Amicus Curiae Brief — Jackson v. Estelle's Place, LLC

Supreme \ ourt, 5

14 (Q JAN 7 ~ 2011

No. 10-768

OFFICE OF THE CLERK |

IN THE

Supreme Court of the United States

TANYA JACKSON, £7'AL.,

et tioners,

y.

KSTELLE’S PLACE, LLC, £7'AL.,

Tee spondents.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Fourth Circuit

BRIEF FOR WASHINGTON LAWYERS’

COMMITTEE FOR CIViL RIGHTS AND URBAN

AFFAIRS, THE PUBLIC JUSTICE CENTER, THE

D.C. EMPLOYMENT JUSTICE CENTER, AND THE

NATIONAL EMPLOYMENT LAW PROJECT AS

AMICI CURIAEIN SUPPORT OF PETITIONERS

PAUL M. SMITH

Counsel of Record

CARRIE I°. APFEL

LESLIE V. POPE*

JENNER & BLOCK LLP

1099 New York Avenue, NW

Suite 900

Washington, DC 20001

(202) 639-6000

psmith@jenner.com

*Admuitted in VA only. supervised by principal:

January 7, 201

January /, z I of the firm

Attorneys for Amici Curiae

TABLE OF CONTENTS

BF eccvcececesecccsescseseseceseseceseses

INTEREST OF AMICI CURIAE................... etches weal

SUMMARY OF ARGUMENT

ARGUMENT ....... Nhl ee te eral ae RON Le AEN Rn? .

IT].

FEE SHIFTING STATUTES ENABLE

INDIVIDUALS WHO CANNOT

AFFORD COUNSEL TO OBTAIN

CAPABLE REPRESENTATION TO

PROUTISCT CIV Es BIRGIT 1, cviccsicccvcsscccsecssens

ATTORNEY'S FEES AWARDS ARE

CRITICAL TO ENSURE PRIVATE

ENFORCEMENT OF RIGHTS UNDER

THE FATR LABOR STANDARDS ACT. .....

A. The Purpose of the FLSA and its

Fee-Shifting Mechanism...................

3. The Increasing Need for FLSA

ge a | See nS een

.. Private Enforcement of the FLSA

et eee ot Le oe ey ee eee)

REDUCTION OF AN ATTORNEY’S

FEE AWARD BASED ON THE SIZE OF

PLAINTIFF'S RECOVERY WILL

HURT =LOWWAGE ~~ WORKERS’

ABILITY TO RETAIN COUNSEL TO

VINDICATE THEIR RIGHTS UNDER

THE FLSA ...... Linabimsudcsausctucecetintciiece amen inicas

CONCLUSION

.

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o>

mares

ee

10 AO

eee bth

i

TABLE OF AUTHORITIES

Cases

Alveska Pipeline Service Co. v. Wilderness

Society, 421 U.S. 240 (1975).........cccsccascccsoeseecees 5

Rarrentine v. Arkansas-Best — Freight

Svstem, Inc., 450 U.S. 728 (1981) ........... 8, 9, 23

Blum v. Stenson, 465 U.S. 886 (1984).....000..0..eee. 8

Brooklyn Savings Bank v. O'Netrl, 324 US.

orotic seks tdcncanceasbueaeecss Gikwtucnpoweuses 9, 23

City of Burlington v. Dague, 505 U.S. 557

CR etary eh ee 21, 22

City of Riverside v. Rivera, 477 U.S. 561

SMR cisiids iis cs vineclaccage nectar eae ok: 6, 7

Feeley v. Higgins, 19 F.3d 1126 (6th Cir.

| Riayat REA rl oc NAN Rt Ae EAS ASRE ROrATA RES NALS 10

Gentry v. Superior Court, 165 P.3d 556

Ce RR. 5 ERAT ARI RPT FT oR RE eT queers. 20

Heder v. City of Two Pivers, 255 ¥. Supp.

2d 947 (E.D. Wis. 2003), affd, 93 F.

Paes Oe O70 0, christen 10

Hensley v. Eckerhart, 461 U.S. 424 (1983)..5, 7, 22

Jackson v. Estelle’s Place, LLC, No. 09

1700, 2010 U.S. App. LEXIS 16856 (4th

aE ae ae) || ee een ee 24; 22

Maddrix v. Dize, 153 ¥.2d 274 (4th Cir.

Pe nor an acesnasie anaes wee cee 10

il

Pennsylvania v. Delaware Valley Citizens’

Council for Clean Air, 478 U.S. 546

(1986), supplemented by, 483 U.S. 71]

5 Sree Ft RR HOOP rent SIE MRO AED :

Pennsylvania v. Delaware Valley Citizens’

Council For Clean Air, 483 U.S. 711

I nk te daa caee 8, 2]

Perdue v. Kenny A. ex rel. Winn, 130 S. Ct.

asec ncn dedccccucnsdinnoscais 8, 23

Quaratino v. Tiffany & Co., 166 F.3d 422

I I eo eet 10

STATUTES

0.2 scscsxuncbucueeecanetvenaseGdmant aetna g

Be a. i risas onc sccnsssncevs>scasencdaveciicearcbuaccoes 10

OTHER AUTHORITIES

Craig Becker, A Good Job for Evervone,

Legal Times, Sept. 6, 2004, at 54..........0.....0... 14

Craig Becker & Paul Strauss, Representing

Low-Wage Workers 1n the Absence of a

Class: The Peculiar Case of Section 16 of

the Farr Labor Standards Act and the

Underentorcement of the Minimum

Labor Standards, 92 Minn. L. Rev. 1317

|, ETE ER TT ee. 12-13, 20

Annette Bernhardt et a/, Broken Laws,

Unprotected Workers (2009) ............... 11, 13, 15

iV

Annette Bernhardt & Siobhan McGrath,

Brennan Center for Justice, Jrends in

Wage and Hour Enforcement in the

re ge ee a SE oon osc ons sak akatdnnucede ceva seas 15

Kim Bobo, Wage Theft in America

ert rs re to OL os 13, 15, 18, 19

Lonnie Golden & Helene’ Jorgensen,

Economic Policy Institute, 77me After

Time: Mandatory Overtime in the U.S.

