ELEVENTH CIRCUIT CONFIRMS THAT THERE IS NO CAKE FOR CHRISTIAN MINISTRY THAT CONDEMNS LGBTQ INDIVIDUALS (WHICH IN THIS CASE IS AMAZON’S MONEY, NOT CAKE)

We’re familiar with the judicial blessing of the Colorado bakery that had the right to sell a cake for an LGBTQ wedding not because of hate or discrimination but because of religion (cough).  A ministry whose current website proclaims “Gender confusion endangers freedom and destroys lives” was quite shocked to learn that Amazon’s designate a portion of your purchase price to go to charity did not include them because apparently discriminating against others who also were made in the divine’s own image is viewed as hate.  When the district court explained that businesses could make their own decisions about who to support, the ministry petitioned a higher authority, who ruled quite tersely that the district court was right. 

Coral Ridge Ministries v. Amazon is a case concerning what is now known as the D. James Kennedy Ministries.  By way of context, but not mentioned in the decision, the current website (which you can find, I am not risking what algorithms might do if I link it here) makes a number of statements about the LGBTQ community.  The home page alone contains such gems as

• Gender Confusion Culture.  A radical assault is taking place in our nation and schools. It’s transgenderism, the notion that we can decide our sex—whether male, female, or any of a mushrooming list of gender options.
• We are witnesses today to an emerging cultural tragedy. Gender confusion endangers freedom and destroys lives. Find out how—and what you can do to protect your children, on this week’s Truths That Transform.
• Help your child or grandchild navigate a gender-confused culture! (Emphasis supplied.)

If you followed a link titled “Request Your Resources Today,” you’d learn more, such as:

• So how do we respond to all this, especially when the public school classroom sends our children unbiblical messages about gender identity, gender roles, same-sex attraction, and sexual fulfillment?
• To help you to steer the young people in your life to embrace their proper calling to godly womanhood or manhood, we have a highly readable, Biblically-based book we will gladly send you.
• [The book is] an essential tool that will . . . [s]how you how to empower children to respond to the gender fluidity confronting them; [e]nable children to respond to the gender-confused with Gospel grace and compassion; [and] [h]elp children to celebrate their God-given gender.

I did not read the rest of the website.

Amazon operates the “Amazon Smile” program, under which a customer can designate a charity for Amazon to donate 0.5% of any purchase price. (If you buy $100 from Amazon, $0.50 of that is donated by Amazon to the charity.)  The charity has to register with Amazon to be part of the program. To register, a charity must not “engage in, support, encourage, or promote intolerance, hate, terrorism, violence, money laundering, or other illegal activities.” (Currently, the language is a little different.)  The website stated that “hate” would be judged on the basis of the SCLC’s list of hate groups.  Turns out that the folks running the website quoted above, they’ve been designated as haters for some reason.

No one likes being called a hater. The ministry sued because Amazon was discriminating against the ministry “because of its religious beliefs about LGBTQ conduct.”  The ministry also explained that it “has never attacked or maligned anyone on the basis of engaging in homosexual conduct.”  (I read it a couple of extra times but, no, the words “some of our best friends are gay” are not there.)

I’m focusing here on the portion of the opinion affirming the district court’s ruling that Amazon did not engage in religious discrimination against the ministry.  The court first accepted that websites such as these are places of public accommodation, and moved immediately on to whether the giving program was a service/privilege/advantage. After quickly establishing that the program was Amazon donating money, and not the customer, the court emphasized that donation of money is expressive, and Amazon could not be forced to express itself by including all possible entities on its charities list.

My favorite part of this opinion is footnote 11, referencing the district court’s analogy to a “a closely held fast-food restaurant chain, whose owners are Christian and object to homosexuality based on their religious beliefs, initiates a “charity match” program.”  (I guess they were too chicken to use a particular entity to fill a blank in the story.)  The footnote explained that under the ministry’s interpretation of the law “the fast-food chain could be compelled—over their objection—to match donations to, for example, a church whose central mission is promoting the Christian acceptance of homosexuality; the Church of Satan . . ..”  What’s good for the goose is good for the fried chicken sandwich, I guess.

What I find interesting about this case is that it manifests so much of what we are seeing in the political arena today.  Positions are taken (by one side or the other) only on the basis of that particular battle, and not with respect to other positions taken by that side. Not going to get partisan about it, but I am sure you know what I mean.

