By Jason A. Pill, Phelps Dunbar LLP
On July 28, 2011, the Eleventh Circuit issued a significant decision that provides employers with an opportunity to moot a plaintiff’s FLSA action, after filing but prior to entry of a judgment, and avoid paying attorneys’ fees and costs. In Dionne v. Floormasters Enterprises, Inc., Case No.: 09-15405, 2011 WL 3189770 (11th Cir. July 28, 2011), the Eleventh Circuit held that when an employer tenders full payment to an FLSA plaintiff, the action is mooted and, because no judgment is entered in favor of the plaintiff, the employer is not required to pay the plaintiff’s attorneys’ fees and costs.
In Dionne, the plaintiff, Perry Dionne, brought an action against Floormasters, on behalf of himself and other Floormasters employees, claiming that the company failed to pay him overtime as required by the FLSA. Early in litigation, Floormasters tendered payment of $637.98 to Dionne as payment in full for Dionne’s overtime claim, including liquidated damages, and filed a motion seeking to dismiss the action as moot. Dionne filed a response to Floormasters’s motion to dismiss and attached an affidavit, in which he stated that his estimated total damages, including liquidated damages, were actually $3,000. Accordingly, the district court denied Floormasters’s motion to dismiss.
Pursuant to Dionne’s affidavit, Floormasters tendered a second check to Dionne in the amount of $3,000, and proceeded to file a second motion to dismiss, again asserting that Dionne’s action had become moot upon tender of full payment. The district court granted Floormasters’s second motion to dismiss with prejudice, holding that the tender of full payment had mooted the action and deprived the district court of subject matter jurisdiction due to the absence of a case or controversy. When Dionne moved for attorneys’ fees and costs under Section 216(b) of the FLSA, Floormasters opposed the motion and asserted that Dionne was not entitled to an award of attorneys’ fees and costs because no judgment had been awarded to Dionne in the action and, thus, he was not the prevailing party. The district court agreed and denied Dionne’s motion for attorneys’ fees and costs. Dionne appealed to the Eleventh Circuit.
On appeal, the Eleventh Circuit affirmed the denial of attorneys’ fees and costs. The Eleventh Circuit, rejecting the “catalyst test” for determining the prevailing party in an FLSA action, reasoned that: (i) entry of judgment in favor of the plaintiff was a predicate to an award of attorneys’ fees and costs under Section 216(b) of the FLSA; (ii) an employer can render an FLSA action moot by tendering the full amount claimed by the plaintiff in back wages and liquidated damages; (iii) a dismissal for mootness is not equivalent to a judgment or settlement in favor of the plaintiff; and, thus (iv) a plaintiff whose FLSA action is mooted by tender of the amount of damages owed is not entitled to an award of attorneys’ fees and costs under Section 216(b).
Critically, although Floormasters tendered payment less than two months after Dionne filed his lawsuit, the Eleventh Circuit did not discuss the timing of Floormasters’s tender of full payment to Dionne, and gave no indication that an employer’s ability to moot an action and avoid payment of attorneys’ fees and costs would be any less applicable later in litigation—when the attorneys’ fees would presumably be much larger. Rather, the Eleventh Circuit emphasized that an award of attorneys’ fees and costs is predicated upon entry of a judgment, which a plaintiff does not obtain when an action is mooted at any point prior to entry of that judgment.
As to the mechanics of the tender of payment to the plaintiff, the Eleventh Circuit indicated that the employer’s offer need not admit liability on behalf of the employer or imply a concession by the employer under the FLSA. Similarly, the offer may, and indeed should, include an express denial of liability by the employer to ensure that the plaintiff is not construed as the prevailing party. The offer does not require an entry of judgment against the employer. Lastly, and perhaps most importantly, the parties need not seek court approval for the agreement (a requirement in the Eleventh Circuit for a valid release of an FLSA claim where the employee compromises his or her claim), if the full amount claimed is tendered—including liquidated damages.
It should also be noted that Dionne brought the case as a collective action, but failed to seek leave to pursue it as such. As a result, the Eleventh Circuit was not presented with the opportunity to discuss an employer’s ability to moot a collective action through the tender of full payment of amounts alleged. Thus, the decision may hold limited precedential value for employers attempting to moot future collective actions through the tender of full payment.
Ultimately, the Eleventh Circuit’s decision in Dionne has provided employers with an alternative procedure to conclude FLSA actions, presumably any time prior to entry of a judgment, and avoid payment of the plaintiff’s attorneys’ fees and costs. As the number of FLSA actions keeps escalating, with the accompanying risk of attorneys’ fees, the Dionne decision may serve as a deterrent to actions motivated primarily by the potential recovery of attorneys’ fees and costs.