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Gurule v. Guardian

United States Court of Appeals, Fifth Circuit

December 27, 2018


          Appeals from the United States District Court for the Southern District of Texas

          Before HAYNES, HO, and DUNCAN, Circuit Judges.


         This case asks us to explore the relationship between the cost-shifting mechanism in Federal Rule of Civil Procedure 68 and the fee-shifting provision in the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. One of the plaintiffs rejected a Rule 68 offer of judgment and proceeded to trial, where she prevailed on her FLSA claim and was awarded damages and attorney's fees. There was a catch, however: the damages she won at trial were lower than the offer she had earlier spurned, and so Rule 68 required her to pay the defendants' post-offer costs. The issue is what effect, if any, this should have on the plaintiff's fee award. Several circuits have held that, in assessing a plaintiff's degree of success under a fee-shifting provision like the FLSA's, a court should consider a plaintiff's rejection of a Rule 68 offer that would have given her more than what she ultimately obtained at trial. We think that approach makes sense and so join those circuits. We AFFIRM the fee award, however, because the district court properly considered the rejected Rule 68 offer in its considerable downward adjustment of the lodestar. We AFFIRM the district court's judgment in all other respects.


         Appellants Krystal Gurule ("Gurule"), Melissa Hall ("Hall"), Ryan Matte ("Matte"), and Kimberly Taylor ("Taylor") were employees at the midtown Houston nightclub, Gaslamp. Gaslamp is owned and operated by Appellees Land Guardian and Mohammad Ayman Jarrah (collectively "Gaslamp"). Gurule and Hall were employed as bottle-service waitresses, Matte and Taylor as bartenders. In December 2015, those employees sued Gaslamp under the FLSA for failure to pay minimum wage and overtime. See 29 U.S.C. §§ 206(a), 207(a). Their complaint alleged that Gaslamp violated the minimum wage requirement by systematically diverting tips from tipped employees, id. §§ 206(a), 203(m), and the overtime requirement by failing to pay time-and-a-half to employees working more than 40 hours per workweek, id. § 207(a). As relief they sought minimum wage for hours worked, "wrongfully diverted" tips, overtime wages, as well as liquidated damages, attorney's fees, and costs. In February 2016 Hall settled her claims against Gaslamp for $300. In April 2017 Gaslamp moved for partial summary judgment on Matte and Taylor's claims. That same month Gurule, Matte, and Taylor were granted stipulated dismissal of their overtime claims.

         In July 2017 the court granted Gaslamp summary judgment on Matte and Taylor's remaining claim. The court found that Matte and Taylor failed to produce any evidence showing "as a matter of just and reasonable inference" that they had "performed uncompensated work." See Harvill v. Westward Commc'ns, LLC, 433 F.3d 428, 441 (5th Cir. 2005) (an FLSA plaintiff meets her initial burden "'if [she] proves that [she] has in fact performed work for which [she] was improperly compensated and if [she] produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference'") (quoting Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687-88 (1946)). Matte and Taylor admitted they lacked "any evidence of their own supporting their claims," but instead "exclusively rel[ied] on the representative testimony of Plaintiff Gurule to prove their hours worked and tips received." As the court explained, such "representational testimony" may establish a prima facie FLSA case under certain circumstances. See, e.g., Tyson Foods, Inc. v. Bouaphakeo, 136 S.Ct. 1036, 1047 (2016); see also Albanil v. Coast 2 Coast, Inc., 444 Fed.Appx. 788, 806 (5th Cir. Oct. 13, 2011) (unpublished) (discussing representational testimony in FLSA cases and collecting authorities). But not here, the court concluded, given that Gurule had different duties from Matte and Taylor, lacked "personal knowledge" of their work, and "could only speculate" about their hours. The court therefore granted summary judgment on Matte and Taylor's claims.[1]

