Court Opinion

ID: 3157890
Source: CourtListenerOpinion
Date Created: 2015-11-25 15:00:56.006242+00
Date Added: 2024-06-11T11:55:57.420448
License: Public Domain

Case: 14-14795        Date Filed: 11/25/2015      Page: 1 of 12

                                                                       [DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT

                                        No. 14-14795

                         D.C. Docket No. 1:10-cv-23548-MGC

HUMBERTO REYES,

                                                           Plaintiff - Appellant,

                                            versus

AQUA LIFE CORP.,

                                                           Defendant - Appellee.

                      Appeal from the United States District Court
                          for the Southern District of Florida

                                    (November 25, 2015)

Before MARCUS and JILL PRYOR, Circuit Judges, and RESTANI, * Judge.

RESTANI, Judge:

*
 Honorable Jane A. Restani, Judge for the United States Court of International Trade, sitting by
designation.
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          This matter arises out of several post-verdict motions filed by appellant

Humberto Reyes (“Mr. Reyes”) and appellee Aqua Life Corp. (“Aqua Life”), after

a jury found in favor of Mr. Reyes in his suit to recover unpaid overtime wages

under the Fair Labor Standards Act (“FLSA”). Mr. Reyes appeals the district

court’s omnibus order denying liquidated damages, granting partial costs, and

reducing his attorney’s fees award by 85% as a sanction. After careful review, and

with the benefit of oral argument, we reverse the denial of liquidated damages,

vacate and remand the costs award, and affirm the attorney’s fees award.

                                         BACKGROUND

          Aqua Life employed Mr. Reyes from approximately March 2008 through

February 2009. Mr. Reyes originally filed a claim for unpaid overtime wages

under the FLSA against Aqua Life in state court, alleging that throughout his

employment he was required to work in excess of forty hours per week without

receiving overtime compensation. Aqua Life subsequently filed for removal to the

Southern District of Florida in October of 2010.1

          The case proceeded to trial in July 2012. At the close of evidence, the

district court granted Aqua Life’s motion for judgment as a matter of law based on

1
    Mr. Reyes also filed a separate workers’ compensation claim that is not relevant to this appeal.

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its Motor Carrier Act affirmative defense.2 Mr. Reyes appealed, and we reversed

and remanded. Reyes v. Aqua Life Corp., 522 F. App’x 494, 494 (11th Cir. 2013).

From the outset, the parties had disagreed about whether a portion of his overtime

claim was barred by the FLSA’s statute of limitations. 3 On remand, prior to the

second jury trial, Aqua Life attempted to simplify the proceedings by filing (as part

of a motion in limine to exclude certain evidence) a stipulation stating “[w]hile [it]

does not admit it was willful or reckless or that it ever violated the

FLSA . . . [Aqua Life] agrees the FLSA statute of limitations does not bar [Mr.

Reyes’s] claim.” DE-195 at 8. Per court order, Aqua Life subsequently filed a

formal stipulation, stating that Mr. Reyes had met his burden to extend the statute

of limitations, thus resolving the issue of whether a portion of the claim was time

barred. Thus, the issue of willfulness, which was relevant to the statute of

limitations issue, was removed from the jury’s consideration and Mr. Reyes was

prevented from introducing evidence of willfulness. At the close of the second

2
  Employees covered by the Motor Carrier Act are not covered by the FLSA. See 29 U.S.C.
§ 213(b)(1). Aqua Life asserted that the type of employment in which Mr. Reyes was engaged
fell under the Motor Carrier Act, and accordingly, was not covered by the FLSA.
3
    The FLSA states that a claim

         may be commenced within two years after the cause of action accrued, and every
         such action shall be forever barred unless commenced within two years after the
         cause of action accrued, except that a cause of action arising out of a willful
         violation may be commenced within three years after the cause of action
         accrued[.]

29 U.S.C. § 255(a) (2012).
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trial, the jury awarded Mr. Reyes overtime wages in the amount of $14,770.00 as

compensatory damages.

      The parties filed five post-verdict motions. Mr. Reyes filed three motions:

1) to amend the judgment to include liquidated damages as required by the FLSA;

2) for attorney’s fees; and 3) for relevant costs. Aqua Life filed two motions:

1) for sanctions in the light of Mr. Reyes’s motion for attorney’s fees, which

contained numerous errors; and 2) for a new trial or an alteration of the judgment,

claiming misconduct on the part of the attorney for Mr. Reyes. Aqua Life used its

motion for sanctions to oppose Mr. Reyes’s motions for attorney’s fees and costs.

Aqua Life also opposed the motion for liquidated damages, claiming that its

actions, with regard to Mr. Reyes, had been taken in good faith.

      During the September 19, 2014 hearing on the motions, the district court

stated, “I don’t think that the record is consistent with the plaintiff’s argument [that

liquidated damages are proper] in this case.” Appellant’s App. Tab 11 at 56, ECF

No. 20. The court indicated that the issue of liquidated damages was reserved for

the court and that Aqua Life had not conceded the issue in the pre-trial stipulation.

