Last week, in Dionne v. Floormasters Enterprises, Inc., the Eleventh Circuit Court of Appeals issued a decision that is sure to affect how attorneys represent their clients in wage and hour matters. Florida leads the nation in wage and hour suits filed under the Fair Labor Standards Act (“FLSA”), largely because the plaintiff’s bar here decided over a decade ago to aggressively pursue these suits. FLSA cases are attractive to plaintiff’s lawyers because the statute includes a one-way prevailing party fees provision that is applicable to plaintiffs only. If a plaintiff files suit and prevails, the plaintiff gets his/her fees paid by the other side. There is no reciprocal provision that applies if the defendant wins.
Because of this one-way fee shifting provision, Defendants who deny liability still often find it cost-effective to settle FLSA suits at their outset. The amount the plaintiff seeks in unpaid wages is usually much less than the attorney’s fees that a defendant will have to pay its own lawyers to defend the suit. And, if the plaintiff prevails on only a small portion of his claim, the defendant will have to also pay the plaintiff’s attorney’s fees. It does not take a rocket scientist to understand the “Catch 22” situation that defendants are in.
One defense tactic that lawyers have long considered has been to offer to pay the plaintiff all damages (double the amount of claimed unpaid wages, plus interest) that the plaintiff could hope to receive in the suit, in order to “moot” the cause of action, and to avoid having to pay the plaintiff’s fees. Unlike other types of case, in FLSA matters most Florida federal courts require that plaintiffs provide a sworn estimate of their claimed damages early in the case, so it is not difficult for the defendant to calculate the precise amount at issue. The problem, though, with tendering the full amount at issue has been that the plaintiff’s attorneys still claim that the plaintiff is the prevailing party in the case, and that the defendant should have to pay the plaintiff’s attorney’s fees.
The Eleventh Circuit in Dionne flatly rejected that argument. There, after the suit was filed, the Defendant “tendered” full payment to the Plaintiff. The Defendant also moved to dismiss for lack of subject matter jurisdiction, under the theory that the payment mooted the case because no claim or controversy existed going forward. The Plaintiff admitted that the case was now moot, but filed a motion for prevailing party attorney’s fees. The court rejected the fee application, and awarded the Plaintiff’s counsel nothing.
The Plaintiff appealed, arguing that filing the suit served as a the “catalyst” for the Defendant’s eventual payment, and that the plaintiff was the “prevailing party”. The Eleventh Circuit disagreed, and stated: “Dionne is not a ‘prevailing party’ in this action because, in granting Floormasters’ motion to dismiss this lawsuit for lack of subject matter jurisdiction, the District Court did not award a judgment in his favor.” In other words, unless the court issues a judgment in favor of the plaintiff, the plaintiff has not become the “prevailing party”.
The likely result of this decision is that in single-plaintiff FLSA cases in which the amount in controversy is relatively small, defense attorneys will recommend that their clients tender full payment in order to end the case. In short, this Eleventh Circuit decision will likely change the way that small, single-plaintiff FLSA cases are handled, and could eventually lead to a decline in the number of these suits filed.