Opinion ID: 1450589
Heading Depth: 1
Heading Rank: 8

Heading: The Department of Labor's Interpretation of the FLSA Supports Treating Bellevue as Barfield's Joint Employer

Text: In rejecting Bellevue's challenge to the district court's joint employer finding, we note that the challenged ruling is, in fact, supported by various opinion letters issued by the Department of Labor (DOL), the agency charged with enforcement of the FLSA. Statutory interpretations contained in DOL opinion letters, as opposed to those arrived at after formal agency adjudication or notice-and-comment rulemaking, are not binding authority, see Gualandi v. Adams, 385 F.3d 236, 243 (2d Cir.2004), and do not command Chevron deference, see Christensen v. Harris County, 529 U.S. 576, 586-87, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000) (citing Chevron U.S.A. Inc. v. Nat'l Res. Def. Council, Inc., 467 U.S. 837, 842-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)). Nevertheless, such agency letters represent a body of experience and informed judgment to which courts and litigants may properly resort for guidance. Gualandi v. Adams, 385 F.3d at 243 (citing Bragdon v. Abbott, 524 U.S. 624, 642, 118 S.Ct. 2196, 141 L.Ed.2d 540 (1998)). Thus, this court has often relied on DOL Opinion Letters for their persuasive value. Id. [9] Like this court, the DOL views joint employment as a question to be resolved from the totality of the evidence. See generally Opinion Letter from Dep't of Labor, Wage & Hour Div., 2001 WL 1558966, at  (May 11, 2001) (identifying relevant factors to include (1) power to control or supervise workers or work performed; (2) power, whether alone or jointly, directly or indirectly, to hire, fire, or modify employment conditions of individual; (3) permanency and duration of relationship; (4) level of skill involved; (5) whether worker's activities are integral part of overall business operations; (6) where work is performed and what equipment is used; and (7) who performs payroll and similar functions). In a case somewhat analogous to the one before us, the DOL considered whether a residential nursing facility that operated a home health care program to provide companion services for its outpatients through various referral agencies qualified as a joint employer with the agencies of the referred workers. See Opinion Letter from Dep't of Labor, Wage & Hour Div., 1998 WL 852807, at  (May 15, 1998). Like Bellevue, the nursing facility home health program paid the agencies an hourly rate for the aides they referred. The agencies, in turn, hired and trained the aides, paid them a somewhat lower hourly rate, and provided them with benefits. Some of the nursing facility's full-time employees worked for the referral agencies on their time off, which resulted in their sometimes working a total of more than 40 hours per week providing both inpatient care at the nursing facility and outpatient care through the home health program. The DOL concluded from the totality of the circumstances that the health aides were jointly employed by the nursing facility and the referral agencies when they provided home health care. Consequently, all the hours worked at both the nursing home and in home health care had to be combined in determining FLSA overtime obligations, and both the nursing facility and the referral agencies were jointly and several liable for this overtime. See id. The reasoning applies with equal force in this case. Although Barfield was not employed as a full-time Bellevue employee when agencies referred her for temporary work at the hospital, it is undisputed that her temporary work was performed exclusively at Bellevue on schedules set and approved by that hospital's staff. Thus, even though multiple agencies made the referral, each referral and each hour worked by Barfield, including total hours in excess of 40, was specifically approved by Bellevue. A few years later, in a slightly different context, the DOL concluded that a hospital was a joint employer with individual inpatients of private duty nurses in light of the great degree of control and supervision evidenced by the fact that all work was performed on hospital premises, all equipment and supplies used by the private nurses were provided by the hospital, the hospital required the private nurses to report to the hospital's nursing office at the start and end of each tour, and the hospital was legally obligated to provide some oversight of the nurses and to take action if the nurses failed to comply with hospital policies. Opinion Letter from Dep't of Labor, Wage & Hour Div., 2001 WL 1558966, at  (supplementing previous Opinion Letter from Dep't of Labor, Wage & Hour Div., 1999 WL 1788146 (Aug. 24, 1999)). The identical control factors are evident in this case. In sum, the cited examples reinforce our conclusion that the totality of the evidence in this case supports the district court's determination that, as a matter of law, Bellevue was Barfield's joint employer, and liable for her overtime under the FLSA when the total number of hours she worked at that single facility exceeded 40 per week.
