A Florida federal court recently dismissed an FLSA action as moot, thereby denying plaintiff’s counsel a fee recovery, after plaintiff’s counsel deposited a check representing full compensation for plaintiff’s actual and liquidated damages.
But in her decision in Craig v. Digital Intelligence Systems Corp., Case No. 8:10-CV-2549-T-EAJ (M.D. Fla., November 2, 2011), Judge Elizabeth Jenkins of the United States District Court for the Middle District of Florida ruled the Eleventh Circuit Court of Appeals’ decision in Dionne v. Floormasters, 647 F.3d 1109 (11th Cir. 2011) – in which the Eleventh Circuit affirmed the dismissal of an FLSA case on mootness grounds – was not controlling, because “plaintiff in Dionne agreed that his claim was moot and should be dismissed. . . . As a result, the Eleventh Circuit did not address the district court’s ruling that the action was rendered moot by the defendant’s tender of full compensation.”
In deciding that issue, Judge Jenkins declined to follow a recent ruling by Middle District Judge James Whittemore in Klingler v. Phil Mook Enters., Inc., No. 8:11-CV-1586-T-27TGW, 2011 U.S. Dist. LEXIS 110205 (M.D. Fla. Sept. 14, 2011). In Klingler, Judge Whittemore ruled that allowing the defendants to avoid responsibility for attorney’s fees would run counter to the FLSA’s goal of fully compensating a wronged employee and that the tender was an attempt to circumvent the requirements of Rule 68. Judge Jenkins wrote that “the issue of attorney’s fees is collateral to the merits of Plaintiff’s FLSA claim. And Klingler is distinguishable from the present case because the plaintiff in Klingler denied receiving the tender payment.” In contrast, Judge Jenkins noted:
Plaintiff’s acceptance and endorsement of a check for full compensation for damages, coupled with the deposit of the funds in the law-firm trust account, rendered his claims moot. Here, it is undisputed that Plaintiff and his counsel accepted the check even though his counsel was on notice that the check was tendered for the purpose of mooting Plaintiff’s claim. Plaintiff endorsed the check, and his counsel deposited it in the law-firm trust account. That the check was in Plaintiff’s name and he endorsed it strengthens the conclusion that Plaintiff accepted the tender of full compensation for damages.
Judge Jenkins went on to hold that plaintiff did not have a right to an award of attorney’s fees and costs under the FLSA because plaintiff was not the prevailing party:
There has been no adjudication on the merits of Plaintiff’s claim, and Digital’s tender of damages does not include an offer of judgment on specified terms pursuant to Rule 68, Fed. R. Civ. P. Further, the parties are not seeking judicial approval of a settlement of Plaintiff’s claim. Consequently, none of the three conditions that would entitle Plaintiff to prevailing party status have been met.
But would Judge Jenkins have ruled differently if plaintiff had not endorsed the check? Perhaps. In her decision, Judge Jenkins cited approvingly to Judge Ryskamp’s decision in Gathagan v. Rag Shop/Hollywood, Inc., No. 04-805200-CIV, 2005 WL 6504749, at *1 (S.D. Fla. May 9, 2005), in which the court commented that instead of trying to revoke the acceptance, the proper procedure for protecting a plaintiff’s right to an attorney’s fee award would be for counsel to “instruct his client to delay acceptance of a tender until a satisfactory fee arrangement is reached or the parties agree that the tender represents an offer of settlement or judgment.”
So where does that leave us in the post-Dionne world of FLSA litigation? Suppose the defendant tenders full compensation to the plaintiff, but the plaintiff rejects the tender, or delays it in an attempt to reach a fee arrangement with defense counsel, or an agreement that the tender represents an offer of settlement or a judgment. What should the defendant do then? Shouldn’t defendant take the position that the tender of full compensation itself renders the case moot, regardless of the whether the plaintiff accepted the tender? Judge Ryskamp’s earlier decision in Gathagan suggests that this is exactly what the defendant should do:
The mootness doctrine applies to FLSA actions. Cameron-Grant v. Maxim Healthcare Services, Inc., 347 F.3d 1240, 1244 (11th Cir. 2003). Defendant's tender of Plaintiff's maximum recoverable damages has rendered her case moot, and the motion to dismiss with prejudice is granted. Buckhannon, 532 U.S. at 601, 121 S.Ct. at 1838.
Gathagan v. The Rag Shop/Hollywood, Inc., 2005 U.S. Dist. LEXIS 47235, 6-7 (S.D. Fla. Feb. 9, 2005). Precedents from other circuits hold that a plaintiff cannot avoid mootness by rejecting an unconditional tender of amounts owed. See Rothe Development Corp. v. Department of Defense, 413 F.3d 1327, 1331 (Fed. Cir. 2005)(a plaintiff may not prolong a case merely by refusing to accept a valid tender); Holstein v. City of Chicago, 29 F.3d 1145, 1147 (7th Cir. 1994) (a plaintiff “may not spurn this offer of all the damages he is owed and proceed to trial”). This is true in FLSA cases. See Thomas v. Interland, Inc., 2003 WL 24065651, *3 (N.D. Ga. 2003)(“Courts have repeatedly held that a plaintiff's claim becomes moot when a defendant offers the plaintiff all relief he could receive if his claim were fully litigated, even if the plaintiff does not accept such offer.”). Is that the law in FLSA cases, or isn’t it? It may take another decision by the Eleventh Circuit to resolve this issue once and for all. Until then, I think we are going to see many district court decisions in the Eleventh Circuit grappling with these questions.