A Florida federal court recently dismissed an FLSA action as moot, thereby denying plaintiff’s counsel a fee recovery, after plaintiff’s counsel deposited a check representing full compensation for plaintiff’s actual and liquidated damages.

But in her decision in Craig v. Digital Intelligence Systems Corp., Case No. 8:10-CV-2549-T-EAJ (M.D. Fla., November 2, 2011), Judge Elizabeth Jenkins of the United States District Court for the Middle District of Florida ruled that the Eleventh Circuit Court of Appeals’ decision in Dionne v. Floormasters, 647 F.3d 1109 (11^th Cir. 2011) – in which the Eleventh Circuit affirmed the dismissal of an FLSA case on mootness grounds – was not controlling, because “plaintiff in Dionne agreed that his claim was moot and should be dismissed. . . .  As a result, the Eleventh Circuit did not address the district court’s ruling that the action was rendered moot by the defendant’s tender of full compensation.”

In deciding that issue, Judge Jenkins declined to follow a recent ruling by Middle District Judge James Whittemore in Klingler v. Phil Mook Enters., Inc., No. 8:11-CV-1586-T-27TGW, 2011 U.S. Dist. LEXIS 110205 (M.D. Fla. Sept. 14, 2011).  In Klingler, Judge Whittemore ruled that allowing the defendants to avoid responsibility for attorney’s fees would run counter to the FLSA’s goal of fully compensating a wronged employee and that the tender was an attempt to circumvent the requirements of Rule 68.  Judge Jenkins wrote that “the issue of attorney’s fees is collateral to the merits of Plaintiff’s FLSA claim. And Klingler is distinguishable from the present case because the plaintiff in Klingler denied receiving the tender payment.”  In contrast, Judge Jenkins noted:

Plaintiff’s acceptance and endorsement of a check for full compensation for damages, coupled with the deposit of the funds in the law-firm trust account, rendered his claims moot. Here, it is undisputed that Plaintiff and his counsel accepted the check even though his counsel was on notice that the check was tendered for the purpose of mooting Plaintiff’s claim. Plaintiff endorsed the check, and his counsel deposited it in the law-firm trust account. That the check was in Plaintiff’s name and he endorsed it strengthens the conclusion that Plaintiff accepted the tender of full compensation for damages.

Judge Jenkins went on to hold that plaintiff did not have a right to an award of attorney’s fees and costs under the FLSA because plaintiff was not the prevailing party:

There has been no adjudication on the merits of Plaintiff’s claim, and Digital’s tender of damages does not include an offer of judgment on specified terms pursuant to Rule 68, Fed. R. Civ. P. Further, the parties are not seeking judicial approval of a settlement of Plaintiff’s claim. Consequently, none of the three conditions that would entitle Plaintiff to prevailing party status have been met.

But would Judge Jenkins have ruled differently if plaintiff had not endorsed the check? Perhaps. In her decision, Judge Jenkins cited approvingly to Judge Kenneth Ryskamp’s decision in Gathagan v. Rag Shop/Hollywood, Inc., No. 04-805200-CIV, 2005 WL 6504749, at *1 (S.D. Fla. May 9, 2005), in which the court commented that instead of trying to revoke the acceptance, the proper procedure for protecting a plaintiff’s right to an attorney’s fee award would be for counsel to “instruct his client to delay acceptance of a tender until a satisfactory fee arrangement is reached or the parties agree that the tender represents an offer of settlement or judgment.”

So where does that leave us in the post-Dionne world of FLSA litigation?  Suppose the defendant tenders full compensation to the plaintiff, but the plaintiff rejects the tender, or delays it in an attempt to reach a fee arrangement with defense counsel, or an agreement that the tender represents an offer of settlement or a judgment.  What should the defendant do then?  Shouldn’t defendant take the position that the tender of full compensation itself renders the case moot, regardless of whether the plaintiff accepted the tender?  Judge Ryskamp’s earlier decision in Gathagan suggests that this is exactly what the defendant should do:

The mootness doctrine applies to FLSA actions. Cameron-Grant v. Maxim Healthcare Services, Inc., 347 F.3d 1240, 1244 (11th Cir. 2003).  Defendant's tender of Plaintiff's maximum recoverable damages has rendered her case moot, and the motion to dismiss with prejudice is granted.  Buckhannon, 532 U.S. at 601, 121 S.Ct. at 1838.

Gathagan v. The Rag Shop/Hollywood, Inc., 2005 U.S. Dist. LEXIS 47235, 6-7 (S.D. Fla. Feb. 9, 2005).  Precedents from other circuits hold that a plaintiff cannot avoid mootness by rejecting an unconditional tender of amounts owed. See Rothe Development Corp. v. Department of Defense,  413 F.3d 1327, 1331 (Fed. Cir. 2005)(a plaintiff may not prolong a case merely by refusing to accept a valid tender); Holstein v. City of Chicago, 29 F.3d 1145, 1147 (7th Cir. 1994) (a plaintiff “may not spurn this offer of all the damages he is owed and proceed to trial”).  This appears to be true in FLSA cases. See Thomas v. Interland, Inc., 2003 WL 24065651, *3 (N.D. Ga. 2003)(“Courts have repeatedly held that a plaintiff's claim becomes moot when a defendant offers the plaintiff all relief he could receive if his claim were fully litigated, even if the plaintiff does not accept such offer.”).

