No. 90-501
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
JACK C. STIMAC, MICHAEL A. TEFFT,
EDWARD C. PETERS, JOSEPH E. GASPAR,
NANCI ELLEN GREEN, RANDY J. ARCHEY,
JOSEPH M. McKAMEY, GEORGE L. DOMME,
MICHAEL D. CROSS, and MICHAEL E. HEISLER,
Plaintiffs and Respondents.
THE STATE OF MONTANA,
Defendant and Appellant.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Thomas M. McKittrick, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
W. D. Hutchison, Assistant Attorney General,
Helena, Montana
For Respondent:
Lawrence D. Anderson, Great Falls, Montana
Submitted on Briefs: February 21, 1991
Decided: June 3, 1991
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Defendant, the State of Montana, appeals from an order of the
District Court of the Eighth Judicial District, Cascade County,
awarding an attorney's fee in accordance with the one-third
contingent-fee agreement entered into between the plaintiffs and
their attorney. We affirm.
The sole issue raised on appeal is whether the District Court
abused its discretion in awarding the full amount of the
plaintiffs1 contingent-fee agreement as a reasonable attorneylsfee
under § 39-3-214 (I), MCA.
The plaintiffs are fire fighters employed by the State of
Montana, Department of Military Affairs, and stationed at the
Montana Air National Guard facilities located at the Great Falls
International Airport. The building in which they are stationed
is owned by the federal government. The equipment used by the
plaintiffs in performing their duties is also owned by the federal
government, but administered by the State. They are paid in part
by the Great Falls International Airport Authority and in part by
the federal government. The money providing their salaries is
administered by the State.
For years, the plaintiffs were required to work more than
eight hours a day and 40 hours a week without receiving overtime
compensation. The plaintiffs made a number of administrative
inquiries concerning overtime pay, but because ofthe confusing and
ambiguous relationship between the state, local, and federal bodies
that employed and paid them, their inquiries were unsuccessful.
Finally, the plaintiffs decided to hire an attorney. They
consulted with two Great Falls practitioners who refused to take
their case. They then contacted attorney Lawrence Anderson, who
agreed to represent them.
The plaintiffs met with their attorney prior to filing the
case. At the meeting, the attorney warned the plaintiffs that
their claims were speculative. He advised them that he would take
the case for an hourly rate of $80 or for a contingent fee.
Because none of the plaintiffs possessed sufficient discretionary
income to pay the hourly rate, they agreed to the contingent-fee
arrangement and signed contracts calling for payment of one-third
of any settlement or judgment secured in their favor by the
attorney.
Six plaintiffs filed suit in December 1984. They were later
joined by four others. As originally filed, the complaint alleged
that the State violated § 39-3-405, MCA, by refusing to pay
plaintiffs overtime compensation for work weeks in excess of 40
hours per week, and 39-4-107, MCA, by requiring plaintiffs to
work in excess of eight hours a day. Plaintiffs sought back pay,
penalties, and attorney's fees. In 1988, the plaintiffs filed an
amended complaint, adding an additional claim under the Fair Labor
Standards Act.
The parties pursued extensive discovery. The plaintiffs filed
motions for summary judgment in June 1986 and again in August 1988.
The State also moved for summary judgment in August 1988. The
District Court denied the 1986 motion, but did not rule on the 1988
motions.
The action was set for trial three times. It was continued
twice, once at the request of the State, and once due to a conflict
in the court's calendar. The second continuance came only a few
days before trial, after the plaintiffs had largely completed
preparation for trial.
Shortly thereafter, the parties settled the case. They filed
a settlement proposal stipulating to entry of judgment three and
one-half months later. Pursuant to the settlement, the State
agreed to pay varying amounts to the individual plaintiffs, based
on length of service and number of overtime hours worked.
Altogether, the plaintiffs received a total of $367,559 in overtime
and interest. The State also agreed to contribute retirement
benefits according to the amount of overtime compensation due each
plaintiff, and to deduct social security taxes from the overtime
payments. The plaintiffs agreed to waive their claims for
penalties under § 39-3-206, MCA. The parties agreed that the
plaintiffs were entitled to reasonable costs and attorney's fees
as provided in 5 39-3-214, MCA. However, they disputed the amount
of the fees and agreed to litigate the issue.
The District Court held hearings on the attorney's fee issue
on March 28 and April 25, 1989. On June 19, 1990, the court issued
findings of facts, conclusions of law, and order, finding that the
contingent-fee agreement was reasonable and awarding fees equalling
one-third of the overtime and interest award, one-third of the
retirement benefits, and one-third of the social security
contributions made by the State. The State appeals from this
order.
