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Alzate v. Creative Man Painting LLC

United States District Court, D. Arizona

February 25, 2015

Eduardo Alzate, et al., Plaintiffs,
v.
Creative Man Painting LLC, et al., Defendants.

ORDER

BRIDGET S. BADE, Magistrate Judge.

Plaintiffs Eduardo Alzate, Alberto Salgado, and Joel Guerrero have filed a motion for attorney's fees and costs in which they request $81, 272.25 in attorney's fees and $3, 512.00 in costs.[1] (Doc. 61 at 15.) Defendants Creative Man Painting, LLC (CMP), Jesus M. Martinez, and Christina Martinez oppose the motion. (Doc. 62.)[2] They argue that any attorney's fees or costs incurred after December 9, 2013 are unreasonable because Defendants offered to resolve this matter on that date, and Plaintiffs refused to participate in settlement discussions. (Id. ) Defendants argue that Plaintiffs are only entitled to $7, 500.00 in attorney's fees and $547.00 in costs. (Id. ) Plaintiffs filed a reply in support of their motion. (Doc. 65.) For the reasons below, the Court awards Plaintiffs $59, 868.50 in attorney's fees, and $2, 292.00 in costs.

I. Background

On October 18, 2013, Plaintiffs, house painters employed by CMP, commenced this action. Plaintiffs alleged that they were generally paid their hourly rate for the hours from 7:30 am to 4:00 or 4:15 pm. During those hours, Plaintiffs typically had a thirty minute break, and, therefore, were paid for eight hours a day. (Doc. 1 at 3.) Plaintiffs alleged that they were only paid for the time they were working at the jobsite. (Id. ) However, Plaintiffs were expected to begin work at CMP's business location at 6:00 am to mix paint, load their trucks, and travel to their jobsite. (Id. ) They were also expected to return to CMP at the end of the day to clean and store their equipment. As a result, Plaintiffs alleged that they worked an additional two to three hours per day. (Id. ) Plaintiffs further alleged they were required to work the same schedule on Saturday and were only paid for eight hours on Saturdays. Plaintiffs alleged that Defendants did not pay overtime for hours worked in excess of forty hours per week as required by law. (Id. at 4.)

In Count One of the Complaint, Plaintiffs alleged that Defendants violated the Fair Labor Standards Act (FLSA), specifically 29 U.S.C. § 207(a)(1), by failing to pay them one and one-half times their regular rate of pay for hours worked in excess of forty hours in a week. (Id. ) In Count Two, Plaintiffs alleged that Defendants violated Ariz. Rev. Stat. § 23-351 by failing to timely pay the wages due them. (Id. at 5.) In Count Three, Plaintiffs alleged a retaliation claim under the FLSA. (Id. ) They asserted that Alzate complained about not being paid overtime and that he was terminated based on his complaints. (Id. ) Plaintiffs also alleged that Defendants retaliated against Guerrero for his complaints about unpaid overtime by reducing his hours and later terminating him. (Id. ) In Count Four, Plaintiffs alleged wrongful discharge claim in violation of Ariz. Rev. Stat. § 23-1501(3)(c)(ii). (Id. at 6.) They alleged that Alzate's and Guerrero's terminations constituted wrongful discharge in violation of public policy and in violation of Arizona law because each case was motivated by retaliation for complaining of violations of the FLSA. (Id. )

Defendants answered the Complaint on December 9, 2013 and denied Plaintiffs' allegations. (Doc. 6) That same day, Defendants offered to settle Plaintiffs' claims for $11, 424.32, with each side to bear its own attorney's fees and costs. (Doc. 62-1 at 12-14.) In the letter conveying Defendants' initial settlement offer, defense counsel asserted that even if Plaintiffs prevailed, they could be precluded from recovering attorney's fees and costs it they refused a reasonable settlement offer. (Id. at 14.) On January 30, 2014, Defendants sent a second letter reiterating their offer to settle Plaintiffs' claims for $11, 424.32, but agreed to submit the issue of Plaintiffs' attorney's fee to the Court. (Id. at 16-19.) Defense counsel again asserted that if they could "demonstrate to the court that Plaintiffs unreasonably refused to settle this matter early, an award of fees in [Plaintiffs'] favor is unlikely (even if you prevail)." (Id. at 19.)

On March 17, 2014, the parties filed a revised joint proposed discovery plan. (Doc. 14.) The parties stated that they anticipated engaging in discovery, including depositions. (Id. at 4-5.) Defendants stated that they had attempted to resolve the matter, but Plaintiffs had refused to participate in any settlement negotiations. (Id. at 6.) Plaintiffs stated that Defendants' settlement offers were not made in good faith and that they intended to participate in settlement discussions when the evidence was more fully developed. (Id. )

On March 28, 2014, Defendants filed a motion requesting that the Court refer the matter to a magistrate judge for a settlement conference. (Doc. 19.) Plaintiffs did not respond to that motion. On March 31, 2014, the Court set an informal scheduling conference for May 5, 2014. (Doc. 20.) The parties then filed a stipulated motion to continue the scheduling conference and requested that the Court reset it for a date after the settlement conference that Defendants had previously requested. (Doc. 21.) On April 7, 2014, the Court denied Defendants' request for a settlement conference without prejudice as premature. (Doc. 22.)

