FLSA Attorneys' Fees Questions Clarified: Tenth Circuit

Practical Law Legal Update 1-578-9366 (Approx. 6 pages)

FLSA Attorneys' Fees Questions Clarified: Tenth Circuit

by Practical Law Labor & Employment

Background

Tyson Foods, Inc. (Tyson), a food production company, employed plaintiff workers at a production facility in Kansas. Before and after each shift, employees would put on and remove required clothing and equipment. The employees were paid separately for:

Gang time, which is time spent working on the production line.
K-Code time, involving activity often referred to as donning and doffing, which is time spent on pre- and post-shift activities, such as:
- putting on and taking off protective clothes and equipment; and
- walking to and from work stations.

The K-Code, implemented in 1998, initially allocated four minutes and applied to only select employees. Tyson increased the amount of K-Code minutes to:

Seven minutes in 2007.
20-22 minutes in 2010.

Employees sued Tyson, alleging insufficient compensation for K-Code time under the:

FLSA.
Kansas Wage Protection Act (KWPA).

The district court certified the matter as a collective action under the FLSA and a class action under the KWPA. A jury found that the employees had been under-compensated for their pre- and post-shift activity, awarding damages of $166,345 under the FLSA and $336,666 under the KWPA. The district court entered judgment for the employees.

Tyson then moved for judgment as a matter of law, arguing that:

Evidence did not support the verdict.
The district court should have decertified the class and collective actions.

The district court denied Tyson's motion, holding that the plaintiffs:

Presented sufficient evidence to support the verdict.
Satisfied the legal requirements for certification as class and collective actions.

The plaintiffs filed a motion for attorneys' fees and costs. Tyson opposed the motion and moved to compel production of counsel's timekeeping records. The district court:

Denied the motion.
Reviewed the records in camera.
Awarded the plaintiffs $3,389,207.41 in attorneys' fees.

Tyson appealed to the Tenth Circuit:

Challenging the denial of its motion for judgment as a matter of law.
Arguing that the fee award was excessive.

Outcome

The Tenth Circuit affirmed the district court's decision, holding that:

The plaintiffs presented sufficient evidence that they were under-compensated by Tyson.
The district court acted within its discretion in setting the fee award.

In finding that the plaintiffs presented sufficient evidence that Tyson did not properly compensate them, the Tenth Circuit found that:

A jury could have reasonably inferred class-wide liability. Tyson's own study showed that its employees averaged 29 minutes per shift for which they were not paid. To determine how many of those minutes were spent on pre- and post-shift work activities, the jury could rely on the:
- testimony of employees who said they spent 5-12 minutes per shift putting on and removing protective clothing and walking to and from work stations;
- testimony of an expert, who observed that employees averaged 20.85 minutes on pre- and post-shift activities; and
- evidence that Tyson increased its K-Code minutes twice in recent years, despite the pre- and post-shift job responsibilities remaining the same. This could be reasonably perceived as Tyson's recognition that it had previously underestimated the time required for pre- and post-shift activities.
A jury could have reasonably inferred that Tyson under-compensated each individual class member because:
- once the district court ordered certification, the plaintiffs were not required to individualize proof of under-compensation;
- the jury could rely on representative evidence to determine class-wide liability, since Tyson did not record the actual time employees spent on pre- and post-shift activities; and
- the cases Tyson relied on involved class certification, an issue which Tyson did not appeal to this court.
Tyson's argument that the jury awarded damages to some class members who were already fully compensated should be rejected because:
- evidence supported a finding of under-compensation for each class member, which allowed the jury to calculate damages class-wide; and
- Tyson's speculation about how the jury calculated damages was improper because the award was within the range of evidence.

Concerning Tyson's challenges to the attorneys' fees awarded to the plaintiffs, the Tenth Circuit held that the district court :

Acted within its discretion by denying Tyson's motion to compel production of itemized time records for the plaintiffs' counsel.
Did not abuse its discretion by allowing the plaintiffs to recover attorneys' fees for time spent on state claims and unsuccessful federal claims.
Acted within its discretion by awarding a fee award that substantially exceeded the award of damages.

In finding that the district court acted within its discretion by denying Tyson's motion to compel production of itemized time records for the plaintiffs' counsel, the Tenth Circuit found that:

The district court created a procedure in which it:
- reviewed the records in camera;
- allowed each side to depose someone familiar with the adversary's billing; and
- ordered each side to disclose the billing rates of and time incurred by counsel.
This procedure was created because Tyson was involved in a similar compensation suit at another facility, and:
- the other suit had not been tried at the time of that attorneys' fees were sought in the present matter;
- the plaintiffs' attorneys feared that legal strategies would be revealed if itemized time records in the present case were produced; and
- the district court wanted to create a procedure that would avoid the risk involved with producing the itemized records.

In finding that the district court did not abuse its discretion by allowing the plaintiffs to recover attorneys' fees for time spent on state claims and unsuccessful federal claims, the Tenth Circuit noted that:

Plaintiffs were successful on their claim for failure to pay for pre- and post-shift activities, but were unsuccessful on claims regarding:
- failure to pay for meal times; and
- failure to pay for time in rest breaks.
In a lawsuit containing related claims, plaintiffs who are awarded relief should not have attorneys' fees reduced just because the district court did not adopt all contentions raised by plaintiffs (Hensley v. Eckerhart, 461 U.S. 424, 440 (1983)).
The district court could reasonably infer a relation between the successful federal claims and the state claims and unsuccessful federal claims, because:
- all were factually related; and
- all arose under the issue of Tyson's alleged failure to pay for the time spent putting on and taking off protective clothing and equipment.
The successful federal claim and the KWPA claim can be seen as interrelated because the jury's function in both claims was to determine whether the plaintiffs were not properly compensated under the FLSA.
The successful federal claim and the unsuccessful meal time claim can be seen as interrelated because the meal time claim involved getting in and out of the protective clothing and walking to and from the production line during the meal period, while the successful claim involved the same issue during the pre- and post-shift period.
The successful federal claim and the unsuccessful break time claim can be seen as interrelated because the plaintiffs alleged that Tyson stopped paying for breaks once the K-Code minutes for pre- and post-shift activities were increased.
The issue before the district court was only whether the claims were interrelated, so it did not matter whether there were also differences between the claims (Hampton v. Dillard Dep't Stores, Inc., 247 F.3d 1091, 1120 (10th Cir. 2001)).

In finding that the district court acted within its discretion by awarding a fee award that substantially exceeded the award of damages, the Tenth Circuit held that:

While attorneys' fees should vary with the degree of success obtained, the district court has discretion to make that judgment (Hensley, 461 U.S. at 435-437).
Attorneys' fees do not need to be proportionate to the damages awarded (Riverside v. Rivera, 477 U.S. 561, 576 (1986)).

Practical Implications

Attorneys' fees do not have to be proportional to damages awarded. The district court has discretion to judge whether the attorneys' fees should match the degree of success in the case. If a plaintiff's successful federal claim is related to a state claim or other unsuccessful federal claim, a substantial award of attorneys' fees should not be reduced just because not all claims were successful.

Based on the Tenth Circuit's affirmation of the district court's holding, employers should be reminded of their obligation to pay their workers for all work performed, including pre- and post-shift activities, and should maintain clear and consistent guidelines on how employees are to be paid for that time.

FLSA Attorneys' Fees Questions Clarified: Tenth Circuit | Practical Law