Case Studies

Ken C. GauveyPersonal Injury Attorney

Successful Wage & Hour (Overtime Pay) Trial Defense

In a recent case before the United States District Court for the District of Maryland a local restaurant won a large FLSA, overtime, case. The case involved an employee, a chef, bringing an action for overtime wages against the restaurant.  The case had no merit, and in the opinion of this firm, which represented the restaurant, never had any merit.  It is our opinion that this case, like so many other wage and hour cases, was brought purely for the purposes of obtaining attorneys fees on a small judgment.  The federal jury agreed that the case had no merit.  The Federal Court agreed that attorneys’ fees were completely improper.  The restaurant won the litigation on every level.

Wage and hour cases are a plague on small businesses.  The vast majority of these businesses try to do right by their employees.  A minority does not.  That minority has led to a tremendous number of wage and hour suits being brought against restaurants, and the restaurants loosing those suits.  So, this victory presents an opportunity, in Maryland at least, for restaurants to have case law to cite to in support of their defense.

The plaintiff in this recent case sued only for overtime wages.  When the plaintiff was hired, he stated that he needed the work and wanted to work at this location.  In exchange for taking a lesser wage than he was paid at his previous job, he demanded all his overtime wages in cash.  The restaurant agreed, as so many often do.  The chef worked for a little more than a year under this arrangement and took every overtime shift he could get.
The employer was never really happy with this arrangement.  Throughout that year, the restaurant implored the plaintiff to go through payroll for overtime wages.  The employer even offered a substantial raise to try to make this happen.  The employee always resisted.  Finally, the employer mandated that all wages, including overtime wages, go through payroll.  The chef became angry and told the restaurant owner, “you just did what I wanted you to.”  The chef then walked out and filed the lawsuit.  It was later discovered that this particular individual had been involved in other wage and hour lawsuits in the past.

During the litigation, Plaintiff refused numerous settlement offers.  Litigation is inherently costly.  Often, it is better to settle, even a good case, rather than pay the cost of litigation.  Fortunately, this firm was able to provide a flat fee cost to the restaurant and so the restaurant knew its costs up front and could plan for them.  The plaintiff refused each settlement offer stating that while the offer covered the alleged “damages” they were not enough to cover all the attorneys’ fees. As such, a jury trial was scheduled.
At trial, the plaintiff called only one witness.  The plaintiff testified in a contradictory fashion that he was never paid any overtime at all despite working typically 60 hours a week.  Plaintiff also testified that he never complained about the lack of overtime wages, but could not really explain why.

The defendant put forth four witnesses.  Each of these witnesses were either directly involved in paying the plaintiff overtime wages in cash, witnessed the cash payments, or witnessed the plaintiff bragging about the cash wages and waiving the cash around like a fan.  Each witnesses story was consistent.  It is important to note that the number of witnesses in these cases is immaterial.  It is much more important to have one credible witness than it is to have four inconsistent witnesses.  Here, the plaintiff was not credible, and the defendants’ witnesses were.

The case was brought under three laws.  The first was the Federal Fair Labor Standards Act.  This Act requires the payment of overtime wages, and mandates attorneys’ fees to a prevailing plaintiff.  The other two laws were the Maryland Wage and Hour Law and the Maryland Wage Payment and Collection Act.  These laws require payment of all wages due, and provide a presumption that attorneys’ fees are proper.

The jury returned a verdict in favor of the Plaintiff in this case in the amount of $282.00.  This verdict was clearly issued as a result of a rounding error in the calculation of wages during one of the weeks the plaintiff worked.  Because of this rounding error, the jury found liability under the FLSA, and the Maryland Wage and Hour Law.  Based on this verdict, Plaintiff’s Counsel sought more than $110,000.00 in attorneys’ fees and costs.
After the trial, this firm moved to set aside the verdict as to the FLSA claim.

The FLSA only applies to businesses who earn more than $500,000 in gross receipts, or to employees engaged in interstate commerce.  At trial, there was no evidence of the restaurant earning more than $500,000 and the evidence of interstate commerce was vague with the plaintiff not being able to provide any details whatsoever in cross-examination.   The Court granted the restaurant’s motion.

With the FLSA judgment set aside, the issue of mandatory attorneys’ fees was no longer viable.  Attorneys’ fees under the state law are discretionary with a strong presumption of granting such fees.  In opposing the Plaintiff’s motion for fees, this firm argued that the Plaintiff was not the prevailing party because not a single fact in the complaint alleged by Plaintiff with regard to wages was believed by the jury and that the wage award was nothing more than a rounding error.  This firm also argued that, under State law, fees were improper because there was no evidence of bad faith, on the part of the defendants at least, and so the request for fees should be denied.

Plaintiff argued strenuously for the award of fees.  Plaintiff went so far as to demand that the time spent on responding to the restaurant’s opposition to fees should be added to the attorneys’ fees bill.

The Court denied any award of fees and costs.  The Court stated both that the plaintiff was not the prevailing party, and that the discretionary nature of the State law with regards to fees permitted the Court to deny fees.  In other words, the Court accepted both arguments set forth by this firm.

The restaurant obtained a bittersweet victory in this case.  While the restaurant had to pay only $282 on an eventual demand of nearly $140,000.00, the restaurant did have to pay its own attorneys’ fees.  To make matters worse, the restaurant hired another law firm initially who billed the restaurant outrageously.  By the time the restaurant came to this firm, on the eve of trial, the restaurant had already paid nearly twice what this firm would have billed to handle the entire case.  As a result, this firm provided a reasonable flat fee cost to take over the case and take it through trial.

Winning these cases is important.  To do this however, restaurant owners, and small business owners, should investigate counsel and find counsel that has the business owners interests at heart rather than simply seeing clients as billable hours.


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