IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 13-10347

SHANNON OWENS; MICAH PACK, individually and on behalf of all 

similarly situated, 

 Plaintiffs – Appellees

v.

MARSTEK, L.L.C., doing business as Condom Sense; SKCMK, L.L.C.; 

STEVEN KAHN, individually, 

 Defendants – Appellants

Appeal from the United States District Court

for the Northern District of Texas

USDC No. 3:11-CV-1435

Before KING, BENAVIDES, and DENNIS, Circuit Judges.

PER CURIAM:*

In this Fair Labor Standards Act case, Plaintiffs–Appellees Shannon 

Owens Ferrell and Micah Pack claim that they were not properly compensated 

for the overtime hours they worked at Marstek, L.L.C., and SKCMK, L.L.C., 

both doing business as “Condom Sense.” The district court granted summary 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

December 5, 2013

Lyle W. Cayce

Clerk

 

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judgment to Ferrell and Pack and granted their motion for attorney’s fees and 

costs. Defendants–Appellants timely appealed. For the following reasons, we 

AFFIRM.

I. FACTUAL AND PROCEDURAL BACKGROUND

Shannon Owens Ferrell1 and Micah Pack (the “Plaintiffs”) are former

employees of SKCMK, L.L.C. (“SKCMK”) and Marstek, L.L.C. (“Marstek”),

limited liability companies operating as individual stores under the “Condom 

Sense” name and owned by Steven Kahn (together, the “Defendants”). Condom 

Sense is a chain of five Dallas- and Fort Worth-area adult novelty stores, all 

owned by Kahn. 

Ferrell began working for Condom Sense as a store clerk, paid hourly, in 

May 2006. She started at the Marstek store and later moved to the SKCMK 

store. She was promoted to manager in January 2008 and continued to be paid 

on an hourly basis. Ferrell resigned in May 2011. According to her declaration, 

she worked 308.7 hours of overtime between June 28, 2008, and May 2011, for 

which she was paid at her hourly rate, rather than time-and-a-half her hourly 

rate. Her rate of pay during that period was $13.00 per hour. She asserts that 

she is owed $2,006.55 in unpaid overtime wages.

Pack began working for Condom Sense as a store clerk, paid hourly, in 

August 2008. He worked at both the SKCMK and Marstek stores. He left his 

position in May 2011. According to his declaration, he worked 1,311.75 hours 

of overtime between September 2008 and May 2011, for which he was paid at 

his hourly rate, rather than time-and-a-half his hourly rate. His rate of pay 

during that period ranged from $8.00 to $9.25 per hour. He asserts that he is 

owed $5,653.64 in unpaid overtime wages.

1 Owens married and changed her name after the complaint was filed. 

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Pack submitted a complaint to the Department of Labor (“DOL”) in early 

2011 because he believed he “was working lots of overtime hours, and [he] 

wasn’t getting appropriately compensated for it.” In February 2011, the DOL

informed Kahn that it was investigating Condom Sense for possible violations

of wage and hour laws. The DOL concluded that Condom Sense’s policies 

regarding overtime compensation violated the Fair Labor Standards Act 

(“FLSA”) and that certain employees, including Ferrell and Pack, were owed 

back wages. The DOL concluded that Ferrell was due $396.12 and Pack was 

due $3,551.40. 

Kahn arranged for Ferrell and Pack to receive the DOL-calculated back 

wages as part of their regular paychecks, to be spaced over several 

installments.2 In late March 2011, Ferrell and Pack noticed increases in their 

paychecks and asked Kahn about them. They “were informed that the money 

was payments for back wages from the DOL settlement.” Ferrell testified at 

her deposition that Kahn refused to provide her with any documentation about 

the DOL-calculated back wages. According to her declaration, she informed

the company’s payroll manager “that [she] did not want the money and asked 

that it be taken out of [her] regular paycheck.” Thereafter, Defendants sent 

separate checks to Plaintiffs with the DOL-calculated back wages. Ferrell

refused the checks and returned them to the company. She asserted that she 

did not accept any money in payment of the back wages. Similarly, Pack 

testified at his deposition that the first installment of the DOL-calculated back 

wages was direct-deposited into his back account with his regular paycheck, 

but he informed Kahn that he did not want the money. According to his 

declaration, he did not accept “any money in payment of the DOL settlement

of [his] back wages.”

