Are Federal Judges Growing Tired Of Attorneys’ Fees-Driven Wage-Hour Class Actions?

A number of years ago – 20 perhaps – someone shared with me a study that was conducted by a major university where participants were asked which professions they most distrust.

My recollection is that it was conducted at Duke University, but I could be wrong.  (I do remember distinctly that there were 998 participants in the survey, which still seems like a peculiar number to me.  They couldn’t find two more people?)

In any event, one spot from the top of the list of most distrusted professions (or the bottom, depending on your perspective) was used car salespersons.  Yes, I know, a cliché.

The top spot (or the bottom) was reserved for lawyers.

Not all lawyers, mind you, but a particular group – plaintiffs’ class action lawyers, who the study’s participants felt took too much money out of the pockets of the people they supposedly represented, making millions while class members often got pennies.

I was told of this survey before I really started focusing on class action defense myself, but I have never forgotten it.

And let me say this – as with many things in life, it is unfair to paint with too broad a brush.  I’ve had the pleasure of dealing with more than a few plaintiffs’ employment class action lawyers who are passionate believers in the positions they take on behalf of employees, who work hard for their clients, who appear to be driven by their commitment to their clients, etc., etc., etc.

But, like any employment class action defense lawyer, I have seen too many of these cases driven not by the facts of the case or by what is best for the employees, but by what is best for their attorneys.  And, in particular, I’ve seen how these cases are often driven by an effort to maximize their own attorneys’ fees recovery.

Settle a class action for $10 million, and the plaintiffs’ attorneys may get as much as $4 million for themselves, even if they did little more than file a lawsuit and attend a mediation.

And it’s not uncommon to hear a lawyer announce at a mediation of a wage-hour class action, “I need to get $2 million for myself out of any settlement.”

Then the parties and the mediator decide whether to work backwards to negotiate a settlement where that lawyer could get that $2 million.

Or $1 million.

Or $750,000.

Whatever the number that the plaintiff’s counsel is insisting on getting in fees, putting the focus on their fees before the merits of the case or the recovery to class members is the tail wagging the dog.

All of this leads me to share some unusual comments made by a highly respected federal judge in California several weeks ago.  Or, at least, a paraphrased summary of her comments.  (I do not want to embarrass the judge by mentioning her name, but she is a fine and thoughtful judge who has overseen some significant cases in the state and has issued some opinions that are favorable to employees.)

In a case in which the judge denied class certification of the plaintiffs’ wage-hour claims, the plaintiff still had similar claims pending under California’s unique Private Attorneys General Act (“PAGA”) – representative claims, but technically not “class claims.”  (PAGA claims, and the issues with them, are another subject for another day.)

Rather than go to trial over those small claims, the parties reached a very small resolution of them.  As part of it, plaintiff’s counsel sought fees for themselves that were significantly more than what the employees themselves would recover. (I won’t mention plaintiff’s counsel by name either as I have had a few cases against them and genuinely like them.)

While other judges might rubber-stamp such a small settlement just to get it off their docket, the judge in this case rejected the proposed settlement.

Here is roughly what she said (I’m relying on my notes):

I’m not doing this. I’m not going to approve this. I’m tired of it. These wage-hour class actions are the worst.  They’re all about attorneys’ fees.  They have nothing to do with the case or with the employees.  They have nothing to do with justice.  It’s just attorneys’ fees.  When I go on retired status, I’m going to tell them I won’t accept any of these wage-hour cases for that reason.  And I don’t think I’m the only judge who is getting tired of this.  I think you’re going to see more and more judges who aren’t going to put up with this.

Again, that’s based on my notes.  She said more that I didn’t jot down (or where I can’t decipher my own handwriting).

Maybe she was just expressing her own frustration. And maybe she is alone.

But maybe she’s right.

And maybe we will see some developments from the bench that will shift the focus of these cases away from the attorneys’ fees and back to the disputes themselves.