Labor & Employment Law Daily Wrap Up, WAGE-HOUR—SETTLEMENTS—D. Kan.: $981,000 settlement of casino dealers’ tip pooling claims approved; attorneys’ fee award reduced, (Dec 10, 2025)

By Ronald Miller, J.D.

Where the parties propose a percentage of the fund approach, the court has discretion to reduce an award of attorney fees that it determines would be unreasonable under the lodestar approach.

A federal district court in Kansas granted approval of a $981,000 settlement of a collective action brought by casino employees who alleged the employer maintained an unlawful, mandatory tip pooling arrangements by failing to limit participation to employees who customarily and regularly received tips. However, because plaintiffs’ counsel had already litigated the same tip pooling practice at the employer’s casinos in another case, the court determined that a straight percentage award might not be reasonable. Accordingly, the court reduced the attorneys’ fee award to $196,200, which was 20 per cent of the common fund (Perry v. Kansas Star Casino, LLC, No. 24-1183-KHV (D. Kan. Dec. 9, 2025)).

Tip pools. The employee worked as a table games dealer earning a sub-minimum wage plus tips at the employer’s casino located in Wichita, Kansas. The employer required the employee and other dealers to pool their tips with fellow dealers at each casino. The employees alleged that for purposes of paying Paid Time Off (PTO), the employer violated the FLSA by including a “dual job” position in the tip pool. Specifically, the employee alleged that the Dual Rate Supervisor position—where an individual works as both a dealer and a floor supervisor—improperly received PTO from the dealer tip pool for work performed as a nontipped, managerial floor supervisor.

In October 2024, the employees filed suit, alleging that the employer’s tip pooling arrangements at its nine casinos violated the FLSA. According to the employees, the employer maintained unlawful, mandatory tip pooling arrangements for table games dealers because it (1) failed to limit participation in the tip pool to employees who customarily and regularly receive tips, and (2) kept tips received by employees so that managers and supervisors received a portion of the employees’ tips.

The court conditionally certified a collective defined as: All persons employed as table games dealers and included within a tip pooling arrangement at a casino property operated by the employer at any time from January 1, 2022 to March 8, 2024.

Settlement. The employees and the employer reached a collective action settlement that was limited to the 507 members of the tip pool who returned consent forms to join the collective action, which the court conditionally certified. Under the agreement, the employer will pay $981,000 into a Qualified Settlement Fund that will (1) make settlement payments to collective members; (2) pay an administrator the cost of notice and settlement administration ($19,956), (3) pay a service award to the named plaintiff; and (4) reimburse plaintiffs’ counsel’s attorney fees and litigation expenses.

The Qualified Settlement Fund represents 77 per cent of the value of the tip credit and misallocated tips at issue. Members of the collective will each receive a minimum payment of $100 plus a pro rata share based on each individual’s tip credit and misallocated tip damages. In addition to the $981,000, the employer will separately pay the employer’s share of payroll taxes. In exchange for these payments, collective members will release only those claims that were or could have been asserted based on the facts alleged in the complaint. Further, the employer has ceased the challenged tip pooling practice.

Settlement approval. To approve the settlement, the court must find that (1) the litigation involves a bona fide dispute, (2) the proposed settlement is fair and equitable to all parties and (3) the proposed settlement contains an award of reasonable attorney fees. Additionally, the court must determine whether the service award for the named plaintiff is fair and reasonable.

Attorneys’ fees. The only remaining issue was whether the proposed settlement awarded reasonable attorney fees. After the court overruled plaintiffs’ counsel’s request for a fee of one-third of the common fund, the employees’ renewed motion sought $245,250.00 in attorney fees (25 percent of the common fund settlement), litigation expenses of $414.60, and a $1,100 service award to the named plaintiff.

When a settlement creates a common fund, courts apply one of two methods to determine reasonable attorney fee awards: a percentage of the fund or the lodestar method. The Tenth Circuit applies a hybrid approach, which combines the percentage fee method with the specific factors traditionally used to calculate the lodestar.

Where the parties propose a percentage of the fund approach, as they did in this case, the court has discretion to reduce an award of attorney fees that it determines would be unreasonable under the lodestar approach.

Johnson factors. To determine reasonableness, the court relies on the 12 factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), which are: (1) the time and labor required, (2) the novelty and difficulty of the questions presented, (3) the skill required to perform the legal service properly, (4) whether accepting the case precluded other employment by the attorneys, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) any time limitations imposed by the client or circumstances, (8) the amount involved and results obtained, (9) the attorneys’ experience, reputation and ability, (10) the “undesirability” of the case, (11) the nature and length of the professional relationship with the client, and (12) awards in similar cases.

Because plaintiffs’ counsel had already litigated the same tip pooling practice at the employer’s casinos in James v. Boyd Gaming Corp., 522 F. Supp. 3d 892 (D. Kan. 2021), the court determined that a straight percentage award might not be reasonable under Johnson. Accordingly, the court ordered that any renewed motion for approval of the settlement agreement include a full lodestar analysis.

Lodestar calculation. To calculate the lodestar, the court multiplies the hours that counsel reasonably spent litigating by a reasonable hourly rate. In reviewing whether counsel’s hours were necessary, the court considers the following factors: (1) whether the tasks being billed would normally be billed to a paying client, (2) the number of hours spent on each task, (3) the complexity of the case, (4) the number of reasonable strategies pursued, (5) the responses necessitated by the maneuvering of the other side, and (6) potential duplication of services by multiple lawyers, as set forth in Robinson v. City of Edmond, 160 F.3d 1275, 1281 (10th Cir. 1998).

Lodestar analysis. Here, plaintiffs requested fees for 253.4 hours of work between three attorneys and five paralegals or legal assistants from two firms. However, plaintiffs’ counsel had not submitted the contemporaneous time records which are necessary for a “full lodestar analysis.” Specifically, absent detailed billing records, the court could not ascertain several factors identified in Robinson, such as whether the tasks being billed would normally be billed to a paying client, the number of hours spent on each task and potential duplication of services by multiple lawyers.

As to the third factor in Robinson—the complexity of the case—this case was not complex. Plaintiffs’ counsel learned that the employer continued the same tip pooling practice that it had challenged in James. As to the fifth factor—the responses necessitated by the maneuvering of the other side—the employer did not maneuver in a way that would necessitate plaintiffs’ counsel performing more work than typically required for a case of this nature.

However, for purposes of the lodestar as a cross check, the court assumed that plaintiffs’ counsel reasonably expended 253.4 hours on the litigation.

Reasonable rate. The next step in calculating the lodestar is to determine the reasonable hourly rates for counsel. To determine whether billing rates are reasonable, the court establishes a rate for each lawyer based upon the norm for comparable private firm lawyers in the area. Here, the court determined that the requested hourly rates for attorneys was excessive. Applying the reasonable number of hours plaintiffs’ counsel’s law firms spent on the litigation at the rates allowed by the court, the lodestar was $145,725.

Accordingly, the court awarded plaintiffs’ counsel’s attorney fees totaling 20 per cent of the fund ($196,200); (2) plaintiffs’ counsel’s litigation expenses in the amount of $414.60 to be paid from the fund; and (3) a $1,100 service award to the named plaintiff to be paid from the fund.

The case is No. 24-1183-KHV.

Judge: Vratil, K.

Attorneys: Alexander T. Ricke (Stueve Siegel Hanson) for Aaron V. Perry. Brodie Walter Herrman (Smoak & Stewart) for Kansas Star Casino, LLC.

Companies: Kansas Star Casino, LLC

Cases: WageHour ClassActions MinimumWage AttorneysFees KansasNews GCNNews