NN os ncess sacs ocean cians seavesduawss 12

Restaurant Opportunities Center of New

York & New York City Restaurant

Industry Coalition, Behind the Kitchen

ee eer e cos aneaeemeerineecss 12

U.S. Dep't of Labor, Close to Half of

Garment Contractors Violating Fair

Labor Standards Act, BNA Daily Labor

Report (May 6, 1996) available in

UE VI Ee OE onic cissecncenceccecsasscacives 13

U.S. Dep't of Labor, Nursing Home

Compliance Fact Sheet (2000)................c0ece0ee- 12

U.S. Dep't of Labor, Poultry Processing

Compliance Survey Fact Sheet (2001)............ 12

U.S. Dep't of Labor, Wage and Hour

Division Mission Statement,

http://www.dol.gov/whd/about/mission/w

re hie U NiteagrGe iad atah weet eran 14

y

U.S. Dep't of Labor, Wage and Hour

Division, 2008 Statistics Fact Sheet, at

http://www.dol.gov/whd/statistics/2008Fi

OE ER iiss dsc sce naataaionaercteueeer ketenes oe

U.S. Dep’t of Labor, WHD Press Release:

U.S. Department of Labor obtains

default judgment in Southern California

garment manufacturer case, Dec. 14,

2010, available at http://www.dol.gov/

opa/media/press/whd/whd20101694.htm........ 13

U.S. Government Accountability Office,

GAQ-09-458T, Wage and Hour Division's

Complaint Intake Processes Leave Low

Wage Workers Vulnerable to Wage Theft

Cae, BE, SOOO? ov vic sceesescstclicvsccnvasseasnes 16, 17, 19

David Weil, Improving Workplace

Conditions Through Strategic

Enforcement (2010) ..........2..05 12, 15, 16, 18, 20

David Weil & Amanda Pyles, Why

Complain? Complaints, Compliance, and

the Problem of Underenforcement 1n the

U.S. Workplace, 27 Comp. Lab. L. &

PT eh, ee hindi idtsicnn caus th dacccecsmrstmaneenes 16

INTEREST OF AMICI CURIAE!

The Washington Lawyers’ Committee for Civil

Rights and Urban Affairs (“The Committee”) is a

non-profit civil rights organization established to

eradicate discrimination by enforcing civil rights

laws through litigation. In furtherance of this

mission, the Committee represents victims of wage

and hour violations in individual, class, and

collective actions. From these cases, the Committee

has amassed expertise in issues arising under the

Fair Labor Standards Act (“FLSA”), as well as in

awards of attorney’s fees to prevailing plaintiffs in

civil rights cases generally. The Committee also

frequently litigates within the jurisdiction of the

United States Court of Appeals for the Fourth

Circuit, and thus has substantial familiarity with

Fourth Circuit jurisprudence on fee-shifting issues.

The Committee was an amicus in earher stages of

the present case.

The Public Justice Center (“PJC”), a non-profit

civil rights and _ anti-poverty legal services’

organization, has a longstanding commitment to

promoting the rights of low-wage workers. To that

end, the PJC has represented thousands of

employees seeking to recover unpaid wages from

1 No counsel for a party authored or made a monetary

contribution to the preparation or submission of this brief.

Counsel of record for both parties have received timely notice of

the intent to file this brief and have consented to its filing. The

letters of consent have been filed with the Clerk.

9

their employers through collective and/or class

actions under the FLSA and state wage and hour

laws, and has also filed amicus curiae briefs in cases

involving the rights of low-wage workers to collect

unpaid wages and attorney’s fees under the FLSA.

The D.C. Employment Justice Center (“EJC”) is a

non-profit organization whose mission 1s to secure,

protect and promote workplace justice in the D.C.

metropolitan area. The EJC uses a combination of

legal services, advocacy and education, focusing its

efforts on low-income workers. Since its founding,

the EJC has provided employment law advice and

assistance to over 8,000 workers at its free, walk-in

legal clinic and has returned more than $5.5 million

in wrongfully withheld wages and damages to low-

income workers in the D.C. metro area. The EJC

addresses the full range of employment law problems

faced by low-wage workers, but the failure to pay

workers in accordance with the law continues to be

the most prevalent problem it sees.

The National Employment Law Project (“NELP”)

is a non-profit organization that advocates on behalf

otf low income and unemployed workers. NELP has a

long-standing commitment to the enforcement of

federal and state wage and hour laws, and has not

only represented large collective actions of workers

in FLSA cases, but has also provided technical

assistance and litigation support to actions across

the country that seek to vindicate workers’ rights to

be paid the wages they are entitled to under the law.

Amici address the significant consequences for

low-wage workers of the Fourth Circuit Court of

Appeals’ holding that trial courts may reduce

3

attorneys fee awards for prevailing plaintiffs in

FLSA cases solely vecause the damages recovered by

the plaintiffs are modest. Amcr predict that if the

Fourth Circuit’s holding is allowed to stand, low-

wage workers will be left without representation, as

private attorneys will be deterred from litigating

meritorious FLSA claims. Amici thus urge the

Court to grant petitioner’s Petition.

