Fast v. Cash Depot Ltd.
Fast v. Cash Depot Ltd.
Opinion of the Court
This case presents the important question of whether an employer accused of violating the Fair Labor Standards Act of 1938,
Relatively early in the case, Cash Depot reached the conclusion that it had been underpaying its employees based upon a wage audit conducted by its accountant. Cash Depot then issued payroll checks for the underpayment calculated by its accountants to its current and former employees. On July 7, 2017, the court approved the parties' stipulation staying all proceedings for sixty days to allow Fast's counsel to review Cash Depot's calculations regarding the amounts owed to Fast. Counsel for Fast disputes Cash Depot's *1000calculation of his client's underpayment, but refuses to tell Cash Depot what he believes the correct amount is or how he arrived at it. Currently before the court are Cash Depot's motions to dismiss Fast's claims on mootness grounds and for summary judgment. The stay was continued pending resolution of the pending motions.
BACKGROUND
Fast alleges in his complaint that Cash Depot violated the FLSA by failing to lawfully compensate current and former non-exempt field service technicians at a correct rate of overtime pay and for all overtime hours worked at that overtime rate of pay.
Sometime after Fast filed the instant action, Cash Depot's legal counsel retained Schenck SC, an accounting firm, to review Cash Depot's payroll practices concerning the payment of on-call premiums, shift premiums, bonuses, and overtime to its employees for the time period of December 2013 through February 2017. Bradley Decl. ¶ 3. Even though Fast's complaint only considered overtime payments to field service technicians, Schenck audited the payroll records for all Cash Depot employees.
Schenck calculated the overtime compensation amount for Fast by reviewing his daily and weekly time reports and payroll report.
Schenck also found that Cash Depot failed to pay Fast overtime compensation for a $700 non-discretionary bonus he received in August 2015 for meeting the company's transaction goals in July 2015. Schenck divided $700 by the number of hours Fast worked during the month of July and determined Cash Depot owed Fast $22.88 in overtime compensation for the 11.15 hours of overtime he worked in July 2015.
Schenck contends that it not only audited Cash Depot's payroll records for Fast, but also the records for all of Cash Depot's current and former employees, even those who were not employed as field service technicians, who worked during the December 2013 through February 2017 time period. After calculating the additional overtime compensation due to each employee, Schenck calculated interest payments on those amounts.
After receiving a spreadsheet from Schenck itemizing these figures, Cash Depot processed payments to all of its current and former employees. Although the payments did not include liquidated damages in accordance with the FLSA, they comprised any overtime wages and interest due to the employee. With respect to employees who Cash Depot owed less than $10, the company elected to pay those employees $10.00. Cash Depot electronically deposited these funds with its current employees during the May 20, 2017 pay period and mailed checks to its former employees. Reis Decl. ¶ 13, ECF No. 19. In all, Cash Depot issued 63 paychecks to its current and former employees, excluding Fast, totaling $21,983.53.
As to Fast himself, Cash Depot determined it was obligated to pay him $380.76, which represented the amount owed to him in overtime compensation plus the amount of liquidated damages afforded under the FLSA. On June 6, 2017, Cash Depot's counsel mailed a letter to Fast's counsel, Attorney James Walcheske, enclosing a payroll check in the amount of $338.98-the total owed less federal and state taxes. Labs Decl. ¶ 5, ECF No. 21; ECF No. 21-1. This correspondence advised Fast and his counsel that Cash Depot would also pay the costs and attorneys' fees associated with advancing Fast's FLSA claim and enclosed formal discovery requests regarding those amounts. ECF Nos. 21-1 & 21-2.
On June 21, 2017, Cash Depot's counsel served Fast's counsel with Defendant's Responses to Plaintiff's First Set of Interrogatories and Request for Production of Documents, which included a spreadsheet summarizing Schenck's overtime compensation calculations as they related to Fast. Labs Decl. ¶ 7. Cash Depot's responses did not provide any information relating to the putative class, asserting that the information is "irrelevant, primarily due to the fact Cash Depot has paid its field service technicians all wages owed to them, including overtime." ECF No. 35-1 at 10. Cash Depot also did not provide Fast with an itemized list of the payments it made to all current and former employees. Walcheske Decl. ¶ 13, ECF No. 35.
*1002Fast's counsel was unaware Cash Depot would be sending Fast a check for the amounts owed to him and requested that the parties discuss the status of the case on June 23, 2017.
