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***** EDITOR’S UPDATE *****:
On July 13, 2012, the Eleventh Circuit granted the Board of Dental Examiners of Alabama’s motion for rehearing, based on a subsequent decision of Alabama’s highest court which held that the Board was in fact an “arm of the state.” As they had in the prior decision, the Eleventh Circuit deferred to the courts of Alabama. Since a higher court in Alabama had ruled that the Board was an “arm of the state,” the Eleventh Circuit reversed itself (and the court below) and entered judgment on behalf of the Board holding that it was sovereign immune as an “arm of the state” of Alabama. Thus, the initial Opinion discussed below is no longer good law.
Click Versiglio v. Board of Dental Examiners of Alabama to read the entire substituted Opinion on Petition for Rehearing.
Versiglio v. Board of Dental Examiners of Alabama
This case was before the Eleventh Circuit on the Board’s appeal asserting that the court below erred when it held that it was not subject to Eleventh Amendment immunity from the FLSA as an “arm of the state.” Rejecting this contention and affirming the decision below, the Eleventh Circuit relied, almost entirely, on the fact that the highest court of Alabama had previously held that the Board was not entitled to Eleventh Amendment immunity.
The Court summarized the issue before it as follows:
“Appellant Board of Dental Examiners of Alabama (the “Board”) appeals the district court’s judgment denying it sovereign immunity protection as an arm of the state of Alabama. Appellee Natalie Versiglio contends that the Board is sufficiently independent from the state of Alabama, that it is not entitled to Eleventh Amendment immunity, and that her claim under the Fair Labor Standards Act should be allowed to continue. The Supreme Court in Alden v. Maine settled the matter of state employees suing under the FLSA, writing, “We hold that the powers delegated to Congress under Article I of the United States Constitution do not include the power to subject nonconsenting States to private suits for damages in state courts. We decide as well that the State of Maine has not consented to suits for overtime pay and liquidated damages under the FLSA.” 527 U.S. 706, 712, 119 S.Ct. 2240, 2246 (1999). Thus, the question before this court is whether the Board is an arm of the state. For the reasons stated below, we conclude that at this time it is not and affirm the judgment of the district court.”
Discussing the parties assertions regarding the applicability of the Eleventh Amendment to Defendant the Eleventh Circuit, the court appeared to find Board’s arguments more compelling. Specifically, the court noted that in creating the Board, the Alabama legislature made specific findings that supported the argument that the Board was an “arm of the state.” Further, the Eleventh Circuit rejected the Plaintiffs’ arguments that Board’s independence- including the composition of its Board and its discretion to spend its funds- supported the finding that it was not an “arm of the state,” based on prior jurisprudence. Curiously, the court also questioned the Plaintiffs’ assertion that the State treasury was not implicated by the case before it. Instead, the court reasoned that- despite the fact that the State does not allocate, administer or collect the funds used by the Board- ultimately the State would likely have to pay any judgment.
Notwithstanding all of the above, the court still concluded that that the Board was not subject to Eleventh Amendment immunity, but relied almost entirely on a decision by Alabama’s highest court in reaching its holding. The court reasoned:
“Despite the strength of the Board’s claim of sovereign immunity under the Miccosukee test, one factor weighs heavily against it. On April 1, 2011, the Court of Civil Appeals of Alabama released its opinion in Wilkinson v. Board of Dental Examiners of Alabama, 2011 WL 1205669, 2011 Ala. Civ.App. LEXIS 88 (Ala. Civ.App. April 1, 2011). FN3 In its opinion, the state appeals court conducted the first substantial analysis by a state court of the Board’s status as a state agency. FN4 The Board argued that it was immune from suit in state court pursuant to Article 1, Section 14 of the Alabama Constitution. That section provides that “the State of Alabama shall never be made a defendant in any court of law or equity.” Alabama courts have construed this immunity to extend to arms of the state. Armory Comm’n v. Staudt, 388 So.2d 991, 993 (Ala.1980). The test for entities seeking immunity is much like this court’s test: whether “a lawsuit against a body created by legislative enactment is a suit against the state depends on the character of power delegated to the body, the relation of the body to the state, and the nature of the function performed by the body.” Id. Applying this test, the Court of Civil Appeals examined many of the provisions discussed above, concluding that the Board is not an arm of the state and thus “is not entitled to § 14 immunity.” Wilkinson, 2011 Ala. Civ.App. Lexis 88 at *16, 2011 WL 1205669 at *5.
This court gives great deference to how state courts characterize the entity in question. This practice is in keeping with the ordinary deference granted state courts when they interpret matters of state concern. See Silverberg v. Paine, Webber, Jackson & Curtis, Inc., 710 F.2d 678, 690 (11th Cir.1983) (“A federal court applying state law is bound to adhere to decisions of the state’s intermediate appellate courts absent some persuasive indication that the state’s highest court would decide the issue otherwise.”). Federal courts are often more skeptical of state court decisions involving issues of sovereign immunity, as otherwise “[a] state would have too much self-interest in extending sovereign immunity to as many of its agencies and corporate creations as possible.” Miller–Davis Co. v. Illinois State Toll Highway Auth., 567 F.2d 323, 330 (7th Cir.1977). However, that concern is obviated when, as here, the state court finds that an entity is not an arm of the state. Id. (“Especially when a state supreme court does not extend immunity but, rather, holds that an entity is not to be deemed the state for purposes of sovereign immunity, we think the federal courts must pay careful attention to the state opinion.”).
Finding that the Board is entitled to sovereign immunity would require this court to interpret Alabama law in a way that is diametrically opposed to the findings of the highest state court to consider the issue. Such a ruling would also create the incongruous result of having a “state agency” that is immune from suit under federal law but not under state law. Cf. Alden, 527 U.S. at 793 n.29, 119 S.Ct. at 2285 n.29 (noting in a different context that the Framers of the Eleventh Amendment “would have considered it absurd that States immune in federal court could be subjected to suit in their own courts”). As such, we believe that a holding by this court that the Board is an arm of the state for purposes of sovereign immunity would be inappropriate.
For the aforementioned reasons, we affirm the district court’s finding that the Board is not entitled to sovereign immunity protection as an arm of the state of Alabama.”
Click Versiglio v. Board of Dental Examiners of Alabama to read the entire decision.
11th Cir.: Trial Court Erred In Allowing Defendants To Amend Their Affirmative Defenses At Trial To Add Previously Unpled Exemption
Diaz v. Jaguar Restaurant Group, LLC
Plaintiff filed a lawsuit against Defendants, her former employer, for unpaid overtime wages under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201–216. During trial, the district court allowed Jaguar to amend its Answer pursuant to Federal Rule of Civil Procedure 15(b) to include the administrative exemption as an affirmative defense as it found that Diaz had injected the issue through her testimony at trial. The jury returned a verdict finding that Diaz had worked more than 40 hours per week for which she was not compensated, but also finding that she was exempt from the requirements of the FLSA as she was an administrative employee. On appeal to the Eleventh Circuit, Plaintiff challenged the district court’s decision to allow Defendant to amend its Answer during trial. The Eleventh Circuit reversed, and remand the case to the district court for a trial on damages.
In reversing, the Eleventh Circuit reasoned:
“Jaguar failed to plead the administrative exemption as an affirmative defense in its Answer. In the fourteen months between the filing of its Answer and the commencement of trial, Jaguar never moved to amend its Answer to include the administrative exemption. Jaguar also did not raise the issue of the administrative exemption during discovery. The only time Jaguar raised the issue prior to trial was by inserting it in one line of the Joint Pretrial Stipulation and in the proposed Joint Jury Instructions, to which Diaz objected. Jaguar did not raise the issue during the pretrial conference and the district court did not include the issue in its Omnibus Order Following Pretrial Conference. If ever there were a classic case of waiver, this is it! See Latimer v. Roaring Toyz, Inc., 601 F.3d 1224, 1239 (11th Cir. 2010) (“Failure to plead an affirmative defense generally results in a waiver of that defense.”). Jaguar repeatedly waived the administrative exemption defense by failing to plead the defense in its Answer and by failing to move to amend its Answer before trial.