STEAK: CIRCUIT CLARIFIES VICARIOUS LIABILITY UNDER MARITIME LAW SIZZLE: CRUISE SHIP! DANCING WITH THE STARS!

The Georgia Courts have been both boring and non-prolific, so I am having fun with the Eleventh Circuit.  Why maritime law (about which I know nothing)?  “After falling during a dance competition on a cruise ship, [64 year old] passenger Joann Yusko sued the ship’s owner NCL (Bahamas), Ltd., for negligence. She alleged that her partner in the competition—a professional dancer and cruise ship employee—released her hands as she leaned away from him during a dance move, causing her to fall backward and hit her head on the deck.”  Yusko v. NCL.

The facts are exactly how the Court put them.  There is an existing principal of maritime law that a “shipowner is not liable to a passenger under maritime negligence law unless it has actual or constructive notice of the risk-creating condition that caused the passenger’s injury.”  There was no dispute that plaintiff did not provide evidence of such notice, so applying that principle, the District Court granted summary judgment.

Plaintiff appealed, arguing that she was not trying to establish direct liability, but rather vicarious liability under respondeat superior.  The court began by explaining how the notice standard evolved, and confirmed that the notice standard was still good law (“Over the intervening decades, we have continued to require plaintiffs in maritime negligence cases to establish notice on the part of a shipowner”).

However, the Court made a distinction:  “But the scope of a shipowner’s duty has nothing to do with vicarious liability, which is not based on the shipowner’s conduct . . . it makes very little sense to rely on caselaw about the scope of a shipowner’s duty where, as here, the shipowner’s duty is irrelevant.”

NCL argued that, in essence, if vicarious liability is permitted, the notice rule would become meaningless. The court reject that view, stating “common sense suggests that there will be just as many occasions where passengers are limited to a theory of direct liability.”  This would be especially true in premises liability cases, dangerous conditions claims, and complaints based on actions of other passengers.

All kidding aside, it’s nice to see simple and discrete pronouncements of law, even if they don’t impact your practice in the least.

DOES THIS CASE REPRESENT ALL THAT IS WRONG WITH THE JUDICIAL SYSTEM? PLEASE DISCUSS.

11th Circuit just decided Burns v. Palm Beach (https://lnkd.in/eC55CaY). Burns wanted to tear down his 10,000 sq. ft. beachfront mansion and replace it with a 25,000 sq. ft. one which was to be “a reflection of his evolved philosophy of simplicity in lifestyle and living with an emphasis on fewer personal possessions.” You read that right. Palm Beach said no. Burns made a federal case out of it, alleging constitutional violations. He lost, then lost the appeal. The majority opinion is 70 pages long; the dissent another 66 pages. The dissent could well be described as a well-researched thesis on the value of free expression in the form of art. The majority makes 93 references to the dissent. So here’s my thing – one rich guy and one rich city received this much judicial attention. Couldn’t the court – on both sides – have made something(s) else a higher priority?

5+ Year Old Securities Fraud Can Be Enjoined — But Why Bother?

Sometimes the decision in a case makes good legal sense, but the pursuit of the case may not.  One possible example of this phenomenon is SEC v. Graham,   11th Cir., No. 14-13562, May 26, 2016.  In Graham, the court held that although the SEC could not seek monetary damages for alleged acts that occurred more than five years before the claim was brought, the defendants were still subject to claims for injunctive relief.

There was no meaningful dispute as to the timing issues involved in the dispute.  The SEC alleged that the defendants, from November 2004 until July 2008, violated federal securities law by selling condominiums that were functioning, in reality, as unregistered securities.  The SEC brought suit for monetary damages, declaratory relief and injunctive relief in January 2013.  The court found that the defendants’ alleged securities violations took place more than five years before the SEC filed suit and dismissed it as time barred.  The SEC appealed, and the Eleventh Circuit.

