In a recent decision, the Fifth Circuit reversed the award of attorney fees to a prevailing plaintiff. In Cervantes v. Cotter, the lower court severely reduced the plaintiff’s fee request by some 75% because the plaintiff’s success was, in the view of the trial court, small. The plaintiffs, noted the trial court, were only warded $409 in lost overtime payments. The district court rejected the plaintiffs’ claim for liquidated damages and their claim for retaliation. So, their recovery was just the $409. Yet, the plaintiffs’ attorneys sought $14,000 in attorney fees. The trial court considered that to be an “extraordinary” amount in light of the relief obtained.

But, the purpose of the attorney fee provision in the Fair Labor Standard Act is to to encourage attorneys to accept these small cases. No attorney would accept a case in which the hard, economic damages was a mere $409. And, as the Fifth Circuit noted on appeal, there are twelve factors in assessing attorney’s fees, not just the one factor involving success at trial. See the Fifth Circuit decision here.

The lower court’s decision is not well thought out. The Magistrate discussed the settlement offers and lack of counter-offers by the parties. The Magistrate then concluded that the plaintiff lawyers were “greedy” and the defense attorney was “penny-pinching.” It is an extraordinary decision. The district court ignored eleven of the twelve factors in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974). Johnson requires lower courts to look at twelve factors, including the success of the plaintiff, when it assesses a request for attorney’s fees.

The lower court in Cervantes looked just at one factor, the success of the plaintiffs. Then, it went beyond that and looked at the relative settlement success of the two parties. It mentioned one offer of $17,000 in attorney fees and a second offer of $22,000 in attorney fees. It noted the response by the employer of $210 in overtime pay and $1,000 in attorney fees. It almost seemed like the judge was annoyed at having to hear a small case when the parties could have easily settled the matter. I find that unfortunate. These “small” cases are quite large to those involved. The Fair Labor Standards Act is a federal law. If federal courts will not enforce federal laws, who will? In truth, these apparently small cases are not small, at all. These relatively small cases reflect a wider problem with many employers underpaying their employees and generally getting away with it. The Department of Labor can enforce the FLSA, but it rarely does. It is left to these “small” lawsuits to stand up for the little guy whose pay is being stolen by employers. If there is one plaintiff filing a case for a lost overtime of $210, then there are ten others who also suffered similar losses, but chose not to file suit. There was a time when I was working my way through college and law school. In those days, $210 was a very large amount to me indeed.

In effect, the trial court imposed some new requirement that appears to involve second-guessing settlement strategy. I think it was this that caught the eye of the Fifth Circuit. It vacated the trial court’s ruling in a per curiam, unpublished decision. “Per curiam” decisions are those which the court views as simple, routine, not needing extensive explanation. The higher court is saying this should be a simple issue. Courts cannot truly second-guess settlement strategy. There are just too many unknowns.

Well, Bill O’Reilly is out at Fox News. His show was cancelled after the settlements surfaced. I wrote about those settlements here. The news report refers to the settlements as allegations. But, when someone pays $13 million for five different accusations, it is more than mere allegations. See CNN news report. Persons do not pay that sort of money unless there is proof to back up such claims.

Of course, this only happened because the five different settlements were exposed. I assume his show would still be on the air if the New York Times had not exposed Mr. O’Reilly’s history of sexual harassment. And, what can we say when the President of the United States has expressed support for two sexual predators, Bill O’Reilly and Roger Ailes?

People in public life have to be careful about they say and do. Pres. Bill Clinton was sued by several women during the last couple of years of his administration. Pres. Trump appears headed toward those same troubled waters. During the campaign a former Apprentice contestant, Summer Zervos, accused Mr. Trump of groping her and assaulting her. The candidate denied it. Now, she has sued the soon-to-be President. Her attorney is the celebrity lawyer, Gloria Allred of Los Angeles. See CBS news report. Ms. Zervos says she will drop the lawsuit if Pres. Trump will simply acknowledge the truth of her claims. That does not seem likely. Mr. Trump enters office already a party to several lawsuits. It looks like his tally will only increase.

But, the President-Elect did settle his Trump University lawsuit. He agreed to pay the victims of his fraud $25 million. See CNN news report.