2 Kahn’s agreement with the DOL to pay the back wages is referred to in the record 

and briefs as the “DOL settlement.” 

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Ferrell and Pack “decided to pursue a private cause of action against 

Defendants rather than take the unknown DOL settlement.” They filed suit

in federal district court on June 29, 2011, against SKCMK, Marstek, and Kahn. 

The complaint alleged that Defendants violated the FLSA “by paying 

employees straight time for overtime hours[,] thereby failing to pay those 

workers at time-and-one-half their regular rates of pay for all hours worked 

within a workweek in excess of forty hours.” The complaint included, as 

plaintiff class members,3 “[a]ll current and former hourly paid employees, 

regardless of title, who were not paid at time-and-one-half their regular rates 

of pay for hours worked over 40 in a work week.” Plaintiffs alleged that 

“Defendants knowingly, willfully, or with reckless disregard carried out their 

illegal pattern or practice of failing to pay overtime compensation with respect 

to Plaintiffs and the Class Members.” Plaintiffs sought unpaid back wages, 

liquidated damages, costs, attorney’s fees, and pre- and post-judgment 

interest. 

In their answer, Defendants asserted as defenses waiver, good faith 

under the Portal-to-Portal Act, and Defendants’ “reasonable grounds [for]

believ[ing] that they complied with the FLSA” given their lack of “actual or 

constructive knowledge of any FLSA violation,” among other defenses.

Following unsuccessful attempts at alternative dispute resolution, Plaintiffs 

filed their motion for summary judgment on November 19, 2012, contending 

that the FLSA applies to Defendants, there were no issues of material fact, and 

Plaintiffs established violations of the FLSA. Plaintiffs argued that they were 

entitled to liquidated damages, that Defendants’ conduct was in willful 

violation of the FLSA and thereby extended the statute of limitations from two 

3 Plaintiffs included a collective action claim pursuant to 29 U.S.C. § 216(b), although

it appears from the record as though Plaintiffs never moved for conditional certification.

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years to three years, and that Defendants had no evidence to support their 

good faith defense. 

Defendants responded that the DOL determined the amount of money

Ferrell and Pack were owed, and that “[t]he Plaintiffs and their attorneys 

cannot turn this case into thousands of dollars to hold Defendants hostage over 

what the government has already said is owed and what the defendants have 

agreed to pay.” Defendants said they “have offered to tender these amounts, 

[but] Plaintiffs will not agree to accept the amount offered. Therefore, 

Defendants contend that the amount should be $0.00, given the need to incur 

depositions, costs, and attorneys’ fees on a matter that Defendants believe is 

frivolous under the circumstances.” Defendants did not contest Plaintiffs’ 

factual assertions. 

The district court granted Plaintiffs’ motion for summary judgment. 

Though Defendants asserted that they “tendered to Plaintiffs the amounts of 

unpaid overtime as determined were owed in accordance with the DOL 

investigation,” the district court noted that “Defendants do not otherwise 

counter Plaintiffs’ factual allegations or argument.” The court “agree[d] with 

Plaintiffs that the settlement reached between the DOL and Defendants has 

no bearing on Plaintiffs’ ability to bring this case since Plaintiffs did not accept 

the tendered offer because they found it too low.” The court found that 

Plaintiffs established the applicability of the FLSA and that Defendants 

violated the FLSA. The court noted that “Defendants fail to sufficiently raise 

any dispute of fact that would preclude disposition on summary judgment. 

Defendants further fail to take issue with Plaintiffs’ legal arguments or provide 

any legal argument or citation in opposition.” As a result, the court held that 

Defendants were liable to Plaintiffs for violating the FLSA. Since Plaintiffs 

“do not explain how the extra money added to their paychecks offsets the 

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amount that they believe is owed,” the court ordered the parties to brief that 

issue.

In their subsequent motion for attorney’s fees, Plaintiffs asserted that 

they did not accept any money from the DOL settlement and attached

declarations from Ferrell and Pack to this effect. They contended that 

therefore, any damages award determined by the court should not be offset by 

any amount. Plaintiffs claimed that Ferrell is owed $2,006.55 and Pack is owed 

$5,653.64 in unpaid overtime wages, and requested attorney’s fees in the 

amount of $30,050.84 and costs in the amount of $2,358.20. Plaintiffs detailed

their attorneys’ qualifications, outlined the time and labor involved in 

litigating the matter, explained why the requested attorney’s fees were 

reasonable, and attached contemporaneous time records to their motion. 

Defendants filed a one-sentence response, “incorporating by reference their 

response to the Motion for Summary Judgment, where these matters were 

fully briefed.”

The district court concluded that, since Plaintiffs supported their 

statements with declarations from Ferrell and Pack, and Defendants did not 

dispute those facts, Plaintiffs established that Ferrell and Pack are owed the 

amount they claimed. The court held that Plaintiffs were entitled to liquidated 

damages because “Defendant [Kahn] does not even attempt to make a showing 

of good faith,” nor did he show that he acted reasonably. The court awarded 

attorney’s fees and costs in the amounts requested by Plaintiffs, “finding that 

Defendants do not dispute any of Plaintiffs’ allegations with respect to the 

same” and that the amounts are “warranted and reasonable.” 

Defendants timely appealed both orders.

II. STANDARD OF REVIEW AND APPLICABLE LAW

We review de novo a grant of summary judgment, applying the same 

standard as the district court. First Am. Title Ins. Co. v. Cont’l Cas. Co., 709 

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F.3d 1170, 1173 (5th Cir. 2013). Summary judgment is appropriate “if the 

movant shows that 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). The 

court “view[s] all evidence in the light most favorable to the nonmoving party 

and draw[s] all reasonable inferences in that party’s favor.” In re Katrina 

Canal Breaches Litig., 495 F.3d 191, 205–06 (5th Cir. 2007).

The FLSA “establishes the general rule that all employees must receive 

overtime compensation for hours worked in excess of forty hours during a 

seven-day workweek.” Vela v. City of Houston, 276 F.3d 659, 666 (5th Cir. 

2001). Specifically, § 207(a)(1) of the FLSA states:

Except as otherwise provided in this section, no employer shall 

employ any of his employees who in any workweek is engaged in 

commerce or in the production of goods for commerce, or is 

employed in an enterprise engaged in commerce or in the 

production of goods for commerce, for a workweek longer than forty 

hours unless such employee receives compensation for his 

employment in excess of the hours above specified at a rate not less 

than one and one-half times the regular rate at which he is 

employed.

29 U.S.C. § 207(a)(1).

“A district court’s determination of attorneys’ fees is reviewed for abuse 

of discretion, and the findings of fact supporting the award are reviewed for 

clear error.” McClain v. Lufkin Indus., Inc., 519 F.3d 264, 284 (5th Cir. 2008).

III. DISCUSSION

The district court’s findings that Defendants are covered by the FLSA 

and that their actions violated the FLSA are not contested. Therefore, we 

proceed to Defendants’ arguments. Defendants argue that: (a) they raised 

genuine issues of material fact regarding Plaintiffs’ waiver; (b) the district 

court’s holding is unconstitutional and against public policy; (c) the waiver 

provision of the FLSA is unconstitutional; (d) they raised an issue of material 

fact regarding the liquidated damages award; and (e) the liquidated damages 

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and attorney’s fees awards are punitive and excessive. Each of these 

arguments is unpersuasive and will be addressed in turn. We conclude that 

the district court was correct in all respects, and we affirm its decision.

A. Waiver

A valid waiver of an employee’s right to seek unpaid overtime wages 

requires “(a) that the employee agree to accept the payment which the [DOL] 

determines to be due and (b) that there be ‘payment in full.’” Sneed v. Sneed’s 

Shipbuilding, Inc., 545 F.2d 537, 539 (5th Cir. 1977); see also 29 U.S.C. § 

216(c). Defendants contend that they raised “a genuine issue of fact as to 

amount of payment in full” because “[Defendants] paid monies to [Plaintiffs], 

some of which were accepted and some were not.” Plaintiffs respond that there 

are no genuine issues of material fact and that they never waived their rights 

under the FLSA both because the defendants never tendered the money in full 

and because Plaintiffs “refused to accept the extra monies put in their 

paychecks.” 

The district court found, based on Ferrell and Pack’s unrebutted 

declarations, that Ferrell and Pack “refused the extra money in their 

paychecks and refused separate checks from Defendants.” Thus, Plaintiffs did 

not agree to accept payment, and there was not payment in full. Defendants 

did not dispute these facts before the district court and do not dispute them 

now. Accordingly, Defendants fail to create a genuine issue of material fact on 

either element of their affirmative defense of waiver.

B. Defendants’ Constitutionality and Policy Arguments

Defendants argue that the district court’s ruling is “unconstitutional and 

violates the intent of the [FLSA]” because “[t]he waiver provision of the FSLA 

[sic], as interpreted by the District Court, is not only incorrect [but] it leaves 

employers at risk once again for compliance issues and lawsuits.” Defendants 

do not articulate any constitutional argument, nor do they cite any authority 

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for the proposition that the district court’s ruling is unconstitutional. Rather,

Defendants’ argument amounts to a challenge to the district court’s application 

of the FLSA. Accordingly, we find Defendants’ “constitutional” argument 

without merit and treat it as a challenge to the district court’s application of 

the FLSA.

The district court correctly applied the FLSA to the facts at issue. The 

FLSA provides that an employee need not accept back wages from an employer, 

as calculated by the DOL. Rather, an employee may choose to pursue an action 

in court against an employer who violates the FLSA, and in pursuing such 

action, can maintain a claim not only for back wages, but also for liquidated 

damages, attorney’s fees, and costs. 29 U.S.C. § 216(b); see Pedigo v. Austin 

Rumba, Inc., 722 F. Supp. 2d 714, 720 (W.D. Tex. 2010) (“Plaintiffs are not 

required to accept such backwages and deductions as compensation for 

Defendant’s violation(s) of the FLSA overtime wage provisions.”). Here, the 

district court found a violation of the FLSA and concluded, based on the 

unrebutted summary judgment record, that Defendants failed to raise a valid 

waiver defense. The district court’s awards of liquidated damages and 

attorney’s fees, as discussed below, were mandatory and not an abuse of 

discretion. Accordingly, Defendants’ challenge to the district court’s decision

fails. 

Defendants contend in their statement of the issues that the waiver 

provision of the FLSA is unconstitutional as written. They do not make this 

argument elsewhere. Defendants also make two arguments about the 

application of the FLSA that rely on legislative history and policy. Defendants 

explain that when Congress crafted the FLSA’s waiver provision, it sought to 

lower the risk that “threats of lawsuits regarding matters that an employer 

has and was willing to address through the government agency of the DOL” 

would threaten “free enterprise and creation of jobs.” This argument seems to 

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be that the legislative history of the FLSA reflects Congress’s interest in 

encouraging potential plaintiffs to accept DOL-calculated back wages. 

Defendants also argue that “punish[ing]” them by requiring them to pay back 

wages and other damages sends a negative message “to a business who opens 

jobs to stimulate the economy.” 

We do not reach any of these arguments because Defendants waived 

them by failing to raise them before the district court. See XL Specialty Ins. 

Co. v. Kiewit Offshore Servs., Ltd., 513 F.3d 146, 153 (5th Cir. 2008) (“An 

argument not raised before the district court cannot be asserted for the first 

time on appeal.”). 

C. Liquidated Damages

Under the FLSA, a court must award liquidated damages when it finds 

a violation of § 207: “Any employer who violates the provisions of section 206 

or section 207 of this title shall be liable to the employee or employees affected 

in the amount of . . . their unpaid overtime compensation . . . and in an 

additional equal amount as liquidated damages.” 29 U.S.C. § 216(b) (emphasis 

added). Section 260 creates an exception to this requirement, available to the 

district court at its discretion:

[I]f the employer shows to the satisfaction of the court that the act 

or omission giving rise to such action was in good faith and that he 

had reasonable grounds for believing that his act or omission was 

not a violation of the Fair Labor Standards Act of 1938, as 

amended, the court may, in its sound discretion, award no 

liquidated damages or award any amount thereof not to exceed the 

amount specified in section 216 of this title.

29 U.S.C. § 260 (emphasis added). Under this court’s precedents, “[a]n 

employer found liable under section 206 or section 207 has the ‘substantial 

burden’ of proving to the satisfaction of the trial court that its acts giving rise 

to the suit are both in good faith and reasonable.” Mireles v. Frio Foods, Inc., 

899 F.2d 1407, 1415 (5th Cir. 1990) (emphasis original). 

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Defendants contend that they “certainly raised a genuine issue of fact” 

regarding good faith and reasonableness. Defendants observe that “Kahn 

testified that he and [sic] on behalf of the Appellants did not know they had 

done anything wrong,” which is “more than adequate evidence to warrant a 

trial on the merits regarding good faith and reasonableness.” 

Defendants’ argument fails on both prongs. As examples of good faith, 

Defendants point to the fact that they “attempted to pay back uncompensated 

overtime [wages]” and told Terrell to contact the DOL investigator with any 

questions about the DOL settlement. These actions may suggest good faith 

compliance with the DOL’s findings, but they do not show “that the act or 

omission giving rise to such action,” i.e., the FLSA violation in the first place, 

was made in good faith. Further, Defendants offered no evidence that Kahn 

had reasonable grounds for believing that his actions were not a violation of 

the FLSA. See Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464, 468–69 

(5th Cir. 1979) (“We do not believe an employer may rely on ignorance alone as 

reasonable grounds for believing that its actions were not in violation of the

Act.”). Defendants’ bare assertions cannot carry their “substantial burden” of 

demonstrating good faith and reasonableness. Accordingly, their argument 

fails.

Defendants also argue that the award of liquidated damages is punitive 

and excessive. Defendants waived this argument by failing to contest the issue 

of liquidated damages on this basis before the district court. See XL Specialty, 

513 F.3d at 153. 

D. Attorney’s Fees

As with liquidated damages, under the FLSA, a court must award 

attorney’s fees when it finds a violation of § 207: “The court in such action shall, 

in addition to any judgment awarded to the plaintiff or plaintiffs, allow a 

reasonable attorney’s fee to be paid by the defendant, and costs of the action.” 

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29 U.S.C. § 216(b) (emphasis added); see Weisel v. Singapore Joint Venture, 

Inc., 602 F.2d 1185, 1191 n.18 (5th Cir. 1979) (“Reasonable attorneys’ fees are 

mandatory.”).

Defendants argue that the award of attorney’s fees, like the award of 

liquidated damages, is punitive and excessive. They contend that this 

argument is not waived because they made “[a]dequate proof showing that the 

award of attorneys’ fees was contested” in their Response to the Motion for 

Summary Judgment. In that Response, Defendants stated: “While Defendants 

have offered to tender these amounts [the DOL-calculated back wages], 

Plaintiffs will not agree to accept the amount offered. Therefore, Defendants 

contend that the amount should be $0.00, given the need to incur depositions, 

costs, and attorneys’ fees on a matter that Defendants believe is frivolous 

under the circumstances.”

This two-sentence argument does not challenge the issue of attorney’s 

fees in any way, including as excessive or punitive. Therefore, we conclude 

that Defendants waived this argument by failing to raise the issue of attorney’s 

fees before the district court. See XL Specialty, 513 F.3d at 153. 

IV. CONCLUSION

For the foregoing reasons, the judgment of the district court is 

AFFIRMED. 

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