Addressing the motions for attorney’s fees and sanctions together, the district court

stated that the numerical errors in the attorney’s fees request were “egregious,” and

that they could not be “mere clerical mistakes.” Id. at 57–58. Neither the parties

nor the district court specifically discussed the motion for costs at the hearing.

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      After the hearing, the district court issued an omnibus order denying

liquidated damages and awarding partial costs and attorney’s fees. The omnibus

order was not accompanied by an opinion and did not explain the reason for

denying liquidated damages. The order also granted Mr. Reyes’s costs award in

part, reducing the requested award from $13,372.17 to $10,452.12 without

explanation. The district court also granted in part, and denied in part, Mr. Reyes’s

motion for attorney’s fees and Aqua Life’s motion for sanctions, and imposed an

85% reduction upon Mr. Reyes’s attorney’s fees award. Mr. Reyes’s attorney’s

fees request was thus reduced from $393,802.50 to $59,070.38. Finally, the court

did not grant Aqua Life a new trial.

      Mr. Reyes appeals the district court’s order arguing that liquidated damages

should have been awarded, that the district court improperly failed to provide a

basis for the reduction of his costs award, and that the district court abused its

discretion in imposing an 85% reduction on the attorney’s fees award as a sanction.

                            STANDARD OF REVIEW

      A district court’s denial of liquidated damages under the FLSA is reviewed

de novo as to the application of law, and for clear error as to the facts. Dybach v.

State of Fla. Dep’t of Corr., 942 F.2d 1562, 1566 (11th Cir. 1991) (citing 29 C.F.R.

§ 790.22(c)). After the employer has shown good faith and a reasonable belief, we

review the district court’s decision to exercise its discretion to award liquidated

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damages for abuse of discretion. Id. “An abuse of discretion occurs if the judge

fails to apply the proper legal standard or to follow proper procedures in making

the determination, or bases an award upon findings of fact that are clearly

erroneous.” In re Red Carpet Corp. of Panama City Beach, 902 F.2d 883, 890

(11th Cir. 1990).

        “[T]he issuance of sanctions [under the district court’s inherent powers] and

the denial of a request for attorney’s fees and costs [are reviewed] for abuse of

discretion.” Sahyers v. Prugh, Holliday & Karatinos, P.L., 560 F.3d 1241, 1244

(11th Cir. 2009); see Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561
F.3d 1298, 1303 (11th Cir. 2009).

                                    DISCUSSION

   I.      Liquidated Damages

        Under the FLSA, liquidated damages are mandatory absent a showing of

good faith by the employer. See 29 U.S.C. § 216(b) (2012); Joiner v. City of

Macon, 814 F.2d 1537, 1538–39 (11th Cir. 1987). Although liquidated damages

are typically assessed at an equal amount of the wages lost due to the FLSA

violation, they can be reduced to zero at the discretion of the court. See 29 U.S.C.

§§ 216(b), 260. If an

        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

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       the Fair Labor Standards Act . . . the court may, in its sound
       discretion, award no liquidated damages . . . .

29 U.S.C. § 260.

       An employer who seeks to avoid liquidated damages bears the burden of

proving to the court that its violation was “both in good faith and predicated upon

such reasonable grounds that it would be unfair to impose upon him more than a

compensatory verdict.” Reeves v. Int’l Tel. & Tel. Corp., 616 F.2d 1342, 1352

(5th Cir. 1980)4 (quoting Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464,

468 (5th Cir. 1979)). “Before a district court may exercise its discretion to award

less than the full amount of liquidated damages, it must explicitly find that the

employer acted in good faith.” Joiner, 814 F.2d at 1539.

       The district court erred in denying liquidated damages on this record. Aqua

Life had the burden of proving good faith and reasonable belief and failed to carry

that burden. The only evidence of the alleged good faith was the testimony of its

Vice President, Mr. Ibarra, who ostensibly researched the Motor Carrier Act

exception to the FLSA, concluding that Mr. Reyes did not need to be paid overtime

hours for his work. Yet, Mr. Ibarra also admitted that he had never heard of the

FLSA until legal action was taken by Mr. Reyes. Aqua Life thus did not make a

sufficient factual showing upon which the district court could have reasonably

4
 The decisions by the former Fifth Circuit handed down prior to October 1, 1981, have been
adopted as precedent by the Eleventh Circuit. See Bonner v. City of Prichard, 661 F.2d 1206,
1207 (11th Cir. 1981) (en banc).
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relied to deny liquidated damages and the record does not support the district

court’s refusal to grant liquidated damages.

         We need not reach Mr. Reyes’s alternative arguments against the denial of

liquidated damages, as the factual record contains no evidence to support the

district court’s denial of liquidated damages. Accordingly, we REVERSE, and

direct the district court to assign full liquidated damages in the amount of

$14,770.00 to Mr. Reyes.

   II.      Costs

         Full taxable costs are expressly awarded to a prevailing plaintiff in an FLSA

action. 29 U.S.C. § 216(b). Although trial courts have discretion to reduce or

deny a costs award, a court’s failure to state its reasoning for denying costs

constitutes reversible error. See Holton v. City of Thomasville Sch. Dist., 425 F.3d
1325, 1355–56 (11th Cir. 2005); Gilchrist v. Bolger, 733 F.2d 1551, 1557 (11th

Cir. 1984). Here, the record contains no findings of fact, or any reasoning,

explaining the district court’s reduction in costs. It may be that the award was

proper, but there is no way to tell from the record presented. Accordingly, the

district court’s cost award is VACATED, and we REMAND for the district court

to explain why the costs award was reduced.

