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E.D.Cal.: Attorney’s Fees and Costs Recoverable Under 216(b) When Plaintiff Obtains Declaratory Relief
This case was before the court on the relatively novel issue of whether an FLSA plaintiff, who prevails in a case solely seeking a declaratory judgment or declaratory relief is entitled to attorneys fees and costs under 29 U.S.C. § 216(b). The court answered the question in the affirmative, reasoning that the broad remedial purpose of the FLSA dictated that such fees are recoverable.
Describing the somewhat unique procedural posture of the case, the court explained:
This case is brought as a collective action under 29 U.S.C. § 201 et seq., the Fair Labor Standards Act (“FLSA”), by Plaintiffs against Defendant Jeffrey Beard in his official capacity as the Secretary of the California Department of Corrections and Rehabilitations. Plaintiffs complain about the calculation of wages by Beard and seek a declaration that Beard is violating the FLSA. Plaintiffs also seek attorneys’ fees under § 216(b). Beard has filed a counterclaim in which he seeks several declarations, the gist of which is that Plaintiffs are not entitled to attorneys’ fees under § 216(b) in this case. Plaintiffs have filed a motion to dismiss under Rules 12(b)(1) and 12(b)(6), and alternatively a Rule 12(f) motion to strike Beard’s counterclaim. For the reasons that follow, Plaintiffs’ motion to dismiss will be granted.
Initially, the court rejected the plaintiffs’ argument that defendant’s claim that attorneys fees was not recoverable on their declaratory judgment count, holding that the issue was one of pure law and thus ripe from the outset of the case.
After summarizing the parties’ respective positions, the court framed the issue before it as follows:
The issue of whether attorney’s fees may be awarded under § 216(b) when only declaratory judgment is sought or obtained appears to be relatively novel. The parties rely to one degree or another on the language of § 216(b), the policies behind § 216(b) and the FLSA in general, and a comparable 2013 district case.
The court then examined the applicable law, noting that it was aware of only two cases discussing the issue before it:
With respect to case law, there are actually two cases that bear on the issue. The first case is Barrows v. City of Chattanooga, 944 F.Supp.2d 596 (E.D.Tenn.2013), which has been cited by Plaintiffs. In Barrows, Fire Captain Barrows sued the City of Chattanooga under the FLSA regarding his employee classification and for past unpaid overtime. Following a bench trial, the district court held that the City had been improperly classifying Barrows as an FLSA-exempt employee and that a declaration that Barrows was a non-exempt FLSA employee was appropriate. See Barrows, 944 F.Supp.2d at 605. As for past unpaid overtime compensation, the district court held that Barrows had failed to meet his burden of proof in that his evidence was essentially too inconsistent and vague. See id. at 606. As a result, Barrows was awarded no monetary damages. See id. With respect to attorney’s fees, the district court held that Barrows could recover attorney’s fees, despite the lack of monetary relief, because Barrow was entitled to a declaratory judgment. See id. at 607. The court explained:
Section 216 of the FLSA provides, in relevant part, that the Court shall allow a prevailing employee to recover his reasonable attorney’s fees, as well as the costs of the action. Defendant has conceded that Plaintiff is entitled to attorney’s fees and costs in the event that he prevails in this action. Although the Court has found that Plaintiff is not entitled to damages for overtime compensation, Plaintiff has prevailed as to his claim for declaratory relief. Judgment for a plaintiff on a claim for declaratory relief will “usually” be satisfactory for finding that the plaintiff has prevailed in order to recover attorney’s fees. Because Plaintiff here has prevailed on his claim for declaratory relief on the merits, the Court finds that he is a prevailing party; accordingly, he is entitled to recovery of reasonable attorney’s fees and costs of this action pursuant to 29 U.S.C. § 216(b).
The second case, which was cited by neither party, is Council 13, American Fed’n of State, Cnty. & Mun. Emples., AFL–CIO v. Casey, 156 Pa.Cmwlth. 92, 626 A.2d 683 (Pa.Commw.Ct.1993).3 In Council 13, employees of the State of Pennsylvania sought inter alia a declaration that the FLSA required Pennsylvania to pay wages and salaries that were coming due, despite an anticipated exhaustion of appropriated funds. See id. at 684. The court held that the employees were entitled to the declaration they sought, and that the FLSA required payment of wages. See id. at 686. With respect to attorney’s fees under § 216(b), the court found that attorney’s fees were not available. See id. After quoting the third and fifth sentences of § 216(b), the court explained:
Although that sentence, as quoted above, itself contains no mention of fault or violation, it rests in a context which plainly involves legal actions against employers in violation. The first sentence in the quoted passage states that it deals with an ‘action to recover the liability prescribed in either of the preceding sentences … against any employer (including a public agency) in any Federal or State court….’ The ‘preceding sentences’ expressly and exclusively refer to situations involving any “employer who violates” [FLSA § 206 or § 207]. However, this present action clearly is not an enforcement action under [§ 216(b) ] to cure and punish a violation, but is one mutually pursuing a declaratory judgment for guidance—no violation having yet occurred. Hence, the federal Act does not mandate imposition of attorney’s fees here….