Ideally, cases should be tried on their merits. Accordingly, even if Jaguar failed to plead the administrative exemption defense, the district court could allow Jaguar to amend its Answer during trial if the issue was tried by the parties’ express or implied consent, or included in a pretrial order. See Fed. R. Civ. P. 15(b); see Steger v. Gen. Elec. Co., 318 F.3d 1066, 1077 (11th Cir. 2003) (“[I]ssues not raised in the pleadings may be treated as if they were properly raised when they are ‘tried by express or implied consent of the parties,’ Federal Rule of Civil Procedure 15(b), or are included in a pretrial order.”). In this case, the issue was not included in the district court’s Omnibus Order Following Pretrial Conference. Further, it is clear that the administrative exemption issue was not tried by the parties’ express consent as Diaz opposed the insertion of the issue in the Joint Pretrial Stipulation, proposed Joint Jury Instructions, and at trial. See R. Vol. 5: 160–65. The district court, however, found that the issue was tried by implied consent as it believed Diaz introduced the issue of the administrative exemption through her testimony at trial. Thus, the district court allowed the amendment.
The district court erred in finding that the administrative exemption issue was tried by implied consent and in thereby allowing Jaguar to amend its Answer. That issue was not tried by implied consent as Diaz’s testimony was relevant to another defense in this case: Jaguar’s independent contractor defense. “The introduction of evidence arguably relevant to pleaded issues cannot serve to give a party fair notice that new issues are entering the case.” Wesco Mfg., Inc. v. Tropical Attractions of Palm Beach, Inc., 833 F.2d 1484, 1487 (11th Cir. 1987); see Jimenez v. Tuna Vessel Granada, 652 F.2d 415, 421 (5th Cir. 1981) (stating that implied consent cannot be found when “evidence is introduced that is relevant to an issue already in the case and there is no indication that the party who introduced the evidence was seeking to raise a new issue”). Diaz’s testimony was relevant to counter Jaguar’s independent contractor defense, and she clearly was not seeking to raise the administrative exemption as a new issue. Further, we cannot conclude that her testimony was “much more strongly relevant” to the administrative exemption than to the independent contractor defense, which could be construed as notice of a new issue. See United States f/u/b/o Seminole Sheet Metal Co. v. SCI, Inc., 828 F.2d 671, 677 (11th Cir. 1987). Thus, her testimony cannot be considered implied consent to try the administrative exemption.”
Click Diaz v. Jaguar Restaurant Group, LLC, to read the entire opinion.
11th Cir.: Res Judicata Did Not Bar Claims Of FLSA Retaliation; Such Claims Arose After The Original Pleading Was Filed In The Earlier Litigation, So Not Previously Litigated
Moore v. Sei Pak
This case was before the Eleventh Circuit on Plaintiffs’ appeal of summary judgment in favor of their employer (“Pak”), in their suit against Pak for retaliation under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 215(a)(3). The Plaintiffs sued Pak for retaliation because Pak denied them positions as independent contractors after they initiated an earlier FLSA suit against Pak for unpaid overtime compensation. The Plaintiffs filed the separate retaliation suit while the overtime compensation suit, which the parties ultimately settled, was still pending. The magistrate judge granted Pak’s summary judgment motion on res judicata grounds after it concluded that the Plaintiffs had raised their retaliation claim in the prior suit. On appeal, Plaintiffs argued that their prior FLSA overtime compensation lawsuit does not preclude their current retaliation suit, because the facts underlying the retaliation suit occurred subsequent to the filing of the original case. The Eleventh Circuit agreed and reversed the lower court reasoning:
“We review de novo a district court’s order on a motion for summary judgment and construe the facts in the light most favorable to the non-moving party. Van Voorhis v. Hillsborough Cnty. Bd. of Cnty. Comm’rs, 512 F.3d 1296, 1299 (11th Cir.2008). We also review de novo a district court’s application of res judicata. EEOC v. Pemco Aeroplex, Inc., 383 F.3d 1280, 1285 (11th Cir.2004). We apply federal law “because federal preclusion principles apply to prior federal decisions.” Id. (quotation marks omitted).
“Under res judicata … a final judgment on the merits bars the parties to a prior action from re-litigating a cause of action that was or could have been raised in that action.” In re Piper Aircraft Corp., 244 F.3d 1289, 1296 (11th Cir.2001). “Res judicata applies not only to the precise legal theory presented in the previous litigation, but to all legal theories and claims arising out of the same operative nucleus of fact.” Manning v. City of Auburn, 953 F.2d 1355, 1358-59 (11th Cir.1992) (quotation marks omitted).
[A] party seeking to invoke the doctrine must establish … four initial elements: (1) the prior decision must have been rendered by a court of competent jurisdiction; (2) there must have been a final judgment on the merits; (3) both cases must involve the same parties or their privies; and (4) both cases must involve the same causes of action. In re Piper Aircraft Corp., 244 F.3d at 1296. If these requirements are met, the court must determine whether the new claim could have been raised in the prior suit. Id. The preclusion of claims that “could have been brought” in earlier litigation does not include claims that arose after the original complaint was filed in the prior action, unless the plaintiff actually asserted the claim in “supplemental pleadings or otherwise.” Pleming v. Universal-Rundle Corp., 142 F.3d 1354, 1357 (11th Cir.1998).
We conclude that even if this case satisfies the res judicata elements, the Plaintiffs’ retaliation claim is one “which ar[o]se after the original pleading [wa]s filed in the earlier litigation” and is not barred unless Plaintiffs asserted the claim in the prior litigation. Id. at 1357. The Plaintiffs filed their overtime compensation suit against Pak on March 4, 2008. Construing the facts in the Plaintiffs’ favor, the retaliation claim did not arise until November 21, 2008, when Pak excluded Plaintiffs from an opportunity to apply for independent contractor positions. Therefore, the Plaintiffs’ retaliation claim arose eight months after they filed their original complaint.
The Plaintiffs could not have asserted the retaliation claim in their initial complaint in the overtime compensation suit and were free to decline to do so through supplemental pleadings. We observed in Manning “that Federal Rule of Civil Procedure 15(d), which governs supplemental pleadings, makes such a pleading optional and held that the doctrine of res judicata does not punish a plaintiff for exercising the option not to supplement the pleadings with an after-acquired claim.” Pleming, 142 F.3d at 1357 (citing Manning, 953 F.2d at 1360).
We also conclude that the Plaintiffs never asserted their retaliation claim in their overtime compensation suit “through supplemental pleadings or otherwise.” Pleming, 142 F.3d at 1357 (emphasis omitted). In the overtime compensation suit, the Plaintiffs’ only reference to retaliation occurred in the status report they filed with the court immediately before the case settled. In this report, the Plaintiffs indicated that mediation had failed, and asked the court to try the case “as soon as possible” based on several unresolved concerns, including Pak’s failure “to … offer Plaintiffs the opportunity to become subcontractors for Defendant, an opportunity previously not granted to Plaintiffs because Plaintiffs were named on a lawsuit against Defendant.” This Court has held that while “a litigant may ‘otherwise’ assert a claim, without filing a supplemental pleading … these other means must conform with the rules of procedure.” Pleming, 142 F.3d at 1358. We have identified specific examples of other means of asserting a claim that trigger res judicata, such as “an amendment pursuant to Rule 15(b) or the assertion of a claim through a pretrial order pursuant to Rule 16(e).” Id. Neither of these options was pursued here. Pak concedes that, in light of Pleming, the magistrate judge’s reliance on the status report as the basis for concluding that the Plaintiffs asserted a retaliation claim in the prior litigation “may have been incorrect.”
