Haworth v. State of Nev.
| Decision Date | 30 May 1995 |
| Docket Number | 94-16561,Nos. 93-16972,s. 93-16972 |
| Citation | 56 F.3d 1048 |
| Parties | , 130 Lab.Cas. P 33,241, 32 Fed.R.Serv.3d 435, 2 Wage & Hour Cas.2d (BNA) 1254 Dayton HAWORTH, et al., Plaintiffs-Appellants, v. STATE OF NEVADA, et al., Defendants-Appellees. Dayton HAWORTH, et al., Plaintiffs-Appellees, v. STATE OF NEVADA, et al., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Michael E. Langton, Langton & Kilburn, Reno, NV, for plaintiffs-appellants-appellees.
Nancy Ford Angres, Chief Deputy Atty. Gen. and Cynthia Pyzel, Senior Deputy Atty. Gen., Carson City, NV, for defendants-appellees-appellants.
Appeals from the United States District Court for the District of Nevada.
Before: BRUNETTI, THOMPSON and HAWKINS, Circuit Judges.
Plaintiffs-appellants are "cottage couples" employed by Nevada to supervise children who are wards of the state. "Cottage couples" or "cottage parents" are a husband-and-wife team living in a simulated home environment and supervising up to ten abused or neglected children.
Twenty-two cottage couples sued Nevada under the federal Fair Labor Standards Act (FLSA), 29 U.S.C. Sec. 201 et seq., seeking back wages allegedly owed for time they spent sleeping in the cottages. After a bench trial, the district court rejected all of the cottage couples' claims, except for one violation of the FLSA previously found by the Department of Labor (DOL) and conceded by the state. Judgment was entered in favor of the cottage couples on that claim. The judgment was for $91,782.54. This was approximately $240,000 less than Nevada's pre-trial settlement offer which it made pursuant to Federal Rule of Civil Procedure 68. The district court also awarded the cottage couples their costs of suit and $85,975 in attorney fees.
The cottage couples appeal the district court's judgment resolving their FLSA claims, appeal No. 93-16972. Nevada appeals the award of costs and attorney fees, appeal No. 94-16561. In Nevada's appeal, we reverse the district court's award of costs incurred after the Rule 68 offer was made. We vacate the award of attorney fees, not because the Rule 68 offer precluded any award for attorney fees incurred after the offer was made, but because the district court should have taken into consideration the reasonableness of the plaintiffs proceeding to trial and recovering approximately $240,000 less than what they could have had by accepting the settlement offer. We remand to the district court for it to recalculate reasonable attorney fees to be awarded to the plaintiffs.
In the cottage couple's appeal, we affirm by a separate memorandum disposition the district court's judgment by which it resolved their FLSA claims.
The facts pertinent to the attorney fee issue in Nevada's appeal are not in dispute. The DOL investigated Nevada's compensation of cottage couples. The DOL found one violation of the FLSA and calculated the amount Nevada owed cottage couples in back pay to rectify the violation. Nevada's appeal to the Administrator of the DOL's Wage and Hour Division was denied. Nevada then tendered checks to each cottage parent to whom it owed back pay. The amount of the checks were the amounts calculated by the DOL. Of the 54 cottage parents then employed by Nevada, 32 accepted the checks; the other 22 filed this lawsuit.
When the cottage couples' suit survived Nevada's motion for summary judgment, Nevada made a valid offer of judgment to each cottage parent pursuant to Federal Rule of Civil Procedure Rule 68. Nevada offered more in these offers of judgment than the DOL had assessed in liability. The cottage couples in this case rejected these offers and their case proceeded to a bench trial.
After trial, the district court found only one violation of FLSA--the violation previously found by the DOL and conceded by the state. The court awarded damages in the amount the DOL had ordered Nevada to pay prior to trial. Aggregating the offers and awards to all 22 cottage parents, the amount awarded in damages was approximately $240,000 less than the amount offered pursuant to Rule 68.
After the judgment, the cottage couples moved for their attorney fees and taxable costs. 1 The district court rejected Nevada's argument that in an FLSA case, a Rule 68 settlement offer cuts off any entitlement to attorney fees and costs incurred thereafter by a plaintiff who obtains a judgment for less
than the settlement offer. This appeal followed.
