WILLIAM HEATH HORNADY, CHRISTOPHER MILLER, TAKENDRIC STEWART, COLIN HARTERY, Plaintiffs-Appellees-Cross Appellants, LAFAYETTE WILSON, BRIAN MOORE, Plaintiffs-Appellees, versus OUTOKUMPU STAINLESS USA, LLC, Defendant-Appellant-Cross Appellee.
No. 22-13691
United States Court of Appeals For the Eleventh Circuit
10/11/2024
[PUBLISH]
Appeals from the United States District Court for the Southern District of Alabama
D.C. Docket No. 1:18-cv-00317-JB-N
Before BRANCH, GRANT, Circuit Judges, and CALVERT,* District Judge.
GRANT, Circuit Judge:
In this labor dispute, the district court ordered defendant Outokumpu Stainless to produce key time and pay records. For more than two years, Outokumpu begged for more time and promised both the court and the plaintiffs that it would produce the records—but time after time, it failed to comply. And as it repeated this pattern, Outokumpu began to paint its third-party payroll processor as the true culprit. Until, that is, the payroll processor caught wind of Outokumpu’s misrepresentations and corrected the record. Confronted with a merry-go-round of broken promises and blatant misrepresentations, along with an upcoming wage-and-hour trial for which no wages or hours were known, the district court issued the only sanction remaining in its arsenal: default judgment.
I.
Outokumpu Stainless, USA, is the domestic subsidiary of Outokumpu Oyj—a multinational steel fabricator and manufacturer headquartered in Finland. It has operated a steel mill in Calvert, Alabama for over a decade. As Outokumpu admits, at least some of its employees are covered by the Fair Labor Standards Act,
Four of those employees sued Outokumpu under the FLSA and Alabama common law. Alleging a series of wage-and-hour violations, they sought relief for themselves and all other similarly situated employees who opted in to the suit. Specifically, in Count I, the named plaintiffs alleged that Outokumpu violated the FLSA by (a) failing to pay wages for the entire time they were clocked in
A.
Several of the FLSA’s requirements—and how they relate to Outokumpu’s pay practices—are relevant to understanding the plaintiffs’ claims. The FLSA requires covered employers to pay an employee “one and one-half times the regular rate at which he is employed” for hours worked beyond forty per week.
The paychecks themselves did not reflect this level of nuance—they categorized total straight time, overtime, and holiday pay, but did not identify any step-up rates. Nor did Outokumpu otherwise provide this information to its employees, who would have needed to record their own daily clock-in and clock-out times, along with the applicable pay rates, to confirm that they were paid appropriately for their overtime. Outokumpu was the only party with access to this information, which was necessary to understand if the “regular rate” of pay was calculated correctly. See
Outokumpu’s records were similarly indispensable to evaluating the merits of the plaintiffs’ challenge to the rounding policy. Rounding clock-in and clock-out times is generally permitted, so long as the practice “will not result, over a period of
Finally, whether the plaintiffs were paid properly also hinges on the precise details of Outokumpu’s incentive plan. According to this plan, Outokumpu pays its employees a nondiscretionary bonus every month. These incentive-based payments could implicate the calculation of an employee’s “regular rate of pay.” See
The bottom line is that Outokumpu was the only party who had the evidence at the heart of the plaintiffs’ claims.
B.
Over the course of nearly two years, the district court ordered Outokumpu to produce the key pay, time, and incentive plan records twelve separate times. Faced with these orders, Outokumpu repeatedly told the court that it would produce the necessary records. But when the time came to comply, somehow Outokumpu always had another excuse—leaving the plaintiffs without any way to prove their case. To cap it all off, Outokumpu followed up on these discovery violations with outrageous misrepresentations to both the plaintiffs and the court.
