When is a win not a win?

One ace in the hand of plaintiffs’ counsel in Fair Labor Standards Act (FLSA) litigation (as well as claims under Title VII, the Americans with Disabilities Act or the Age Discrimination in Employment Act) is their ability to recover attorney fees should they prevail. While that is, indeed, a strong card, it can be overplayed, as a recent case demonstrates.

In Vasconcelo v. Miami Auto Max, Inc., Case No. 19-10679 (11th Cir. Nov. 25, 2020), the plaintiff brought an FLSA claim based on alleged problems with the employer’s commission draw system that he contended deprived him of the minimum wage in some weeks. The employer made a Rule 68 offer of judgment for $3,500 plus reasonable attorney fees, an offer the plaintiff rejected.

At trial, the jury found that the commission draw system was not improper but did award the plaintiff $97.20 (times two for liquidated damages) for two instances in which he failed to punch in but was not compensated for the extra hours.

Yes. He recovered less than $200.

That didn’t stop the attorney from claiming $55,990 in attorney fees and almost $4,000 in costs. The district court, however, noting the limited success, only awarded $13,083 in fees and no post-offer costs, and the U.S. Court of Appeals for the 11th Circuit affirmed.

The court attributed the rejection of the Rule 68 offer largely to “stubbornness” on the part of plaintiffs’ counsel and affirmed the award based on the limited degree of success. It similarly affirmed the trial court’s refusal to award costs against the defendant for expenses incurred following the Rule 68 offer.

While Vasconcelo was not a class action, it demonstrates that there are at least some limits to attorney fee awards. Tactically, it also shows that a well-played Rule 68 offer may shift the court’s sympathies to the defendant and limit costs and, to a degree, liability for the other side’s attorney fees.

The bottom line: Minuscule recovery may translate into reduced attorney fee awards.