On July 6, 2017, the parties filed a stipulation, approved by the court, to stay proceedings for sixty days to allow them to evaluate the accuracy of Schenck's calculations and Cash Depot's payments. ECF Nos. 14-15. That same day, Fast's counsel emailed a letter to Cash Depot's counsel regarding Cash Depot's previous discovery responses and attached Plaintiff's Second Set of Interrogatories and Requests for Production of Documents. Walcheske Decl. ¶ 23. Even though the parties agreed to stay all proceedings in the case, Fast's counsel indicated he expected responses to the requests by July 17, 2017. ECF No. 35-4. On July 7, 2017, the parties decided to table the discovery issue until Fast's counsel met with Schenck representatives to discuss their calculations.
Meanwhile, on July 13, 2017, Cash Depot's counsel received Plaintiff's Answers and Objections to Defendant's Interrogatories and Request to Produce Documents addressing the costs and attorneys' fees associated with advancing Fast's claim. Labs Decl. ¶ 16. Fast indicated he incurred $402.35 in costs and $12,931.00 in attorneys' fees related to this litigation. ECF No. 21-12 at 3-4. On July 17, 2017, Cash Depot's counsel sent a letter to Fast's counsel requesting additional information to verify the reasonableness of the attorneys' fees incurred by Fast. Labs Decl. ¶ 17. Cash Depot's counsel did not receive a response to this correspondence.
On July 20, 2017, Cash Depot's counsel and Amy Bradley, Schenck's lead payroll specialist, participated in a teleconference with Fast's counsel to discuss Schenck's methodology and calculations of the overtime compensation owed to Fast.
On August 3, 2017, Cash Depot's counsel mailed a check in the amount of $13,333.35 to Fast's counsel, which represented payment by Cash Depot of the attorneys' fees and costs disclosed in Fast's discovery responses. Labs Decl. ¶ 18. The following day, Cash Depot filed the instant motion to dismiss on the ground that Fast has been paid in full and his claim is now moot. Alternatively, Cash Depot filed a motion for summary judgment seeking a determination that it owes Fast the sum of $380.76, plus his costs and reasonable attorneys' fees. Fast denies that the case is moot, noting that although the checks from Cash Depot remain in his attorney's possession, neither Fast nor his counsel have deposited the checks or indicated any acceptance of the funds. Walcheske Decl.
*1003¶ 39. Fast also contends that Cash Depot's motion for summary judgment is premature and inappropriate.
ANALYSIS
"Article III of the Constitution limits federal-court jurisdiction to 'cases' and 'controversies.' " Campbell-Ewald Co. v. Gomez , --- U.S. ----,
"A case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party." Knox v. Service Employees Int'l Union ,
Fast argues that the case is not moot because: (1) neither he, nor his attorney, has deposited or cashed the check that Cash Depot mailed to his attorney; (2) the additional relief requested in his complaint, including conditional certification of the collective, appointment of his attorneys as collective counsel, and full payment of wages due, liquidated damages and pre-judgment interest, has not been granted; and (3) Cash Depot's calculation of the overtime pay due Fast and other employees is incorrect. Only the first of these reasons has support in the law and facts of the case.
If Fast's claim is moot, the fact that the additional relief available for FLSA collective actions has not been granted is irrelevant. In the absence of other employees opting in, "the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied." Genesis Healthcare Corp. ,
And Fast's argument that Cash Depot's calculation is incorrect is waived, at least for purposes of the instant motion. Cash Depot has filed a sworn declaration by the leader of the Payroll Services Team of its accountant showing precisely how she arrived at the calculation of Fast's unpaid overtime for the approximately one year he was employed by Cash Depot. ECF Nos. 24-4 & 24-5. Fast challenges the accuracy of Cash Depot's determination of his regular rate and corresponding *1004overtime rate, but he has failed to state where its accountant's calculation is wrong or produce any countervailing evidence to contradict Cash Depot's calculations. Instead, Fast refers to a hypothetical example provided in
Cash Depot has coupled its motion to dismiss with a motion for summary judgment. Fast is required at the summary judgment stage to present some evidence to allow the court to accept his position that Cash Depot's calculations regarding Fast's additional overtime payments are incorrect. See Harney v. Speedway SuperAmerica, LLC ,
There remains Fast's argument that a live controversy continues to exist because he has not cashed the check he received from Cash Depot. In Campbell-Ewald , the Supreme Court held that an unaccepted offer of judgment for the full amount the plaintiff could recover on his claim pursuant to Rule 68 of the Federal Rules of Civil Procedure did not render the claim moot.