Under the FLSA, a district court is generally required to award a plaintiff liquidated damages equal in amount to actual damages. See 29 U.S.C. § 216(b) (Any employer who violates [the overtime provisions of the FLSA] 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.). The Portal-to-Portal Act, 29 U.S.C. § 251 et seq., which amended the FLSA, affords district courts discretion to deny liquidated damages where the employer shows that, despite its failure to pay appropriate wages, it acted in subjective good faith with objectively reasonable grounds for believing that its acts or omissions did not violate the FLSA. Id. § 260. This court has characterized the employer's burden as a difficult one, emphasizing that double damages [are] the norm and single damages the exception. Herman v. RSR Sec. Servs. Ltd., 172 F.3d at 142; see also Reich v. S. New England Telecomm. Corp., 121 F.3d 58, 71 (2d Cir.1997). To establish the requisite subjective good faith, an employer must show that it took active steps to ascertain the dictates of the FLSA and then act to comply with them. Herman v. RSR Sec. Servs. Ltd., 172 F.3d at 142; see also Reich v. S. New England Telecomm. Corp., 121 F.3d at 71. The district court concluded that defendants failed to adduce any evidence to carry this burden. See Barfield v. N.Y. City Health & Hosps. Corp., 432 F.Supp.2d at 395 (observing that defendants failed to establish that [it] took any affirmative action to determine if [its] actions were in compliance with the FLSA). In challenging this determination, defendants assert that Bellevue showed that it paid referral agencies a flat hourly fee for their services in the good faith belief that the agencies were the sole employers of the referred workers, including Barfield. Neither the payment nor the assumption that informed it, however, constituted an active step[ ] to ascertain the dictates of the FLSA. Herman v. RSR Sec. Servs. Ltd., 172 F.3d at 142. Thus, this fact is insufficient, as a matter of law, to warrant an exception to the FLSA liquidated damages requirement. Defendants also assert that they showed that Bellevue conducted thorough reviews and analyses of its payroll employees' records to ensure that they were paid in compliance with the provisions of the FLSA. While such review constitutes an active step, its purpose was plainly not to ascertain the dictates of the FLSA with respect to the issue at hand: Bellevue's overtime obligations to its agency-referred workers generally or to Barfield in particular. Here too, then, we agree with the district court that, as a matter of law, defendants cannot carry the heavy burden necessary to avoid liquidated damages.
In addition to providing for liquidated damages, the FLSA directs courts to award prevailing plaintiffs reasonable attorney's fees and costs. See 29 U.S.C. § 216(b) (providing that [t]he 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). We afford a district court considerable discretion in determining what constitutes reasonable attorney's fees in a given case, mindful of the court's superior understanding of the litigation and the desirability of avoiding frequent appellate review of what essentially are factual matters. Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). While an erroneous application of law or clear error of fact may indicate abuse of this discretion, see id.; Patterson v. Balsamico, 440 F.3d 104, 123 (2d Cir.2006), that is not this case. In determining reasonable attorney's fees in this case, the district court employed a two-step technique whereby it first calculated a lodestar amount of $99,778.75, determined by multiplying the reasonable hours worked on the case (282.7 attorney hours, 2.3 travel hours, and 5.75 paralegal hours) by a reasonable hourly rate of compensation ($350 per attorney hour, $175 per travel hour, and $75 per paralegal hour), see Hensley v. Eckerhart, 461 U.S. at 433-34 & n. 9, 103 S.Ct. 1933, and then reduced this loadstar by 50 percent based on case-specific considerations, see Blanchard v. Bergeron, 489 U.S. 87, 94, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989), specifically, plaintiff's failure to secure certification of the case as a collective action under the FLSA. See Barfield v. N.Y. City Health & Hosps. Corp., 2006 WL 2356152, at , . In Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany, 522 F.3d 182 (2d Cir.2008), this court recently traced the evolution of this two-step process and the confusion sometimes attending its application before concluding that the lodestar metaphor should be abandoned, see id. at 190. Henceforth, we have advised district courts, in exercising their considerable discretion ... to bear in mind all of the case-specific variables that we and other courts have identified as relevant to the reasonableness of attorney's fees in setting a reasonable hourly rate to be used in calculating a `presumptively reasonable fee.' Id. (emphasis in original). The