In Fair Labor Standards Act (“FLSA”) collective actions it is not uncommon for plaintiffs to file motions for conditional certification of an opt-in class early in the litigation, many times with the Complaint.  Courts frequently grant such motions and order class notice to issue before discovery has taken place.  Defendants usually seek to include language in the notice that informs potential opt-in plaintiffs that if they lose they may be liable for the defendant’s costs (not including attorney’s fees).  The Western District of Pennsylvania gave defendants some additional ammunition in negotiating these notices, by awarding the prevailing defendants over $60,000 in costs. 

In Fair Labor Standards Act (“FLSA”) collective actions it is not uncommon for plaintiffs to file motions for conditional certification of an opt-in class early in the litigation, many times with the Complaint.  Courts frequently grant such motions and order to class notice to issue before discovery has taken place.  Defendants usually seek to include language in the notice that informs potential opt-in plaintiffs that if they lose they may be liable for the defendant’s costs (not including attorney’s fees).  The Western District of Pennsylvania gave defendants some additional ammunition in negotiating these notices, by awarding the prevailing defendants over $60,000 in costs. 

In Kuznyetsov v. West Penn Allegheny Health System, Incet al, Case No: 10-948, 2014 WL 5393182 (W.D. Pa 2014), the court conditionally certified an FLSA class of almost 15,000 current and former employees of the health system.  Over 1,000 plaintiffs opted in to the lawsuit.  After what the court described as contentious discovery and excessive motion practice, the court decertified the class because the opt-in plaintiffs were not similarly situated.  The opt-in plaintiffs’ claims were voluntarily dismissed without prejudice and the named plaintiffs’ claims were dismissed with prejudice.   The defendants then filed a bill of costs seeking a total of $78,561.77.  The clerk of courts ultimately taxed $60,890.97 in costs. 

The three named plaintiffs moved the district court to review and deny the taxation of costs.  The plaintiffs primarily argued: 1) that assessing costs is contrary to the policy and purpose of the FLSA; 2) the defendants were not the prevailing party;  3) the costs awarded for e-discovery costs was unreasonably high; 4) the plaintiffs were unable to pay for the full measure of the costs; and 5) it was inequitable for the named plaintiffs to pay the entire cost. The court denied the plaintiffs’ motion.

In denying the plaintiffs’ motion, the court held that the FLSA does not have any provision that precludes an award of costs to a prevailing defendant.  “If Congress had intended to override Rule 54(d) [of the Federal Rules of Civil Procedure], then it would be clear in the statute.”  Other courts have held the same.  See Frye v. Baptist Mem'l Hosp., Inc., 507 F. App'x 506 (6th Cir. 2012) (awarding costs to the prevailing defendant in an FLSA collective action would not have a “chilling effect” on future FLSA claims).

The court in Kuznyetsov next held that there was no doubt that the defendants were the prevailing party on the issue of decertification and as a consequence should be awarded costs and that the costs awarded were not excessive.  The court also held that it was not inequitable to tax the costs of the collective action onto the three named plaintiffs. The court reasoned that the named plaintiffs “failed to provide any evidence that counsel informed the opt-in [p]laintiffs that they may be potentially liable for a portion of the costs.”  There was nothing inequitable about requiring the named plaintiffs to pay the costs for the entire collective action because the plaintiffs “chose to bring their claims as a collective action.”  They assumed the risks associated with that decision.

Like the Sixth Circuit’s decision in Frye, the Western District of Pennsylvania’s decision provides powerful ammunition to defendants who seek to have class notices to disclaim the possibility that if the plaintiffs lose the action they could be liable for costs.  Plaintiffs’ counsel would even be wise to include such language in their notices so that the named plaintiffs are not stuck paying all of the costs if they lose.