The Court left open in Campbell-Ewald the question of whether depositing the full amount of the plaintiff's individual claim in an account payable to the plaintiff, along with a judgment for the plaintiff for that amount, would render the claim moot. The majority likewise did not address the suggestions offered by Justice Alito in his dissent that a defendant could render a plaintiff's suit moot by paying over the damages claimed in the form of a certified check or by depositing the funds with the district court or another trusted intermediary. Id. at 684 (Alito, J., dissenting). However, the Seventh Circuit held in Fulton Dental, LLC v. Bisco, Inc. , that depositing the full value of the individual plaintiff's *1005claim with the court pursuant to Rule 67 of the Federal Rules of Civil Procedure did not have such an effect.
It would be more accurate to say that Cash Depot has tried to pay Fast, however. It has sent his attorney a check for the amount he was underpaid for overtime, plus liquidated damages. But neither Fast nor his attorney has cashed, deposited or otherwise indicated an intent to accept Cash Depot's offer of settlement. Cash Depot argues that because Fast and his attorney retained the checks, whether they cashed them or not is inconsequential, "for they presently control the funds, and after holding them for weeks they have accepted payment." Def.'s Reply Br. at 6-7, ECF No. 37.
The case Cash Depot cites for this argument, however, does not support the principle upon which it rests. The case, IFC Credit Corp. v. Bulk Petroleum Corp. ,
Ultimately, I conclude that the case is controlled by Fulton Dental . There the court made clear that a defendant may not force a settlement on an unwilling party, whether by offering the plaintiff the full value of his claim or by depositing that amount with the court. "In either case, all that exists is an unaccepted contract offer, and as the Supreme Court recognized, an unaccepted offer is not binding on the offeree."
Likewise in this case, Fast has refused to accept Cash Depot's offer of payment for his claim because he believes his case is about more that the unpaid overtime to which he believes he is entitled. Among the other relief he requests in his complaint may be an additional award as lead plaintiff for a collective action. In any event, the Seventh Circuit seems to have decided that a collective or class action plaintiff can refuse an offer of settlement for the full value of his claim to avoid rendering his potential class or collective action moot. As the court noted in Chapman , "[s]ettlement proposals designed to decapitate the class *1006upset the incentive structure of the litigation by separating the representative's interests from those of other class members."
Of course, this case differs from Chapman and Fulton Dental , as well as Campbell-Ewald , in that Cash Depot contends that it has not simply offered Fast what he has asked for so as to "decapitate" the collective class, or "pick off" the class representative and leave the rest of the possible claimants with nothing. Cash Depot contends that once it recognized its mistake, it recalculated the overtime pay for all of its current and past employees for the three-year period prior to the filing of Fast's action, both exempt and non-exempt, and has paid them the difference in order to make them whole as well. If that is true, then it would appear that Cash Depot has a strong argument that any motion by Fast to conditionally certify a class should be denied. But because discovery has been stayed, Fast is not in a position to dispute Cash Depot's evidence on this issue. Once the stay is lifted, both parties should be able to quickly assess their respective positions and determine where, if at all, any dispute still exists.
If, as Cash Depot contends, it has cured its prior FLSA violations by paying what it owed its current and former employees, this case should promptly resolve with little additional expense to either party. Courts should not countenance meaningless class actions, or collective actions, that benefit no one but the attorneys. See In re Subway Footlong Sandwich Marketing & Sales Practices Litigation ,
CONCLUSION
Accordingly and for the reasons set forth above, Cash Depot's motion for summary judgment (ECF No. 22) is GRANTED-IN-PART and DENIED-IN-PART . Cash Depot's motion for summary judgment is granted to the extent that Cash Depot correctly calculated that it owes Fast the sum of $380.76 in unpaid overtime plus his costs and reasonable attorneys' fees. Cash Depot's motion to dismiss the case as moot (ECF No. 17) is DENIED . Fast's motion for leave to file a sur-reply (ECF No. 40) is GRANTED . Cash Depot's motion to lift the stay (ECF No. 16) is GRANTED .
SO ORDERED at Green Bay, Wisconsin this 6th day of November, 2017.
Reference
- Full Case Name
- Timothy J. FAST v. CASH DEPOT LTD.
- Cited By
- 2 cases
- Status
- Published