Id. at 686–87 (emphasis in original).
In both Barrows and Counsel 13, declaratory relief was sought and obtained. In both Barrows and Counsel 13, attorney’s fees under § 216(b) were sought by the plaintiffs. However, only in Barrows, where an actual violation of the FLSA was found, were fees awarded. Because no violation of the FLSA was actually involved in Counsel 13, the court held that attorney’s fees were not appropriate. Together, Barrows and Counsel 13 indicate that an award of only declaratory relief may form the basis of attorney’s fee under § 216(b), but that attorney’s fees are only available when an actual violation of the FLSA is involved.
Turning to the public policy and legislative intent behind the FLSA’s fee provisions, the court reasoned that such policy and intent too supported a reading of the FLSA that permitted the recovery of attorneys fees and costs for a plaintiff who successfully recovered declaratory relief:
With respect to the policy and legislative intent behind § 216(b)‘s attorney’s fee provision, several circuits have made observations. The Fourth and Eleventh Circuits have indicated that Congress intended that a wronged employee “receive his full wages plus the penalty without incurring any expense for legal fees or costs.” Silva v. Miller, 307 Fed. Appx. 349, 351 (11th Cir.2009); Maddrix v. Dize, 153 F.2d 274, 275–76 (4th Cir.1946). Similarly, the Fifth Circuit has indicated that the legislative intent behind § 216(b)‘ s attorney’s fee provision is “to recompense wronged employees for the expenses incurred in redressing violations of the FLSA and obtaining wrongfully withheld back pay.” San Antonio Metro. Transit Auth. v. McLaughlin, 876 F.2d 441, 445 (5th Cir.1989). The Sixth Circuit, in reliance in part on Maddrix, has found that “the purpose of § 216(b) is to insure effective access to the judicial process by providing attorney fees for prevailing plaintiffs with wage and hour grievances; ‘obviously Congress intended that the wronged employee should receive his full wages … without incurring any expense for legal fees or costs.’ ” United Slate, Local 307 v. G & M Roofing & Sheet Metal Co., 732 F.2d 495, 501–02 (6th Cir.1984) (quoting Maddrix, 153 F.2d at 275–76). Finally, the D.C. Circuit has noted that through § 216(b), “Congress clearly hoped to provide an adequate economic incentive for private attorneys to take employment discrimination cases, and thereby to ensure that plaintiffs would be able to obtain competent legal representation for the prosecution of legitimate claims.” Laffey v. Northwest Airlines. Inc., 746 F.2d 4, 11 (D.C.Cir.1984). These cases reflect that the intent behind § 216(b) was to allow employees to obtain payment owed under the FLSA in court without the employee incurring legal fees and expenses, and to encourage attorneys to take FLSA cases.
While the court acknowledged that the defendant’s proposed reading of the plain language of the FLSA could support the defendant’s argument that the fees at issue were not recoverable, ultimately it rejected this view, citing the need to liberally construe the FLSA:
The FLSA as a whole is to be interpreted liberally to the fullest extent of Congressional direction. See Probert, 651 F.3d at 1010. As indicated above, the intent behind the attorney’s fees provision is to ensure that employees obtain full payment owed under the FLSA without incurring legal fees. An interpretation of § 216(b) that would eliminate the availability of attorney’s fees to employees who seek to obtain or who only obtain declaratory relief, would partially frustrate the intent behind § 216(b). Although declaratory relief will not necessarily permit an employee to obtain past payments that were mandated by the FLSA, it could ensure that future payments do conform to the FLSA. That is, declaratory relief could aid an employee in obtaining his full future wages. For example, in a case like Barrows, no monetary relief was awarded despite obtaining declaratory relief.4 Nevertheless, by declaring that an employee is properly classified as a non-exempt FLSA employee, and not as an exempt FLSA employee, the declaratory relief will ensure that the employee begins to receive overtime pay in the future and in conformity with the FLSA.5 As another example, in this case, the dispute is whether Beard is currently calculating overtime correctly. A declaration that the overtime calculations are incorrectly being made will help Plaintiffs to obtain the full future FLSA wages and overtime that would be due to them under a proper calculation. In cases where monetary damages are unavailable or very tenuous, but a violation of the FLSA appears to be occurring, the availability of attorney’s fees provides an incentive to correct the FLSA violation. Without the availability of attorney’s fees, the expense to employees bringing such lawsuits would be increased and the incentive for attorneys to take such cases would be diminished.