SUMMARY OF ARGUMENT

Section 216 of the Fair Labor Standards Act

(“FLSA”) requires courts to award “a reasonable

attorney’s fee” to a prevailing plaintiff. This case

raises two important questions as to when courts

may award a prevailing FLSA plaintiff less than the

lodestar fee: first, whether a court may reduce a

prevailing FLSA plaintiffs attorney's fee award

based on the “modest” amount of damages recovered

by the plaintiff} and second, whether a court may

reduce a 92revailing FLSA plaintiffs award because

he or she did not prevail on all of the alternative,

non-FLSA legal theories asserted in the complaint.

As the Petition demonstrates, the courts of appeals

are sharply split on both questions.

In this brief, amici address the consequences of

leaving in place the Fourth Circuit Court of Appeals’

holding that a trial judge may reduce a statutorily

mandated attorney’s fee award based on the amount

of monetary relief obtained by a prevailing plaintiff.

Amici anticipate that permitting trial courts to

consider the size of the monetary award when setting

counsel’s fees will have a dramatic effect on low-wage

workers’ ability to seek legal redress for violations of

their civil rights, because many low-wage workers

4

seek damages that, though substantial to them,

° Ms 2

might otherwise seem “modest.

FLSA claimants who achieve complete success in

vindicating the civil rights abuses of their employers

often recover less than $1000 in lost wages.

According to the Department of Labor, the average

FLSA claim in 2008 was for $712. This modest

amount is several times larger than the average back

wages owed to victims of FLSA violations in certain

low-wage industries plagued by wage theft. For

example, in the fast food industry, victims of FLSA

violations are owed an average of $178 in back

wages. As a result, a rule permitting a court to set

attorney's fees based on the size of the prevailing

plaintiffs damage award will devastate low-wage

workers’ ability to retain competent counsel.

Imposing additional barriers to low-wage

workers’ ability to bring private FLSA actions is

especially troubling in light of the increasingly

critical role that private enforcement plays in

protecting against civil rights abuses. Wage theft is

a pervasive problem, affecting more than one million

workers each week in Chicago, Los Angeles, and New

York alone. And, at the same time that low-wage

workers have experienced a sharp rise in wage theft,

the Department of Labor’s Wage and Hour Division’s

2 Though it is not the focus of this brief, Amici agree with

petitioner that it is hkewise improper for a trial court to reduce

an otherwise reasonable attorney’s fee award based on the

plaintiffs failure to prevail on other claims providing additional

remedies. See Pet. at 35-36.

5

enforcement of the FLSA’s minimum wage and

overtime provisions has become less effective,

leaving low-wage workers more vulnerable to wage

theft. As a result, low-wage workers increasingly

must rely on private causes of action to vindicate

violations of their labor rights. It is therefore

essential to ensure that these victims can continue to

procure competent counsel through attorney’s fee

awards that are commensurate with the time and

effort required to litigate FLSA actions — time and

effort that is essentially the same whether the claim

is for $100 or for $100,000.

ARGUMENT

I. FEE-SHIFTING STATUTES ENABLE INDIVIDUALS

WHO CANNOT AFFORD COUNSEL TO OBTAIN

CAPABLE REPRESENTATION TO PROTECT CIVIL

RIGHTS.

Though the “American Rule” provides that

each party to a lawsuit must pay his or her own

counsel fees, this Court has long recognized

Congress’s power to abrogate this rule to permit

prevailing plaintiffs to recover their legal fees from

their opponents. See, e.g., Alyeska Pipeline Serv. Co.

v. Wilderness Soc’y, 421 U.S. 240 (1975). Congress

has repeatedly determined that an exception to the

American Rule is both necessary and appropriate “to

ensure ‘effective access to the judicial process’ for

persons with civil rights grievances.” Hensley v.

Eckerhart, 461 U.S. 424, 429 (1983) (quoting H.R.

Rep. No. 94-1588, at 1 (1976)); see also id. at 444

(Brennan, J., concurring in part and dissenting in

part) (fee-shifting statutes serve “the need to ensure

6

that civil rights plaintiffs with bona fide claims are

able to find lawyers to represent them”).

In fact, Congress has enacted over 100

different statutes that provide a prevailing plaintiff

with attorney’s fees in a variety of causes of action.

See Pennsylvania v. Delaware Valley Citizens’

Council for Clean Air, 478 U.S. 546, 562 (1986),

supplemented by, 483 U.S. 711 (4987). These fee-

shifting statutes are especially prevalent in the civil

rights context, because Congress has recognized that

under the American Rule, several factors operate to

impede civil rights htigants’ ability to procure

representation to vindicate their rights. For

example, Congress “found that the private market

for legal services failed to provide many victims of

civil rights violations with effective access to the

judicial process,” because “[t]hese victims ordinarily

cannot afford to purchase legal services at the rates

set by the private market.” City of Riverside v.

Rivera, 477 U.S. 561, 576 (1986) (plurality) (citing

H.R. Rep. No. 94-1558, at 3 (1976)). Compounding

this problem are various “immunity doctrines and

special defenses, available only to public officials,”

that “preclude or severely limit the damage remedy”

available to civil rights litigants. /d. at 577 (quoting

H.R. Rep. No. 94-1558, at 9). Indeed, often times,

victims of federal and constitutional violations seek

little to no monetary relief at ali. Therefore, counsel

may be reluctant or unable to accept important civil

rights cases siven the real risks of nonpayment for

hours, weeks, months, and even years of service.

