## Facts

- LaMecia McKenzie, represented by Jackson Hanson, LLP, brought a wage-and-hour class action against Federal Express Corporation (FedEx).
- The complaint alleged FedEx failed to include all information required by California wage-statement law on employees’ paystubs.
- The parties litigated for about two years, with several unsettled questions in the case, including whether it could proceed on a class basis.
- The parties reached a settlement creating an $8.25 million common fund.
- The settlement allocated most of the fund to (1) class payments totaling about $5.3 million, using an allocation formula that produced an average payment of roughly $372 per class member, and (2) attorneys’ fees of $2.75 million (33.3% of the fund) to class counsel.
- Any remaining money in the fund would be redistributed to class members as additional payments or paid to a cy pres recipient (a charity).
- Class counsel reported spending about 1,000–1,100 hours litigating the matter and pointed to typical hourly rates of about $550–$600 for comparable work.
- To support the requested one-third fee, counsel also pointed to a prior, separate employment-class settlement of roughly $200 million that awarded class counsel 28% and produced significant nationwide policy changes.

## Issues

1. Whether the court should award class counsel 33.3% of the $8.25 million common fund in attorneys’ fees, as contemplated by the settlement, or instead award a lower percentage under Ninth Circuit common-fund standards.
2. Whether a lodestar cross-check (hours worked times reasonable rates) indicated that a 33.3% award would be disproportionate to the work performed and results obtained.

## Decision

- The court granted final approval of the class settlement creating the $8.25 million common fund.
- The court reduced attorneys’ fees from the requested 33.3% ($2.75 million) to 25% of the common fund (about $2.06 million).
- In evaluating the request, the court used the Ninth Circuit’s 25% starting point for common-fund fee awards and considered whether there was a sound basis to depart upward.
- The court considered counsel’s reported time (about 1,000–1,100 hours) and asserted market rates (about $550–$600 per hour) as a check on whether the percentage request would generate an excessive multiplier.
- The court was not persuaded that comparisons to a much larger, higher-impact employment settlement justified a one-third fee in this wage-statement case, which the court viewed as relatively straightforward.

## Legal Principles

- In Ninth Circuit common-fund class actions, courts commonly start from a 25% fee award as a general reference point and then adjust up or down based on case-specific factors.
- A settlement’s fee provision does not control the fee award; the court must independently evaluate the requested fees as part of its review of the settlement’s fairness to absent class members.
- Courts may use a lodestar cross-check to test whether a percentage-based request is reasonable in relation to the time spent and reasonable hourly rates, and to reduce the risk of a windfall.
- Factors that may justify moving away from 25% include the risks of continued litigation, the results obtained for the class, the difficulty of the legal and factual questions, the quality of representation, and fee awards in comparable cases.

## Conclusion

McKenzie v. Federal Express Corp. approved an $8.25 million settlement of a California wage-statement class action, but the court cut class counsel’s requested one-third fee to 25% after applying Ninth Circuit common-fund standards and checking the request against counsel’s reported hours and market rates, concluding the higher percentage was not warranted on this record.


McKenzie v. Federal Express Corp., 2012 WL 2930201 (2012)