Not one, but two chefs backed out of agreements to open restaurants in Donald Trump’s Washington, D.C. hotel. I previously wrote about celebrity chef Jose Andres here. Also, Geoffrey Zakarian backed out of a similar deal. Donald Trump sued both. Both backed out after he disparaged Mexican immigrants. Both chefs claim they would have trouble hiring staff and attracting patrons after such remarks. Donald sued, as he often does. Mr. Trump is set to be deposed in Mr. Andres’ lawsuit next week. See CBS news report.

Both chefs have talked settlement with Mr. Trump. But, no agreement has been reached. The President-elect has tried to postpone the deposition. But, it is his lawsuit. He cannot file a lawsuit and then complain that the rules are not convenient for him.

Judges matter. The life experiences they bring to the bench matter. So, when I see a concurrence like the one written by Judge Jones of the Fifth Circuit, I become concerned. In Pineda v. JTCH Apartments, LLC, No. 15-10932 (5th Cir. 12/19/2016), the employee recovered some $5,000 in damages. Santiago Pineda was a maintenance worker for the apartments. He and his wife lived in the apartments. He sued to recover unpaid overtime. Three days after filing suit, the apartment owner evicted Mr. Pineda and his wife for nonpayment of rent. The eviction action sought repayment of the rent from Maria Pena, Mr. Pineda’s wife. After being evicted, Maria Pena joined the lawsuit and alleged retaliation. After a three day trial, the jury awarded the plaintiff $1400 in lost wages and $3700 for the retaliation claim. The judge awarded liquidated damages, which in effect doubled the lost wage award.

The judge then awarded the plaintiff’s attorney some $76,000 in attorney’s fees. The judge reduced the attorney fee request by 25% because, said the trial court, the amount sought was “grossly” disproportionate to the amount recovered.

Both parties appealed. The plaintiffs appealed because they believe the court should have allowed emotional damages. Many courts have allowed a claim for emotional distress damages under the Fair Labor Standards Act. This three-judge panel concluded there was no reason why the district court could not have done so. It found the lower court should have allowed a claim for emotional distress damages.

The defendant argued that the claim for attorney’s fees was too high. It claimed the plaintiff’s attorney did not settle the case when he could have. This is a claim unique to Texas state law, described as the “doctrine of excessive demand.” They also claimed the complaint was filed in bad faith. But, said the court, the defendant waived this argument by not bringing it before the trial court. The higher court then ordered the case be remanded to address the claim for emotional distress damages. But, cautioned the court, the attorney’s fees are already quite high. So, counsel should proceed expeditiously.

Judge Jones then dissented, accusing the plaintiff’s attorney of engaging in hardball tactics in freezing the bank account of the employer during the lawsuit. Judge Jones accused the plaintiff attorney of freezing the bank account ex parte – meaning it was done without notice to the defendant. She also claimed that testimony “implied” that Mr. Pineda may have sued for this “tiny” sum only because the apartment manager reported Mr. Pineda for possible child abuse. She described the attorney’s efforts as possible procedural abuse. My concern is that having done collections type legal work, I know that freezing bank accounts is exceedingly difficult. It is possible to freeze the account ex parte, but if so, one must provide notice to the defendant immediately. Too, this vase reflects the purpose of having a statute that allows for attorney fees. If there were no attorney’s fees available, then such smaller claims would not be pursued.

Too, I do not know how many maintenance workers Judge Jones has known throughout her lifetime, but at least to the maintenance workers I have known, $1400 is not a “tiny” sum. In truth, Judge Jones may have never spoken to an actual maintenance worker. Yes, a judge’s life experiences do matter.

As I review the Docket Sheet, I do not see anything out of the ordinary in this lawsuit. It was not over-worked in some way. Neither party seems to have filed unnecessary motions. The defendant did not seek dismissal or summary judgment. The reality is that even relatively small amounts require a great deal of attorney time. If there is a problem of some sort, it may be that the plaintiff did not accept the amount offered in settlement. But, that is not unusual. Judge Jones appears to be looking for issues with which to cast the plaintiff in a negative light.

