Tran v. Thai

While not a novel concept, this case demonstrates a commonly misunderstood concept in FLSA jurisprudence, an FLSA defendant who prevails at trial, following the tender of an offer of judgment (OJ), is not entitled to an award of its attorneys fees.

In this case the defendant had served an OJ on the plaintiff in the amount of $500.00, which the plaintiff did not accept.  The case then proceeded to trial and resulted in a defense verdict.  Following the defense verdict, the defendant moved for an award of its fees and costs, citing Rule 68, the OJ statute.  Denying the defendant’s motion, the court explained that OJ’s do not shift attorney’s fees in FLSA cases, because: (1) OJ’s only shift fees where a plaintiff prevails at trial, but for less than the amount of the OJ; and (2) the FLSA does not permit fee shifting to a defendant.

Reasoning that an award of the defendant’s attorney’s fees was impermissible here, the court explained:

“There are two flaws in the defendants’ request for the fees they incurred after the plaintiff failed to accept the $500 offer. First, Rule 68 “applies only to offers made by the defendant and only to judgments obtained by the plaintiff. It therefore is simply inapplicable to this case because it was the defendant that obtained the judgment.” Delta Air Lines, Inc. v. August, 450 U.S. 346, 352, 101 S.Ct. 1146, 67 L.Ed.2d 287 (1981); MRO Communications, Inc. v. American Tel. & Tel. Co., 197 F.3d 1276, 1280 (9th Cir.1999); see also CHARLES ALAN WRIGHT, et al., 12 FED. PRAC. & PROC. CIV. § 3006 (2d ed.) (“[Rule 68] is entirely inapplicable … if the defendant, rather than the plaintiff, obtain judgment.”). In Delta Airlines, Justice Powell, concurring in the result noted that the Court’s holding implies that “a defendant may obtain costs under Rule 68 against a plaintiff who prevails in part but not against a plaintiff who loses entirely.” 450 U.S. at 362 (Powell, J., concurring) (emphasis in original). In other words, if the jury in this case had awarded Nguyen $300 against the defendants, they could seek attorney fees under Rule 68(d). But because the jury awarded nothing, and judgment is entered in favor of the defendants, there is no basis to award attorney’s fees. See Farley v. Country Coach, Inc., No. 05-71623, 2008 WL 795788, at *1 (E.D.Mich. Mar.26, 2008); Drewery v. Mervyns Dept. Store, No. C 07-5017 RJB, 2008 WL 222627, at *1-2 (W.D.Wash. Jan.25, 2008).

In support of their argument that Rule 68 is relevant to an award of costs in this case, the defendants have cited Haworth v. Nevada, 56 F.3d 1048 (9th Cir.1995). In that case, however, the plaintiffs prevailed on one of their claims. The Ninth Circuit held that the defendant was entitled to costs under Rule 68 because the defendant’s offer of judgment exceeded the final judgment obtained by the plaintiffs. Id. at 1052. In this case, the defendants prevailed and the plaintiff lost entirely. Rule 68 is not applicable.

The second flaw is that the FLSA does not appear to be in the category of statutes on which Rule 68 operates to include fees. The Supreme Court considered the applicability of Rule 68 to statutory fee-shifting provisions in Marek v. Chesny, 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985). The Court upheld the application of Rule 68 to the fee-shifting provision of 42 U.S.C. § 1983. The Court reasoned that in an action under § 1983, “all costs properly awardable in an action are to be considered within the scope of Rule 68 ‘costs.’ Thus, absent congressional expressions to the contrary, where the underlying statute defines ‘costs’ to include attorney’s fees, we are satisfied such fees are to be included as costs for purposes of Rule 68.”   Id. at 9, 105 S.Ct. at 3016. Because § 1983 defined costs to include attorney’s fees, Rule 68 applied to bar recovery for any attorney’s fees incurred after a Rule 68 offer was made when the plaintiff recovered less by judgment than the settlement offer. Id. The FLSA is different. The FLSA defines attorney’s fees separately from costs. 29 U.S.C. § 216(b). Unlike attorney’s fees in a § 1983 action, attorney’s fees in an FLSA action are not automatically shifted by Rule 68. Accord Fegley v. Higgins, 19 F.3d 1126, 1135 (6th Cir.1994), cert. denied, 513 U.S. 875, 115 S.Ct. 203, 130 L.Ed.2d 134 (1994); Cox v. Brookshire Grocery Co., 919 F.2d 354, 358 (5th Cir.1990) (dicta); Haworth v. State of Nev., 56 F.3d 1048, 1051 (9th Cir.1995).

The motion for judgment is denied to the extent it seeks to include $22,057.90 in attorney’s fees after the offer of judgment.”