No one disputed that 28 U.S.C. § 2462 governed the action.  In relevant part, that section  bars the government from bringing suit to enforce “any civil fine, penalty, or forfeiture” after five years from when the claim first accrued.   Graham argued, and the District Court agreed, that the injunction sought by the SEC was a penalty, and that the bar applied.  The Eleventh Circuit disagreed, relying on Nat’l Parks & Conservation Ass’n v. Tenn. Valley Auth., 502 F.3d 1316, 1326 (11th Cir. 2007) (noting, where the plaintiffs sought an injunction to enforce EPA standards, “the statute of limitations set forth in 28 U.S.C. § 2462 applies only to claims for legal relief; it does not apply to equitable remedies”).  Having made that point, it was not difficult to find that a claim for injunctive relief is an equitable claim and therefore outside the statute’s bar.  The court found on a different ground that an injunction could not be a penalty because it is not a punishment for past behavior, but, rather, a restriction on future behavior.

So here’s my thing:  what’s the purpose of seeking an injunction five years after the behavior at issue has abated?  I recognize the need to take infractions seriously.  However, once the problem has stopped, isn’t the only rationale (despite the rationale of the decision) something like spite or vengeance?  Just sayin.

 

 

Eleventh Circuit Recognizes Tort of Foreclosure Vengance

Today, in Carter v. Filbeck, No. 15-12529, 11th Cir. May 3, 2016, the Eleventh Circuit ruled that a Sheriff’s Deputy who lost his home through foreclosure, and who arrests people then lawfully in the home and throws them in jail, is not immune from suit by those folks.

I think the Eleventh Circuit’s own introductory paragraph put it best:  “Defendant-Appellant Timothy Filbeck was a lieutenant with the Butts County Sheriff’s Office. When his house was foreclosed upon, he, like anyone else who has been through foreclosure, had certain options available to him. But arresting the new owner’s agents, Plaintiffs-Appellees David Carter, Clayton Graham, Jr., and Mitchell Webster (collectively, “Plaintiffs”), who were lawfully performing their jobs, was not one of them. And neither was ordering Plaintiffs handcuffed and thrown in jail overnight. We think that should go without saying. Yet Filbeck did these things, anyway. Now Filbeck tries to convince us that he is immune from suit. We are not persuaded. Being a law-enforcement officer is not a license to break the law. And it is certainly not a shield behind which Filbeck may abuse his power with impunity.”  The only thing you have to ask is, in a case so obvious. why did they have to take 26 pages to get to that answer.

The facts were quite simple.  At all times relevant, Filbeck was a Sheriff’s Deputy. He bought his home in 2005, and borrowed money to do so, with the loan secured by the home. In July 2010, Filbeck fell behind, and his lender declared default and accelerated. The foreclosure sale happened in January 2011. Before that time, in November, Filbeck moved out of the house. The lender took ownership of the property at the sale, and began preparing it for resale. The lender hired out the job of preparing the home to the Plaintiffs, who began to do so.

This is where Filbeck re-enters the narrative:  proceeding under his own accusation that he had personal property taken from the house, he filed a police report (using the name of another officer without permission), made an insurance claim, and boarded up the house, placing “keep out” signs on the front.  When Plaintiffs again entered the property to do their job, some law enforcement officials questioned them, but appeared satisfied upon reviewing paperwork that everything was in order.  Filbeck, however, arrived at the scene and declared  “Your boys are going to jail and are staying there until I get my stuff back.” After determining that there was no eviction notice, he had the Plaintiffs arrested and treated them to a one night stay in Butts County detention. They were released, and no charges were filed.

Not surprisingly, they sued. Defendants moved for summary judgment on immunity grounds, and those motions were denied.  This appeal followed and the Eleventh Circuit affirmed.  I’ll dispense with the pages of boilerplate on immunity and go straight to the key issue, as explained by the court:  “Here, the parties agree that Filbeck was acting within the scope of his discretionary authority as a police officer at the time of the incident. So we turn to whether Plaintiffs showed that Filbeck violated Plaintiffs’ constitutional rights when he arrested them and whether those rights were clearly established at the time of the arrests.”

The court began by determining whether Filbeck had probable cause, arguable probable cause, or no probable cause at all for making the arrest. Filbeck asserted that he had cause to arrest under charges of burglary, trespass, and theft. “The common thread running through all of these offenses is a lack of authority: a lack of authority to be at or inside the Property and a lack of authority to remove the Property’s contents.”  In concluding that Filbeck lacked cause, the court looked to written notice, the conclusions of other law enforcement officials, and further attempts to provide Filbeck with written notice.