Yet despite the modest monetary recovery

these cases bestow upon prevailing plaintiffs, they

5

play a critical role in protecting against violations of

constitutional and_= statutory rights and have

consequences far beyond both their remunerative

value and the benefits provided to any one individual

plaintiff. Indeed, Congress recognized the

fundamental role private citizens play in protecting

federal rights more generally and the need to ensure

that private enforcement remains a viable avenue to

vindicate civil rights for the benefit of the public.

Hensley, 461 U.S. at 445 (Brennan, J., concurring in

part and dissenting in part) (“faJll of these civil

nghts laws depend _ heavily upon private

enforcement”) (quoting S. Rep. No. 94-1011, at 2,

reprinted in 1976 U.S.C.C.A.N. 5908, 5910).

Accordingly, fee-shifting statutes ensure that

those seeking to protect important federal and

constitutional rights can obtain counsel to pursue

these claims on their behalf. This legislation is

designed to “enable plaintiffs to enforce the civil

rights laws even where the amount of damages at

stake would not otherwise make it feasible to do so,”

as Congress recognized that “[ilf private citizens are

to be able to assert their civil rights, and if those who

violate the Nation’s fundamental laws are not to

proceed with impunity, then citizens must have the

opportunity to recover what it costs them to

vindicate these rights in court.” Ayvera, 477 U.S. at

578 (plurality) (quoting S. Rep. No. 94-1011, at 2

(1976), reprinted in 1976 U.S.C.C.A.N. at 5910)).

Requiring payment of a_ prevailing plaintiff's

attorney’s fees “guaranteels] reasonable payment for

the time and effort expended” on successful claims.

8

Pennsylvania v. Delaware Valley Citizens’ Council

For Clean Air, 483 U.S. 711, 726 (1987).

Toward these ends, fee-shifting statutes aim to

provide counsel for civil rights plaintiffs a reasonable

attorney's fee, 1.e., “one that 1s adequate to attract.

competent counsel, but . . . [that does] not produce

windfalls to attorneys.” Blum v. Stenson, 465 U.S.

886, 897 (1984) (internal quotation marks omitted)

(alterations in original). The fee award must be

“sufficient to induce a capable attorney to undertake

the representation of a meritorious civil rights case.”

Perdue v. Kenny A. ex rel. Winn, 130 S. Ct. 1662,

1672 (2010). This Court has consistently found that

the lodestar figure — calculated by multiplying the

number of hours reasonably spent on the matter by a

reasonable billing rate — “yields a fee that is

presumptively sufficient to achieve this objective.”

Id. at 1673. Trial courts ordinarily should not alter

the lodestar fee since calculation of the lodestar

‘includes most, if not all, of the relevant factors

constituting a ‘reasonable’ attorney’s fee.” Id.

Gnternal quotation marks omitted).

H. ATTORNEY'S FEES AWARDS - ARE

CRITICAL TO ENSURE PRIVATE

ENFORCEMENT OF RIGHTS UNDER THE

FAIR LABOR STANDARDS ACT.

A. The Purpose of the FLSA and its Fee-

Shifting Mechanism

In 1938, Congress enacted the Fair Labor

Standards Act (“FLSA”) “to protect all covered

workers from substandard wages and oppressive

working hours.” Barrentine v. Arkansas-Best

9

Freight Sys., Inc. 450 U.S. 728, 739 (1981).

Concluding that both underpay and everwork were

“detrimental to the maintenance of the minimum

standard of living necessary for health, efficiency and

general well-being of workers,” see 29 U.S.C. §

202(a), the FLSA aims to provide “specific minimum

protections to zndividua/ workers and to ensure that

each employee covered by the Act would receive [a]

fair day’s pay for a fair day’s work and would be

protected from the evil of overwork as well as

underpay.” Sarrentine, 450 U.S. at 739 (alteration

and emphasis in original) (internal quotation marks

omitted).

Indeed, as the congressional record reflects,

the statute was designed “to aid the unprotected,

unorganized and lowest paid of the nation’s working

population.” Brooklyn Sav. Bank v. O'Neil, 324 U.S.

697, 707 n.18 (1945) (citing 81 Cong. Rec. 7652, 7672,

7885; 82 Cong. Rec. 1386, 1395, 1491, 1507; 83 Cong.

Rec. 7283, 7298, 9260, 9265; H. Rep. No. 75-1452, at

9 (1937); S. Rep. No. 75-884, at 3, 4 (1937)). As a

result, most FLSA plaintiffs cannot afford to hire a

lawyer to vindicate violations of the statute. And

even when successful, FLSA plaintiffs rarely recover

sufficient damages to pay counsel fees. According to

the United States Department of Labor, in 2008, the

average amount of back pay recovered by a

prevailing FLSA claimant was $712. See U.S. Dept.

of Labor, Wage and Hour Division, 2008 Statistics

Fact Sheet, at http://www.dol.gov/whd/statistics/

2008FiscalYear.htm [hereinafter 2008 Fact Sheet

(noting that for fiscal year 2008, “more than 197,000

employees received a total of $140.2 million in

10

minimum wage and overtime back wages as a result

of Fair Labor Standards Act (FLSA) violations”).

