In an FLSA case, Defendant made an Offer of Judgment in the amount of $3,133.44, which was rejected. After a one-day trial, a jury returned a verdict in the plaintiff’s favor and awarded her $1,131.39.
In addition to the damages awarded, (and less the defense costs that were taxed against the plaintiff based on the rejection of the Rule 68 offer), Plaintiffs’ counsel initially sought a fee award of $129,565.00. After reductions for time expended on the claims of unsuccessful plaintiffs, “block billing”, and a lack of reasonable billing judgment, the district court arrived at a lodestar of $62,722.80. Applying the Johnson factors, the district court noted that the “most critical factor in determining a fee award — the degree of success obtained — strongly supported a downward departure” and arrived at a final fee award of $25,089.30.
On appeal, the defendant argued, unsuccessfully that the fee award should have been rejected, or greatly reduced, as unreasonably disproportionate to the relief obtained. This argument was rejected.
“It is true that proportionality is an appropriate consideration in assessing a fee award. It is also true that the disproportion between the fees awarded Gurule’s attorneys and what Gurule netted is eyebrow-raising. As Gaslamp noted, the $25,089.30 award was thirty-three times Gurule’s net recovery (and even without deducting Gurule’s offsetting costs, the award was still eleven times her damages). Yet our court has consistently emphasized that there is no per se requirement of proportionality in an award of attorney fees. The key flaw in Migis was that the district court’s meager 10% reduction of the fee award failed to adequately consider just how limited the plaintiff’s success was. We have a different story here. Instead of overlooking Gurule’s relative lack of success, the district court emphasized it. Among other things, the court pointed out the chasm between what Gurule sought and what little she recovered and, as a result, reduced the lodestar by 60 percent.”
The defendant also argued that rejection of a more favorable Rule 68 offer should have further reduced, if not outright precluded, the fee award.
The Fifth Circuit, joining other Circuits, held that, in setting a reasonable attorney’s fee under a fee-shifting statute, a court should consider the prevailing party’s rejection of a Rule 68 offer that was more favorable than the judgment obtained. “Courts have long understood that the most critical factor in a reasonable fee is a prevailing party’s degree of success. In measuring that success, a court should ask whether the party would have been more successful had his attorney accepted a Rule 68 offer instead of pressing on to trial.”
Applying that principle to this particular case, the Fifth Circuit affirmed the District Court’s award. The District Court, the Court found, appropriately factored the rejection of the defendant’s move favorable offer into its downward adjustment of the lodestar.
Gurule v. Land Guardian, 912 F.3d 252 (5th Cir. 2018).