Filbeck then asked the court to apply the legal principle that he was simply a former owner holding over, and he had to be evicted.  However, because Filbeck had indisputably abandoned the property well before the foreclosure, this argument was of no avail.

(It should be noted that it was not a complete victory for the Plaintiffs.  Various other claims against the County were held to be subject to sovereign immunity.)

As always, nothing here is legal advice; it’s all just commentary on publicly available legal rulings.

 

“Bank Error In Your Favor” Works in Monopoly But Not In Real Life

The Eleventh Circuit just announced its decision in Victor W. Patterson v. CitiMortgage, Inc., No. 14-14636, 11^th Cir. (April 28, 2016), a decision which will prevent lay consumers from taking advantage of mistakes made by large, sophisticated and well-represented financial institutions.  

Patterson wished to purchase a home owned by Breedlove. Citi held the mortgage on Breedlove’s home. Patterson and Citi engaged in negotiations over a short sale, which would allow Citi to “generate a net payout that was greater than the expected proceeds from a foreclosure sale.”  In the negotiations, Patterson made increasing offers, generating payouts of $350,000, then $391,940, then $412,620.

Evidence was presented that Citi intended to accept that offer with some small adjustments.  However, in the communication sent by Citi intended to state that acceptance, Citi stated that it would accept a net payout of $113,968.45. Citi’s letter was dated September 19, 2008, and set a closing date of October 24, 2008.

Closing was set for October 23, 2008, and the closing attorney disbursed $113,968.45 to Citi.  Only then did Citi realize its error, and it told the closing attorney it was rejecting the funds.  Patterson, for his part, demanded closing of the sale. The transaction did not close.

Nothing happened for two years, at which time Citi began foreclosure proceedings, and, well, to put it simply, everybody involved asserted everything possible, it ended up in federal court, and the trial court granted summary judgment to Citi on the ground of unilateral mistake.  The Eleventh Circuit affirmed, and gave a roadmap to any party that wants to set up a unilateral mistake defense.

First, parol evidence is admissible to show the lack of existence of an agreement. (nb. I’ve tried that argument twice and am now wishing I had this panel those times).  Second, “Georgia courts will not permit a party to take unfair advantage of an offer that contains an obvious, unilateral mistake.”  The court did note the existence of a contrary principle:  “Georgia courts will often refuse to save contracting parties from their own unilateral mistakes that could have been avoided through the exercise of due diligence.”  The question the court then focused upon was whether Patterson knew, at the time he accepted the offer, that the offer was mistaken.  The court looked to the value of the prior offers as being much, much, higher than the mistaken one, and concluded that “no rational person would believe that was anything but a mistake because rational persons and mortgage companies do not counteroffer for less — in this case nearly $300,000 less — than the latest and highest and still outstanding offer.”

I’m not saying the ultimate outcome is wrong. It is, however, curious that both the trial court and the appellate court went the route of summary judgment. Perhaps there was an unacknowledged fear that every juror would believe in the Monopoly card of this post’s title.

As always, none of this is legal advice, so don’t rely on it as such.

You Won’t Believe Whose Rights Alabama Tried To Trample Now

Look, if you think Alabama has it out for you (i.e., your particular color/religion/gender etc.) because of things like this, you need to take a look at U.S. v. Alabama, No. 14-11298, 11th Cir., February 12, 2014, in which the Heart of Dixie was taken to task for attempting to limit the voting rights of — wait for it — active military personnel.

The opinion itself is an unremarkable application of the principle that “if the statutory language is unambiguous and the statutory scheme is coherent and consistent,” the court will just follow the plain meaning of the statute.  The statute at issue in this case was the Uniformed and Overseas Citizens Absentee Voting Act (“UOCAVA”).  Section 20302(a)(8) of the UOCAVA requires that states “transmit a validly requested absentee ballot to an absent uniformed services voter or overseas voter . . . in the case in which the request is received at least 45 days before an election for Federal office, not later than 45 days before the election.”

Seems simple enough, but:

Under Alabama law, runoff elections are required if no candidate in a
primary election receives a majority of the votes. Ala. Code § 17-13-18. The
dates are set by statute at forty-two days after the relevant primary election. See id.
This system prevents Alabama from sending absentee ballots to UOCAVA voters
forty-five days before runoff elections.

