Other Issues: Compensatory Time and a Report on Claims Processing
1. Extensions for Late Filed Claims
On 3-7-01 Judge Lipscomb E-mailed his letter of opinion to the parties on the request for extensions that had been made and finally made a ruling on the petition that has been filed for attorney's fees. That letter is electronically posted as an attachment to this progress report. I will cover each of those issues in the separate sections of this report.
In early February, I filed a motion to request permission for an extension of approximately 120 Plaintiffs to file late claims. The reasons varied greatly as to why numerous Plaintiffs had missed the deadline. Some just miscounted the due date, some were busy with the holidays, some were dealing with serious family illnesses, or deaths in the family, and some never received notice until after the deadline when they were located by an employee who tracked them via the Internet. Their claim packages had been returned from the post office as undeliverable. The State opposed all extensions of time in the case. In the alternative, the State conceded that if the Court looked at various reasons for extensions, many of them were legitimate. Initially, the State even opposed extensions for those persons who had deaths in their family, but upon reflection the State changed its position for them while still maintaining a blanket opposition to all late claims.
Judge Lipscomb ruled that all persons who either made a claim, or requested an extension by February 15, 2001 would have their claims accepted. Claims made after that date will be considered on a case-by-case basis. There are approximately a dozen of those, which we will be processing. The Judge also carved out an exception for those persons who very recently received actual notice of this lawsuit, by virtue of the Internet tracking service that I had utilized. Given this Court Order, there are now slightly over 1,900 persons who have made claims in this case.
2. The Court Awards Attorney's Fees in Varying Amounts
During two different hearings, Judge Lipscomb had indicated his concern over the proper amount of attorney's fee in this case. Recently, I had supplied him with an exhaustive memorandum detailing numerous awards around the country where Courts approved attorney's fees in the neighborhood of 25% in cases where attorney's fees had to be made out of "a common fund." Judge Lipscomb finally ruled that on claims where there had been no involvement from this office, and the claims were accepted immediately by the State, those persons would pay 15% attorney's fees, and all others would pay 25% attorney's fees. This is something that was not requested by myself, nor any other parties in the case, nor by the Attorney General's office. I am aware of no other class action case where such an Order has been entered.
I am not pleased that Plaintiffs are being treated differently. Sometimes, whether a claim is accepted or rejected depends upon a number of factors well outside of a Plaintiff's control. This is compounded by the fact that claims were initially being rejected by DAS on a 4-to-1 ratio because of mistakes in the questionnaire which caused confusion as to whether paid time off, i.e. sick time, holiday time, or vacation time, should count towards hours worked. As many of you are finding out it does not count.
On the other hand, in an individual case, a standard contingency fee agreement may start at 25% if the case is quickly settled, and goes to 40% if the case is tried, and 50% if the case goes on to the Court of Appeals. This case has been to the Court of Appeals once and is going back. Under my initial contingency fee agreement, I could have easily requested 40%, but upon a review of national case authority for what is the norm for these types of cases, I decided it was appropriate to cut it to 25%. I have no apologies for that amount, and I believe that more is easily justified.
In addition, in individual cases, the percentage of a contingent fee that plaintiffs will pay their attorneys varies largely upon whether or not a defendant settles a case quickly. This depends upon the sophistication of the defendant, be it an individual, a corporation, or a government, and in the expertise of the defendant's attorney. On a daily basis, plaintiffs in litigation will pay a higher percentage of fees because of conduct of the other side which they can't control.
Balancing all of these factors, and having discussed this matter with the Representative Plaintiffs, it is my decision not to contest the Court's Order on attorney's fees. I don't think the way that it is written is particularly fair, but I also believe that an award of 25% should have occurred without exception. David Young suggested that I should view this as an unjustified Court Order reducing fees where a higher fee should have been awarded. That is true from my perspective, but this may strike individual Plaintiffs as unfair. As I am working on challenged claims, I have been telling Plaintiffs about the Court's decision on attorney's fees. One of them immediately asked if accepting the State's contested amount would reduce his attorney's fees. Under the Court's Order, it would not, but it was a very rational question.
The final reason not to appeal this award, is that the Court has widespread discretion on the amount of the attorney's fees to award. Appealing would hold up the issuance of checks for all Plaintiffs. That does not seem to be the fair thing to do.