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   III.   Attorney’s Fees

      The FLSA provides that a 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). The Supreme Court has explained that the

“starting point for determining . . . a reasonable fee is the number of hours

reasonably expended on the litigation multiplied by a reasonable hourly rate.”

Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). The “applicant bears the burden

of establishing entitlement and documenting” reasonable hours expended and

reasonable hourly rates. See ACLU v. Barnes, 168 F.3d 423, 427 (11th Cir. 1999).

If “applicants do not exercise billing judgment, courts are obligated to . . . cut the

amount of hours for which payment is sought, pruning out those that are

‘excessive, redundant, or otherwise unnecessary.’” See id. at 428 (quoting

Hensley, 461 U.S. at 434).

      Courts have the inherent power to impose sanctions when a party acts in bad

faith. See Chambers v. NASCO, Inc., 501 U.S. 32, 45–46 (1991); Barnes v.

Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998). The bad faith standard is an

objective one. Norelus v. Denny’s, Inc., 628 F.3d 1270, 1282 (11th Cir. 2010)

(“[O]bjectively reckless conduct is enough to warrant sanctions even if the attorney

does not act knowingly and malevolently.” (quoting Amlong & Amlong, P.A. v.

Denny’s, Inc., 500 F.3d 1230, 1241 (11th Cir. 2006)). A review of bad faith is a

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comparison of “the conduct at issue with how a reasonable attorney would have

acted under the circumstances.” Id.

       Analysis of the district court’s actions must begin with the finding of bad

faith on the part of the attorney for Mr. Reyes. On the discussion of possible

sanctions, the court stated:

       I am unprepared to say that what you put down were mere clerical
       mistakes. They can’t be . . . . [T]here are many of your entries that are
       three and four times [the amount] . . . . [T]his conduct was egregious.
       There is just no place for this. It just really was no place for this.

Appellant’s App. Tab 11 at 57–58. Although the court did not specifically state

that the attorney for Mr. Reyes acted in “bad faith,” on this record the court’s

determination that the attorney’s errors were “egregious”5 suffices. A contrary

conclusion would exalt form over substance. C.f. Cogan v. Allianz Life Ins. Co. of

N. Am., 592 F. Supp. 2d. 1349, 1355 (N.D. Ala. 2008) (holding that the effect of a

district court’s dismissal is “determined by its substance, and not by the incantation

of any particular magic words” (quoting Schal Bovis, Inc. v. Cas. Ins. Co., 732
N.E.2d 1082, 1087 (Ill. App. Ct. 1999)). The egregious conduct here, namely, the

repeated and inexcusable improper billing entries, meets the objective recklessness

standard for bad faith.

5
 Black’s Law Dictionary defines egregious as, “[e]xtremely or remarkably bad; flagrant.”
Egregious, Black’s Law Dictionary (9th ed. 2014).
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      Specifically, in its analysis of the fee request, the court mentioned the

egregious nature of improperly filing a fee request for an easily calculable time

entry, and that the attorney for Mr. Reyes asserted in his fee application that he had

spent “three to four times” the actual time spent on tasks. The court noted the

errors were numerous, and could not be “mere clerical mistakes.” Appellant’s

App. Tab 11 at 57–58.

      Mr. Reyes argues that even in the light of a finding of bad faith, the district

court must show its calculation in a fee award reduction. We have stated that

“when hours are disallowed the court should identify the hours disallowed and

explain why they are disallowed.” Loranger v. Stierheim, 10 F.3d 776, 783 (11th

Cir. 1994). We have recognized, however, that in cases “[w]here fee

documentation is voluminous,” it is not feasible to require a court to “engage in

such a precise review.” Id. Such is the case here, as Mr. Reyes’s fee application

totaled eighty-eight pages, contained 729 time entries, and requested fees for over

1,000 hours of attorney time. The district court’s decision not to detail its

calculation in this case was thus reasonable. See, e.g., Villano v. City of Boynton

Beach, 254 F.3d 1302, 1311 (11th Cir. 2001) (noting that 569 hours were extensive

enough not to expect district court to conduct an hour-by-hour analysis). The court

properly used its inherent power to determine the appropriate sanction in the light

of Mr. Reyes’s attorney’s conduct. Mr. Reyes’s attorney’s fees request contained

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over fifty significant time entry errors, forty-six of which Mr. Reyes’s attorney

admitted to after the fact, explaining them as “misplacement of decimal.” DE-262-

2. Given the severity of the time-keeping errors, the 85% reduction was a

reasonable sanction and does not constitute an abuse of discretion. Accordingly,

we AFFIRM the attorney’s fees award.

                                    CONCLUSION

        For the foregoing reasons, the district court’s order is

REVERSED in part, VACATED and REMANDED in part, and AFFIRMED in

part.

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