After settlement negotiations failed, the court again ordered Outokumpu to produce the necessary time, pay, and bonus records. In a pattern of conduct that would repeat itself many times over, Outokumpu failed to comply by the deadline, assured the plaintiffs that its failure was not intentional but a product of “some sort of mistake, confusion, or misunderstanding,” promised to “provide responses as soon as reasonably possible“—and then did nothing to change its behavior. The company made no disclosures, offered no responses to discovery, and gave no estimate of when the information would be provided. These deficiencies prompted the plaintiffs’ first of many motions to compel. After Outokumpu failed to respond to the motion, the
The sanction did not end Outokumpu’s streak of noncompliance—it again refused to produce the necessary records, convinced the plaintiffs and the court that it needed more time, and then failed to meet the extended deadline too. Faced with another motion to compel, Outokumpu stressed that court intervention was unwarranted and promised to provide the time and pay records “within a reasonable time period” if mediation failed to resolve the dispute. Mediation failed, and Outokumpu promised to deliver the records by the date of the next settlement hearing. Continuing the pattern, the settlement conference came and went without any documents being produced, and the plaintiffs filed yet another motion to compel. True to form, Outokumpu agreed to supplement its production but then failed to produce the records.
Outokumpu followed-up on that failure by attempting to move the goalposts—representing that, even after sixteen months of litigation, it would be too burdensome to produce the time and pay records without yet another extension. The magistrate judge, in a fit of generosity, accommodated this request and ordered Outokumpu to produce the records over the next three months.
During that time, the plaintiffs deposed Outokumpu’s payroll specialist and learned that the verified pay summaries and time records originally produced in 2018 were incorrect and incomplete—ultimately meaningless. The Outokumpu-created pay records did not show the correct pay rates, and there was no
The records that Outokumpu produced in response to the court’s latest order fared no better. For each employee and for each pay period, the spreadsheets produced included over 120 columns of data. Remarkably, none of these columns contained any information about pay rates—neither base rate of pay, nor step-up, holiday, overtime, or nighttime pay rates. At the next discovery hearing, the plaintiffs accused Outokumpu of bad faith, but Outokumpu again pleaded innocence and asked for another four months to produce the time and pay records. The conference ended with a new scheduling order designed to cure Outokumpu’s recurring discovery deficiencies the next month—now the ninth discovery order related to Outokumpu’s pay and timekeeping practices.1
C.
While the plaintiffs’ latest motion for sanctions was pending, several troubling misrepresentations came to light. These misrepresentations centered on Outokumpu’s attempt to blame its third-party payroll processor, Automatic Data Processing, Inc., for its own discovery violations.
Outokumpu first raised the specter of ADP’s alleged misconduct in the fall of 2018, describing the requested records as “ADP pay records.” Then, after it was caught producing false records, Outokumpu again blamed ADP, arguing that part of the necessary records came “not from the company but from the ADP system.” And again—when faced with the possibility of sanctions—Outokumpu painted ADP as the real culprit and accused it of having “not been very helpful.”
That was just the start of the ADP narrative. Outokumpu successfully delayed the plaintiffs’ motion for summary judgment by representing that it was still waiting on information from ADP and that it was “just as frustrated as [the plaintiffs] on this particular
In reality, ADP had diligently complied with every request. ADP responded to the subpoena within one day, explaining that it did not ordinarily create time reports, but still offering PDF records of the limited data it had. It also explained that Outokumpu itself could create the required reports in Excel format using its payroll software.2 Following these exchanges, ADP rightfully believed that it had complied with the terms of the subpoena. It did not know that Outokumpu had not produced any documents to the plaintiffs or that the plaintiffs had renewed their motion for sanctions in response to that continued failure of production.
Troubled by ADP’s apparent role in the never-ending discovery dispute, the district court instructed Outokumpu to confer with ADP in advance of a hearing set later that month. At that next hearing, Outokumpu reassured the court that it had indeed “reach[ed] out” to ADP but “ha[d] not gotten a response yet.” Although the court could not have known it, Outokumpu had not contacted ADP until three hours before the start of the hearing—despite having twelve days to comply. ADP, for its part,
Believing—understandably—that ADP had intentionally flouted the subpoena, the district court entered a show cause order, directing an ADP corporate representative to appear fourteen days later. The court simultaneously directed Outokumpu to serve ADP with the order. It will likely come as no surprise that Outokumpu did not comply. First, it waited ten days to tell ADP about the hearing. And even then, it led ADP to believe that the hearing would be canceled if ADP could provide the necessary data before the hearing date.