The State acknowledges that, under 5 39-3-214, MCA, and the
terms of the settlement, the plaintiffs are entitled to an
attorney's fee. It argues, however, that the District Court abused
its discretion in awarding fees equalling the full amount of the
one-third contingent-fee agreement. It contends that such an award
was unreasonably large.
A party who prevails in a wage-claim action shall be entitled
to a reasonable attorney's fee. Section 39-3-214(1), MCA, provides
as follows:
Whenever it is necessary for the employee to enter or
maintain a suit at law for the recovery or collection of
wages due as provided for by this part, a resulting
judgment must include a reasonable attorney's fee in
favor of the successful party, to be taxed as part of the
costs in the case.
The purpose of this statute is Ifto provide an employee who
wins a judgment for wages due against an employer a vehicle by
which to receive attorneys fees and thus be made who1e.I' Glaspey
v. Workman, 230 Mont. 307, 309, 749 P.2d 1083, 1084 (1988)
(Glaspey I). By passing the attorney's fee obligation to the
employer, the employee's net award is preserved intact and is not
eroded by the cost of litigation.
In Glaspey v. Workman, 234 Mont. 374, 378, 763 P.2d 666, 668
(1988) (Glaspey 11), we held that the district court must consider
seven factors in determining whether an award of attorney's fees
under B 39-3-214(1), MCA, is reasonable. The factors include:
(1) [Tlhe amount and character of the services rendered;
(2) the labor, time, and trouble involved; (3) the
character and importance of the litigation in which the
services were rendered; (4) the amount of money or the
value of the property to be affected; (5) the profes-
sional skill and experience called for; (6) the character
and standing in their profession of the attorneys; and
(7) the result secured by the services of the attorneys.
Glaspey 11, 234 Mont. at 378, 763 P.2d at 668.
Glaspey I1 involved a wage-claim action in which the attorney
charged an hourly rate. The present case, on the other hand,
concerns a contingent-fee arrangement. The plaintiffs here argue
that, when a case concerns a contingent-fee contract, the court
should consider the factors enumerated in Wightv. Hughes Livestock
Co., 204 Mont. 98, 114, 664 P.2d 303, 312 (1983), in addition to
those set out in Glaspey 11.
In Wisht, 204 Mont. at 114, 664 P.2d at 312, we held that, in
workers' compensation cases, the district court should examine
several factors in assessing the reasonableness of a contingent-
fee arrangement. These include:
(1) The anticipated time and labor required to perform
the legal service properly.
(2) The novelty and difficulty of legal issues involved
in the matter.
(3) The fees customarily charged for similar legal
services.
(4) The possible total recovery if successful.
(5) The time limitations imposed by the client or
circumstances of the case.
(6) The nature and length of the attorney-client
relationship.
(7) The experience, skill and reputation of the
attorney.
(8) The ability of the, client to pay for the legal
services rendered.
(9) The risk of no recovery.
Wiqht, 204 Mont. at 114, 664 P.2d at 312 (quoting Clark v. Sage,
629 P.2d 657, 661 (Idaho 1981)) .
We also noted that another factor ''is the market value of the
lawyer's services at the time and place involved. Wiqht, 204
Mont. at 114, 664 P.2d at 312.
The Glaspey I1 and Wiqht factors are quite similar. Wiqht
simply adds elements pertaining to the market value of the
attorney's services--the amount of fees customarily charged, the
ability of the client to pay, and the risk of no recovery--
elements that are pertinent when considering the reasonableness of
a contingent-fee agreement. As we have observed:
Most of the [workers1 compensation] disability claimants
have no other resources for the payment of fees. The
contingency of compensation, whether it stems from an
employment contract or results from the claimants [sic]
indigency, is highly relevant in the appraisal of the
reasonableness of any claim. The effective lawyer will
not win all of his cases, and any determination of the
reasonableness of his fees in those cases in which his
client prevails must take account of the lawyer's risk
of receiving nothing for his services. Charges on the
basis of a minimal hourly rate are surely inappropriate
for a lawyer who has performed creditably when payment
of any fee is so uncertain.
Wiqht, 204 Mont. at 110-11, 664 P.2d at 310 (quoting McKittrick v.
Gardner, 378 F.2d 872, 875 (4th Cir. 1967)).
