Kyla Asbury Nov. 21, 2014, 10:13am

CINCINNATI (Legal Newsline) -  A federal appeals court has ruled that attorneys fees should be vacated in a class action lawsuit against ServiceMaster for violations of the Fair Labor Standards Act.

The district court’s order included minimal explanation for the substantial award, according to an opinion filed Nov. 14 in the U.S. Court of Appeals for the Sixth Circuit.

"In approximately four pages of analysis, it emphasized that fee and cost awards are within the discretion of the district court and cited relevant precedent," the majority opinion stated.

Circuit judges Deborah L. Cook and Helene N. White and District Judge Laurie J. Michelson voted in the majority, with White authoring the opinion.

The district court explained that the determination of a reasonable fee must be reached through an evaluation of a myriad of factors examined in light of "the congressional policy underlying the substantive portions of the statute providing for the award of fees."

John Smith and the class members brought their action against ServiceMaster Holding Corp., ServiceMaster Company, Inc., Terminix International Company L.P., and Terminix International Inc. as current and former employees who claimed the defendants violated the Fair Labor Standards Act by not compensating employees for all hours worked and for overtime.

Smith filed his class action on July 14, 2009, in the U.S. District Court for the Western District of Tennessee. Two other plaintiffs, Dominick Massaro and Troy Yates, were added in 2011 and William Craig and Billy Simpkins filed motions to join the class action as well.

On Jan. 11, 2012, ServiceMaster moved to compel Massaro and Yates to arbitrate their claims pursuant to the arbitration provision in the employment agreements.

On Oct. 31, 2012, a telephonic arbitration-management conference was held and the arbitrator asked the parties to submit additional briefing regarding whether the arbitration clause permitted collective actions, which the parties did on Dec. 27, 2012.

The arbitrator then entered a partial final award finding that the "arbitration agreement [did] not preclude this arbitration from proceeding on behalf of a class."

ServiceMaster filed a motion to vacate the arbitrator’s award, which the district court denied on May 21, 2013.

The district court entered judgment on each individual’s FLSA claim, awarding $6,552 to Smith; $2,295.39 to Massaro; $10,733.06 to Yates; $5,137.96 to Craig; and $57,623.20 to Simpkins.

The plaintiffs filed a revised motion requesting $516,890.25 in attorneys fees and $18,908.85 in costs on Oct. 15, 2013, to which ServiceMaster objected. It contested the amount and also argued that the plaintiffs were not prevailing parties in the collective action portion of the case and should therefore not recover fees for work done in pursuit of collective action.

The district court granted the plaintiffs’ motion.

The panel stated the district court did not acknowledge the appellate court’s prevailing legal standard for determining the reasonable hourly rate for the local market, did not evaluate the reasonableness of the hours spent and did not address most of ServiceMaster’s objections.

"Although '[a] request for attorney’s fees should not result in a second major litigation' and 'the district court has discretion in determining the amount of a fee award, . . . [i]t remains important . . . for the district court to provide a concise but clear explanation of its reasons for the fee award,'" the opinion states. "For these reasons, we vacate the award of fees and costs, and remand for further consideration consistent with this opinion."

Smith is represented by Jennie L. Anderson and Lori E. Andrus of Andrus Anderson LLP in San Francisco; Mark E. Burton Jr. and Nancy Hersh of Hersh & Hersh in San Francisco; and R. Christopher Gilreath of Gilreath & Associates in Memphis, Tenn.

The defendants are represented by Steve Likens and Paul Prather of Littler in Memphis, Tenn.

U.S. Court of Appeals for the Sixth Circuit case number: 14-5481

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