The Plaintiffs’ reference to Pak’s retaliation is similar to the references we have held insufficient to assert a claim before a district court. In Coon v. Georgia Pacific Corp., 829 F.2d 1563, 1568-71 (11th Cir.1987), we affirmed the district court’s refusal to consider the plaintiff’s claims of specific acts of discrimination, which she included in her briefs, discovery requests, and motions, but never added to her complaint. We explained that “[t]hese claims were not somehow ‘present’ within her complaint, despite her failure to allege them.” Id. at 1570. We also rejected the notion that the claims were before the district court because they were part of a “continuing violation.” Id.; see also Pleming, 142 F.3d at 1358 (collecting cases). We conclude that the Plaintiffs’ reference to retaliation in the status report was insufficient to put their retaliation claim properly before the district court pursuant to the Federal Rules of Civil Procedure.
For these reasons, we hold that res judicata does not bar the Plaintiffs’ retaliation claim against Pak. We VACATE and REMAND this case to the district court for further proceedings consistent with this opinion.”
Click Moore v. Sei Pak to read the entire decision.
11th Cir.: Despite Variable Premium/Bonuses That Fluctuated With Quantity/Quality of Work Performed, Bookkeeper/Accountants Were Paid on “Salary Basis”
Bell v. Callaway Partners, LLC
Plaintiffs were bookkeepers/accountants classified by Defendant as exempt from the Fair Labor Standards Act’s (FLSA) overtime pay requirement. This appeal concerned solely the issue of whether Plaintiff- who was paid a combination of a guaranteed weekly salary plus a variable bonus (at a straight-time rate rather than time and a half)- was paid on a “salary basis” for the purposes of satisfying the so-called “white collar” exemptions of the FLSA. The Court ruled that she was and affirmed the ruling of the lower court, holding that variations in bonus or extra pay do not affect the underlying analysis of whether the first 40 hours are paid at on a “salary basis.”
Describing the pay structure at issue, the Court stated:
“Plaintiffs’ pay consisted of two distinct components. First, Plaintiffs received a guaranteed weekly salary of $1600 or more that did not depend on the quality or quantity of the work performed. This weekly salary was reduced by one-fifth of the weekly salary for every full day a Plaintiff took off from work for personal reasons during the normal workweek without substituting Paid Time Off (“PTO”). But, a Plaintiff could work fewer than eight hours during any given workday without any reduction in his or her weekly salary. Second, Plaintiffs were eligible to receive additional incentive compensation (a “bonus”) paid at a straight-time hourly rate based on the cumulative number of billable hours that Plaintiffs worked. Any bonus to be awarded was determined based on how many additional hours over forty a Plaintiff worked in a given week minus any “deficit” hours a Plaintiff had accumulated in past weeks. For example, if a Plaintiff worked seven and not eight hours on each regularly-scheduled workday in a given week, thus totaling 35 hours of work, he or she still earned the full predetermined weekly salary, but would not earn a bonus in a subsequent week until he or she made up the bonus-hour deficit of five hours and then worked more than 40 hours in a given week.”
Holding that this compensation methodology complied with the “salary basis” test, the Court reasoned:
“An employee is considered “paid on a salary basis” if “he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.” 29 C .F.R. § 541.602. Plaintiffs argue that they were not paid on a salary basis because the amount of their bonuses fluctuated based on the cumulative number of hours worked. But, as we have previously determined, “as long as there is a non-deductible minimum, additional compensation on top of the non-deductible salary is permissible.” Hogan v. Allstate Ins. Co., 361 F.3d 621, 625 (11th Cir.2004) (citation omitted). And, while additional compensation is permissible, the regulations do not require additional compensation, nor do they prescribe a set method for setting up a bonus system. 29 C.F.R. § 541.604(a) (“An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis…. Such additional compensation may be paid on any basis ….”).
After a review of the record, we agree with the district court’s well-reasoned analysis concluding that Callaway’s bonus system conformed to the requirements of the salary basis test. (R.374 at 13-24.) While Callaway’s incentive program may have been designed in a way that encouraged overtime work, as Plaintiffs argue it was, because it deducted for “deficit” hours, it nevertheless conformed to the requirements of the FLSA. Because there was a non-deductible minimum weekly salary, Callaway was free to structure any bonus program as it saw fit.
Plaintiffs also argue that Callaway violated the salary basis test when it deducted a full day’s pay for personal days missed during the workweek (Monday through Friday) but did not pay Plaintiffs for a “full day” for partial days worked on Saturday or Sunday. Again, we agree with the district court’s analysis concluding that such deductions were allowable under the provisions of 29 C.F.R. § 541.602(b)(1). (R.374 at 25-34.) Therefore, we hold that the district court did not err in finding Callaway’s pay policies to be in compliance with the FLSA.”
11th Cir.: Rehearing En Banc Denied On Refusal To Award Prevailing FLSA Plaintiff Attorney’s Fees; Strong Dissents
Sahyers v. Prugh, Holliday & Karatinos, P.L.
In a decision discussed here previously, the 11th Circuit had affirmed the trial court’s decision to award no attorneys fees or costs, in a case where they reasoned that attorney civility towards one another trumped the mandatory fee provisions of the FLSA. The case was again before the 11th Circuit, this time on Plaintiff’s Motion for a Rehearing En Banc. Although the Court denied the Motion for Rehearing, significantly, there was very strong dissent, perhaps signaling that the case may be ripe for review at the United States Supreme Court, who just this week signaled they will begin hearing more cases than they have in recent years.
Citing legal principle, but little statutory authority for the Court’s position, in a concurring opinion, one Judge explained, in part:
“About this case, I have a few observations to make. Lawyers, as members of the Courts’ Bars (that is, as officers of the Courts) are often, and in a variety of ways, treated by the Courts better or worse than nonlawyers. I stress that I do not see the Courts’ inherent powers to supervise the members of their Bars as “overriding” (that is, cancelling) the FLSA statute’s treatment of fees. The statute is law, general law tied to the outcome of FLSA suits.
I see the Courts’ inherent powers over Bar members as a separate and pre-existing font of law and legal authority that specifically governs the conduct of lawyers as lawyers, regardless of the outcome of the case: the law of inherent powers supplements the FLSA statute to make up the whole of the applicable law in this case. Therefore, I see the whole applicable law to run this way: When the outcome favors the plaintiff, fees shall be awarded unless the District Court, in the reasonable exercise of its power to supervise lawyers in their practice in cases before the Court, determines that an award of fees (given the specific circumstances of a particular case) is not right-not right directly because of lawyer conduct related to the specific case. Thus, fees nearly always are to be awarded; but never are the Courts altogether stripped of the power to supervise lawyer conduct through the grant or withholding of fees.
That Courts have the inherent and main-if not exclusive-authority (along with the duty and responsibility) to supervise their Bar members is, I believe, no innovative idea. And that Courts can use the control of attorney fees as a means of exercising the inherent power to supervise lawyer conduct in particular cases seems uninnovative too. See Chambers v. NASCO, Inc., 111 S.Ct. 2123, 2133 (1991) (court may per inherent power assess attorneys fees when a party has acted in bad faith, vexatiously, wantonly, or for oppressive purposes); Roadway Express, Inc. v. Piper, 100 S.Ct. 2455, 2463 (1980) (federal courts have inherent powers to assess attorneys fees against counsel).”
With separate strongly worded dissents, Circuit Court Judges Barkett and Wilson, sternly warned that the Eleventh Circuit had exceeded their authority by attempting to ignore the FLSA, a federal statute, without any basis.
