Eleventh Circuit Rules Liquidated Damages Are Not Mandatory In FLSA Retaliation Claims

On February 13, 2013 in the case of Moore, et al. v. Appliance Direct, Inc., the Eleventh Circuit was faced with a question of first impression: When the employer is found liable for retaliation but provides no evidence of reasonable good faith, does the Fair Labor Standards Act (“FLSA”) require an award of liquidated damages or are liquidated damages discretionary?  The Eleventh Circuit recently joined the Sixth and Eighth Circuits and held that liquidated damages for retaliation claims under the FLSA are discretionary when liability is found, but the employer does not present any evidence of  reasonable good faith. 

 In Moore, the plaintiffs were former delivery drivers for Appliance Direct, Inc. (“Appliance Direct”).  The plaintiffs filed suit against their employer and the Company’s Chief Executive Officer seeking overtime.  While the overtime lawsuit was pending, Appliance Direct outsourced the position of delivery driver.  While other drivers formerly employed by Appliance Direct received offers to become independent contractors, the plaintiffs did not, and their employment was terminated when their jobs were outsourced.  Following this termination, the plaintiffs filed another lawsuit alleging retaliation under the FLSA.  Appliance Direct filed for bankruptcy, and the retaliation case proceeded to a jury trial against only the CEO.  At the end of the trial, the jury returned a verdict in favor of the plaintiffs for economic damages in the amount of $30,000 each.  The parties filed cross-appeals on the verdict and the Court’s denial of requests for a reduction of the award, a new trial, and an award of liquidated damages. 

The Eleventh Circuit upheld the District Court’s rulings on the various motions.  Of key importance is the Court’s ruling on the issue of liquidated damages in FLSA retaliation cases.  First, the Court considered the language of 29 U.S.C. §216(b).  The first sentence applies only to damages for violations of Sections 206 (minimum wage) and 207 (overtime).  The second sentence applies to violations of Section 215(a)(3) (retaliation).  There is no discretion for the court in awarding liquidated damages for employers found liable for violating Section 206 and 207.  However, the portion of the statute addressing retaliation claims states that an employer shall be held liable for damages “as may be appropriate to effectuate the purposes of section 215(a)(3).”  The statute also gives examples of possible damages, including, but not limited to, reinstatement, promotion, lost wages, and liquidated damages.  The Court found that this language does not require an award of liquidated damages in a retaliation case.  Instead, the language indicates that whatever is awarded must be appropriate to effectuate the purposes of the retaliation provision, which is within the discretion of the Court.

Second, the Court found that the plaintiffs’ cited cases from the Fifth and Seventh Circuits did not thoroughly address the issue on mandatory liquidated damages in FLSA retaliation cases.  See Lowe v. Southmark Corp., 998 F.2d 335 (5th Cir. 1993) and Avitia v. Metro. Club of Chicago, Inc., 49 F.3d 1219 (7th Cir. 1995).  The Court did find that the cases cited by the defendant from the Sixth and Eighth Circuits were more instructive and well-reasoned on this issue.  In short, the Eleventh Circuit followed the reasoning outlined in Braswell v. City of El Dorado, Ark., 187 F.3d 954 (8th Cir. 1999) and came to the same result: upholding the District Court’s refusal to award liquidated damages in a FLSA retaliation case.  Blanton v. City of Murfreesboro, 856 F.2d 731 (6th Cir. 1988) outlined similar reasoning and found that the trial court erred in awarding damages because such an award would not effectuate the purposes of the statute.

The holding in Moore is beneficial for employers found liable for FLSA retaliation claims: unlike FLSA overtime and minimum wage claims, an award of liquidated damages is not mandatory when the employer presents no evidence of a reasonable good faith belief; instead such an award is in the discretion of the Court and must effectuate the purposes of the statute.

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