Last year we reported on the Eleventh Circuit's decision in Zinni v. ER Solutions, Inc. (11th Cir., August 27, 2012), which seemed to signal that a defendant in a Fair Labor Standards Act case cannot moot the case by offering full monetary relief to the plaintiff without also offering a judgment to the plaintiff. The issue is significant because a judgment will trigger a plaintiff's entitlement to attorney’s fees. In Zinni, a defendant could not avoid an award of fees to plaintiff, even when offering the full amount of damages that could be recovered. But, Zinni was not a FLSA case – it was a Fair Debt Collection Practices Act case.
Recently, the Eleventh Circuit confirmed the conclusion that Zinni seemed to portend. In Wolff v. Royal American Management, Inc. (11th Cir., October 1, 2013), the court held that the defendant's tendering of full monetary relief to the plaintiff did not moot her FLSA case and the plaintiff was therefore entitled to her attorney's fees.
The plaintiff, Phyllis Wolff, claimed she was owed $1,800 in overtime wages and an equal amount in liquidated damages. The defendant, Royal American Management, Inc. ("RAM"), tendered $3,600 to plaintiff through her attorney and moved to dismiss the complaint. Wolff's counsel returned the check. RAM then offered to settle the case for $5,000, but Wolff's counsel never submitted the offer to Wolff because it was not in writing. When Wolff learned of the offer, she met with RAM on her own, signed a general release, and took the $3,600 check. The district court approved the settlement but found that the settlement had not mooted the case. The court entered judgment for Wolff and awarded her attorney's fees in the amount of $61,810.44.
On appeal, the Eleventh Circuit affirmed. The court held that RAM's offer did not constitute full relief that would moot Wolff's claim, because full relief must include an offer of judgment. The catch, of course, is that a judgment triggers the plaintiff's entitlement to attorney's fees.
The Supreme Court's recent decision in Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013), does not change the analysis. Genesis involved a settlement offer that included an offer of judgment. The Supreme Court held that, assuming such an offer mooted the plaintiff's case, it also mooted a putative collective action where there were no other plaintiffs in the case. Genesis did not answer the question of whether a defendant can moot a FLSA case by offering full monetary relief, but not a judgment, to the plaintiff.
In the Eleventh Circuit, Wolff provides the answer to that question and makes it clear that plaintiff's attorneys will continue to have a financial incentive to file even low-dollar FLSA cases in court. A defendant cannot buy off the plaintiff without also paying her attorney. And as the facts of Wolff illustrate, a defendant's failure to realize that early in the case can be a very expensive mistake.