There is a broader interpretation of § 216(b) that is also reasonable. The fifth sentence is ultimately tethered to actions under the first and second sentences involving violations of § 206, § 207, and § 215(a)(3). In actions that seek to remedy violations of § 206, § 207, or § 215(a)(3), the fifth sentence requires courts to award attorney’s fees in addition “to any judgment obtained by the plaintiff.” 29 U.S.C. § 216(b) (emphasis added). There is no express limit as to the type or amount of judgment that must be obtained before attorney’s fees are available, rather, so long as “any judgment” is obtained by the plaintiff, attorney’s fees are to be awarded. Declaratory relief has been awarded in this district in an FLSA case against a State, the Third Circuit has held that declaratory relief in an FLSA case is available against a State, and the District of Tennessee has awarded declaratory relief in an FLSA case even in the absence of monetary damages. See Balgowan v. New Jersey, 115 F.3d 214, 217–18 (3d Cir.1997); Barrows, 944 F.Supp.2d at 605;Biggs v. Wilson, 828 F.Supp. 774, 779–80 (E.D.Cal.1991), aff d 1 F.3d 1537 (9th Cir.1993). If a declaratory judgment may be issued in an FLSA case, then it is unclear why a declaratory judgment would not be included under § 216(b)‘s “any judgment” language. As long the lawsuit/action is one that seeks to correct/remedy violations of § 206, § 207, or § 215(a)(3), obtaining a declaratory judgment would constitute “any judgment” and could serve as the basis for attorney’s fees under § 216(b).6 Such an interpretation would permit attorney’s fees not only when unpaid wages for past violations of § 206 or § 207 are obtained, but also for declarations that would essentially end ongoing violations of § 206 or § 207. Declarations that find and/or remedy ongoing violations of § 206 or § 207 would help to ensure that an employee obtains the full wages and overtime that are due him in the future. Correcting violations of § 206 or § 207 and obtaining full wages due are both consistent with congressional intent.
As such, the court concluded that fees and costs are available to an FLSA plaintiff who prevails solely on a claim for declaratory relief:
The Court does not find Beard’s interpretation to be unreasonable. However, as discussed above, there is a broader interpretation of § 216(b) that appears consistent with Congressional intent. Further, the very limited case law that deals with § 216(b) attorney’s fees provision in the context of declaratory relief indicates that attorney’s fees may be awarded. Considering the arguments made by the parties, the limited case law, and the Ninth Circuit’s admonition for a liberal interpretation of the FLSA, the Court concludes that, in cases that seek to correct violations of § 206, § 207, or § 215(a)(3), attorney’s fees under § 216(b) are available when only declaratory relief is sought or obtained, so long as an actual violation of the FLSA by the employer is involved. In this case, Plaintiffs allege ongoing violations of § 207, and seek declarations relating to the proper calculation of overtime under § 207. This case is therefore one that seeks to correct an actual and ongoing violation of § 207. Accordingly, if Plaintiffs prevail and obtain declaratory relief, they will be entitled to attorney’s fees.
The declaratory relief requested by Beard is a pure issue of law, and no further facts need be developed before resolving that issue. The declaratory relief requested by Beard is contrary to the Court’s conclusion. Because attorney’s fees are available under § 216(b) in this case, it is appropriate to dismiss Beard’s request for declaratory relief.
Click Pickett v. Beard to read the entire Order on Plaintiffs’ Motion to Dismiss and Alternatively Motion to Strike.
M.D.Tenn.: FLSA Defendant’s Counterclaim Seeking Declaratory Judgment That Plaintiff Was Exempt Dismissed, Because It Mirrored Plaintiff’s Claim
Richmond v. Centurion Exteriors, Inc.
This case was before the court on Plaintiff’s motion to dismiss the Defendant’s counterclaim, which sought a declaratory judgment that Plaintiff was exempt from the FLSA’s overtime provisions. Because the Plaintiff had made an identical claim for declaratory judgment that the Defendant had misclassified him as exempt, the court dismissed the counterclaim.