To ensure that these low-wage workers can

access the judicial process to vindicate violations of

their rights under the FLSA, Congress included

within the statute a fee-shifting mechanism whereby

prevailing plaintiffs are entitled to recover

reasonable attorney’s fees. See 29 U.S.C. § 216(b);

see also Fegley v. Higgins, 19 F.3d 1126, 1134-35 (6th

Cir. 1994). The award of attorney’s fees to a

prevailing FLSA plaintiff is mandatory. See 29

U.S.C. § 216(b). Allowing recovery for prevailing

FLSA plaintiffs’ legal fees enables private citizens to

retain capable counsel to prosecute violations of their

rights without risking financial hardship _ to

themselves. Shifting a prevailing plaintiff's legal

fees to his or her opponent helps ensure private

enforcement of FLSA grievances. See Heder v. City

of Two Rivers, 255 F. Supp. 2d 947, 952 (E.D. Wis.

2003), aff'd, 93 F. App’x 81 (7th Cir. 2004); cf

Quaratino v. Tiffany & Co., 166 F.3d 422, 426 (2d Cir.

1999) (“Congress enacted fee-shifting in civil rights

litigation precisely because the expected monetary

recovery in many cases was too small to attract

effective legal representation.”). By including a fee-

shifting provision in the FLSA, Congress sought to

enable recovery for victims of FLSA violations for the

full amount of back pay or overtime to which they

are entitled, plus penalties, without having to then

spend this money to cover the legal fees. See

Madarix v. Dize, 153 F.2d 274, 275-76 (4th Cir. 1946).

1]

B. The Increasing Need for FLSA

Enforcement

Every week, millions of low-wage workers across

the country are cheated out of a significant portion of

their pay. A 2008 survey conducted by Amicus

National Employment Law _ Project (“NELP”)

revealed that more than one-fourth of the 4,387 low-

wage workers surveyed in Chicago, Los Angeles and

New York had been paid less than the minimum

wage in the previous week, while more than three-

quarters of those workers entitled to overtime pay

had not received it. Annette Bernhardt et al., Broken

Laws, Unprotected Workers 2 (2009) [hereinafter

Broken Laws|. The average worker surveyed earns

just $339 a week and had been cheated out of $51, or

roughly 15% of his wages, the previous week. /d. at

5. According to NELP estimates, employers for over

one million workers’ unlawfully cheat their

employees out of more than $56.4 million in wages

each week in Chicago, Los Angles, and New York

alone. J/d. at 6.

Indeed, over the past several years, the number of

FLSA violations has grown dramatically. In 2008,

Department of Labor investigators investigated the

employers of approximately 77,000 low-wage workers

and determined that these workers were owed $57.5

million in earned minimum wage and overtime back

wages by their employers — a 77% increase over the

amount of back wages WHD _ investigators

determined that investigated employers owed to

12

- . ; = ‘ 3 ‘ > ’

workers in low-wage industries in 2001." 2008 Fact

Sheet at 3.

In some low-wage industries, non-compliance

with the FLSA has become standard industry

practice. The restaurant, retail, manufacturing,

health care, and construction industries—which

collectively provide an estimated 58% of all low-wage

jobs—are among the worst offenders. David Weil,

Improving Workplace Conditions Through Strategic

Enforcement 8 (2010) [hereinafter Strategic

Enforcement). Study after study has found shocking

levels of non-compliance in these industries." Craig

Becker & Paul Strauss, Hepresenting Low-Wage

Workers 1n the Absence of a Class: The Pecular Case

of Section 16 of the Fair Labor Standards Act and

3° This number grossly underestimates the amount of back

wages and overtime pay owed to low-wage workers, as it is

based only on those cases WHD decided to investigate—a

number that reflects only a small] fraction of the milhons of

FLSA violations that occur each year. See infra Section ILC.

4 See, e.g, Restaurant Opportunities Center of New York &

New York City Restaurant Industry Coalition, Behind the

Kitchen Door 14 (2005) (13% of New York City restaurant

workers are paid less than minimum wage and 59% were are

not. properly paid overtime); see also U.S. Dep't of Labor,

Nursing Home Compliance Fact Sheet (2000) (60% of nursing

homes are not complaint with the FLSA); Lonnie Golden &

Helene Jorgensen, Economic Policy Institute, 77me After Trme-

Mandatory Overtime in the U.S. Economy (2002), at 7 (27% of

contract construction employees are not properly paid

overtime); U.S. Dep't of Labor, Poultry Processing Compliance

Survev Fact Sheet (2001) (100% of 51 investigated poultry

plants are noncompliant with FLSA).

13

the Underentorcement of the Minimum Labor

Standards, 92 Minn. L. Rev. 1317, 1318 (2007)

(‘Numerous investigations have documented

shocking levels of noncompliance with the minimum

standards established in the FLSA, particularly in

low-wage industries such as the janitorial, food

service, garment, and hospitality industries.”) For

example, NELP found that 40% of the sewing and

garment workers it surveyed were paid less than

minimum wage and 70% were not properly paid

overtime. Broken Laws at 39; see also, e.g., U.S.

Dep't of Labor, Close to Half of Garment Contractors

Violating Fair Labor Standards Act, BNA Daily

Labor Report (May 6, 1996), avarlable in Westlaw

1996 DLR 87; U.S. Dep't of Labor, WHD Press

Release: U.S. Department of Labor obtains default

Judgment in ~=6© Southern California garment

manufacturer case, Dec. 14, 2010, available at

http://www.dol.gov/opa/media/

press/whd/whd20101694.htm.

Within particular industries, noncompliance with

the FLSA. disproportionately impacts minority

workers. Studies have shown that women are

significantly more likely than men to be cheated out

of wages and employers are three times more likely

to unlawfully withhold wages from African-American

workers than from white workers. Broken Laws at

5.