BARKETT, Circuit Judge, dissenting:
“En banc review is warranted in this case because district courts do not have the power, inherent or otherwise, to directly contravene a federal statute. The panel decision, holding that the district court could deny attorneys’ fees mandated by the Fair Labor Standards Act (“FLSA”), is contrary to settled United States Supreme Court precedent providing that the use of a district court’s inherent supervisory powers is invalid when it conflicts with a statutory command. See, e.g. Bank of Nova Scotia v. United States, 487 U.S. 250, 254 (1988); Thomas v. Arn, 474 U.S. 140, 148 (1985). As Judge Wilson notes in his dissent, there is no dispute that the language of the statute is mandatory, see29 U.S.C. § 216(b) (“The court in such action shall, in addition to any judgment awarded to plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.”), and has been previously so construed by our court. Dale v. Comcast Corp., 498 F.3d 1216, 1223 n.12 (11th Cir.2007).
The panel characterizes the denial of attorneys’ fees as an informal sanction of Sahyers’ lawyer for suing fellow lawyers without first attempting to resolve the dispute through informal means. In his concurrence to the denial of rehearing, Judge Edmondson stresses that the district court based its decision on local litigation customs and practices, but the district court opinion references no such customs or practices. The district court simply says that, in its view, it is “reasonable” to call another lawyer prior to filing suit. That is not enough to give notice to Sahyers’ attorney. District courts do not have the authority to sanction lawyers for conduct not proscribed by law or rule-which is the case here-without first providing them with notice that their conduct may warrant sanctions. Fed.R.Civ.P. 83(b) (“No sanction or other disadvantage may be imposed for noncompliance with any requirement not in federal law, federal rules, or the local rules unless the alleged violator has been furnished in the particular case with actual notice of the requirement.”). Because Sahyers’ attorney was given no actual notice, the district court had no authority to sanction him for failing to contact the defendants or their lawyers before filing suit. See In re Mroz, 65 F.3d 1567, 1575 (11th Cir.1995) (“Due process requires that the attorney (or party) be given fair notice that his conduct may warrant sanctions and the reasons why.” (citation omitted)). Accordingly, there is no authority for disregarding the mandatory language of FLSA on this basis.
The panel’s only supporting authority for its contention that a court may deny an award of litigation expenses to which a client is otherwise entitled by law is Litton Syss., Inc. v. Am. Tel. & Tel. Co., 700 F.2d 785 (2d Cir.1983). However, that decision does not permit a district court to simply disregard the express language of a statute that mandates attorneys’ fees and costs. Rather, it affirms a sanction imposed under Federal Rule of Civil Procedure 37 for “gross negligence” and “willful misconduct” by the plaintiff’s lawyers. Id. at 826-28. The failure to notify an opposing lawyer prior to suit in the absence of any known requirement to do so can hardly qualify as negligence or willful misconduct.
Because the panel opinion disregards the express mandate of Congress, this case warrants en banc review.”
WILSON, Circuit Judge, dissenting:
“The Court affirms a decision by a district court that denies a prevailing plaintiff’s lawyer his entitlement to an attorney’s fee under the Fair Labor Standards Act (“FLSA”) on account of his failure to give the defendant, a lawyer, advance notice of the lawsuit. I am concerned about the precedent this case sets. First, an award of attorneys’ fees to a prevailing party is mandatory under the FLSA. Second, I have found no authority that requires plaintiff’s counsel to provide pre-suit notice when another lawyer is the defendant. Although well-intentioned, I doubt that the federal courts have the inherent authority to ignore and override a statutory mandate in the interest of promoting a professional courtesy. I also do not believe that Congress intended to single out lawyers for exclusive treatment under the FLSA. Since it is now within the inherent authority and discretion of the district courts in our Circuit to hold that no attorney’s fee is a reasonable fee when no pre-suit notice is extended to defendants who are lawyers, I would consider this case en banc before permitting this new Circuit precedent to stand.
The facts are these. Plaintiff Christine Sahyers worked as a paralegal for the defendant law firm Prugh, Holliday & Karatinos, P.L. On January 9, 2007, Sahyers filed a lawsuit against her former employer and its three owners and principals, Timothy F. Prugh, James W. Holliday, II, and Theodore Karatinos (collectively the “defendants”), pursuant to the FLSA to recover unpaid overtime compensation. The defendants filed an answer, denying liability. The case proceeded to discovery, and less than one month after a failed court-ordered mediation, the plaintiff accepted an offer of judgment pursuant to Federal Rule of Civil Procedure 68. The next day, the district court entered final judgment against the defendants in the amount of $3,500.
Thereafter, the plaintiff filed a motion for attorneys’ fees and expenses, in which she sought $15,640.70, comprised of $13,800 in attorneys’ fees and $1,840.70 in costs. The district court determined that the plaintiff was a prevailing party under the FLSA. However, recognizing that the FLSA provides for a mandatory award of reasonable attorneys’ fees, the district court was persuaded to conclude that this case presented “special circumstances” and decided that “a reasonable fee is no fee.” Sahyers v. Prugh, Holliday & Karatinos, P.L., No. 8:07-cv-52-T-30MAP, slip op. at 3 (M.D.Fla. Feb. 1, 2008) (“District Court Order”).
The district court found that the plaintiff subjected the defendants to “unnecessary litigation” and refused to reward such behavior because at no time prior to filing the lawsuit did the plaintiff or the plaintiff’s attorney make a written demand for payment of the overtime compensation. Id. at 3-5. Further, the district court stressed that the plaintiff’s attorney should have notified the defendant law firm, because prior to filing suit in the Middle District of Florida, “it is still reasonable to pick up the phone and call another lawyer so it won’t be necessary to file suit.” Id. at 4. The district court dismissed the plaintiff’s counsel’s claim that his client did not want him to make a pre-suit demand, “remind[ing] [plaintiff’s counsel] that the lawyer is the officer of the Court, not the client.” Id. at 5. The plaintiff appealed the denial of attorneys’ fees and costs, and defendant Karatinos cross-appealed the district court’s determination that the plaintiff was a prevailing party.
With the benefit of oral argument, the Sahyers opinion affirmed. The Sahyers opinion framed the issue in this way: “This appeal is about the power of a district court to supervise the work of the lawyers who practice before it.” Sahyers v. Prugh, Holliday & Karatinos, P.L., 560 F.3d 1241, 1243 (11th Cir.2009). The Sahyers opinion construed the District Court Order as creating an “exception” to the FLSA’s mandatory fee statute based on the district court’s “inherent powers to supervise the conduct of the lawyers who come before it and to keep in proper condition the legal community of which the courts are a leading part.” Id. at 1244. It explained that “at least in the absence of very clear words from Congress, we do not presume that a statute supersedes the customary powers of a court to govern the practice of lawyers in litigation before it.” Id. at 1245 n.6. I disagree-well-settled Supreme Court precedent rejects the Sahyers opinion’s “very clear words” standard.
“In the exercise of its supervisory authority, a federal court ‘may, within limits, formulate procedural rules not specifically required by the Constitution or the Congress.’ ” Bank of Nova Scotia v. United States, 487 U.S. 250, 254 (1988) (quoting United States v. Hasting, 461 U.S. 499, 505 (1983)) (emphasis added). One of those limits on a federal court is when Congress has spoken: “[e]ven a sensible and efficient use of [a court’s] supervisory power, however, is invalid if it conflicts with constitutional or statutory provisions.” Thomas v. Arn, 474 U.S. 140, 148 (1985). “A contrary result ‘would confer on the judiciary discretionary power to disregard the considered limitations of the law it is charged with enforcing.’ ” Id. (quoting United States v. Payner, 447 U.S. 727, 737 (1980)). Applied here, the Sahyers opinion’s denial of attorneys’ fees and costs as an exercise of its supervisory authority over the practice of lawyers conflicts with the plain language of the FLSA.
The FLSA is a mandatory fee statute, and we have not recognized any exception to it. “The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.” 29 U.S.C. § 216(b) (emphasis added). The Supreme Court, our Circuit, and our sister circuits have consistently interpreted § 216(b) as mandatory. FN1 We have gone so far as to declare expressly that “[p]revailing plaintiffs are automatically entitled to attorneys’ fees and costs under the FLSA.” Dale v. Comcast Corp., 498 F.3d 1216, 1223 n.12 (11th Cir.2007) (emphasis added).