Discussing the duplicative counterclaim, the court reasoned:
“In his complaint, Richmond alleged four legal claims, including a violation of the Fair Labor Standards Act (“FLSA”) based upon Defendants’ alleged failure to pay Richmond, a nonexempt employee, wages and overtime for all hours worked before his employment was terminated. (Docket No. 1, Complaint ¶¶ 21, 35-40 (Count I).) Among various forms of relief, Richmond requested a declaratory judgment that the practices he complains about are unlawful. (Id. at 9.) In the answer, Defendants denied the FLSA allegations and raised as an affirmative defense that the FLSA does not apply because Richmond was an “outside salesman” pursuant to 29 U.S.C. § 213 and thus, an exempt employee who was not covered by the FLSA. In addition, Defendants filed a counterclaim seeking a declaratory judgment that Richmond was an exempt employee. (Docket No. 9, Answer at 6-7, 10-11.)
Richmond now seeks dismissal of the counterclaim under Federal Rule of Civil Procedure 12(b)(6) on the ground that the counterclaim is a mirror image of his own claim and Defendants do not allege factual or legal issues different from those raised in the complaint. Defendants emphasize that they carry the burden to prove that Richmond was an exempt employee, and that their counterclaim could have been brought as a separate declaratory judgment action. Additionally, they believe their declaratory judgment request is proper because a ruling could impact the way Centurion classifies current and future employees under the FLSA or a ruling may have ramifications on enforcement actions of the federal government with respect to Richmond’s claim. Defendants also want to assure their ability to obtain a declaratory judgment that Richmond was an exempt employee even if Richmond decides to dismiss his lawsuit voluntarily.
The Sixth Circuit apparently has not addressed this issue outside the patent context. In Dominion Elec. Mfg. Co. v. Edwin Wiegand Co., 126 F.2d 172, 173-74 (6th Cir.1942), the court held that a counterclaim in a patent infringement suit should not have been dismissed prior to trial, but in so holding the court recognized the unique situation often presented in patent cases where defendants seek declaratory judgments on issues beyond the scope of the complaint. In other types of cases, district courts “have disagreed on the proper treatment of so-called ‘mirror-image’ counterclaims.” Erickson v. Brock & Scott, PLLC, 2009 WL 4884424 at *3 (W.D.Tenn. Dec.8, 2009). Some district courts have dismissed counterclaims because they are redundant to the complaint, while other courts have not. Id. (and cases cited therein).
A district court in Ohio found that these “cases are not necessarily at odds.” Pettrey v. Enterprise Title Agency, Inc., 2006 WL 3342633 at * 3 (N.D.Ohio Nov.17, 2006). Relying on 6 Wright, Miller & Kane, FEDERAL PRACTICE & PROCEDURE 2D § 1406, the Pettrey court determined the focus should be on whether the counterclaim serves any useful purpose. Id. If it cannot be determined early in the litigation if the counterclaim is identical to the complaint, “ ‘the safer course for the court to follow is to deny a request to dismiss a counterclaim for declaratory relief unless there is no doubt that it will be rendered moot by the adjudication of the main action.’ ” Id. (quoting 6 Wright, Miller & Kane, FEDERAL PRACTICE & PROCEDURE 2D § 1406). On the other hand, the court should dismiss a redundant counterclaim when it is clear that there is complete identity of factual and legal issues between the complaint and the counterclaim. Id. (citing Aldens, Inc. v. Packel, 524 F.2d 38, 51-52 (3d Cir.1975)). In Pettrey the district court “harbor[ed] no doubt whatsoever that Defendants’ declaratory judgment counterclaims will be rendered moot by the adjudication of Plaintiffs’ claims [,]” and dismissed the counterclaims, distinguishing the case from the patent infringement context in Dominion. Id.