Believing Outokumpu’s representations, ADP produced an Excel report two days later that included pay data going back to 2018—everything still retained in its system. But not until the night before the hearing did Outokumpu tell ADP that it was still going forward as planned. The hearing marked the first time that ADP learned what Outokumpu had been telling the court all along, which left it understandably unprepared to answer the court’s questions. The court set another hearing for a week later.
At the second show cause hearing, ADP was able to correct the record and shine a light on Outokumpu’s misrepresentations. In a desperate attempt to avoid a “blame game,” Outokumpu tried
D.
Although the district court said that it was “loath to enter a default as to liability,” it did not see “any other recourse.” On November 18, 2021, the court formally entered default judgment on liability against Outokumpu under
Outokumpu fired their old counsel and moved for reconsideration. New counsel, however, appeared to continue singing from the same song sheet, telling the court that the old attorney had “accurately characterized the need for ADP’s help in
Both parties appealed. Outokumpu takes issue with the district court’s entry of default judgment as a sanction, denial of the motion to reconsider sanctions, and its determination that certain allegations made by the plaintiffs were well pleaded. In their cross appeal, the plaintiffs argue that the district court erred by limiting damages to those claims that fell within the FLSA’s statute of limitations.
II.
“This Court reviews sanctions orders for abuse of discretion.” J.C. Penney Corp. v. Oxford Mall, LLC, 100 F.4th 1340, 1346 (11th Cir. 2024). That standard means that “we review the district court’s legal conclusions de novo and its subsidiary factual findings for clear error.” Skanska USA Civ. Se. Inc. v. Bagelheads, Inc., 75 F.4th 1290, 1311 (11th Cir. 2023). We also review for abuse of discretion a district court’s decision whether to reconsider its own interlocutory order. Region 8 Forest Serv. Timber Purchasers Council v. Alcock, 993 F.2d 800, 805–06 (11th Cir. 1993). This Court reviews
III.
On appeal, Outokumpu does not argue that this conduct was not sanctionable—and how could it. Instead, it says that for two reasons the district court should not have awarded the ultimate sanction of default judgment. Neither carries the day.
First, Outokumpu contends that it should not be sanctioned for the conduct of its attorneys. This argument is wrong several times over. To start, it is generally “not an abuse of discretion to charge [parties] personally with ‘the consequences of the acts or omissions of their freely selected agent.’” Jochum v. Schmidt, 570 F.2d 1229, 1232 (5th Cir. 1978) (alteration adopted and quotation omitted).3 “There is certainly no merit to the contention that dismissal of petitioner’s claim because of his counsel’s unexcused conduct imposes an unjust penalty on the client.” Link v. Wabash R.R. Co., 370 U.S. 626, 633 (1962). To hold otherwise “would be wholly inconsistent with our system of representative litigation.” Id. at 634.4
Second, Outokumpu argues that the district court should have imposed lesser sanctions because the plaintiffs eventually received all the records they sought. According to Outokumpu, ADP’s production of certain records after the second show cause order, eighth scheduling order, and fifth motion to compel cured any discovery violation and rendered the sanction of default unnecessarily severe.
To call that a remarkable contention is exercising a great deal of judicial restraint. To start, any cure would have been only
Even if Outokumpu were correct that it had lived up to its discovery obligations, the district court’s sanction would not have outstripped the company’s disclosure violations. Generally speaking, sanctions of last resort—such as dismissals or default judgments—are appropriate only “when less drastic sanctions would not ensure compliance with the court’s orders.” Malautea v. Suzuki Motor Co., 987 F.2d 1536, 1542 (11th Cir. 1993). But “[w]hen lesser sanctions would be ineffective,
The record shows that the district court did not abuse its discretion by deciding that no sanction short of default judgment
IV.