3. Treatment of Plaintiffs Who Earned Compensatory Time
A number of Plaintiffs in this case are members of labor organizations whose contracts with the State allow them to accrue compensatory time for hours worked over 40 in a work week, but most of those contracts have a limitation on the amount of compensatory time and/or limit the compensatory time to be accrued at the straight time rate as opposed to time and half. Given the Court's ruling that has been appealed, that overtime in this case will be paid out at the "half time rate," and that Plaintiffs who accrue compensatory time can also take it off, a disagreement has arisen as to how to deal with these cases. The State's position appears to be that all Plaintiffs who accrued compensatory time are owed nothing by the State, because at some future date they could take time off.
It is my position on behalf of those Plaintiffs that this State statute looks at overtime on weekly basis. If Plaintiffs worked more than 40 hours in a week, they are entitled to compensation. Plaintiffs who earn comp time at the straight time rate and took it off on other weeks, thereby reduced potential overtime claims in those weeks, so the State has already received credit for the comp time that was earned. The matter will be presented to the Court for resolution and will cause those cases where Plaintiffs earned comp time to be challenged until the matter is resolved.
4. The Claims Review Process
The short report is that it is going slowly, and there is a high error rate on claims that have been made. To date 382 claims have been finalized by OSRL and sent to the State and to this office. The State has 45 days to accept or reject those claims. We are still at the beginning stages of this process, so a number of those claims have not been either accepted or rejected. To date 45 claims have initially been accepted, and 83 have been contested.
When a claim is contested we immediately ensure that all relevant documents have been received from DAS, which is supposed to copy them and send them to us. Then the Paralegals in this office copy those documents and mail them to the individual Plaintiff. The Paralegal will call Plaintiffs and set an appointment to go over this matter with me. Most of those appointments are by phone, but some of them are in person. At that point a decision is made as to whether to accept or contest the State's audit of the initial claim. Of the claims that have been contested, an overwhelming majority of them have been because the Plaintiffs were confused with instructions that were in the questionnaire and counted paid time off, such as sick time, holiday time, or vacation time as hours worked. I've been able to settle 24 to date. However, a number of claims have been contested simply because the estimates of overtime have been challenged. If those challenges do not have a basis in fact, I will arbitrate those cases. That arbitration will be at no additional cost to Plaintiffs.
We are getting questions on what is the order that OSRL is processing the claims. OSRL initially informed us that they would be processing the claims on first in first out. They have since modified that and have no particular order of processing these claims. In addition, this office has been processing at least a dozen claims that have been made on behalf of former State employees who are deceased. Those are very time consuming, and I have hired a retired federal wage and hour investigator to work on those. We are in the process of completing questionnaires on behalf of those former employees and sending them to OSRL for processing.
When claims are now either accepted by the State or settled as a result of negotiations between by myself and representatives of the State, they will be entered as judgments. Then the State will issue checks on a monthly basis. As of this moment in time, the State intends to issue those once a month on the first of the month. They will be mailed to me along with a separate check in each case for attorney's fees. I will be forwarding the wage checks on to the Plaintiffs with an instruction as to how to handle this as income at tax time. The short answer is that the percentage of the recovery, which is going to be deducted for attorney's fees, is still income to each Plaintiff, but it is not wages. The amount of the attorney's fees is a Schedule A deduction that can be made by those Plaintiffs who itemize their taxes. As a reminder, PERS will have to go back and credit the income to the years that it was earned and adjust the PERS balance of all Plaintiffs accordingly.
5. The Appeals
The appeals will take one to three years. Issues that will be litigated on appeal are as follows:
(1) Whether elected officials are also employees and should have been allowed to participate in the case.
(2) Whether overtime should have been calculated at time and half, rather than the "half time rate."
(3) Whether pre-judgment interest should have been paid on all claims.
(4) Whether part or all of the employees who terminated their employment with the State should receive penalty pay of one month.
During the appeal process it is important that all Plaintiffs keep my office informed of any change of address that they may have during this time period. My office will be moving because the building I am in is going to be extensively remodeled, and I do not intend to stick around for the noise. I will be sending out a change of address and posting it on my Web Site.
Do not hesitate to contact this office by E-mail or phone if you have further questions that we can answer.