Darren Cuff v. Trans State Holdings, Inc., 768 F.3d 605

Background

Darren Cuff was on Trans States Airlines’ payroll as a regional manager working at O’Hare; he performed duties for Trans States and GoJet and was the contact for both carriers at O’Hare.
At the time of his termination (Jan. 2010) Trans States had 33 employees within 75 miles of O’Hare, GoJet had 343, and parent Trans States Holdings had none.
Cuff took medical leave; his FMLA leave request was denied and he was fired. He sued claiming FMLA violations.
The Department of Labor regulation treats a worker as covered if jointly employed by multiple firms whose combined workforce meets the FMLA threshold (29 C.F.R. §825.106(a)); the district court granted summary judgment that Cuff was jointly employed by Trans States and GoJet.
A jury found Cuff otherwise eligible and awarded compensatory damages and front pay; the district court also awarded roughly $325,000 in attorneys’ fees.
On appeal defendants argued joint-business and other defenses (including after-acquired evidence under McKennon); the Seventh Circuit affirmed, holding Cuff was a joint employee, McKennon applies to FMLA but defendants forfeited that defense by failing to make offers of proof, and the fee award was not an abuse of discretion given defendants’ litigation conduct.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Joint employment under FMLA (29 C.F.R. §825.106(a))	Cuff was jointly employed by Trans States and GoJet (shared services, management role, corporate directories, business card, supervisor testimony).	Carriers operate separately (e.g., separate labor relations); thus Trans States alone lacks 50 employees within 75 miles so FMLA doesn't apply.	Affirmed: joint-employment inquiry is person-specific; record shows arrangement to share Cuff’s services and one employer acting for the other — Cuff was jointly employed.
Application of McKennon (after-acquired evidence limits remedies) to FMLA	N/A (plaintiff contests reduction of damages).	McKennon should limit damages based on after-acquired evidence (misconduct, unfitness for duty).	McKennon applies to FMLA generally, but defendants forfeited the defense by failing to make offers of proof that decisionmakers would have fired Cuff on learning the misconduct; jury verdict stands.
Exclusion of defendants’ evidence under Fed. R. Evid. 403	Evidence was admissible to show employer would have discharged Cuff; exclusion prejudiced defense.	Evidence was unfairly prejudicial / impermissible impeachment.	Court: exclusion was erroneous in part; Rule 403 cannot be used to bar properly offered McKennon evidence merely because it casts plaintiff in a bad light; but defendants failed to preserve offers of proof, so error did not aid them.
Attorneys’ fees reasonableness under FMLA (29 U.S.C. §2617)	Cuff sought full fees; time and rates uncontested.	Fee award (~$325,000) unreasonable relative to small recovery (~$50,000).	Affirmed: district court did not abuse discretion; high fees justified by defendants’ hyper‑aggressive, shifting defenses that increased litigation costs and BCS Services principle supports full fee shifting.

Key Cases Cited

Moldenhauer v. Tazewell-Pekin Consol. Commc’ns Ctr., 536 F.3d 640 (7th Cir.) (discussing use of nonexhaustive factor lists at summary judgment)
Lauritzen v. Secretary of Labor, 835 F.2d 1529 (7th Cir.) (factor‑balancing in multi‑employer/joint‑employment contexts)
McKennon v. Nashville Banner Publ’g Co., 513 U.S. 352 (U.S. 1995) (after‑acquired evidence may limit remedies but not negate liability)
Dotson v. Pfizer, Inc., 558 F.3d 284 (4th Cir.) (McKennon applies to FMLA)
Edgar v. JAC Prods., Inc., 443 F.3d 501 (6th Cir.) (McKennon applies to FMLA)
BCS Servs., Inc. v. BG Inv’rs, Inc., 728 F.3d 633 (7th Cir.) (defendants who drive up litigation costs may be required to pay full fee awards)