As these statistics demonstrate, the nation is

currently facing “a crisis of wage theft.” Kim Bobo,

Wage Theft in America 117 (2009). The Employer

Policy Foundation, an employer-supported think

tank, estimates that workers would receive an

14

additional $19 Jdi//ion each year if all employers

complied with the FLSA’s overtime provision. Craig

Becker, A Good Job for Everyone, Legal Times, Sept.

6, 2004, at 54. Absent intervention, this crisis will

only worsen. When cheating workers out of their

earned wages becomes standard practice within an

industry, honest employers are unfairly

disadvantaged and suffer competitive harm. As a

result, they face intense economic pressure to level

the playing field by underpaying their workers.

Given the scale of the crisis of wage theft facing the

nation’s workers, and the likelihood that this crisis

will worsen absent intervention, there is an urgent

need to vindicate violations of the FLSA and to hold

employers accountable for the unlawful wage theft.

C. Private Enforcement of the FLSA is

Critical

At the same time that theft of low-wage workers’

wages and over-time pay has become increasingly

prevalent, the government resources devoted to the

enforcement of the FLSA have diminished. As of

2008, the Department of Labor’s Wage and Hour

Division (“WHD”)-—-the division responsible for

enforcing the FLSA and other labor laws’—had just

> The WHD also enforces government contracts labor standards

statutes, the Migrant and Seasonal Agricultural Worker

Protection Act, the Employee Polygraph Protection Act, the

Family and Medical Leave Act, and certain provision of the

Immigration Reform and Control Act of 1986. U.S. Dep't of

Labor, Wage and Hour Division Mission Statement,

http://www.dol.gov/whd/about/mission/whdmiss.htm;, see a/so

generally Bobo at 7-15.

15

750 investigators and is responsible for protecting

more than 130 million full- and part-time workers in

approximately 7 million workplaces. Bobo, supra, at

116-17. Put differently, the WHD had just one

investigator for every 170,000 workers and 9,000

workplaces. Jd.

Indeed, as the labor market has grown, the

number of investigators devoted to the enforcement

of the FLSA’s minimum wage and_ overtime

provisions and the number of investigations handled

by each investigator has fallen, rather than

increased.” In the last three decades, the labor force

grew by 52%, but the number of WHD inspectors

enforcing federal minimum wage and overtime laws

fell by 31%. Broken Laws at 52; see also Strategic

Enforcement, at 6. And, in the last decade, the

number of investigations handled by each

investigator plummeted. In 1998, the average

investigator conducted 52.6 investigations; in

contrast, in 2008, the average investigator conducted

just 31.5 investigations. Strategic Enforcement, at 7.

Overall, the WHD conducted 49,521 investigations in

1998 and a mere 23,043 investigations in 2008. /d.

6 Annette Bernhardt and Siobhan McGrath calculate that

between 1975 and 2004 the number of WHD investigators

dropped 14%, the number of investigations dropped 36%, and

the number of workers paid back wages dropped 24%. Annette

Bernhardt & Siobhan McGrath, Brennan Center for Justice,

Trends in Wage 2d Hour Enforcement in the U.S. Department

of Labor, 1975-2004, 1 (2005). During the same period, the labor

force grew by 55% and the number of workplaces grew by 112%.

ld.

16

Because of the inadequate resources devoted to

public enforcement, the federal government’s efforts

to enforce the FLSA do little to discourage employers

from flouting the FLSA’s minimum wage and

overtime provisions. Given the limited number of

investigators handling such cases, the odds are low

that the WHD will investigate even large employers

who are likely to be noncompliant with the FLSA’s

standards. For example, the twenty largest fast food

restaurant chains in the United States face a mere

0.008 likelihood that they will be investigated by the

WHD in any given year. /d., at 6, 51. And the

likelihood that a garden-variety workplace will be

investigated is even lower: one study estimates that

the probability of an investigation in the average

workplace is well below 0.001. David Weil &

Amanda Pyles, Why Complain? Complaints,

Compliance, and the Problem of Underenforcement

in the U.S. Workplace, 27 Comp. Lab. L. & Pol’y J

59, 62 (2005).

Moreover, even if a worker does file a complaint

to the WHD, there is no guarantee that it will

investigate that complaint. In recent years, the WHD

has launched fewer investigations in response to

worker complaints. In 2008, the WHD conducted

roughly half the number of investigations in

response to worker complaints that it did a decade

earlier. Strategic Enforcement, at 7. A 2009

Government Accountability Office investigation of

the WHD reveals that the WHD’s failure to respond

adequately to worker complaints is the product not

only of a lack of manpower, but also of systematic

failures within the WHD. U.S. Gov't Accountability

17

Office, GAQ-09-458T, Wage and Hour Division's

Complaint Intake Processes Leave Low Wage

Workers Vulnerable to Wage Theft (Mar. 25, 2009)

[hereinafter Jntake Process]. Of the ten fictional

complaints filed by undercover GAO employees, the

WHD successfully investigated only one. Jd. at 4.

The WHD’s response was “sluggish,” the intake

process “ineffective,” and, in one case, a WHD

investigator lied about having investigated a

complaint. /d. at 1. Moreover, the GAO identified at

least ZO specific cases—affecting at least 1,160 real

employees—that the WHD had inadequately

investigated. The WHD took more than one year to

respond to some complaints, closed cases based on

unverified denials of employers, and dropped cases

when employers did not return phone calls. /d. The

GAO concluded that its “investigation clearly shows

that the Department of Labor has left thousands of

actual victims of wage theft who sought federal

government assistance with nowhere to turn.” /d. at

24.’