district court in this case, operating without the benefit of the Arbor Hill decision, did not employ its specific technique for determining a presumptively reasonable fee, but that is not a concern on this appeal where plaintiff does not challenge the lodestar calculation but only the 50 percent reduction applied to it. In considering Barfield's fee challenge, we are mindful of the Supreme Court's observation that the most critical factor in a district court's determination of what constitutes reasonable attorney's fees in a given case is the degree of success obtained by the plaintiff. Farrar v. Hobby, 506 U.S. 103, 114, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992); accord Kassim v. City of Schenectady, 415 F.3d 246, 254 (2d Cir. 2005); Pino v. Locascio, 101 F.3d 235, 237-38 (2d Cir.1996). Barfield asserts that no fee reduction for lack of success was warranted in her case because she did, in fact, succeed on the single FLSA claim alleged in her complaint. She submits that a motion for FLSA collective action certification is not a claim and, thus, failure on such a motion does not support a fee reduction. We are not persuaded. A district court's assessment of the degree of success achieved in a case is not limited to inquiring whether a plaintiff prevailed on individual claims. See Kassim v. City of Schenectady, 415 F.3d at 254. Both the quantity and quality of relief obtained, as compared to what the plaintiff sought to achieve as evidenced in her complaint, are key factors in determining the degree of success achieved. Carroll v. Blinken, 105 F.3d 79, 81 (2d Cir.1997). Indeed, this comparison promotes the court's `central' responsibility to `make the assessment of what is a reasonable fee under the circumstances of the case.' Farrar v. Hobby, 506 U.S. at 114-15, 113 S.Ct. 566 (quoting Blanchard v. Bergeron, 489 U.S. at 96, 109 S.Ct. 939). We agree with the district court that plaintiff's primary aim in this litigation, as reflected in her complaint and in the first four months of litigation ... was to certify a collective action. Barfield v. N.Y. City Health & Hosps. Corp., 2006 WL 2356152, at . As the district court noted, plaintiff had urged certification to secure relief for thousands of workers. Id. Her motion failed because counsel could not make even the modest factual showing required to support an FLSA collective action. Id. It is against this background of anticipated relief for thousands that plaintiff's recovery of $1,744.50 in compensatory and liquidated damages for herself appears to reflect only a small degree of success. Indeed, plaintiff's failure to certify a collective action precluded declaratory and injunctive relief, which was sought on behalf of individuals, unlike plaintiff, who were still working for defendants. As noted above, the district court was rightly concerned that not reducing the fee award in these circumstances would pose two risks: (a) decreasing the incentive for plaintiffs' lawyers vigorously to litigate collective action certification, and (b) encouraging plaintiffs' lawyers to file collective action-based claims even where there is little basis for doing so. See id. at ; see also Hensley v. Eckerhart, 461 U.S. at 436, 103 S.Ct. 1933 (noting that [i]f a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount ... even where the plaintiff's claims were interrelated, non-frivolous, and raised in good faith). Barfield asserts that, even if the district court acted within its discretion in reducing the fee to reflect her failure to certify a collective action, it abused its discretion in applying a 50 percent reduction, as opposed to subtracting the number of hours expended on plaintiff's unsuccessful attempt to certify a collective action. Specifically, plaintiff submits that, instead of the 142.5 hour reduction, the district court should have subtracted at most 63 hours of work, the time expended on the case up until the denial of collective action certification. While plaintiff's arithmetic has the virtue of simple application, we are not persuaded that the district court exceeded its discretion in concluding that this proposed reduction did not adequately reflect the plaintiff's limited success in this case. Barfield's potential recovery in this case was not, after all, a matter of debate, as in tort or civil rights cases. The amount of unpaid overtime was easily determined at the outset to be only $887.25. Even doubled for liquidated damages, this recovery does not reflect such a degree of success as to compel an award for the full attorney's fees incurred after denial of class certification. [10] In this respect the district court got it exactly right: the reasonableness of the attorney's fees incurred linked directly to the ability to maintain the case as an FLSA collective action. Accordingly, we identify no abuse of discretion in its decision to reduce the fee for the success in pursuing Barfield's claim by itself to $49,889.