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. . . but is the problem the courts&rsquo; use of percentages? Without settlements, class action litigation would likely grind the work of our nation&rsquo;s courts to a halt.&nbsp; One impediment, however, to settlement in many cases is the amount of attorney fees.&nbsp; Particularly in smaller cases, or cases involving relatively minor alleged violations (e.g. minimal off-the-clock-time), the fees may quickly dwarf the claimed amount of recovery.&nbsp; Thus, in a case with, say, an opt-in class of 50 employees claiming 15 minutes a day of off-the-clock time, the parties will face many of the expenses of class or collective litigation, but a relatively small potential recovery.&nbsp; And, what if discovery reveals that the off-the-clock time is really closer to 5 minutes, or may result in no recovery at all, i.e. where employees earn above the minimum wage and have no overtime even with the claimed unpaid minutes? With that in mind, it&rsquo;s easy to argue both ways about the decision in <a href="https://employmentclassactionreport.bakerhostetlerblogs.com/wp-content/uploads/sites/8/2013/12/https-ecf-cand-uscourts-gov-cgi-bin-show_doc-pl-ca.pdf">Villa v. United Site Services of California, Inc., Case No. 12-CV-00318-LHK (N.D. Cal. Nov. 27, 2013)</a>.&nbsp; In that case, the parties settled state and federal wage and hour claims involving claimed missed rest periods for a total of just short of $350,000.&nbsp; The plaintiffs&rsquo; attorney fees were $220,000, and they had an additional $50,000 or so in attorney expenses, leaving the class with only about $80,000, or 22% of the settlement funds.&nbsp; The docket reflects that the case was aggressively litigated by both sides.&nbsp; The plaintiffs successfully requested conditional certification of the FLSA claim, and filed two motions (one successful) to certify all or a portion of the class under state law.&nbsp; There was also an apparently &ldquo;testy&rdquo; dispute, to put it politely, over company interviews of putative class members. Citing the Ninth Circuit&rsquo;s 25% guideline, the district court rejected the settlement because 78% of the settlement fund was allocated to the attorneys&rsquo; fees and costs.&nbsp; But, setting percentages aside, did the plaintiffs&rsquo; attorneys earn a $220,000 fee? OK, it is a large percentage to be sure, but $220,000 also does not seem unreasonable given the work and successes by the plaintiffs&rsquo; attorneys.&nbsp; And, what if the $80,000 for the class was a fair estimate of the amounts they might have recovered had the case proceeded to trial?&nbsp; This is one of the problems of using percentages as a yardstick for attorneys&rsquo; fees in class action litigation.&nbsp; At one extreme; litigated cases with relatively small amounts in dispute per claimant and complex issues in which set percentages may not be enough.&nbsp; At the other; larger cases with greater amounts that settle quickly that may result in a windfall.&nbsp; Of course, few courts analyze the reasons why a defendant might settle &ndash; including the ever-increasing costs of litigation holds, e-discovery, and its own attorney fees, but when a court refuses to approve a settlement on a percentage basis, both sets of parties become hostage to the litigation. Class actions can be complicated things. So, too, their settlements.&nbsp; It&rsquo;s easy to scoff at an award such as that sought in Villa (I did, too, before I started delving into the facts), but the real issue is whether, under the circumstances, the fee is reasonable.&nbsp; Percentages are easy, but they are a rough yardstick at best, particularly at the extremes. The cynic&rsquo;s bottom line:&nbsp; Courts should rely less on percentages to determine attorney fees in class action settlements than on reasonableness. The more practical bottom line:&nbsp; Parties should support attorney fee awards in settlements with something more tangible than mere percentages.

California District Court Rejects FLSA Settlement Due to 78% Fee Award