Is that the law in FLSA cases that are decided post-Dionne, or isn’t it?  It may take another decision by the Eleventh Circuit to resolve this issue once and for all.  Until then, I think we are going to see many district court decisions in the Eleventh Circuit grappling with these questions. 

Defense lawyers should always remove Fair Labor Standards Act cases to federal court, right?

I thought so until last October, when Florida’s Third District Court of Appeals, relying on the U.S. Seventh Circuit Court of Appeals’ decision in Kasten v. Saint-Gobain Performance Plastics Corp., 570 F.3d 834, 838-40 (7th Cir. 2009), ruled that to “file” a complaint under the FLSA, the employee must complain in writing.  See Alvarado v. Bayshore Grove Mgmt., LLC, 2010 Fla. App. LEXIS 15020 (Fla. 3d DCA 2010).  This decision was at odds with precedent in the U.S. Court of Appeals for the Eleventh Circuit (which covers Florida, Georgia, and Alabama).  I wrote a blog post at the time recommending that defense attorneys reconsider their practice of removing FLSA retaliation cases to federal court.  If the employee did not make a written complaint, the employer was probably better off in state court, where the employer could argue that the employee did not engage in protected activity under the FLSA.  

In March of this year, the United States Supreme Court vacated the Seventh Circuit’s decision in Kasten, holding that oral complaints can suffice under the FLSA.  See Kasten v. Saint-Gobain Performance Plastics Corp., 131 S. Ct. 1325 (U.S. 2011).  I thought that it was back to business as usual, and that defense attorneys should resume their practice of removing FLSA retaliation cases to federal court. 

Now I’m re-thinking that strategy again.  Last week, the Third DCA issued a new decision in Alvarado that acknowledges the Supreme Court’s holding in Kasten, but once again seems to  construe the concept of protected activity under the FLSA more narrowly than Eleventh Circuit precedents.  See Alvarado v. Bayshore Grove Mgmt., LLC, 2011 Fla. App. LEXIS 12136 (Fla. 3d DCA. Aug. 3, 2011).

In Alvarado, the plaintiff described his complaint to his employer as follows:

Just before I was fired on July 11, 2007, I complained to Defendant's management that I was not receiving the correct amount of pay since my time records were altered and/or falsified so as to avoid having to pay me overtime.

The Third DCA held that “[i]t is obvious that this ‘complaint’ fell far short of the degree of specificity and reference to the statute required by the Supreme Court [in Kasten].”  In Kasten, the Supreme Court held that “[t]o fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.”

The Alvarado decision once again seems at odds with Eleventh Circuit precedents and other federal court decisions, under which employees can engage in protected activity by complaining about a practice that is regulated by the FLSA without mentioning the FLSA by name.  See, .e.g,  EEOC v. White & Son Enters., 881 F.2d 1006, 1011-12 (11th Cir. 1989) (finding that employees' informal complaints concerning unequal pay, which did not involve citation of the Equal Pay Act or the FLSA, constituted protected activity); Debrecht v. Osceola County, 243 F. Supp. 2d 1364, 1374 (M.D. Fla. 2003) (finding that employees' informal complaints to employer concerning unpaid overtime constituted protected activity under the FLSA). 

I do not believe the Supreme Court’s decision in Kasten changed this legal standard. But apparently, in the Third District Court of Appeals, an employee must do something more than complain about not receiving overtime pay.  That’s good news for employers, and suggests (once again) that employers may be better off defending FLSA retaliation claims in state court. 

A trial court's award of $72,000 in attorney's fees to the successful plaintiffs in a Fair Labor Standards Act (FLSA) overtime case was in error and must be vacated, according to a recent decision by Florida's Fifth District Court of Appeals, Van Diepen v. Brown (Fla. 5th DCA, January 28, 2011).   

The problem with the fee claim was that plaintiffs' counsel was unable to separate the fees he incurred in prosecution of the successful FLSA claims from the fees incurred in the unsuccessful prosecution of numerous state law claims in the same case. Plaintiffs argued that all  the claims were intertwined and that it was impossible for their counsel to identify the time spent on the overtime claims.  But the court rejected this argument, holding that "[w]here the claims are as distinct from each other as overtime is from fraud or negligent misrepresentation, no attorney's fees are awardable if the attorney billing records do not support the fee." 

The Van Diepen case serves as a reminder to plaintiffs' attorneys that their fee records must be sufficiently detailed to allow the court to distinguish fees incurred on successful claims from those incurred on unsuccessful claims, or at least those claims that are not intertwined with successful ones.  A failure to do so can be an expensive lesson in record keeping -- and a boon to the defense.