FN1. See Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 415 & n.5 (1978) (referring to § 216(b) of the FLSA as one of the “statutes [that] make fee awards mandatory for prevailing plaintiffs”); Singer v. City of Waco, 324 F.3d 813, 829 n.10 (5th Cir.2003) (“The FLSA requires an employer who violates the statute to pay attorney’s fees.”); Uphoff v. Elegant Bath, Ltd., 176 F.3d 399, 406 (7th Cir.1999) (“While the award of fees [under the FLSA] is mandatory, the district court has ‘wide latitude’ in determining the amount of the fee.”) (citation omitted); Fegley v. Higgins, 19 F.3d 1126, 1134 (6th Cir.1994) (“An award of attorney fees to a prevailing plaintiff under § 16(b) of the FLSA is mandatory, but the amount of the award is within the discretion of the judge.”) (citation omitted); Shelton v. Ervin, 830 F.2d 182, 184 (11th Cir.1987) (“Section 216 provides for an award of attorney’s fees, as opposed to granting the court discretion in awarding such fees, to the prevailing plaintiff in FLSA cases.”) (emphasis added); Kreager v. Solomon & Flanagan, P.A., 775 F.2d 1541, 1542 (11th Cir.1985) (“Section 216(b) of the Act makes fee awards mandatory for prevailing plaintiffs.”); Burnley v. Short, 730 F.2d 136, 141 (4th Cir.1984) (“The payment of attorney’s fees to employees prevailing in FLSA cases is mandatory. The amount of the attorney’s fees, however, is within the sound discretion of the trial court.”) (internal citation omitted); Graham v. Henegar, 640 F.2d 732, 736 n.8 (5th Cir. Unit A Mar. 1981) (“[A]n award of attorney’s fees to a prevailing plaintiff in an FLSA suit is mandatory.”); Wright v. Carrigg, 275 F.2d 448, 449 (4th Cir.1960) (“With respect to the counsel fee [pursuant to § 216(b) ], the court had no discretion to deny it; the law’s requirement of an award is mandatory and unconditional.”); Murray v. Playmaker Servs., LLC, 548 F.Supp.2d 1378, 1381 (S.D.Fla.2008) (Ryskamp, J.) (providing that the FLSA “directs district courts to award reasonable attorney’s fees and costs to a plaintiff, in addition to any judgment received”) (emphasis added).
In a perfect world, a lawyer who files a lawsuit against another lawyer would first attempt to resolve the matter outside the courthouse. Such a practice is both sensible and efficient. However, a procedural rule that in effect mandates pre-suit notice is invalid if it conflicts with a statutory provision. The Court’s opinion in effect reads a requirement of pre-suit notice into § 216(b) of the FLSA, at least where a law firm or lawyer is a defendant, thereby “confer[ring] on [itself] discretionary power to disregard the considered limitations of the law it is charged with enforcing.” Arn, 474 U.S. at 148 (quoting Payner, 447 U.S. at 737). Although a legislature can make pre-suit notice mandatory when it chooses, that circumstance does not apply here. See, e.g.,Fla. Stat. § 766.106(2)(a) (providing that “prior to filing a complaint for medical negligence, a claimant shall notify each prospective defendant”). While it is desirable to encourage lawyer collegiality and to discourage unnecessary litigation, I do not believe that we can rewrite a statute to conform with certain policy preferences. See Reeves v. Astrue, 526 F.3d 732, 738 (11th Cir.2008) (“The Supreme Court has advised that whatever merits … policy arguments may have, it is not the province of this Court to rewrite the statute to accommodate them.”) (quotation marks, alteration, and citation omitted). The Sahyers opinion provides binding precedent for a district court to ignore a clear Congressional mandate from a federal statute based on its “inherent powers.” Such precedent oversteps the boundaries of our proper duty as neutral arbiters and obviates the role of Congress. My discussion could end here, as the plaintiff was the prevailing party, and the FLSA’s plain language is controlling.
Moreover, I also disagree with the Court’s statement that “a lawyer’s duties as a member of the bar-an officer of the court-are generally greater than a lawyer’s duties to the client.” Sahyers, 560 F.3d at 1245 n.7. It bears repeating that the Sahyers opinion failed to cite any statute, rule, local rule, or case from this Circuit, the Middle District of Florida, or elsewhere that even arguably imposes a duty on an attorney to contact prospective opposing counsel where that counsel represents a law firm or a lawyer. I can find no rule of professional responsibility that would place Sahyers’ lawyer on notice that it is a breach of professional or ethical responsibility to file a lawsuit against a fellow lawyer without the courtesy of advance notice. Honorable though it may be, providing a lawyer-defendant with pre-suit notice in FLSA cases is neither a requirement, nor a breach of a lawyer’s ethical responsibility.
I recognize that the appropriate balance between duty to a client and duty of candor to the court is certainly a difficult one to strike. In certain circumstances, a lawyer’s duty to the court is “greater” than his or her duty to a client. However, while counsel owes a duty to the court, context matters. The plaintiff did not instruct her counsel to commit a crime, to perpetrate a fraud upon the court, or to file a frivolous lawsuit. Rather, the plaintiff merely instructed her counsel to file a lawsuit, which-considering the fact that defendants filed an answer as opposed to a motion to dismiss and ultimately offered judgment-appeared to have, at least, some merit. In fact, the Model Code of Professional Responsibility appears to require exactly what the plaintiff’s counsel did-follow his client’s instructions: “[T]he lawyer should always remember that the decision whether to forego legally available objectives or methods because of non-legal factors is ultimately for the client and not for himself.” Model Code of Prof’l Responsibility EC 7-8 (1983); see also id. at EC 7-7 (providing that, except in areas of legal representation not affecting the merits of the cause or substantially prejudicing the rights of a client, “the authority to make decisions is exclusively that of the client and, if made within the framework of the law, such decisions are binding on his lawyer”) (emphasis added). Hence, not only is there no rule requiring plaintiff’s counsel to give pre-suit notice to his fellow lawyers, plaintiff’s counsel had an ethical duty to follow his client’s instructions. In applying the Sahyers opinion’s reasoning, however, a plaintiff’s lawyer must ignore a client’s explicit instruction to file an arguably meritorious lawsuit and must first give “word” by way of a phone call, e-mail, or letter before “su[ing] his fellow lawyers.” This rule should not be the law.
The Sahyers opinion equated the conduct of the plaintiff’s counsel to bad faith: “the conscious indifference to lawyer-to-lawyer collegiality and civility exhibited by Plaintiff’s lawyer (per his client’s request) amounted to harassing Defendants’ lawyers by causing them unnecessary trouble and expense and satisfied the bad-faith standard.” 560 F.3d at 1246 n.9. It relies on Litton Systems, Inc. v. American Telephone & Telegraph Co., 700 F.2d 785 (2d Cir.1983), stating that “[a] court … may deny an award of litigation expenses to which a client is otherwise entitled.” Sahyers, 560 F.3d at 1245. As a threshold matter, Litton Systems, a Second Circuit opinion, is not binding precedent in this Circuit; it is merely persuasive authority. Additionally, Litton Systems does not stand for that broad proposition, and, even if it did, the facts of Litton Systems are so far removed from Sahyers that the former sheds no light on the latter. The Litton court merely affirmed a sanction pursuant to Federal Rule of Civil Procedure 37 finding “gross negligence” and “willful misconduct.” Here, the district court did not impose any sanction and did not invoke Rule 37. Instead, it carved out a “special circumstances” exception to the FLSA. See District Court Order at 3. The only reason relied upon by the district court to award Sahyers “nothing” as an attorney’s fee was the failure to extend the professional courtesy of pre-suit notice to a law firm. This conduct does not amount to bad faith.
