal relationship between [the plaintiff] and the defendant.’ “ 532 U.S. at 604, citing Texas State Teachers Ass’n., 489 U.S. at 792. Further, the Supreme Court in Maher v. Gagne upheld an award of attorneys’ fees based on a settlement agreement containing a disclaimer of liability similar to the one in defendants’ offer of judgment. See 448 U.S. at 126 n. 8. The Court therefore finds that plaintiffs are the prevailing party, and that they are entitled to attorneys’ fees and costs under the FLSA and NYLL.”

Thus, the Court calculated a reasonable attorneys fee and costs and awarded same to Plaintiffs’ counsel.

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