         All that remained was Gurule's minimum wage claim, which would be tried to a jury in September 2017. About a year-and-a-half before that, in February 2016, Gaslamp made Gurule an offer of judgment under Federal Rule of Civil Procedure 68 in the amount of $3, 133.44, which she rejected. She also declined to accept subsequent offers ranging from $1, 566 to $5, 000 in the months leading up to trial. After a one-day trial, a jury returned a verdict in Gurule's favor and awarded her $1, 131.39 in compensatory damages. The district court subsequently awarded her $1, 131.39 in liquidated damages and $25, 089.30 in attorney's fees. See 29 U.S.C. § 216(b) (providing for liquidated damages equal to compensatory damages and reasonable attorney's fees). Because she had declined Gaslamp's more favorable Rule 68 offer in February 2016, however, Gurule was ordered to pay Gaslamp $1, 517.57 in costs. See Fed. R. Civ. P. 68(d) (if offeree's final judgment is "not more favorable than the unaccepted offer," offeree "must pay the costs incurred after the offer was made"); see also Marek v. Chesny, 473 U.S. 1, 5-12 (1985) (discussing Rule 68).

         Matte and Taylor timely appealed the summary judgment grant, and Gaslamp timely cross-appealed the district court's attorney's fee award.


         We first address Matte and Taylor's challenge to the summary judgment dismissing their FLSA claim. We review that judgment de novo, applying the same legal standards as the district court and drawing all justifiable factual inferences in favor of the non-moving party. Hemphill v. State Farm Mut. Auto. Ins. Co., 805 F.3d 535, 538 (5th Cir. 2015). Summary judgment is proper "if the movant shows there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). Matte and Taylor raise no argument on appeal concerning the only issue litigated at summary judgment-namely, whether they failed to prove a prima facie FLSA case by relying solely on Gurule's "representational testimony" about her own hours and tips. They instead argue that Gaslamp did not actually move for summary judgment on their "minimum wage" claim at all, but instead challenged only their "stolen tip" claim. We disagree.

         The district court addressed and rejected this argument in response to Matte and Taylor's pre-trial "Memorandum of Law," which argued that the summary judgment order "did not dispose of [their] minimum wage claims" but instead addressed only their "stolen tip" claims. The district court correctly concluded that these two claims were one and the same: "Plaintiffs' theory of the case is that because Defendants diverted their tips, they failed to satisfy the condition of the tip credit and therefore violated the FLSA requirement to pay the minimum wage. Th[ese] [are] not two separate causes of action but rather one for failure to pay minimum wage." See, e.g., Montano v. Montrose Rest. Assoc., Inc., 800 F.3d 186, 188 (5th Cir. 2015) (discussing "tip credit exception" to FLSA "that permits employers to pay less than the minimum wage-$2.13 per hour-to a 'tipped employee' as long as the employee's tips make up the difference between the $2.13 minimum wage and the general minimum wage"); 29 U.S.C. § 203(m). The court also correctly pointed out that Gaslamp's summary judgment motion presented the "minimum wage" and "stolen tip" claims as "one legal theory," and that the court's summary judgment order did the same. We agree with the district court that its summary judgment disposed of Matte and Taylor's minimum wage claim and we therefore affirm that judgment.[2]


         We turn to Gaslamp's argument that the district court abused its discretion in awarding Plaintiffs' counsel $25, 089.30 in attorney's fees. The FLSA provides that the court "shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant[.]" 29 U.S.C. § 216(b). This circuit uses the analysis in prevailing party cases to set FLSA fee awards. Saizan v. Delta Concrete Prod. Co., 448 F.3d 795, 799 n.7 (5th Cir. 2006). Courts calculate a "lodestar" by multiplying the hours reasonably spent on the case by an appropriate hourly rate. Id. (citing Heidtman v. Cty. of El Paso, 171 F.3d 1038, 1043 (5th Cir. 1999)). Courts may then adjust that amount based on the twelve Johnson factors. Id. at 800; Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974)).[3] While "the most critical factor in determining an attorney's fee award is the degree of success obtained," Saizan, 448 F.3d at 799, "'a low damages award alone … should not lead the court to reduce a fee award.'" Black v. SettlePou, P.C., 732 F.3d 492, 503 (5th Cir. 2013) (quoting Saizan). We review challenges to a district court's ...

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