We next consider the district court’s denial of Outokumpu’s motion for reconsideration. That turns out to be a somewhat trickier question, if only because our precedents are less than clear about what standard of review district courts should employ when faced with such a motion in the context of a non-final order.
The answer is
This Court has yet to precisely define the standards governing
This inherent power was recognized—not changed—by
A district court‘s discretion in these matters is governed by the law-of-the-case doctrine, which in this context functions as a guide for courts rather than “a limit to their power.” See Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 815-17 (1988). Operating with more or less force depending on the stage of litigation, the doctrine as a whole “expresses the practice of courts generally to refuse to reopen what has been decided.” Id. at 817 (quotation omitted). So district courts should gently keep in mind the general point that “when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.” Arizona v. California, 460 U.S. 605, 618 (1983).5 “Common sense, not a rigid set of rules,” governs when there is no higher court mandate. 18 James Wm. Moore et
A district court‘s decision to reconsider an interlocutory order is thus committed to its sound judgment, which we review for abuse of discretion. See Alcock, 993 F.2d at 805-06. If the movant is able to meet a significantly higher showing for reconsideration—for example, the standards applicable to
On the flip side, a district court typically would not abuse its discretion when rejecting a motion to reconsider an interlocutory order if the movant simply rehashed arguments already considered and rejected. Cf. Am. Home Assurance Co. v. Glenn Estess & Assocs., Inc., 763 F.2d 1237, 1239 (11th Cir. 1985). And finally, the more time that has passed between a district court‘s ruling and a party‘s motion to reconsider that ruling, the less willing the court ought to be to entertain the party‘s request. Parties must “be able to rely on the rulings that progressively direct proceedings toward trial.” 18B Wright & Miller, supra, § 4478.1.
In short, district courts have discretion to revisit their prior interlocutory orders, considering both the weight of the moving party‘s arguments and the disruption that a change would cause in light of the time that has passed since the decision was initially
Viewed against this backdrop, the district court here did not abuse its considerable discretion by denying Outokumpu‘s motion to reconsider the sanction order. The district court recognized its plenary power to revisit its order and refused to do so for reasons well within its discretion. In fact, the district court (though understanding that it need not reconsider all aspects of its decision) entertained most of Outokumpu‘s arguments in full. And Outokumpu—after years of misbehavior—simply failed to provide the court with an adequate reason to revise the sanction order. Instead, the company almost exclusively raised arguments that had already been rejected. The district court‘s rejection of Outokumpu‘s unashamed rehash was no abuse of discretion.
B.
Outokumpu‘s principal argument on appeal is that the district court should have applied
The text of
The district court here never entered a
The second half of
We now turn to Outokumpu‘s final contention, that the district court should not have credited the plaintiffs’ legal arguments in support of several claims.
After a default, the defendant cannot contest the plaintiff‘s factual allegations. Nishimatsu Constr. Co. v. Houston Nat‘l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). But the same is not true for legal arguments; those can be challenged as not offering a sufficient basis for the judgment. Id. When deciding whether the claims are sufficiently pleaded, we apply the same analysis we use when evaluating
Outokumpu challenges the district court‘s conclusion that the plaintiffs’ workweek and bonus claims were well pleaded. In the Third Amended Complaint, two of the plaintiffs’ allegations were that Outokumpu violated the FLSA by (1) failing to calculate
First, the workweek claim. The FLSA requires employees to be paid overtime at one and one-half times the regular rate of pay for any hours worked in excess of forty per workweek.
