JOHNSON v. GDF, INC. (February 13, 2012)
In May of 2005, Robert Johnson brought a class action for unpaid overtime against his employer GDF, an Oak Park, Illinois Domino's pizza franchise. By July, he was no longer working at Domino's. At his deposition almost a year later, Johnson admitted that he was only unemployed for about a month and also that he had failed to disclose prior criminal convictions when he originally applied at Domino's. The state court denied class certification in mid-2006. Johnson filed a federal retaliation claim in 2007. Johnson rejected GDF's offer to settle both suits for $25,000. GDF paid Johnson over $4,000 in the state court case. The parties engaged in no further settlement discussions in the federal case. After a trial, a jury awarded Johnson $1,000 in back pay and $4,000 in punitive damages. GDF paid Johnson another $5,000 to settle his request for liquidated damages. Johnson's lawyer sought $112,000 in attorneys fees. Judge Guzman (N.D. Ill.) accepted a magistrate judge's recommendation to award only $1800 on the theory that the case should have settled within hours had Johnson's attorney been candid about Johnson's limited damages. Johnson appeals.
In their opinion, Seventh Circuit Judges Bauer and Tinder and District Judge Magnus-Stinson reversed and remanded. The Court criticized the district court's reliance on Spegon. In that case, the plaintiff had a simple overtime claim that the employer did not contest. The only issue was how much was owed. Although the parties settled rather quickly, plaintiffs attorney sought over $7,000 in fees. The Seventh Circuit affirmed the district court's reduction in fees on the grounds that the case should have been settled within a few hours. The Court cited several differences between Spegon and Johnson's facts. GDF knew by the time of Johnson's deposition that his potential recovery was quite low. Although it did make a substantial settlement offer, there were no further settlement discussions or offers of judgment. Instead, the case went to trial. Therefore, Johnson's attorney is entitled to the reasonable hours required to try the case. With respect to the appropriate hourly rate, the Court stated that the district court erred in rejecting affidavits of a market rate on the grounds that the affidavits did not distinguish between FSLA and Title VII cases, as he thought they should. It is not up to the district court determine what the market is and he should not disregard affidavits on that ground. Finally, the Court concluded the district court erred in considering only prior fee awards to Johnson's attorney where the fee was contested. A prior fee award is relevant whether it is contested or not.