Finally, I am troubled by the implication that lawyers are entitled to exclusive treatment under the FLSA. Although the Sahyers opinion states that it does not intend to create a new rule of pre-suit notice in FLSA cases where the defendant is a law firm or a lawyer, such language will surely fall on deaf ears in this Circuit (as it should) in light of the fact that Sahyers is a published opinion, which makes it binding precedent in this Circuit. See I.O.P. 2 to Fed. R.App. P. 36 (“Under the law of this circuit, published opinions are binding precedent.”). Section 216(b) pays no attention to the occupation of the defendants. Neither should we. The Sahyers opinion has unintentionally created a new rule that a plaintiff’s failure to give pre-suit notice to a lawyer-defendant in an FLSA case may forfeit the plaintiff’s otherwise statutory right to attorneys’ fees and costs. Courts within this Circuit will rely on Sahyers and will interpret it as creating a discretionary exception to a mandatory fee statute. In point of fact, courts both within this Circuit and outside of this Circuit have already followed suit, recognizing, but not yet applying, the proposition that no fee can be a reasonable fee under the FLSA when a plaintiff fails to give pre-suit notice to a lawyer-defendant. See Roldan v. Pure Air Solutions, Inc., S.D. Fla.2010.
Moreover, there is no indication in the record that plaintiff’s counsel filed this lawsuit in an attempt to “shake down” the defendants for attorneys’ fees and costs. The case settled after discovery ended, and the defendants made an offer of judgment only after they had the opportunity to look at the evidence. Any determination that the case would have settled if plaintiff’s counsel sent a pre-suit notice to the defendants (based on the record as it appears before us) is pure speculation. In other words, pre-suit notice may not have made a difference. Moreover, at the motion hearing before the district court, Sahyers’ counsel asserted that (1) Sahyers herself made a demand on the law firm prior to litigation, and (2) he lacked the records necessary to make a pre-suit demand before filing the lawsuit. Tr. of Jan. 24, 2008 Mot. Hr’g at 21:19-23 (arguing that had the defendants deposed Sahyers, “she would have testified that she did ask for her money”); id. at 22:12-18 (arguing that “[plaintiff’s counsel] did not have access to [Sahyers’] time records”).
While counsel’s arguments are not evidence, an evidentiary hearing would prove or disprove these assertions. The district court made no specific factual findings based on any evidence regarding, for example, bad faith on behalf of the plaintiff or the necessity of the litigation. The Sahyers opinion relied solely on plaintiff’s counsel’s failure to give pre-suit notice. Since we have held that “an inquiry into a party’s bad faith is best conducted by the district court,” Turlington v. Atlanta Gas Light Co., 135 F.3d 1428, 1438 (11th Cir.1998), I would at least have remanded this case back to the district court for an evidentiary hearing with instructions to engage in the lodestar analysis.
A district court retains the discretion to determine or to set a reasonable attorney’s fee under the FLSA, but the district courts, in my view, lack the discretion to deny all fees and costs by way of a “special circumstances” exception to promote collegiality. I agree completely with the efforts of the distinguished district judge to seek to promote professionalism and civility in the practice of law. It is an important component of judicial administration. I also agree that this Court was well-intentioned in deferring to the district court’s discretion; however, I fear that we went too far. My primary concern is with the precedent this case now creates: It is now within the discretion of district courts in our Circuit to deny attorney’s fees to lawyers who fail to extend professional courtesies to lawyer-defendants in FLSA and (presumably other) civil rights cases. This new law will undoubtedly discourage public interest lawyers from taking these cases. Although the plaintiff prevailed in her FLSA claim, her lawyer was unable to recover any fees or his client’s costs as mandated by Congress. I would prefer that the full Court consider this appeal before creating this new precedent.”
Many legal scholars have already voiced their opinion that this case is likely headed to the United States Supreme Court for ultimate decision. Stay tuned, because this one is likely not done yet.
11th Cir.: Although § 255(a)’s Statute Of Limitations Is An Affirmative Defense That Must Be Specifically Pled, Defendants Sufficiently Did So With Language Referencing 2-3 Year Period In Their Pleadings
Following a jury verdict in favor of the Defendants, the Plaintiff appealed, based on a jury instruction the Court gave regarding the FLSA’s 2-3 statute of limitations. Specifically, the Plaintiffs asserted that the Court erred in giving an instruction framing the applicable limitations period, because Defendants had failed to specifically plead statute of limitations as an affirmative defense. However, construing Defendants’ pleadings in the case, as described below, to have pled such an affirmative defense, the Court affirmed the lower Court’s jury verdict, based on the instruction at issue.
The Eleventh Circuit explained:
“The district court instructed the jury as follows:
The Plaintiff is entitled to recover lost wages from the present time back to no more than two years before this lawsuit was filed on June 18, 2008, unless you find the employer either knew, or showed reckless disregard for the matter of whether its conduct was prohibited by the FLSA. If you find that the employer knew, or showed reckless disregard for the matter of whether its conduct was prohibited by the FLSA, the Plaintiff is entitled to recover lost wages from the present time back to no more than three years before this lawsuit was filed.
The jury answered “no” to the first question on the verdict form, concerning whether Appellees failed to pay Navarro overtime wages as required by law. Thereafter, Navarro filed this appeal.
On appeal, Navarro urges that the district court’s application of § 255(a)‘s limitation was improper because Appellees had waived the limitation by failing to properly plead it in their Answer. Appellees, on the other hand, urge that § 255(a) is not a traditional statute of limitations that must be raised as an affirmative defense. In the alternative, they claim that they adequately raised the limitation in their Answer and in the pretrial stipulations submitted to the district court.
The Court reviews a district court’s instructions to the jury for abuse of discretion. U.S. v. Lopez, 590 F.3d 1238, 1247-48 (11th Cir.2009). The Court reviews de novo a district court’s grant of a F.R.Civ.P. 50 motion for judgment as a matter of law. D’Angelo v. Sch. Bd., 497 F.3d 1203, 1208 (11th Cir.2007).
This Court has held that the § 255(a) statute of limitations is “an affirmative defense which must be specifically pled.” Day v. Liberty Nat’l Life Ins. Co., 122 F.3d 1012, 1015 (11th Cir.1997) (citing F.R.Civ.P. 8(c)). In Day, the Court ruled that the defendant had waived the § 255(a) statute of limitations by failing to assert it until after the jury had rendered a verdict. As a result, the Court reversed the district court’s grant of a judgment notwithstanding the verdict based on the statute of limitations defense. Id. at 1015-16 The Day Court emphasized the fact that the defendant’s failure to raise the defense until after the jury rendered a verdict deprived the plaintiff of the opportunity to contest the application of the limitation. Id. at 1015 (“[I]f [the defendant] had brought the limitations issue to the court during the … trial, [the plaintiff] could have offered evidence that the statute was tolled during some period of time, or have insisted that the jury instructions reflect the effect of the statute of limitations on any possible recovery by him.”). In finding a waiver, the Day Court relied on the Fifth Circuit’s earlier opinion in Pearce v. Wichita County, 590 F.2d 128, 134 (5th Cir.1979). The Pearce Court had addressed a situation almost identical to that in the Day case. In Pearce, the defendant had not raised the statute of limitations defense in its pleadings or in objection to the court’s jury instructions. Id. It had waited until after the jury verdict, finally bringing the limitations issue to the Court’s attention in a motion for judgment notwithstanding the verdict. Id. The Pearce Court held that such a delay constituted waiver of any objection to the limitations period that was applied. Id.
