In a landmark decision whose influence may rival its 1982 ruling in Lynn's Food Stores that FLSA claims can only be settled with DOL or court supervision, the Eleventh Circuit Court has held that a plaintiff may not recover attorney's fees and costs as a "prevailing party" under federal wage and hour law when his employer tenders payment of maximum recoverable damages but does not admit liability. In its July 28, 2011 decision in Dionne v. Floormasters Enterprises, Inc., the Eleventh Circuit affirmed the district court’s denial of attorneys’ fees and costs to the plaintiff because there had been no judgment awarding the plaintiff overtime pay and because the FLSA requires a plaintiff to receive a judgment in his favor to be entitled to such fees and costs.

The plaintiff in Dionne initially filed his putative collective action lawsuit against Floormasters in federal court in the Middle District of Florida pursuant to section 216(b) of the FLSA, seeking overtime pay, liquidated damages, and attorneys’ fees. In response, Floormasters, while denying the plaintiff’s allegations, tendered payment of the full amount the plaintiff sought in alleged overtime pay plus liquidated damages. Floormasters simultaneously sought dismissal of the lawsuit arguing that since payment in full had been tendered to the plaintiff, his claims were mooted. In response, the plaintiff agreed that his claim was moot and should be dismissed, but stated he would still seek attorneys’ fees. The district court denied the plaintiff’s motion for attorneys’ fees because there was no judicial determination that Floormasters had violated the FLSA.

On appeal, the plaintiff argued that the district court erred, and that he was in fact the prevailing party entitled to attorneys’ fees because the lawsuit "brought about" the payment of FLSA damages. In affirming the district court, the Eleventh Circuit explained that the Supreme Court has explicitly rejected this "catalyst" argument for entitlement to attorneys’ fees and that a party has not prevailed unless there is an "alteration in the legal relationship of the parties." Here, the dismissal of the plaintiff’s lawsuit with prejudice was not such an alteration because there was minimal involvement by the district court in this case--there was no approval of a settlement amount, no retention of jurisdiction to enforce a settlement, and no finding of liability. The court reasoned that a party cannot be the "prevailing" party "by simply filing a nonfrivolous but potentially meritless lawsuit" that results in the plaintiff obtaining the "sought-after destination without obtaining any judicial relief." Instead, under the FLSA, a plaintiff must receive "a judgment in his favor to be entitled to attorney’s fees and costs."

The Dionne decision confirms -- at least in the Eleventh Circuit -- that employers can avoid prolonged and expensive litigation by tendering payment of maximum damages sought by an individual plaintiff in an FLSA action without admitting liability, and that they need not pay the plaintiff's attorney fees and costs after doing so. The ruling's influence may be farther reaching, given that it was authored by a Ninth Circuit judge sitting on the Eleventh Circuit by designation.