In their response to Plaintiffs' motion for attorney's fees and costs, Defendants assert that, on March 28, 2014, counsel met with Magistrate Judge Anderson in chambers and requested an early settlement conference, but Plaintiffs refused and the Court declined Defendants' request. (Doc. 62 at 5.) The docket, however, establishes that on March 28, 2014 this matter was still assigned to Judge Wake and that there was a scheduling hearing on that date, in the courtroom with a court reporter. (Doc. 16.) Apparently, Defendants are referring to a scheduling conference before Magistrate Judge Anderson on May 1, 2014. (Doc. 25.) This conference was not recorded and a court reporter was not present.

In September 2014, defense counsel sent an email to Plaintiffs' counsel stating that in May 2014 Plaintiffs had sent Defendants a settlement demand of $91, 587.84. (Doc. 65-1 at 17.)[3] On May 19, 2014, "in response" to Plaintiffs' demand, Defendants sent Plaintiffs an offer of judgment to settle all claims for $20, 000.00, with the amount of Plaintiffs' attorney's fees to be determined by the Court. (Doc. 62-1 at 24-25; Doc. 65-1 at 17.) On May 20, 2014, Plaintiffs served a supplemental disclosure statement that included a computation of damages. (Doc. 62-1 at 21-23.) Plaintiffs calculated their "wage claim damages" to be "in excess" of $41, 000.00, and additional damages for liquidated damages, front pay, and attorney's fees and costs. (Id. )

On July 7, 2014, Defendants file a request for a settlement conference and stated that "this Court instructed counsel in chambers that a settlement conference would be scheduled only after the parties had completed discovery." (Doc. 31.) Therefore, Defendants requested a settlement conference on or after October 1, 2014, after discovery closed. (Id. ) The Court set the matter for a settlement conference on October 9, 2014. (Doc. 36.) Shortly before the settlement conference, Defendants sent Plaintiffs a second offer of judgment to settle all claims for $55, 870.00. (Doc. 62-1 at 26.) The parties agreed to settle the case during that conference and the Court subsequently approved the settlement agreement.[4] (Docs. 54, 58.) The Court ordered that Plaintiffs' counsel could file a motion for attorney's fees and costs. (Doc. 58.)

II. Attorney's Fees Under the FLSA

The settlement agreement provides for the payment of damages to Plaintiffs and states that the Court will determine a reasonable award of attorney's fees. (Doc. 57, filed under seal.) The parties agree that, for purposes of determining fees, Plaintiffs are deemed the prevailing party. (Id. ) The FLSA provides for a mandatory award of reasonable attorney's fees and costs to encourage private litigants to act as "private attorneys general" to enforce FLSA standards.[5] "The amount of the attorney's fees, however, is within the sound discretion of the trial court." Burnley v. Short, 730 F.2d 136, 141 (4th Cir. 1984).

Reasonable attorney's fees are generally based on the "lodestar" method. Under the lodestar method, the court determines a reasonable fee by multiplying "the number of hours reasonably expended on the litigation" by "a reasonable hourly rate." See Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). The lodestar figure is presumptively reasonable. Cunningham v. Cnty. of L.A., 879 F.2d 481, 488 (9th Cir. 1988). The Court first considers a reasonable hourly rate for Plaintiffs' counsel.

A. Reasonable Hourly Rate

Plaintiffs' counsel states that his hourly rate is $395.00. (Doc. 61 at 12.) He also states that Plaintiffs agreed to pay that rate initially, but soon could not pay that amount. (Id. ) Counsel states that he agreed to accept $150.00 per hour on the condition that Plaintiffs would owe the remainder. (Doc. 61 at 12 n.1; Doc. 61-1 at 5-6.) Defendants argue that, based on counsel's agreement with his clients, $150.00 is a reasonable hourly rate. (Doc. 62 at 8.) Alternatively, they argue that because counsel's practice is not devoted to employment law, an hourly rate of $395.00 is excessive and should be reduced to no more than $300.00, a rate recently found reasonable in Riendeau v. Apache Carson Partners LP, 2013 WL 6728141, at *1 (D. Ariz. Dec. 19, 2013), for a Phoenix attorney who dedicates his practice to employment law. (Doc. 62 at 7.)

Plaintiffs' counsel states that he started practicing employment law in 1995 and that he also practices real estate and business law. (Doc. 61 at 12.) However, as Defendants assert, counsel's website, www.ArizonaRealEstateLaw.net (last visited Feb. 25, 2015), focuses on his practice in real estate and business law, and there is no indication that he specializes in employment law. Thus, it does not appear that Plaintiffs' counsel is a specialist in the area of employment law, and he has not provided sufficient justification for an hourly rate of $395.00. However, the Court declines to reduce counsel's hourly rate to $150.00. Although he agreed to accept that rate during the pendency of the litigation, counsel also intended for Plaintiffs to owe the remainder of his fee. (Doc. 61-1 at ...


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