Compounding this problem is the fact that even if

a worker's complaint is investigated and the WHD

finds that the employee is entitled to back wages, th

employee is unlikely to recover the wages owed to

him if the employer decides not to pay him. When an

employer fails to pay, the WHD refers the case to the

‘ In response to the GAQO’s report, the Obama Administration

has reportedly added 250 investigators to the WHD in January

of 2010. Whether these efforts will address the WHD’s

manpower shortage and the systematic problems witnessed by

GAO is yet to be seen

18

Office of the Solicitor to collect on the debt. Like the

WHD, the Office of the Solicitor has diminished in

size over the past two decades, losing approximately

one-fourth of its staff. Strategic Enforcement, at 90.

This has had an enormous impact on the number of

FLSA cases the Solicitor handles because the

Solicitor has discretion as to whether to litigate a

FLSA case. Lack of resources has led to few litigated

cases. In fact, the number of FLSA lawsuits filed by

the Solicitor’s Office decreased at the same time that

violations of the FLSA were on the rise, dropping

from 705 in 1987 to 151 in 2007. Jd.

The Solicitor’s Office’s limited capacity to collect

employer debts undermines the effectiveness of the

WHD’s hmited enforcement of the FLSA. A 2007

case 1s illustrative. Masonry Structures, a

construction company, had promised to pay eleven

workers $13 per hour, but paid them nothing at all.

In total, Masonry Structures owed these eleven

workers more than $15,000. Six months after the

violation was reported to the WHD, a WHD

investigator informed the workers that Masonry

Structures had agreed to pay. When Masonry

reneged on its promise, the Solicitors Office

“considered” suing, but ultimately did nothing. Bobo,

supra, at 171. Even though the WHD had

determined that Masonry Structures had failed to

pay these workers, they were no better off for having

complained to the WHD, and the employer suffered

no penalty for stealing wages and refusing to comply

with WHD’s determination.

Collectively, the lack of resources at the WHD

and the _ Solicitors Office and the resulting

19

unwillingness or inability to investigate and litigate

meritorious FLSA complaints has dramatically

reduced the federal government’s ability to protect

low-wage workers against pervasive wage and hour

violations under the FLSA. In light of the federal

government’s failure to vindicate the rights of low-

wage workers, “the private bar is carrying most of

the burden before the courts.” Bobo, supra, at 177.

While the Solicitor’s Office filed only 151 lawsuits in

2007, private attorneys filed over 7,000 that same

year. In fact, individual WHD investigators have

been known to advise complainants that filing a

private suit is their best, or only, option. See /d. at

118; /ntake Processes at 8-9. It is therefore clear

that if the law on attorney’s fee recovery renders the

private bar unwilling to take on meritorious FLSA

claims of low-wage workers, those workers wil] be

left without a remedy. See Bobo, supra, at 177.

III. REDUCTION OF AN ATTORNEYS FEE

AWARD BASED ON THE SIZE OF

PLAINTIFFS RECOVERY WILL HURT

LOW-WAGE WORKERS’ ABILITY TO

RETAIN COUNSEL TO VINDICATE THEIR

RIGHTS UNDER THE FLSA

Because low-wage workers must increasingly

rely on private enforcement of the FLSA, it is critica]

that they be able to attract and retain qualified

counsel. Traditional fee arrangements do not work

for most FLSA claimants, as low-wage workers

generally cannot afford to pay an attorney by the

hour, and most FLSA claimants’ total damages are

20

insufficient to justify a standard contingent-fee

arrangement. For example, the average worker

cheated out of wages by one of the top twenty fast

food restaurant chains in the United States could

recover just $178 in wages, plus liquidated damages,

if completely successful in his FLSA claim. Strategic

Enforcement, at 54. For a fast-food employee

working 40 hours per week at the federal minimum

wage, this seemingly modest damages award equals

well over a week’s pay—a significant recovery by

most standards. Nevertheless, this amount clearly is

insufficient to attract and retain a capable attorney

to handle the case on contingency. Even the

“simplest” FLSA case “if carried through trial, is

likely to require at least ten thousand dollars worth

of attorney time and in most cases the fees and costs

incurred will be much higher.” Becker & Strauss,

supra, 92 Minn. L. Rev. at 1333.

For these reasons, attorneys representing low-

wage workers in FLSA cases rely on the FLSA’s fee-

shifting mechanism to compensate them for their

services in Jitigating meritorious claims. Indeed,

given FLSA claimants’ general inability to pay

counsel, it is only the prospect of fee-shifting that

8Gentry v. Superior Court, 165 P.3d 556, 564 (Cal. 2007)

(“[IJIndividual awards in wage-and-hour cases tend to be

modest. In addition to the fact that litigation over minimum

wage by definition involves the lowest-wage workers, overtime

litigation also usually involves workers at the lower end of the

pay scale, since professional, executive, and administrative

employees are generally exempt from overtime statutes and

regulations.”).

2]

renders representation — possible. The Fourth

Circuit’s holding in this case will significantly

increase the risk that attorneys who _ achieve

complete success on behalf of low-wage workers will

not be paid the full lodestar. This, in turn, will make

it more difficult for low-wage workers who have been

cheated out of FLSA-mandated wages to retain

private attorneys to help them recover the wages to

which they are_- entitled, undermining the

effecurveness of the FLSA’s fee-shifting mechanism.

The message the Fourth Circuit has sent to

employers is that they face little risk of hability for

cheating low-wage workers out of damages that,

while significant to the worker, are of “modest value”

in comparison to the average attorney’s fee. Jackson

v. Estelle’s Place, LLC, No. 09-1700, 2010 U.S. App.