The plaintiffs’ complaint alleges two separate violations of this workweek requirement. Each allegation—supported by testimony from Outokumpu‘s payroll specialist—states a plausible claim for relief. One is that from 2015 until January 27, 2019, Outokumpu‘s workweek ran from Monday to Sunday, but the company paid overtime based on the number of hours worked between a different sequence of days.7 That alone is a sufficient basis for judgment in their favor; if Outokumpu‘s workweek was Monday to Sunday, but it calculated overtime based on the hours
The plaintiffs also allege that Outokumpu allocated all the time associated with an employee‘s shift to a single workweek regardless of when the shift began or ended. So, for example, a shift that spanned the end of one workweek and the beginning of the next would have counted only toward the hours worked in the first workweek. This too presents a sufficient basis for judgment in favor of the plaintiffs on their workweek claim. If Outokumpu allocated all hours worked during a shift to only one workweek, even if that shift spanned multiple workweeks, overtime miscalculations would have been unavoidable.
Second, the bonus claim. The FLSA requires employers to calculate overtime pay as a function of the employee‘s “regular rate.”
Every month, Outokumpu paid its employees a nondiscretionary incentive bonus if the mill met certain production criteria. The plaintiffs allege that this bonus did not qualify as an FLSA-approved percentage bonus because the “percentage is applied to the gross amount of pay received by the employee during the calendar month” and not “the gross amount of pay the employee earned during the calendar month.” Paychecks received during a 30-day calendar month, for example, may have only covered 4 workweeks, or 28 days. And if the mill met production goals during that 30-day period, a bonus was applied to only 28 days’ worth of paychecks.
The plaintiffs say that this mismatch between pay periods and calendar months means Outokumpu‘s incentive bonus plan did not qualify as a percentage bonus. Because the bonus was neither an exemption under
Outokumpu tries to rebut the plaintiffs’ arguments, pointing to evidence uncovered during discovery that it says contradicts the
VI.
On cross-appeal, the plaintiffs argue that the district court improperly credited Outokumpu‘s statute of limitations defense when it calculated the damages owed.9
The FLSA‘s statute of limitations provides that an action must commence no later than three years after a willful violation of the statute.
The plaintiffs also sought recovery for the later opt-in plaintiffs back to July 30, 2015. To get around
The statute of limitations provided by
Here, Outokumpu asserted the statute of limitations defense in each of its answers. The magistrate judge first struck the defense from Outokumpu‘s second amended answer as a sanction. And although Outokumpu re-pleaded the defense in its third amended answer, the district court struck that entire answer as part of its final sanction. As a result of these two sanctions, the statute of limitations defense was effectively unpleaded.
Even so, when the plaintiffs submitted proposed damages that included claims dating back to July 2015 for opt-in parties, Outokumpu objected, arguing that the scope of relief was inconsistent with the court‘s earlier ruling rejecting equitable tolling and applying
Reviewing the record, we cannot determine why the district court decided to sustain the objection. “A court has an obligation to assure that there is a legitimate basis for any damage award it enters.” Anheuser-Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003). When a court enters default judgment, the award entered must be at the very least “a reasonable estimate of damages.” Adolph Coors Co. v. Movement Against Racism & the Klan, supra
Although we review a district court‘s award of damages under a clearly erroneous standard, the sparse record here renders this question incapable of meaningful appellate review. See Meader ex rel. Long v. United States, 881 F.2d 1056, 1060 (11th Cir. 1989). It could be the case that the district court limited the plaintiffs’ claims as an attempt to estimate damages more faithfully. Or perhaps the court rejected the plaintiffs’ equitable tolling arguments on the merits. Or perhaps in the flurry of the case it was not clear that the affirmative defense had been stricken. Or perhaps it was something else—the record does not say. Consequently, we remand to the district court to explain or reconsider its reasoning for sustaining Outokumpu‘s objection on the statute of limitations defense.
* * *
The “most severe in the spectrum of sanctions provided by statute or rule must be available to the district court in appropriate cases.” Nat‘l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976). It is hard to imagine a more appropriate case than this one. Years of obstinance, dozens of discovery violations, and unceasing attempts to blame others finally caught up with Outokumpu. Even on appeal, the company displays a remarkable