 

Well, Donald Trump has decided to settle the case against him and Trump University. That is wise. It would look very bad for him to have this going on while he is trying to get his government together. I previously wrote about that lawsuit here. He had no choice really. That he would settle is a significant turn. According to the New York State Attorney General, he would not even offer small amounts to settle before he was elected President.

He agreed to settle these claims for $25 million. Trial was set for Monday, Nov. 28. They settled ten days before trial. Mr. Trump said he rarely settle cases, because he believes that only encourages additional lawsuits against him. The settlement benefits some 7,000 class members. The trial would have lasted weeks. See AP news report here.

A few days later, Mr. Trump tweeted that he would have easily won the trial. He only settled because he needed to focus on organizing his government. Don’t they all say much the same.

When a local politician wins office, she or he like to bring in their own persons for key positions. Sometimes, they also like to fire the employees who supported their opponent. County Clerks from here to Timbuktu will seek to replace you if you support the defeated opponent. But, the County Clerks who do so will be violating the First Amendment. The First Amendment protects our free speech. That free speech includes political support for one candidate or another.

County Clerk Rebecca Bolin did not get that memo. She won election as County Clerk of Kerr County and promptly fired three employees who supported the incumbent, Jannett Peiper. The new Clerk fired Julia Gaeza, Sarah Trainum, and Judith Rodgers in 2014. Ms. Bolin had been a deputy clerk herself before beating her boss. Ms. Bolin fired the three women on her first day in office. That is close timing indeed. Ms. Bolin told one of the three women, Julie Garza, that she was fired because of her Facebook post supporting the incumbent.

The employer moved for summary judgment and lost. Mag. Judge Primomo noted the timing, the three deputy clerks were fired the day the new County Clerk took office. He described Ms. Bolin’s motives as “ambiguous at best.” That is judge-speak for the employer’s evidence is weak. So, he was saying this case should be decided by a jury. The judge also noted there were no written warnings for any of the three deputy clerks. There was no history of poor performance.

The employer appealed to the Fifth Circuit regarding the denial of summary judgment. It argued that Ms. Bolin should receive qualified immunity for her actions. But, Kerr County settled while that appeal was pending. Texas counties are part of an insurance pool, Texas Association of Counties.TAC settled the case with the three women. The plaintiff’s lawyer indicated this amount replaced their lost income.

The three former deputies will receive $300,000, presumably that means $100,000 for each former deputy clerk. The lawyer mentioned that amount would replace their lost income. If they have been out of work for three years, that amount sounds about right as lost income

See San Antonio Express News report.

Settling a case is not easy. The hardest part is simply looking at your own case objectively and trying to put a number to its value. When we sell cars, there are sources of valuation of cars. But, valuation of lawsuits is generally based on results from other similar cases. But, the thing is no two cases are truly alike. There are innumerable variations from one lawsuit to another. So, perhaps, it is not too surprising what happened in one case involving Target in South Carolina.

A customer’s daughter found a hypodermic needle in the parking lot. She picked it up. Her mother reached to swat it away and stuck herself. She sued Target. She had to take medication for possible HIV infection. Her husband had to take some time off from work. The medication made her ill. This is not the sort of lawsuit with thousands and thousands of dollars in medical bills.

Just before trial, the plaintiff offered to settle the case for $12,000. Target responded with an offer of $750. The case did not settle. The jury awarded the plaintiff $4.6 million. Oops. That $12,000 offer is looking pretty good, now. There is a cap on punitive damages. So, the award will be reduced somewhat. But, Target is surely now wishing it could go back in time. See ABA Bar Journal report.

Gretchen Carlson has settled her sex harassment case for $20 million and a public apology. See CNN news report. Fox News paid a portion and according to one report, so did Roger Ailes. It is one of the largest settlements ever for one person in a discrimination lawsuit. It also included a public apology. Fox News also settled with other women who lodged complaints for much smaller amounts.

Ms. Carlson’s case was settled before any motion for summary judgment or to dismiss. Ms. Carlson was said to have recordings of her encounters with Mr. Ailes. That would help explain the speed and size of this settlement.The settlement is also remarkable because Fox News settled the case. Fox News was not sued. To avoid the terms of a non-compete agreement, Ms. Carlson actually sued Roger Ailes.