Applying a similar analysis here, the Court concludes that Defendants’ counterclaim raises factual and legal issues identical to those stated in the complaint, and the counterclaim will be rendered moot upon adjudication of the complaint. See id.; Aldens, Inc., 524 F.2d at 51-52; Mille Lacs Band of Chippewa Indians v. State of Minnesota, 152 F.R.D. 580, 582 (D.Minn.1993); Resolution Trust Corp. v. Ryan, 801 F.Supp. 1545, 1556 (S.D.Miss.1992). Defendants secured their opportunity to litigate whether Richmond was an exempt employee by raising that issue as an affirmative defense, on which they carry the burden of proof. See Franklin v. Kellogg Co., — F.3d —-, 2010 WL 3396843 at *4 (6th Cir.2010); Baden-Winterwood v. Life Time Fitness, Inc., 566 F.3d 618, 626 (6th Cir.2009). Even if Richmond decides to dismiss his case voluntarily, Defendants have not identified any case or controversy that would remain for adjudication so that Defendants would have standing to proceed and the Court would possess jurisdiction to render a proper decision, and not an advisory opinion. See Fieger v. Michigan Supreme Court, 553 F.3d 955, 961 (6th Cir.2009) (holding Article III and Declaratory Judgment Act allow district court to enter declaratory relief only in case of actual controversy where plaintiff has standing).
Accordingly, Richmond’s Motion To Dismiss Counterclaim (Docket No. 11) is hereby GRANTED and Defendants’ counterclaim is hereby DISMISSED for failure to state a claim under Rule 12(b)(6).”
W.D.La.: Employer’s Suit Seeking Declaratory Judgment That Employees Are Properly Deemed Exempt Dismissed; Subject Matter Jurisdiction Lacking, Because No Case Or Controversy
City of Monroe v. Otwell
The case was before the Court on the Magistrate Judge’s Report and Recommendation, recommending that the case be dismissed for lack of subject matter jurisdiction, because there was no case or controversy. The employer had filed the instant declaratory judgment complaint against 19 higher ranking members of the Monroe Police Department (the “Police Officer Defendants”). The City sought a judgment against the Police Officer Defendants pursuant to 28 U.S.C. § 2201 declaring that they meet the executive and/or administrative exemptions from the overtime provisions of the Fair Labor Standards Act (“FLSA”). Finding that the case did not present a live case or controversy, the Court dismissed the case.
On June 17, 2009, the Court (sua sponte) questioned whether there was appropriate subject matter jurisdiction in this matter because the complaint contained no allegations to suggest that there is any current dispute between the City and the Police Officer Defendants. (June 17, 2009, Order [doc. # 12] ). The Court then afforded plaintiff 15 days to file a brief, together with appropriate, competent evidence, to establish the court’s jurisdiction to retain the matter. Id. The City was cautioned that if it failed to so comply, or if jurisdiction was found to be lacking, then dismissal would be recommended. Id. It appears from the text of the Order that the parties did not file briefs on the issue of subject matter jurisdiction.
Adopting the Magistrate’s reasoning (from the report and recommendation), finding it lacked subject matter jurisdiction, because there was no dispute between the parties, the Court discussed the applicable law:
“Federal courts are obliged to examine the basis for the exercise of federal subject matter jurisdiction. Smith v. Texas Children’s Hospital, 172 F.3d 923, 925 (5th Cir.1999). A lack of subject matter jurisdiction may be raised at any time. Giles v. Nylcare Health Plans, Inc., 172 F.3d 332, 336 (5th Cir.1999). Furthermore, a court must raise the issue sua sponte if it discovers that it lacks subject matter jurisdiction. Id.
‘A federal court may not issue a declaratory judgment unless there exists an actual case or controversy.” Columbia Cas. Co. v. Georgia & Florida RailNet, Inc., 542 F.3d 106, 110 (5th Cir.2008) (citation omitted). The burden is on the party seeking a declaratory judgment to establish the existence of an actual case or controversy, i.e. “a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. See, Cardinal Chemical Co. v. Morton Intern., Inc., 508 U.S. 83, 113 S.Ct. 1967 (1993) (citation omitted); Vantage Trailers, Inc. v. Beall Corp., 567 F.3d 745, 2009 WL 1262388 (5th Cir. May 8, 2009) (citing MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S.Ct. 764 (2007)). If the plaintiff fails to meet this burden, then the court lacks jurisdiction. Hosein v. Gonzales, 452 F.3d 401, 403 (5th Cir.2006).
Despite having been afforded an opportunity to so, the City has not endeavored to establish that its request for declaratory relief against the Police Officer Defendants presents an actual case or controversy sufficient to support subject matter jurisdiction. Accordingly, the undersigned is compelled to find that the court lacks subject matter jurisdiction to retain plaintiff’s remaining claim. See Hosein, supra. Of course, in the absence of subject matter jurisdiction, dismissal is required. Fed.R.Civ.P. 12(h)(3).”
Thus, the Court dismissed the case for want of subject matter jurisdiction, without prejudice.