I. Attorney Fees
We have jurisdiction over this timely appeal pursuant to 28 U.S.C. Sec. 1291. We generally review fee awards for an abuse of discretion. Cunningham v. County of Los Angeles, 879 F.2d 481, 487 (9th Cir.1988), cert. denied, 493 U.S. 1035, 110 S.Ct. 757, 107 L.Ed.2d 773 (1990). We review de novo, however, "any elements of legal analysis and statutory interpretation which figure in the district court's" award. Id. (quoting Hall v. Bolger, 768 F.2d 1148, 1150 (9th Cir.1985)).
Nevada argues that if a plaintiff fails to recover a judgment greater than the amount offered in settlement under Rule 68, that rule precludes any award of attorney fees for services rendered after the Rule 68 offer was made. Rule 68 provides: "If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer." Fed.R.Civ.P. 68. In a nutshell, Nevada argues that Rule 68 should apply to attorney fees in the same way it applies to costs. Nevada also argues that even if Rule 68 is not an automatic bar to subsequently incurred attorney fees, a Rule 68 offer of judgment must be considered by the district court in relation to the amount recovered by judgment when the court calculates a reasonable fee in an FLSA case. We discuss each argument in turn.
The Supreme Court considered the applicability of Rule 68 to statutory fee-shifting provisions in Marek v. Chesny, 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985). The Court upheld the application of Rule 68 to the fee-shifting provision of 42 U.S.C. Sec. 1983. The Court reasoned that in an action under section 1983,
all costs properly awardable in an action are to be considered within the scope of Rule 68 'costs.' Thus, absent congressional expressions to the contrary, where the underlying statute defines 'costs' to include attorney's fees, we are satisfied such fees are to be included as costs for purposes of Rule 68.
Id. at 9, 105 S.Ct. at 3016. Because the 1983 statute defined costs to include attorney fees, Rule 68 applied to bar a recovery for any attorney fees incurred after a Rule 68 offer was made when the plaintiff recovered less by judgment than the settlement offer. Id.
The FLSA statute differs from the 1983 statute with regard to its fee-shifting provision. The FLSA statute defines attorney fees separately from costs. 29 U.S.C. Sec. 216(b). Therefore, unlike attorney fees in a section 1983 action, attorney fees in an FLSA action are not automatically shifted by Rule 68. Accord Fegley v. Higgins, 19 F.3d 1126, 1135 (6th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 203, 130 L.Ed.2d 134 (1994); Cox v. Brookshire Grocery Co., 919 F.2d 354, 358 (5th Cir.1990) (dicta).
We conclude the district court properly held that Rule 68 did not bar the plaintiffs from recovering reasonable attorney fees for services rendered in their FLSA action after the Rule 68 settlement offer was made.
The FLSA provides that upon a finding of a violation of the Act, the district court shall "allow a reasonable attorney's fee to be paid by the defendant, and costs of the action." 29 U.S.C. Sec. 216(b). The to all federal fee-shifting statutes. City of Burlington v. Dague, --- U.S. ----, ----, 112 S.Ct. 2638, 2641, 120 L.Ed.2d 449 (1992).
In calculating the amount it would award as reasonable attorney fees, the district court correctly referred to Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir.1975), cert. denied, 425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195 (1976). In applying the Kerr factors, however, the court failed to consider the reasonableness of the attorney fee award in light of the "results obtained" by judgment after the Rule 68 offer was rejected.
The district court's application of the Kerr factors in this case is somewhat similar to the district court's approach in Gates v. Deukmejian, 987 F.2d 1392 (9th Cir.1992). In that case, the district court rejected a reduction in the fee award based on the quantum of the result obtained. The court held that if the result made the plaintiff the prevailing party, that was enough to entitle the plaintiff to a full recovery of attorney fees. Id. at 1403. We reversed. Applying the reasoning from Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), we held
the prevailing party is not automatically deemed to have attained complete rather than partial success. Rather, the partial success determination is part of the district court's secondary inquiry into what fee is reasonable in a given case.
Gates, 987 F.2d at 1403 (citing Hensley, 461 U.S. at 434-435, 103 S.Ct. at 1939-1940).
In the present case, other than the one FLSA violation Nevada conceded, the plaintiffs succeeded on not a single theory at trial. And, even on the conceded claim, the plaintiffs failed to recover the damages they sought. They recovered a judgment which was close to a quarter of a million dollars less than they could have had by accepting the Rule 68 offer. Clearly, the only one who benefited by pursuing the litigation after the Rule 68 offer was made was the plaintiffs' attorney.
Although the clients, and not the attorney, are the ones to decide whether to accept a settlement offer,...
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