The case at hand is clearly distinguishable from the Day and Pearce cases, however, as Appellees raised § 255(a) several times before the case was submitted to the jury. First, Appellees stated in their Answer (under the heading “Affirmative Defenses”) that “[a]ny violation of the [FLSA] by Defendants was not willful, and was wholly unintentional. Defendants continuously acted in good faith with regard to the administration of its [sic] pay plan.” Next, more than a month before trial, the two-or-three-year limitation was referenced more than once in the parties’ Joint Pretrial Stipulation. Specifically, under the heading “Defendants’ Statement of the Case,” Appellees stated that “Defendants dispute … that Plaintiff was not paid for any overtime he may have worked during the last two or three years of his employment.” Also, in the Stipulation, the parties stated that the following fact was agreed upon and would not require proof at trial: “The corporate Defendant grossed in excess of $500,000.00 per year during the last three years of Plaintiff’s employment.” Finally, the parties and the court addressed this matter during trial, when, following the close of Navarro’s case, the Appellees based several motions for directed verdict on the three-year maximum limitations period. Navarro’s counsel, armed with case law, responded with the contention that the Appellees had not pled § 255(a) as an affirmative defense. The Court reviewed the proffered case, but ultimately ruled that § 255(a) would apply so that, at most, Navarro would recover for a three-year time period. Thus, this case stands in stark contrast to the Day and Pearce cases, where defendants had waived the defense by not raising it until after the jury had rendered a verdict.
The Court finds that Appellees timely raised the § 255(a) statute of limitations. Even if Appellees’ assertions in their Answer did not comply with a strict reading of F.R.Civ.P. 8(c), under this Court’s precedent, the limitation was still not waived. That is, although Rule 8(c) requires that a statute of limitations defense be raised as an affirmative defense, this Court has noted that “the purpose of Rule 8(c) is to give the opposing party notice of the affirmative defense and a chance to rebut it,” and, as a result, “if a plaintiff receives notice of an affirmative defense by some means other than the pleadings, ‘the defendant’s failure to comply with Rule 8(c) does not cause the plaintiff any prejudice.’ “ Grant v. Preferred Research, Inc., 885 F.2d 795, 797 (11th Cir.1989) (quoting Hassan v. U.S. Postal Serv., 842 F.2d 260, 263 (11th Cir.1988)). In Grant, the defendant raised the statute of limitations defense for the first time in a motion for summary judgment filed approximately one month before trial. Id. This court ruled that, because the plaintiff was “fully aware” that the defendant intended to rely on the defense, and because the plaintiff did not assert any prejudice from the lateness of the pleading, the defendant’s failure to comply with Rule 8(c) did not result in a waiver. Id. at 797-98.
As demonstrated above, in this case, Navarro was given ample notice of Appellees’ intent to rely on § 255(a) in several instances prior to trial. Moreover, when the issue was debated in light of the Appellees’ directed verdict motions, Navarro’s counsel made a thorough argument (including case citations) against the statute’s application. He never claimed during that argument that he had been surprised or somehow otherwise prejudiced by defense counsel’s reliance upon § 255(a) at trial. As a result, the district court did not err in limiting the jury’s consideration of unpaid overtime to the two-or three-year period prior to the filing of the complaint. Further, because it was uncontested that there was no evidence that Domingo or Rosa Santos exercised any active supervisory control over the company for the period three years prior to the filing of the complaint, the district court did not err in granting Appellees’ motion for judgment as a matter of law on the issue of the individual liability of either of them. Accordingly, we affirm the judgment entered on the jury’s verdict.”
11th Cir.: Receipt And Signing WH-58 Form And Cashing Of The Employer’s Check Is Sufficient To Effect A Waiver Of Right To Sue Under FLSA
Blackwell v. United Drywall Supply
Plaintiffs were employed by Defendants. In September 2007, they sued Defendants pursuant to the Fair Labor Standards Act (FLSA). Plaintiffs alleged that, from 2002 forward, Defendants intentionally violated the Act by failing to pay them properly for overtime. Plaintiffs further alleged that, in 2007, “as a result of an investigation by the United States Department of Labor involving allegations of the improper payment of overtime compensation to its laborer employees, [United Drywall] made payments to various employees for past due overtime compensation.” Plaintiffs alleged that Defendants retaliated against Williams for his complaints to the Department of Labor regarding overtime violations. And, Plaintiffs alleged that the payments made as part of the Department of Labor supervised settlement were “far lower than what the employees were legally due.” They sought allegedly unpaid overtime compensation for three years before the filing of the complaint and attorney’s fees and expenses pursuant to § 216 of the Act. The Court below granted Defendants’ Motion for Summary Judgment holding that Plaintiffs’ signing of the DOL WH-58 form and cashing of settlement checks was a valid waiver of their FLSA rights. On appeal, the Eleventh Circuit affirmed.
Framing the issue before it, the Court explained, “Defendants moved for summary judgment, arguing, among other things: (1) that Plaintiffs had waived their right to sue under the Act when they cashed checks from United Drywall pursuant to the 2007 settlement between the parties supervised by the Department of Labor, and (2) that Plaintiffs are exempt employees under the Motor Carrier Exemption in the Act (“the Exemption”) and therefore are not entitled to back pay pursuant to the Act. Plaintiffs opposed the motion, arguing that there were genuine issues of fact regarding whether they had knowingly waived their rights to sue and whether the Exemption applied. After considering arguments and evidence from both sides, the district court granted Defendants’ motion for summary judgment. The court held that, because Plaintiffs had received Department of Labor form WH-58 (which contained a statement that if Plaintiffs accepted the back wages provided in conjunction with the form, they would give up their rights to bring suit under the Act) and because Plaintiffs had cashed the checks provided in conjunction with the WH-58 forms, Plaintiffs had waived their rights to sue Defendants for the payments they sought under the Act. The court entered judgment for Defendants. Plaintiffs appeal the judgment.”
Addressing and denying Plaintiffs’ appeal, the Court reasoned, “Plaintiffs argue that the district court erred in finding waiver because Plaintiffs did not knowingly and intentionally waive their rights to sue. They argue that the WH-58 form provided to them by the Department of Labor is ambiguous and did not put them on notice that, by cashing the checks, they would waive their rights to sue for additional back pay. Defendants argue that the district court correctly found waiver and that the judgment can be supported on the additional ground that the Exemption applies to bar Plaintiffs’ claims. In their reply brief, Plaintiffs respond that affirmance of the judgment based on the Exemption would not be proper because the Exemption is not applicable to Defendants’ business as a matter of law or, in the alternative, there are genuine issues of material fact regarding the application of the Exemption.
We affirm the judgment. We find no error in the district court’s holding “that receipt of a WH-58 form and cashing of the employer’s check is sufficient to effect a waiver of the right to sue under the FLSA.” There is no dispute that Plaintiffs received WH-58 forms in connection with the checks written by United Drywall and given to Plaintiffs by the Department of Labor as part of the supervised settlement between United Drywall and its employees. Those forms are receipts for payment of “unpaid wages, employment benefits, or other compensation due … for the period up to and including 05/20/2007 … under … The Fair Labor Standards Act….” They contain this language:
NOTICE TO EMPLOYEE UNDER THE FAIR LABOR STANDARDS ACT-Your acceptance of back wages due under the Fair Labor Standards Act means that you have given up any right you may have to bring suit for back wages under Section 16(b) of that Act. ( Id.)
The WH-58 forms then proceed to describe the types of recovery and statutes of limitations under § 16(b) of the Act. We agree with the district court that these forms unambiguously informed Plaintiffs that, if they cashed the checks provided with the forms, they would be waiving their rights to sue for back pay. And, there is no dispute that Plaintiffs cashed the checks. Therefore, the district court correctly determined that ‘both Plaintiffs have waived their right to sue. Affirming the judgment on waiver grounds, we do not address the parties’ arguments regarding application of the Exemption.’ “
11th Cir.: Bus Drivers Exempt From FLSA Under Motor Carrier (MCA) Exemption; Bus Company’s Airport-to-Seaport Shuttle Routes Shared A Practical Continuity Of Movement Due To Interstate Travel Of Cruise Line Customers Shuttled
Walters v. American Coach Lines Of Miami, Inc.