Every Plaintiff’s lawyer in the country will draw a breath, not because this is such a large amount, but because now every client will ask why they cannot ask for $20 million. What makes her case worth so much is any alleged tape recordings and her high income. Doubtless, she was paid in the mid to high six figures. So, her lost income will be quite high. And, with this sort of notoriety, she will probably have trouble working as a news anchor for the foreseeable future.

In many lawsuits, the two opposing parties eventually turn to mediation or talks about settlement. Not every case settles at mediation, but many do. Typically at mediation, if the parties reach a verbal agreement, they then reduce that verbal agreement to a very brief written agreement. The mediator will usually have on hand a generic, one-size-fits-all agreement. The idea is that the parties will then negotiate a more detailed written agreement in the next few days. But, what happens if there are new provisions in the more detailed agreement? That is often the case, since attorneys for both sides typically are accustomed to fairly mundane clauses that may cause concern to a person new to the process. Most, if not all, plaintiffs are new to the process. For example, all settlement agreements in employment cases involve a confidentiality clause. But, the generic, two page settlement agreement used by most mediators does not include a confidentiality clause. When the plaintiff signs that brief agreement, there is no confidentiality clause. What happens if a plaintiff sees new clauses as some form of subterfuge?

Trust in your lawyer is key at times like that. Many plaintiffs have no real understanding of these “legalese” clauses. They are asked to learn too much too fast. It can be overwhelming. Many plaintiffs’ first reaction is to run away. Buying a car is similar. The car salesman is so friendly and smiling. Until the big moment. It is time to sign. He tries to rush you through it. You know you need to read those papers. But, that car is so shiny and pretty. Why wait?

But, a settlement is different. You had to compromise. You had to accept $20,000 when you were convinced your case was worth half a million. That car just ain’t so pretty at moments like that.

In Sanders v. UNUM Life Ins. Co. of America, No. SA-15.CV-310-DAE (W.D. Tex. 2/5/2016), the plaintiff appears to have had a similar reaction. She went to mediation over an ERISA claim. The plaintiff had received disability benefits and was then cut off. She filed suit. The life insurance company counter-sued saying Mrs. Sanders had received $35,000 in benefits that she should not have received. UNUM wanted that $35,000 back. It was a major lawsuit. The parties reached an agreement at mediation on Nov. 5, 2015. They signed the short mediator’s agreement. But, when they started working on the more detailed settlement agreement, Mrs. Sanders balked. She met with her lawyer for over two hours. They exchanged emails. They spoke on the phone. According to the plaintiff’s lawyer, the plaintiff raised new concerns that she had not previousl;y raised. The plaintiff’s hesitation and discussions extended over two months.

The discussions between a lawyer and client are privileged. So, we do not know what specific new concerns were raised by the plaintiff. If the new concerns were based on new clauses added by the insurance company, then her new concerns might have some justification. But, that appears to not be the case. Because the plaintiff’s lawyer asked to withdraw. After two months of negotiating, the insurance company said it would file suit to enforce the brief mediator’s settlement agreement. The plaintiff had signed that brief agreement on Nov. 5.  Now, in late January, 2016, the insurance company had already agreed to make some changes to the settlement agreement to satisfy Mrs. Sanders. But, she apparently was still raising new issues. So, they threatened to file a motion to enforce the brief settlement agreement.

At this point, the plaintiff’s lawyer must decide whether she can legitimately oppose a motion to enforce. If there are no grounds to oppose the motion to enforce the brief settlement agreement, then she must withdraw from the case. Otherwise, the plaintiff’s lawyer risks being sanctioned by the court. A frivolous breach of the brief settlement agreement is a breach of contract. If a person lacks good grounds for doing so, both the party and the lawyer risk being sanctioned. This is federal court, after all.  So, Mrs. Sanders’ lawyer asked to withdraw. The court granted the motion to withdraw.

Moral of the story is trust your lawyer. If you do not trust your lawyer, you need a new one. Second moral is to be careful when you agree to settlement. Once you sign that piece of paper, no matter how brief and simple it is, you are bound. Third moral is that buyer’s remorse is as common in settling cases as when buying a shiny, new car. Understand it and be ready for some buyer’s remorse the day after.