The contract attorneys who sued Skadden Arps Slate Meagher & Flom and Tower Legal Staffing for overtime pay have settled their lawsuit for a fraction of their “maximum liquidated damages,” according to a letter their attorney wrote to the judge.
Tower paid $75,000 according to a settlement agreement that was attached to the letter, filed in U.S. District Court in Manhattan on Tuesday. The settlement has not been approved by the court, but a fairness hearing is scheduled for Dec. 21.
“This recovery would warrant approval under any circumstances, [but] it is a particularly excellent result for this case,” plaintiffs’ attorney D. Maimon Kirschenbaum, of Joseph & Kirschenbaum wrote in the letter to U.S. District Judge Richard J. Sullivan.
In the closely-watched case, the plaintiff David Lola was a contract attorney in North Carolina who in July 2013 sued Skadden and Tower, the legal staffing service that placed him on contracted document review with the firm, accusing them of violating the Fair Labor Standards Act. Two other plaintiffs joined the suit.
The defendants moved to dismiss the action under the theory that contract attorneys are exempt from receiving overtime pay as professionals under the FLSA because they are licensed attorneys engaged in the practice of law. In September 2014, Sullivan agreed and dismissed the case.
However, in August, a three judge panel of the U.S. Second Circuit Court of Appeals, found that Lola was not engaged in the practice of the law and thus was improperly dismissed. They remanded the case to Sullivan.
Kirschenbaum said at the time, “We think this hopefully will open the door for contract attorneys to assert their rights with respect to money owed to them, and to get money paid to them in the future.”
However, the settlement means that it remains an open question as to whether the contract attorneys could have collected overtime pay.
These issues could be litigated in a separate case — Kirschenbaum’s firm is also representing the plaintiff — brought by a different contract attorney, William Henig, who brought similar claims against the law firm Quinn Emanuel Urquhart & Sullivan and the legal staffing company, Providus New York. That case is pending in front of U.S. District Judge Ronnie Abrams.
Kirschenbaum did not return calls seeking comment, and as part of the settlement both he and the plaintiffs agreed not to comment or utilize social media to discuss the settlement. In addition, he agreed to remove any reference to the lawsuit from his law firm’s website.
In the lawsuit, Lola had been paid $25 per hour for document review and was seeking overtime wages for weeks in which he worked in excess of 40 hours during a 15-month period.
As part of the $75,000 settlement, Kirschenbaum wrote in his letter to the judge that each of the three plaintiffs will receive one-third of his or her maximum liquidated damages – though he did not disclose the amounts.
The letter also stated that plaintiffs’ attorneys’ lodestar — defined as the hours expended multiplied by a reasonable rate — exceeded $90,000, and that they have agreed to accept “less than half” of this amount. It will be taken out of the $75,000 settlement.
He did not specify the exact amount but said it will be disclosed at the Dec. 21 hearing.
David Schwartz, a Skadden partner who represented both the firm and Tower, which were both released under the settlement, did not return calls seeking comment.