This appeal required the Court to determine whether Appellants, who are all current or former bus drivers for American Coach Lines of Miami (“ACLM”), were subject to a provision in the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq., exempting from the FLSA’s overtime requirements any employees who fall under the jurisdiction of the Secretary of Transportation under the Motor Carrier Act (“MCA”). The district court found Appellants to be eligible for this “motor carrier” exemption and therefore granted the portion of ACLM’s motion for summary judgment addressing Appellants’ claims for overtime wages. After reviewing the record and the parties’ briefs and hearing oral argument, we AFFIRM the grant of summary judgment.
The Court stated the relevant facts to its inquiry as follows:
“ACLM is a private motor carrier providing for-hire ground transportation for passengers that holds itself out to be an “interstate” motor carrier. It is licensed with the United States Department of Transportation (“DOT”), holds all the authorizations from the Federal Motor Carrier Safety Administration (“FMCSA”) necessary to be an interstate passenger motor carrier, and has been issued a DOT number. Since 2004, federal transportation agencies have audited ACLM at least twice, on at least one occasion in combination with Florida authorities. ACLM also requires its drivers to meet DOT safety standards, which Florida has adopted as well. See
Fla. Stat. § 316.302. ACLM does not pay its drivers overtime wages.
ACLM primarily provides transportation within the state of Florida, though some of its business is between Florida and other states. Much of ACLM’s revenue comes from shuttling cruise ship passengers between the Miami and Fort Lauderdale airports and local hotels and cruise ship ports. Since September 2006, ACLM has had a written contract to be the sole provider of such transportation for Royal Caribbean Cruise Lines (“Royal Caribbean”) during daytime hours. ACLM asserts that between April 2006 and December 2007 it transported more than 500,000 Royal Caribbean passengers, trips that resulted in over $4.4 million in revenues. Appellants contend that there is no proof that ACLM provided such transport prior to September 2006, though they appear not to dispute the total revenue figure. In addition to this written arrangement with Royal Caribbean, ACLM maintains that it earned over $700,000 from earlier informal agreements to provide similar shuttle transportation for Costa Cruises and Princess Cruises. Appellants likewise dispute the existence of such arrangements.
Under ACLM’s contract with Royal Caribbean, it provides ground transportation for passengers who book vacation packages through travel agents or Royal Caribbean. For those passengers, ground transportation is included as part of the overall package and is not priced or itemized separately. Passengers who do not pre-purchase ground transportation can request shuttle service when they arrive at the airport or cruise ship terminal, which will then be charged to that passenger’s Royal Caribbean account. Under the agreement, Royal Caribbean provides ACLM with weekly manifests listing the expected time, date, and number of passengers for each shuttle trip. Royal Caribbean employees greet passengers on arrival, contact ACLM when a bus is required, and collect vouchers from passengers before they board the bus. Royal Caribbean does not keep the vouchers nor does it give them to ACLM; rather, it gives ACLM a “load slip” with a head count for each trip. ACLM then uses these load slips to invoice Royal Caribbean for the trips. The agreement stated that ACLM would receive payment only if a passenger actually boarded the bus, with Royal Caribbean deciding whether to pay based on a per-person or per-bus rate. FN2 As a result, ACLM receives all of its payments from Royal Caribbean, rather than the passengers.
In addition to these local shuttle services, ACLM also provided other forms of in-state and out-of-state motor coach transportation, including driving shuttle bus routes at the University of Miami. Between 2004 and 2007, ACLM drivers made at least 148 trips that involved out-of-state travel, some for as long as 90 days. Both parties agree that approximately $1.7 million, or 4.06% of ACLM’s total revenue during that period, came from these out-of-state trips and that about 19% of its drivers made such trips. There appear to have been 75 ACLM drivers who made out-of-state trips during the time frame, which constitutes 19.08% of the 393 drivers employed by ACLM for that period.FN5 Nine of the 63 Appellants (14.29%) made out-of-state trips for ACLM, and Appellants spent less than 286 days on such trips during the period in question. ACLM does not keep records of how many trips its drivers make on a daily or annual basis, and there is no solid evidence regarding how many overall trips ACLM drivers made between 2004 and 2007 nor of what percentage of those trips involved out-of-state travel. One ACLM executive agreed that 10,000 total trips a year would be a reasonable estimate. He stated that, if this estimate were correct, then around 100 of those trips would involve out-of-state travel, which would mean that approximately 1% of ACLM’s total trips were out of state.”
After finding that the Defendant was a “motor carrier” the Court turned its inquiry to that of whether Plaintiffs were covered by the MCA. “Courts are ‘guided by practical considerations’ in determining whether an employee’s activities would be part of interstate commerce for purposes of the FLSA. Marshall v. Victoria Transp. Co., Inc., 603 F.2d 1122, 1123 (5th Cir.1979) (quotation marks and citation omitted). “When persons or goods move from a point of origin in one state to a point of destination in another, the fact that a part of that journey consists of transportation by an independent agency solely within the boundaries of one state does not make that portion of the trip any less interstate in character.”United States v. Yellow Cab Co., 332 U.S. 218, 228, 67 S.Ct. 1560, 1566, 91 L.Ed. 2010 (1947), overruled on other grounds by Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984). As a result, purely intrastate transportation can constitute part of interstate commerce if it is part of a “continuous stream of interstate travel.” Chao v. First Class Coach Co., Inc., 214 F.Supp.2d. 1263, 1272 (M.D.Fla.2001). For this to be the case, there must be a “practical continuity of movement” between the intrastate segment and the overall interstate flow. Walling v. Jacksonville Paper Co., 317 U.S. 564, 568, 63 S.Ct. 332, 335, 87 L.Ed. 460 (1943); see also Bilyou v. Dutchess Beer Distribs., Inc., 300 F.3d 217, 223 (2d Cir.2002) (applying this standard in analyzing applicability of motor carrier exemption).
In Marshall, we addressed a city bus service in Brownsville, Texas, which often transported people who had walked across the Mexican border before boarding the bus. See Marshall, 603 F.2d at 1123-24. We characterized the transportation of people making international journeys as “a regular, recurring and substantial part” of the bus drivers’ overall workload. Id. at 1125. Because the drivers’ work thereby was “entwined with a continuous stream of international travel,” we concluded that the drivers were engaged in interstate commerce, even though their routes were solely intrastate. Id. The Supreme Court reached a similar conclusion in United States v. Capital Transit Co., 338 U.S. 286, 70 S.Ct. 115, 94 L.Ed. 93 (1949). That case involved a bus service that drove routes within the District of Columbia that took commuters to locations where they then could board buses bound for Virginia. See id. at 288, 70 S.Ct. at 116. The Court found that the Interstate Commerce Commission (“ICC”) had regulatory authority under the MCA over those intra-district bus routes because they were “part of a continuous stream of interstate transportation” and thus formed “an integral part of an interstate movement.” Id. at 290, 70 S.Ct. at 117.
These cases indicate that ACLM’s airport-to-seaport routes would come under the Secretary’s MCA jurisdiction. Its shuttle trips share a practical continuity of movement with the interstate or international travel of the cruise lines and their passengers, just as the Brownsville bus routes did for their riders’ cross-border journeys. For cruise ship passengers arriving at the airport or seaport, ACLM’s shuttle rides would be part of the continuous stream of interstate travel that is their cruise vacation. The Royal Caribbean patrons in particular would have no reason to have any alternate view since the fee for the shuttle ride would either be bundled as part of their cruise vacation package or would be included on the bill for their Royal Caribbean shipboard account.”
The Court shot down each of Plaintiffs arguments that they were not subject to the MCA. The Court said: (1) application of the MCA did not require travel in interstate trips; (2) the incidental-to-air exemption was inapplicable; and (3) Defendants were not required to have a “through-ticketing” arrangement with the cruise line to argue that the passengers were all moving in the continuity of interstate commerce.
Therefore, the Court found that under the circumstances, the bus drivers were not entitled to the benefits of the FLSA, because they were exempt under the Motor Carrier Act (MCA) exemption to the FLSA.