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Chan v. Sung Yue Tung Corp.

May 7, 2007

HENG CHAN, SHING TAO AU, YAN BIN CAO, AI YIN CHEN, WAN ZHEN JIANG, FONG LI, JIAN YUN LIN, WEI CHAO TAN, FENG QIN ZENG TANG, SUM KAY WONG AND YONG CAI ZHANG, PLAINTIFFS,
v.
SUNG YUE TUNG CORP. D/B/A 88 PALACE, KUNG TAK YEUNG, GUI YANG, GONG GUI GUAN, CHEUK HONG LAU, AND YEUNG CHAO LO, DEFENDANTS.



The opinion of the court was delivered by: Gerard E. Lynch, District Judge

OPINION AND ORDER

Plaintiffs, a group of eleven waiters, busboys, and captains employed at the 88 Palace Restaurant in New York City's Chinatown, brought this case under the Fair Labor Standards Act ("FLSA") and the New York Labor Law alleging violations of federal and state labor laws by the restaurant and its managers and owners. The parties tried the case before the Court from November 27 to December 6, 2006, and on February 1, 2007, the Court issued Findings of Fact and Conclusions of Law awarding damages of $699,374.32 against the defendants other than Gong Gui Guan. Heng Chan v. Sung Yue Tung Corp., No. 03 Civ. 6048, 2007 WL 313483 (S.D.N.Y. Feb. 1, 2007). Plaintiffs now move for an award of attorneys' fees, costs, and prejudgment interest. The motion will be granted.

BACKGROUND

In August 2003, the plaintiffs filed a complaint in this Court alleging that the defendants, as well as a number of other defendants no longer in the case,*fn1 violated the FLSA and the New York Labor Law by unlawfully retaining certain tips to which the plaintiffs were entitled, by reducing plaintiffs' wages in the amount of a "tip credit" to which defendants were not entitled, and by failing to pay plaintiffs overtime, uniform expenses, and extra pay to which they were entitled for working more than a given spread of hours. The Court found in favor of plaintiffs on almost all of their claims, with the exceptions of the claims against defendant Gong Gui Guan, who was found not to have exercised managerial authority and therefore not subject to liability. Chan, 2007 WL 313483, at *13. Specifically, the plaintiffs were awarded compensatory damages totaling $363,368.08 under both New York law and the FLSA, liquidated damages under the FLSA of $326,885.63, and liquidated damages under New York law of $9,120.61, for a total of $699,374.32. Defendants raise several objections to plaintiffs' calculation of attorneys' fees and interest.

DISCUSSION

I. Attorneys' Fees and Costs

Both the FLSA and the state Labor Law provide that a prevailing plaintiff may seek an award of reasonable attorneys' fees and costs, to be paid by the defendants. 29 U.S.C. § 216(b); N.Y. Lab. Law § 198. In ascertaining the amount of fees to award, the Second Circuit uses the "lodestar" method of calculation, which involves determining the reasonable hourly rate for each attorney and the reasonable number of hours expended, and multiplying the two figures together to obtain the lodestar amount, which represents a presumptively reasonable fee award. LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 763-64 (2d Cir. 1998). After determining the lodestar amount, the court may use its discretion to increase or reduce the amount based on the particular circumstances of the case. Hensley v. Eckerhart, 461 U.S. 424, 434 (1983).

Defendants make several objections to the award of attorneys' fees. They argue (1) that the hourly rates requested should be reduced; (2) that certain work was unnecessary; (3) that the award should be reduced to account for the fact that two defendants prevailed on the claims asserted against them; and (4) that plaintiffs should receive no fees for work performed after December 18, 2004, because at that point plaintiffs stopped negotiating in good faith for a settlement.

A. Reasonable Hourly Rates

Defendants argue that plaintiffs' proposed hourly rates are unreasonable, but make no real effort to propose an alternative rate for the relevant attorneys. They propose a figure of $220 per hour, but do not explain whether they intend this proposal to apply to the partner who represented plaintiffs in the case, the associates, or both.

To determine the reasonable hourly rate for each attorney, courts must look to current market rates "prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Gierlinger v. Gleason, 160 F.3d 858, 882 (2d Cir. 1998). Since this case was brought in the Southern District of New York, the relevant community to which the Court should look is that of Manhattan civil rights attorneys. Marisol A. v. Giuliani, 111 F. Supp. 2d 381, 386 (S.D.N.Y. 2000). In determining the value of the "lodestar," or "presumptively reasonable fee," the Second Circuit recently explained, the district court should, in determining what a reasonable, paying client would be willing to pay, consider factors including, but not limited to, the complexity and difficulty of the case, the available expertise and capacity of the client's other counsel (if any), the resources required to prosecute the case effectively (taking account of the resources being marshaled on the other side but not endorsing scorched earth tactics), the timing demands of the case, whether the attorney had an interest (independent of that of his client) in achieving the ends of the litigation or initiated the representation himself, whether the attorney was initially acting pro bono (such that a client might be aware that the attorney expected low or non-existent remuneration), and other returns (such as reputation, etc.) the attorney expected from the representation.

Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, ___ F.3d ___, 2007 WL 1189487, at *1 (2d Cir. Apr. 24, 2007). In this case, most of these factors point to a relatively high award of fees. The case was unusually difficult and complex, the resources required to prosecute it immense. Importantly, the damages sought were low compared to the likely expense of prosecuting the case, which would have been a significant disincentive for an attorney to take the case and therefore a reason to charge a higher fee.

Defendants argue that the fees sought should be reduced because plaintiffs' counsel, employees of Skadden, Arps, Slate, Meagher & Flom, LLP ("Skadden"), took the case pro bono.

It is well-established that civil rights attorneys not working for profit are entitled to fees that are comparable to those awarded to private attorneys with fee-paying clients, Blum v. Stenson, 465 U.S. 886, 892-94 (1984), and defendants are careful not to argue that a "penalty for taking a case pro bono" is merited. (D. Mem. 2 n.3.) As this Court noted in a prior case, "[i]f the measure is the market rate, what matters is the value placed on lawyers' services by clients in the market, not whether the lawyers who receive that value spend it on fancy offices and extravagant salaries, or plow it back into subsidizing public interest activities." Moon v. Kwon, No. 99 Civ. 11810, 2002 WL 31512816, at *2 (S.D.N.Y. Nov. 8, 2002).

The Second Circuit in Arbor Hill listed the question of whether an attorney "was initially acting pro bono" as a factor to be considered in calculating the presumptively reasonable fee. 2007 WL 1189487, at *1. Although the fact that an attorney is willing to take a case pro bono is not itself a basis for reducing fees, a discount in fees is appropriate insofar as the market rate for civil rights litigation services is lower than the market rate for services provided to high-profile corporate clients. See Pastre v. Weber, 800 F. Supp. 1120, 1125 (S.D.N.Y. 1991) (concluding that defendant should not be required to pay the rates usually charged to clients such as General Motors or IBM, but should be required to pay the rates that "would have been charged by a competent attorney specializing in civil rights litigation"). The hourly rates sought in this case, however, already reflect a substantial discount from the regular market rates charged by Skadden for the services of these attorneys. Moreover, plaintiffs' counsel represent that they have excluded from their application over 4,100 ...


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