This left Alabama with two choices:  (a) add 3 days to its election calendar to help out members of the military; or (b) dig in and fight.  Guess which option was picked?  War Damn Eagle. Roll Damn Tide.  The trial court, however, granted summary judgment to the federal government and the 11th Circuit affirmed.

Alabama did not come without arguments.  It first argued that the UOCAVA did not apply to runoff elections, just general elections.  Due to the lack of any explicit text to that effect, the court explained “we presume Congress did not pass the statute in order to affect transmission of ballots to UOCAVA voters during one, unspecified election within the class of federal elections.”

Alabama then argued that the following provision of the UOCAVA gives states discretion to vary the 45 day period in runoff elections:  “if the State declares or otherwise holds a runoff election for Federal office, [the State shall] establish a written plan that provides absentee ballots are made available to [UOCAVA] voters in [a] manner that gives them sufficient time to vote in the runoff election.”  Again, relying on the actual language of the statute, the court rejected Alabama’s argument:  “states can easily comply with both requirements by sending ballots to qualifying UOCAVA voters forty-five days before all elections and also establishing a written plan describing procedures to be used in runoff elections.”

Finally, Alabama sought to apply the language of the waiver section of the statute, about which even the court acknowledged that “We do not deny that Congress could have been more precise in its word choices.”  However, ” the result is not simply that the states may choose whatever time period they believe to be suitable.”  By allowing for waivers, the statute did not contemplate unilateral action.  Relatedly, the court explained that a more logical meaning of the waiver provisions is that they apply to “the states’ ability to comply with the new requirements during elections that can occur without notice and on an abbreviated timeline.”

I’m not saying that Alabama’s arguments were frivolous, nor was the Court saying so (“Alabama’s arguments, while carefully considered and not without some textual support, cannot overcome the plain text . . .”). I’m merely suggesting that for a three-day difference, why fight a statutory scheme that makes it easier for members of the military to vote.  Maybe it is a continuing vestige of that whole “states rights” thing. But I just don’t get it.

Nothing here is legal advice.  It is just editorial comment on a recently released court decision.

11th Circuit Offers A Primer On Rule 807 For No Apparent Reason

In Rivers v. US, No. 12-15208, 11th Cir., February 5, 2015, the Eleventh Circuit found that the trial court should not have admitted evidence of a conversation involving the defendant’s now-deceased trial counsel under Rule 807 because the evidence lacked the “circumstantial guarantees of trustworthiness” required by that rule.  Nonetheless, that error was found to be harmless, and the trial court’s decision was affirmed.

This post will focus solely on the Rule 807 portion of the opinion.  Defendant was charged with what seem like the standard assortment of federal crimes that come into play when five kilograms of cocaine are involved.  Defendant was convicted, and appealed the conviction ineffective assistance of counsel grounds.  Significantly, after trial, Defendant’s counsel died, and his files could not be located.  The basis of the claim of ineffectiveness was Defendant’s contention that his counsel did not communicate with him, either sufficiently or at all.  Specifically, Defendant contended that his counsel (McComb) never communicated with him about “evidence, discovery materials, motions, witnesses, exhibits, defense witnesses, defense exhibits, expert witnesses, the Sentencing Guidelines, his criminal record, the indictment, the jury instructions, the elements of the charges against him, or the wiretap recordings. He also testified that he never spoke with McComb about the possibility of pleading guilty or whether he should have done so.”

To refute this contention (and, please note that I am admitting some non-material procedural details), the government offered the testimony of Rodriguez, who was counsel for one of Defendant’s co-defendants.  Rodriguez testified as to communications he had with McComb, in which McComb purportedly stated that he was presenting plea possibilities to Defendant.    Rodriguez also testified as to conversations he had with McComb about McComb’s conversations with the Defendant.  Defendant objected on hearsay grounds. The trial court relied on Rule 807:

(a) In General. Under the following circumstances, a hearsay
statement is not excluded by the rule against hearsay even if the
statement is not specifically covered by a hearsay exception in Rule
803 or 804:
(1) the statement has equivalent circumstantial guarantees of
trustworthiness;

(2) it is offered as evidence of a material fact;

(3) it is more probative on the point for which it is offered than
any other evidence that the proponent can obtain through
reasonable efforts; and

(4) admitting it will best serve the purposes of these rules and
the interests of justice.

