Krystal Gurule v. Land Guardian, Incorporat
912 F.3d 252
| 5th Cir. | 2018Background
- Four Gaslamp employees sued under the FLSA for diverted tips and unpaid minimum wage/overtime; three plaintiffs' overtime claims were dismissed or settled, leaving Gurule's minimum-wage claim for trial.
- Gaslamp made Rule 68 offers to Gurule (initial offer $3,133.44 in Feb 2016; later offers $1,566–$5,000); Gurule rejected them and proceeded to trial.
- At trial Gurule prevailed, recovering $1,131.39 in compensatory damages and an equal amount in liquidated damages; the district court awarded $25,089.30 in attorney's fees but ordered Gurule to pay $1,517.57 in post-offer costs under Rule 68.
- Matte and Taylor relied on Gurule’s representative testimony; the district court granted summary judgment against them for failing to prove their own hours/tips, and they appealed that dismissal.
- Gaslamp appealed the fee award, arguing the fee was disproportionate to Gurule’s recovery and that Gurule’s rejection of a superior Rule 68 offer should preclude or substantially reduce post-offer fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a prevailing FLSA plaintiff's rejection of a Rule 68 offer that was more favorable than the judgment bars or must reduce an attorney-fee award | Gurule: FLSA separately authorizes fees apart from costs, so Rule 68 does not automatically preclude post-offer fees | Gaslamp: Rejection of a superior Rule 68 offer shows lack of success and should preclude or substantially reduce post-offer fees | Court: Rule 68 does not automatically bar FLSA fees (fees are defined separately), but a rejected favorable Rule 68 offer is a permissible factor in assessing reasonableness and degree of success; courts should consider it when setting fees |
| Whether the district court abused its discretion by awarding $25,089.30 in fees given the small monetary recovery | Gurule: District court properly applied lodestar and Johnson factors and substantially reduced fees to reflect limited success | Gaslamp: Fee is grossly disproportionate to net recovery (33x) and should be further reduced or eliminated | Court: Affirmed; district court gave a 60% downward adjustment, adequately considered proportionality and degree of success, so no abuse of discretion |
| Whether Gurule’s counsel should be denied post-offer fees entirely because of Rule 68 | Gurule: FLSA’s separate fee provision means Rule 68 cannot automatically cut off fees | Gaslamp: Marek and related authority require barring post-offer fees when offer exceeded recovery | Court: Distinguished Marek (which applied when fees are part of costs) and held FLSA fees are separate; Marek does not mandate an automatic bar in FLSA cases |
| Whether summary judgment dismissing Matte and Taylor’s claims was proper | Matte/Taylor: District court’s order did not dispose of their minimum-wage claim; payroll evidence should have defeated summary judgment | Gaslamp: Summary judgment correctly decided that their claims (relying on representational testimony) failed to meet prima facie proof | Court: Affirmed summary judgment; district court correctly treated "stolen tips" and "minimum wage" as the same theory and found insufficient evidence for Matte and Taylor |
Key Cases Cited
- Harvill v. Westward Commc'ns, LLC, 433 F.3d 428 (5th Cir. 2005) (standards for proving hours worked in FLSA cases)
- Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (U.S. 1946) (foundational burden-shifting on proving uncompensated work in wage cases)
- Marek v. Chesny, 473 U.S. 1 (U.S. 1985) (Rule 68 can shift costs and, when fees are part of costs, can preclude post-offer fees)
- Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (lodestar method and necessity of explaining fee award adjustments)
- Saizan v. Delta Concrete Prod. Co., 448 F.3d 795 (5th Cir. 2006) (using prevailing-party analysis and lodestar in FLSA fee awards)
- Migis v. Pearle Vision, Inc., 135 F.3d 1041 (5th Cir. 1998) (discussing proportionality concerns where fees greatly exceed damages)
- Haworth v. Nevada, 56 F.3d 1048 (9th Cir. 1995) (rejected Rule 68 offers are relevant to reasonableness of attorney fees under fee-shifting statutes)
- McKelvey v. Sec'y of U.S. Army, 768 F.3d 491 (6th Cir. 2014) (approved considering rejected Rule 68 offers when assessing fee awards)
- Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) (Johnson factors for adjusting the lodestar)
- Montano v. Montrose Rest. Assoc., Inc., 800 F.3d 186 (5th Cir. 2015) (FLSA tip-credit framework)