LEXIS 16,856, at *7 (4th Cir. Aug. 12, 2010).

Even absent the Fourth Circuit’s holding that

a trial court may reduce an otherwise reasonable

attorneys fee award based on the size of the

recovery, attorneys representing low-wage FLSA

claimants receive only a discounted fee for their

services because the lodestar does not fully

compensate attorneys who bring cases under fee-

shifting statutes. Rather, when an attorney takes

such a case he “assumes a risk of nonpayment” for

which the lodestar will not compensate him.

Pennsylvania v. Delaware Valley Citizens’ Council

for Clean Air, 483 U.S. 711, 715 (1986); see also City

of Burlington v. Dague, 505 U.S. 557, 569 (1992)

(Blackmun, J., dissenting) (“In many cases brought

under federal statutes that authorize fee shifting,

plaintiffs will be unable to ensure that their

1)

attorneys will be compensated for the risk that they

might not prevail”). While the lodestar is calculated

by multiplying the number of hours the attorney

devoted to the case by the attorney’s customary rate,

the customary hourly rates generally reflect lawyers’

expectations that they will be “paid promptly and

without regard to success or failure.” Hensley, 461

U.S. at 448 (Brennan, J., concurring in part and

dissenting in part). Private attorneys who take cases

on contingency, and _ therefore “takle] upon

themselves the risk that they will receive no

payment at all, generally receive far more in winning

cases than they would if they charged an hourly

rate.” Jd. The premium clients pay when their

attorney takes their case on contingency

“reflects...the risk of nonrecovery usually borne by

clients in cases where lawyers are paid an hourly

rate.” Jd. at 448-49. Accordingly, “the expected

return from cases brought under federal fee-shifting

provisions will be less than could be obtained in

otherwise comparable private litigation offering

guaranteed, win-or-lose compensation.” C7ty of

Burlington, 505 U.S. at 568-569 (Blackmun, J.,

dissenting). Given this economic reality, there is a

danger that “[plrudent counsel” will “avoid federal

fee-bearing claims in favor of private htigation, even

in the very situations for which the attorney’s fee

statutes were designed” and “even if the fee-bearing

claim is more hkely meritornous than the competing

private claim.” Jd. at 569.

This Court has made clear that the lodestar is

designed to be the “fee that is sufficient to induce a

capable attorney to undertake the representation of

23

a meritorious...case.” Perdue, 130 S. Ct. at 1672

(emphasis added). If courts have discretion to reduce

a fee award on the grounds that “[aJn attorneys’ fee

should bear some reasonable relationship to the

recovery, Estelle’s Place, 2010 U.S. App. LEXIS

16856, at *7 (quotation marks omitted), the expected

value of a low-wage worker’s meritorious FLSA claim

will no longer be sufficient to induce a capable

attorney to represent him. Equally problematic,

there is a risk that different district courts will have

different views as to what constitutes a “modest

value” warranting a reduction in an attorney's fee

award.

Indeed, the Fourth Circuit’s decision may lead to

the emergence of two tiers of FLSA plaintiffs. The

first tier, consisting of claimants owed tens of

thousands of dollars or more in back wages, may be

able to find a capable lawyer despite the Fourth

Circuit's holding, while the second tier, consisting of

claimants owed several thousand dollars or even

less, may not. In other words, the very lowest paid

workers — the precise group the FLSA was designed

to protect, see, e.g., Brooklyn Sav. Bank, 324 U.S. at

707 n.18 (the FLSA was designed to protect “the

unprotected, unorganized and lowest paid of the

nations’ working population”) — will be the first left

without legal representation as a result of the Fourth

Circuit's holding. This harsh result is inconsistent

with the fundamental goal of the FLSA: to provide

al] individual workers with protection from overwork

and underpay. See Barrentine, 450 U.S. at 739.

Making attorney’s fee awards contingent on

the monetary relief recovered by a plaintiff not only

24

undermines the very purpose of the fee-shifting

mechanism contained in the FLSA, but it also makes

no sense. The Fourth Circuit’s holding assumes that

attorneys representing low-wage workers” with

smaller claims of monetary damages do not deserve

the same remuneration for their time as attorneys

representing chents with larger claims. That is

simply illogical. One hour of an attorney’s time has

the same inherent value whether the claim is for

$100 or $10,000 in lost wages. An attorney htigating

a FLSA claim for a chent will perform essentially the

same work regardless of the amount at stake. She

will conduct the same type of factual investigation,

wrestle with the same legal issues, file the same

amount of motions, draft the same type of briefs, and

prepare for trial in the same manner, without regard

to the damages sought. A rule that permits a

reduction of a fee award based on the amount of the

damages recovered under the FLSA penalizes those

lawyers who represent the lowest paid workers, and

severely limits low-wage workers’ ability to retain

counsel. For these reasons, tying an attorney's

recovery to the amount of damages sought is as

illogical as it is unjust, and trial courts should not be

permitted to reduce an _ otherwise’ reasonable

attorney's fee award on this basis.

25

CONCLUSION

Kor these reasons and those set forth in the

Petition, the Petition for Certiorari should be

granted.

Respectfully Submitted,

PAUL M. SMITH

Counsel of Record

CARRIE F. APFEL

LESLIE V. POPE*

JENNER & BLOCK LLP

1099 New York Avenue, NW

Suite 900

Washington, DC 20001

psmith@jenner.com

*Admitted in VA only; supervised by

principals of the firm

Counsel for Amici Curiat

January 7, 2011