We hold that the District Court should consider the following
factors when assessing whether to award the full amount of the
contingent-fee agreement as a reasonable attorney's fee under
§ 39-3-214 (I), MCA:
1. The novelty and difficulty of the legal and factual
issues involved;
2. The time and labor required to perform the legal service
properly ;
3. The character and importance of the litigation;
4. The result secured by the attorney;
5. The experience, skill, and reputation of the attorney;
6. The fees customarily charged for similar legal services
at the time and place where the services were rendered;
7. The ability of the client to pay for the legal services
rendered; and
8. The risk of no recovery.
Applying these factors to the present case, we conclude that
the District Court did not abuse its discretion in awarding an
attorney's fee equalling the full amount of the contingent-fee
agreement. Under the circumstances, the fee was reasonable.
1. The novelty and difficulty of the lesal and factual
issues. This was not an ordinary wage-claim action. Rather, the
case presented extremely novel and complex legal and factual
issues. Because of the ambiguous relationship between the
differing state, local, and federal agencies who employedthem, the
plaintiffs failed to fall neatly within any statutory or regulatory
scheme. The State vigorously asserted that the plaintiffs were
exempted from Montana's statutes governing wages and overtime. It
also claimed that the meal and sleep exemptions applied. These
defenses raised both legal and factual issues that required
analysis of time records, pay records, standing orders of the
State, and daily logs.
The complexities of the case were compounded by the fact that
the attorney represented not one plaintiff, but ten. Each claim
depended upon the length of service of each plaintiff as well as
the number of overtime hours worked.
In addition, while the lawsuit was pending, the United States
Supreme Court decided Garcia v. San Antonio Metropolitan Transit
Auth., 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985).
Garcia created additional complications because of the conflicts
between the Fair Labor Standards Act and the Montana wage and
overtime statutes.
2. The time and labor required. Because the case was so
complex, the attorney was required to spend a great deal of time
looking through documents and researching law. One of the
plaintiffs1 expert witnesses, Doug Wold, who had experience in
complex wage and hour litigation, testified that he had expended
in excess of $42,000 in attorney's fees in a case involving three
plaintiffs who sought overtime compensation covering a three and
one-half year period. He testified that the present case was more
complex by virtue of the greater number of plaintiffs and the
longer period of time as well as the additional legal and factual
issues involved.
Although the plaintiffs1 attorney did not keep track of the
number of hours expended on the case, he marshalled evidence
demonstrating that the case was very time consuming. In addition
to conducting extensive factual and legal research, the attorney
vigorously prosecuted the action. He moved for summary judgment
twice and defended against the State's motion for summary judgment
once. He largely completed trial preparation, even though the case
never went to trial. Once the parties agreed to settle the case,
it took three and one-half months to reduce the settlement to a
six-page stipulation for judgment.
3. The character and importance ofthe litisation. There can
be no doubt that the case was important. Indeed, by enacting a
statute providing for attorney's fees to the successful litigant
"[tlhe legislature has recognized the gravity of an employee's
right to wages ... .'I Glaspev 11, 234 Mont. at 378, 763 P.2d at
668-69. Moreover, the case benefited not only the individual
plaintiffs but other similarly situated fire fighters as well. The
legislative appropriation funding the judgment provided benefits
for fire fighters who did not participate in the lawsuit.
4. The result secured. In the face of factual complexities,
lack of legal precedent, and active defense by the State, the
attorney managed to successfully settle the case. The plaintiffs
received overtime and interest awards ranging from $10,461 to
$62,434, as well as retirement benefits. Under the circumstances,
the attorney secured excellent results for the plaintiffs.
5. The experience, skill, and reputation of the attorney.
Montana does not have a pool of lawyers available and experienced
in handling this type of case. The plaintiffs1 attorney is one of
the few in the state who handle complex wage and hour litigation.
6. The fees customarily charaed. A one-third rate is
universally charged in contingent-fee cases. In this lawsuit, it
was probably a conservative rate as the case posed post-collection
risks of funding dependent upon a legislative appropriation and the
governorls approval.
7. The ability of the client to pay. The plaintiffs did not
have sufficient discretionary income to finance the case on an
hourly fee basis. Furthermore, they were informed by the attorney
that they were undertaking some amount of risk in pursuing their
claims. The plaintiffs were both unable and unwilling to assume
the economic risk of an hourly fee contract in the event of no
recovery.
8. The risk of no recovery. As noted above, the case
presented novel legal theories with no established precedent.
Before the plaintiffs1 present attorney took the case, it had been
rejected by two others. Furthermore, the plaintiffs were faced
with the additional risk of depending on an appropriation from the
legislature for funding for their awards. The risks involved in
the case justified the contingent-fee arrangement.
The District Court issued detailed findings of fact, which are
fully supported by the record. The court did not abuse its
discretion in granting the plaintiffs a reasonable attorney's fee
of one-third of the amount of settlement in accordance with the
contingent-fee arrangement.
Affirmed.
We Concur: