Opinion ID: 763784
Heading Depth: 2
Heading Rank: 1

Heading: Liquidated Damages and Prejudgment Interest

Text: 11 We consider concurrently Plaintiffs' first two arguments. Section 216(b) of the FLSA provides that the payment of liquidated damages is mandatory if an employer fails to compensate the employee for overtime wages. The statute sets the amount of liquidated damages as the amount of unpaid overtime compensation owed to the employee, plus an additional equal (doubled) amount. See 29 U.S.C. § 216(b). However, the statute also provides: 12 if the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and had reasonable grounds for believing that his act or omission was not a violation of the [FLSA] ... 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. 13 29 U.S.C. § 260. The employer bears the burden of proving both good faith and reasonable belief. Shea v. Galaxie Lumber & Constr. Co., 152 F.3d 729, 733 (7th Cir.1998) (citing Bankston v. State of Ill., 60 F.3d 1249, 1254 (7th Cir.1995)). Although in the final analysis we review a district court's decision on liquidated damages for abuse of discretion, that discretion must be exercised consistently with the strong presumption under the statute in favor of doubling. Shea, 152 F.3d at 733. Doubling is the norm, not the exception. Id.; Avitia v. Metropolitan Club of Chicago, Inc., 49 F.3d 1219, 1223 (7th Cir.1995). 14 In this case, the district court found that the Defendants satisfied their burden of acting with good faith and with a reasonable belief, noting: 15 It is undisputed by the parties that Defendants gave Uphoff and Damon numerous cash payments as well as access to CDIA vehicles and materials for personal use; Defendants assert that these facilities were given to Plaintiffs as compensation for their overtime hours, and, indeed, Uphoff and Damon both admitted in their depositions that the cash payments received from Defendants were bonuses for extra work and that they were permitted to use CDIA trucks for their own purposes. 16 Thus, although Defendants cannot document the amount and/or the value of the cash and other facilities provided to Plaintiffs and are therefore subject to FLSA liability, the Court is confident that Defendants attempted, in good faith, to compensate Uphoff and Damon for their overtime hours and to comply with the FLSA's overtime wage standards. Accordingly, the Court exercises its discretion and awards Plaintiffs single damages. 17 Uphoff, No. 96 C 4645, 1997 WL 285859, at  3. 18 We do not agree with the district court's conclusion on this issue. Even if we credit the district court's finding of good faith, we have not been presented with sufficient evidence that supports the equally necessary finding of reasonableness of the Defendants' actions. 19 Liability for liquidated damages follows, unless the employer has a certain kind of excuse--a reasonable belief that its acts or omissions did not violate the law. A court cannot evaluate the reasonableness of an employer's belief that its act or omission was not a violation without first identifying the act or omission. Then, and only then, is the court in a position to ascertain what the employer believed about its acts or omissions, and to evaluate the employer's reasons for so believing. 20 Thomas v. Howard Univ. Hosp., 39 F.3d 370, 373 (D.C.Cir.1994). Here, the act was the Defendants' use of cash payments and other facilities to satisfy the Plaintiffs' overtime compensation. What did the Defendants believe about this act? Did they think that the cash payments and other facilities would serve as overtime compensation to the extent the Defendants deemed sufficient as measured by their own judgment, or did the Defendants believe that the cash payments and other facilities would serve as an equivalent measure of overtime compensation as that required by the statute? Whatever the answer, it is the Defendants' burden to show what they intended to achieve through the cash payments and allowance of the other facilities. See id. But, as the district court's opinion points out, the Defendants did not document the amount and/or the value of the cash and other facilities provided to the Plaintiffs, but merely presented evidence that cash payments were made and that other facilities were provided. 21 The Defendants attempt to bolster their testimony by offering the Plaintiffs' admission that the Plaintiffs had, in fact, received cash payments and used other facilities. Although relevant, this evidence does not satisfy the Defendants' burden of showing that they acted reasonably; rather, it only demonstrates that the Defendants attempted to give the Plaintiffs a bonus for their work, but not necessarily the overtime compensation required by the statute. The Defendants have simply failed to present sufficient evidence that the bonuses given to the Plaintiffs were intended to serve as the overtime compensation to which the Plaintiffs were entitled under the FLSA. Accordingly, we conclude that the Defendants did not meet their burden of establishing a reasonable belief in the legality of their actions. The district court, therefore, should have doubled the Plaintiffs' lost overtime wages award to Uphoff, from $4,066.50 to $8,133 and to Damon, from $2,126.07 to $4,252.14, in accordance with § 216(b) of the FLSA. 22 Because we have determined that the Plaintiffs are entitled to liquidated damages, we will not entertain the Plaintiffs' plea for prejudgment interest. Following the rule adopted by the majority of circuits, we hold that the FLSA does not permit successful plaintiffs to obtain prejudgment interest in addition to liquidated damages because that would enable them to obtain double recovery. Gibson v. Mohawk Rubber Co., 695 F.2d 1093, 1102 (8th Cir.1982); accord Shea, 152 F.3d at 733; but see Starceski v. Westinghouse Elec. Corp., 54 F.3d 1089 (3d Cir.1995) (recognizing that the First, Fourth, Fifth, Sixth, Eighth, and Tenth Circuits follow the Gibson approach; Second, Third, Ninth, and Eleventh do not). Therefore, we affirm the district court's denial of prejudgment interest.