Labor & Employment Law Daily Wrap Up, ATTORNEYS FEES—4th Cir.: District court erred in slashing meritorious FLSA plaintiffs’ fees award in half, (Apr 16, 2025)

By Marjorie Johnson, J.D.

A court cannot treat a fee matrix as “‘presumptively reasonable’ and require special justification to deviate from it—even when that matrix is contained in the district court’s local rules.”

Two employees who won mostly at trial on their FLSA claims against their former employer but had their request for approximately $343K in attorneys’ fees slashed in half by the federal district court will get their fee award reconsidered. Vacating the fee order and remanding for further proceedings, the Fourth Circuit held that the judge erred in treating the hourly rates contained in official District of Maryland guidelines as presumptively correct and higher rates as requiring special justification (Arriaza De Paredes v. Zen Nail Studio LLC, No. 23-2309 (4th Cir. Apr. 15, 2025)).

Prevailed at FLSA trial. The two employees sued their former employer alleging violations of the FLSA and Maryland’s state wage-and-hour law. After a five-day bench trial, they prevailed and were awarded roughly 60 percent of their requested damages.

Employees seek $343K in attorneys’ fees. Pursuant to the FLSA’s fee-shifting provision, they sought $343,189.85 in fees. Without proposing a specific number, the employer argued the court should reduce or deny the amount requested.

Court awards $167K. The district court awarded $167,115.49 in fees—just under half of what they sought. The court reached that figure by: (1) setting reasonable hourly rates for their attorneys, paralegals, and paraprofessionals; (2) calculating the hours reasonably worked by each person; and (3) reducing the combined figure by 35 percent because the employees “achieved a moderately successful outcome but not a complete victory.”

“Reasonable” rates. On appeal, the employees challenged the first step—setting reasonable hourly rates—and sought compensation ranging from $180 per hour for paralegals and paraprofessionals to $625 per hour for an attorney with 36 years of experience. In support, they presented evidence that included declarations and an inflation-adjusted fee matrix used by other courts to set hourly rates.

District court’s rationale. The district court began by acknowledging that “[t]he reasonable hourly rate requirement is typically met by compensating attorneys at prevailing market rates” for “the community in which the court where the action is prosecuted sits.” The court also described one of the employee’s declarations as having provided support “for the reasonableness of the hourly rates” they sought. Nevertheless, the court adopted hourly rates for all personnel well below those the employees requested.

The court’s stated reasons for choosing the lower rates all referenced a provision in its local rules captioned “Guidelines Regarding Hourly Rates.” The court described that provision as providing “presumptively reasonable hourly rates keyed to an attorney’s years of experience” and noted that the employees’ proposed rates were all “higher than the applicable Local Rule guideline range.” The court acknowledged their argument that their attorneys had substantially more experience than was reflected in the experience ranges within the rules, but found “that the legal work conducted here was not particularly novel or complex, and it did not require skill beyond the typical case.” The court then declined to approve hourly rates “above those contemplated by the Local Rules.” Because those ranges had not been increased for several years, the court selected hourly rates at the high end of the guidelines ranges.

Wrong rules. Reviewing the district court’s fee award for abuse of discretion, the Fourth Circuit concluded that the court’s “written order applied the wrong rules here,” and reiterated its prior ruling that fee matrices can be “a useful starting point to determine fees.” As the district court’s local rules explain, a published fee matrix can “provide practical guidance to lawyers and judges when requesting, challenging, and awarding fees” and help make fee petitions “less onerous by narrowing the debate over the range of a reasonable hourly rate in many cases.”

In addition, because courts follow “the principle of party presentation,” a district court ordinarily need not consider hourly rates higher than those a fee-seeking party requests or lower than those with which the opposing party counters. The court may accept the parties’ framing of the dispute before it, even if that framing has been influenced by a fee matrix. Once a fee dispute is before it, however, a district court is not necessarily bound by any matrix. A court also cannot treat a fee matrix as “presumptively reasonable” and require special justification to deviate from it—even when that matrix is contained in the district court’s local rules.

Prevailing market rates. Instead, the court must consider all relevant evidence to determine “the prevailing market rates in the relevant community,” including lawyer affidavits, fee awards in similar cases, general surveys, fee matrices, and even its “own personal knowledge.” The court may not elevate a matrix above all other types of evidence or treat a matrix as establishing a presumptive answer or range of answers.

Here, the district court’s fee order fell “on the impermissible side of that line.” Indeed, the court stated it “will not approve hourly rates above those contemplated by the Local Rules” and found that “the reasonable hourly rates are those at the high end of the guideline ranges set forth in the Local Rules.” The fee ranges listed in the district court’s local rules thus appear to have had a substantial anchoring effect on the court’s ultimate fee award.

“That was legal error,” concluded the Fourth Circuit. Just as the Supreme Court has held that district courts “may not presume that the Guidelines range is reasonable” when sentencing a criminal defendant, they may not treat court-produced fee matrices as setting a baseline from which departures are disfavored and require special justification.

The case is No. 23-2309.

Judge: Heytens, T.

Attorneys: Andrew George Balashov (Melehy & Associates LLC) for Flor I. Arriaza De Paredes. Neil R. Lebowitz (Law Office of Neil R. Lebowitz, LLC) for Zen Nails Studio LLC.

Companies: Zen Nails Studio LLC

Cases: AttorneysFees WageHour Procedure MarylandNews NorthCarolinaNews SouthCarolinaNews VirginiaNews WestVirginiaNews GCNNews