A recent Washington Court of Appeals case shows the potential dangers and costs involved in a relatively small wage and hour case. In Fiore v. PPG Industries, Inc., No. 66956-7-1 (Div. 1, July 2, 2012), the parties stipulated to a small amount of damages—$12,203.10—but the plaintiff was awarded over $500,000 in legal fees by the trial court.
The parties in Fiore were fighting over whether the plaintiff was an administrative employee exempt from the overtime provisions of the Washington Minimum Wage Act (MWA). However, the more interesting and frightening point for employers is the amount of legal fees awarded. After receiving an unfavorable arbitration decision, the plaintiff sought a trial de novo in Superior Court. In seeking the trial de novo, the plaintiff faced the risk of having to pay the defendant’s attorney fees if he did not improve his position from the arbitration decision.
Both parties moved for summary judgment with the trial court. The trial court granted in part the plaintiff’s motion for summary judgment ruling that the defendant could not demonstrate that plaintiff was exempt from the MWA. The trial court also found that defendant willfully withheld the additional wages owed to plaintiff. The parties thereafter stipulated to damages of $12, 203.10, and due to the finding of willfulness, the trial court entered judgment against defendant for $24, 406.20.
Plaintiff requested an award of attorney fees and costs, and asked for a fee multiplier of .50 for the risk associated with seeking a trial de novo. The trial court awarded plaintiff fees and costs in the amount of $596,559.47, including a .25 multiplier. Not surprisingly, the defendant appealed. The court of appeals held that the trial court did not err in granting plaintiff’s motion for summary judgment as to the MWA claim.
More importantly, the court of appeals also addressed the awarding to plaintiff of attorney fees and costs. The court of appeals affirmed the trial court’s determination of the “lodestar” amount of attorney’s fees. The “lodestar” amount is calculated by “multiplying the reasonable hourly rate by the reasonable number of hours incurred in obtaining the successful result.” Under Washington law, a large attorney fee award in civil litigation won’t necessarily be overturned merely because the amount at stake in the case is small. The court of appeals found that the trial court’s determination of the number of hours spent and hourly rate billed was reasonable.
However, the appellate court found that the trial court erred by awarding plaintiff a .25 multiplier on the attorney fee award, stating that the extensive and time-consuming nature of the litigation was encompassed within the lodestar amount and the policies cited by the trial court as justification for the multiplier do not support such an award. A fee multiplier is occasionally warranted when the lodestar amount does not adequately account for the high risk nature of the case. Here, the appellate court found that the litigation was not high risk and did not present risky trial strategies or problems of proof. The appellate court overturned the trial court’s award of the multiplier, but affirmed the award of attorney fees and costs in all other respects. As an added kicker, the court awarded plaintiff his fees incurred in the appeal.
This case is a good example of how a relatively small matter can balloon into a much larger overall end cost.