Fee Shifting Cases Can Be a Minefield For Both Plaintiffs & Defendants

Defendants and their counsel normally fear fee shifting cases. But plaintiffs and their counsel can get trapped as well.

Ellis v. Whitewater Auto, Inc.,[1] and the nearly 3 ½ years from case filing to the damages award, illustrates this. The Plaintiff was awarded $4,999 in lost overtime wages and liquidated damages, and for not having received payment for the last two days of work.

This Fair Labor Standards Act (FLSA) case is fee shifting for a prevailing plaintiff, and thus a portion of the bar becomes interested. Ellis should serve as a warning, though, to anyone thinking that these cases provide a carte blanche ability to run up attorney fees. A plaintiff is entitled to only ‘reasonable attorney’s fees’ under the FLSA,[2].

This is where Ellis gets interesting. The Plaintiff requested $67,920 in fees. The Magistrate Judge recommended $60,720. But Judge J.P. Stadtmueller of the Eastern District of Wisconsin reduced the award to $16,006.30. Defendants had contended that the attorneys’ fees were excessive, unnecessary, and redundant, and that the Plaintiff’s initial failure to prosecute ironically caused overlitigation. Judge Stadtmueller’s stinging words about overlitigation bear repeating:

“The Court agrees with Defendants. Regrettably, in the almost 36 years that this Judge has been on the bench, the Court has seen few cases as poorly prepared for trial as this one. As the Court observed at trial,

…keeping in mind that this lawsuit was filed in January of 2020,… to wait almost two and a half years after the lawsuit was filed to engage in testimony under oath and the discovery of the additional records does not speak well the approach good litigators should have taken in prosecuting the case. In fact, much of what was said in the courtroom today might be charitably described as open discovery being taken in the context of a trial.

Indeed, the four-hour bench trial in this action is best described as a primetime special of Judge Judy, where the parties confronted their dispute face-to-face, dug into the documentary evidence, and took testimony, all for the very first time in open court.”

Ouch.

Judge Stadtmueller reduced the attorney’s fees by 50% because of limited success and the fees-versus-damages disparity. He then further reduced 33% for unnecessarily prolonging the litigation and lack of diligent prosecution, after striking some of the fee request outright.

Conclusion

The message to defendants in fee shifting cases has always been to resolve as early as you can. The message to plaintiffs should be the same.

[1]Ellis v. Whitewater Auto, Inc., No. 20-CV-37-JPS, 2023 WL 2570329 (E.D. Wis. Mar. 20, 2023).

[2] Koch v. Jerry W. Bailey Trucking, Inc., 51 F.4th 748, 757 (7th Cir. 2022).