The plaintiff sought more than $12,000 in unpaid wages on his FLSA claims, rejected the defendant employer’s Rule 68 offer of judgment of $3,500 on those claims, and then was awarded only $97.20 plus an equal amount of liquidated damages. Under these circumstances, the Eleventh Circuit held that the trial court properly awarded the defendant with costs of $1340. Moreover, given the plaintiff’s limited success, the Eleventh Circuit also held that the trial court correctly reduced the plaintiff’s request for attorney’s fees. Vasconcelo v. Miami Auto Max, Inc., 2020 U.S. App. LEXIS 37183 (11th Cir. Nov. 25, 2020).

Background

The plaintiff worked for the defendant as a commissioned automobile salesman for about eight months. Unfortunately, he was not very good at car sales and by the time he left, his draws against commissions had exceeded his actual commissions by about $2700. Shortly before quitting, the plaintiff sued his employer and its owner under the Fair Labor Standards Act (FLSA), alleging that his draw-against-commission plan was unlawful. In addition, he asserted that he was required to work off the clock for which he was not paid at least minimum wage; that the defendant took unwarranted deductions from his pay; and that it did not pay him on time. He sought nearly $13,000 in unpaid wages and liquidated damages.

Several months into the litigation, the defendant made an offer of judgment under Federal Rule of Civil Procedure 68. That offer was $3,500, inclusive of liquidated damages but exclusive of attorney’s fees and costs incurred to date. The plaintiff rejected the offer. Generally under Rule 68, if a defendant makes an offer of judgment and the plaintiff subsequently is awarded less than what the defendant offered, the defendant is entitled to any costs it incurred to defend the case subsequent to the Rule 68 offer.

Following trial, the jury rejected the plaintiff’s commission-based claim but found in his favor on his off-the-clock and minimum wage claims. However, because those claims were only for 12 hours of work, the jury awarded him a paltry $97.20. The plaintiff then filed several post-trial motions, but the only one on which he prevailed was his motion to amend the judgment to award him an additional $97.20 in liquidated damages.

During briefing on the issue of fees and costs, the plaintiff sought about $56,000 in attorney’s fees and $4,000 in costs. The defendant filed its objections to these requests and additionally moved to tax $1,340 in post-offer costs against the plaintiff based on its Rule 68 motion. Adopting the magistrate judge’s recommendations, the district court entered a final judgment for plaintiff in the amount of $194.40 and awarded him $13,083 in attorney’s fees. The trial court further agreed with the magistrate judge’s recommendation that the defendant’s post-offer costs should be taxed against the plaintiff based on the defendant’s Rule 68 motion. The plaintiff appealed all aspects of this final order.

The Circuit Court Decision

The Eleventh Circuit upheld the district court’s decision in all respects. First, the Court of Appeals held that it lacked jurisdiction over the plaintiff’s appeal of the $194.40 award because it was untimely filed.  The Eleventh Circuit next concluded that the district court was within its discretion to reduce the plaintiff’s attorney’s fee request as it did, given the very limited recovery on his claims (about 1.5% of the amount he sought) and the fact that, beyond the Rule 68 offer, he had rejected numerous settlement offers throughout the litigation that exceeded what he ultimately recovered.

The Court of Appeals went on to reject several arguments by the plaintiff as to why the trial court should not have awarded the defendant’s costs on its Rule 68 offer of judgment. First, the Eleventh Circuit noted that there was no special exception from Rule 68 for cases brought under the FLSA. On the contrary, Federal Rule of Civil Procedure 1 is clear that the Rules of Civil Procedure “govern the procedure in all civil actions,” and even if there is a conflict between the underlying purposes of an act and the Rules of Civil Procedure, the Rules Enabling Act provided that any laws conflicting with the Rules that were enacted after the Rules went into effect would have “no further force or effect.” Because the FLSA was enacted after the Rules of Civil Procedure, any conflict between the two would be resolved in favor of following the Rules of Civil Procedure.

The plaintiff further argued that his former employer’s offer of judgment was ambiguous because it was unclear whether it included attorney’s fees and costs. As an initial matter, the Court of Appeals noted that any ambiguity would merely require that the offer be construed against its drafter (here, the defendant), not that the offer necessarily would be invalid. Regardless, there was no ambiguity here, as the plain and only reasonable reading of the Rule 68 offer was that any attorney’s fees and costs were not included in the $3,500 itself and instead would be separately determined by the court.

The plaintiff further asserted that the $194.40 judgment and a finding of liability is “more favorable” for purposes of Rule 68 than a $3,500 settlement and a denial of liability, and that there is a public benefit in the “vindication of rights” that he obtained by way of his jury award that must be considered in the Rule 68 analysis. While that may be true in general terms, concluded the Eleventh Circuit, the trial court did not clearly err in determining that whatever non-pecuniary interest may exist in finding the defendant liable, it was not worth the significant difference between the defendant’s offer of judgment and the plaintiff’s small jury award. As the magistrate judge had noted in his recommendation, the FLSA is not designed to merely reward attorney[’]s billing time.” Moreover, noted the Eleventh Circuit, Rule 68 does not contemplate a “holistic approach” that considers the societal benefits of establishing liability under the FLSA. On the contrary, the Rule merely “directs courts to compare the offer of judgment to the judgment [] finally obtain[ed].”