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Gristedes Must Pay Workers' $4M Attys' Fees, 2nd Circ. Says

Law 360—Lance Duroni

New York grocery chain Gristedes Foods Inc. is still on the hook for a $3.8 million legal bill chalked up by workers in a long-settled class action against the company over overtime pay, the Second Circuit ruled Wednesday.

A district court judge did not, as Gristedes had argued, abuse his discretion in the fee award to class counsel Outten & Golden LLP, the appeals court said in a summary order that upheld the award “in all respects.”  

Gristedes agreed in 2009 to pay about $3.5 million to settle claims that it underpaid overtime to department managers and night managers who worked for the chain, located mostly in Manhattan, and to reform its overtime procedures.

Payment for the workers’ lawyers was left an open question. In 2011, U.S. District Judge Paul A. Crotty awarded them $3.4 million in fees and about $450,000 in costs, based on their request to be compensated for 14,000 hours work.

On appeal, the grocery chain argued that this number was far too high for an employment case like this, brought on behalf of about five hundred workers. The district court failed to closely analyze the billing records to determine if the number of hours was reasonable, according to Gristedes.

There were “clear examples of overbilling, overstaffing and overcharging,” Gristedes' attorney Ira Glauber of Jaffe & Asher LLP said during oral arguments last week.

But the Second Circuit found that the lower court did enough when it discounted by up to 25 percent the individual rates sought by Outten attorneys, trimming the fee demand by $600,000.

“To the extent Gristedes faults the district court — which presided over the litigation for more than seven years and adjudicated nine major motions and most discovery disputes during that time — for not parsing the billed hours further, we identify no abuse of discretion,” the appeals court said.

In defending its fees, Outten pointed to a finding by Judge Crotty that Gristedes’ litigation tactics drove up the legal bills. The company fought discovery, played hardball on motions and drew out depositions, according to the firm.

Gristedes argued that the district court “clearly erred” in finding that the fees were reasonable in light of the grocery chain’s litigation posture, but the Second Circuit disagreed.

“[B]ecause the district court referenced Gristedes’ litigation tactics only to explain why plaintiffs incurred such high attorney’s fees and not to sanction Gristedes for defending the action as it did, there is no merit to the suggestion that the fee award penalized Gristedes for exercising its constitutional rights,” the appeals court said.

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The plaintiffs are represented by Matthew Brinckerhoff of Emery Celli Brinckerhoff & Abady LLP and Adam Klein, Justin Swartz and Molly Brooks of Outten & Golden LLP.