In finding that this residual exception permitted the testimony, the trial court “found in a footnote that McComb’s “statements had equivalent circumstantial guarantees of trustworthiness because the statements” were made to a codefendant’s counsel and “[f]rank and forthright communication between counsel for co-defendants is expected when they are
planning pretrial strategy.” The court found Rodriguez’s testimony “credible and consistent with common sense,” and Rivers’s testimony “incredible and perjurious,” because it “strains credulity for this Court to believe that an experienced and competent criminal defense attorney such as Mr. McComb would not have fully discussed the discovery material and a government plea offer with his client before trial.”

This appeal followed.  The court began its analysis by citing authorities for the proposition that ““Congress intended the residual hearsay exception to be used very rarely, and only in exceptional circumstances” and that the exception “appl[ies] only when certain exceptional
guarantees of trustworthiness exist and when high degrees of probativeness and necessity are present.”  The court then devoted a paragraph to explaining that an abuse of discretion standard applied to the district court’s evidentiary decisions.

The court determined that the district court should not have admitted the evidence.  Particularly, the district court was wrongly focused on the credibility of the witness, as opposed to the circumstantial guarantees of trustworthiness required by the rule.  “The fundamental question, therefore, is not the trustworthiness of the witness reciting the statements in court, but of the declarant who originally made the statements.”   Citing authorities, the court noted that “such guarantees must be ‘equivalent to cross-examined former testimony, statements under a belief of impending death, statements against interest, and statements of personal or family history.'” In examining the reasons the district court gave for admitting the testimony, the court explained that — as concerning the declarant — ” if he was failing as completely as Rivers alleges, he would have had every incentive to
dissimulate.”

Nonetheless, the Eleventh Circuit affirmed the decision because “Accordingly, even without the portion of Rodriguez’s testimony that was improperly admitted under Rule 807, the remainder of his testimony still gives the district court reason to believe that Rivers did not tell the truth before the magistrate judge, and thus to discredit Rivers’s testimony.”  So everything discussed above is, well, pretty much dicta.

Here’s the thing — we hear much about judicial appointment approval backlogs.  The panel in this case consisted of one Eleventh Circuit Judge, plus a Court of International Trade judge, and a District Court judge, from another circuit.   80% of the ink spilled in this opinion concerned an issue not material to the determination of the appeal.  The court just as well could have said “we are going to assume the evidence to be inadmissible without making any finding, and we hold that even with such evidence excised, we affirm.”  I’m grateful, as a law nerd, to have future guidance as to Rule 807.  But I’m just not sure it’s worth it.

As always, nothing here is legal advice.  Just commentary on a recent publicly reported decision.

Eleventh Circuit Rejects Notion That Christmas Has Been Commercialized

In New Wave Innovations, Inc. v. McClimond, No. 14-11466, 11th Cir. January 21, 2015, the Eleventh Circuit affirmed the denial of an application for preliminary judgment in a trademark infringement case, on the ground that the plaintiff had not established prior use.

New Wave apparently operated car washes.  In November of 2011, New Wave sent a Christmas card to its customers, proclaiming “Christmas Wishes from Mr. Foamer,” and including a cartoon foam generator called Mr. Foamer.   Defendants incorporated a car wash business called Mr. Foamer in 2012.  New Wave sought an injunction prohibiting Defendant from operating a business under that name.  Upon recommendation from the magistrate judge, the district court denied that request.  This appeal followed.

After reciting the standard for injunctive relief and the standard of review for the denial of injunctive relief, the court got into the substance of the matter:  “Trademark rights are gained in the common law via actual prior use in commerce. Tally-Ho, Inc. v. Coast Comm. Coll. Dist., 889 F.2d 1018, 1022 (11th Cir. 1990). We have stated that, “[i]n general, uses that are de minimis may not establish trademark ownership rights.” Planetary Motion, Inc. v. Techplosion,
Inc., 261 F.3d 1188, 1196 (11th Cir. 2001).”    Evaluating the role of a Christmas card, the court concluded that “The card did not infer that NewWave had a new name or was marketing a product with the name Mr. Foamer; it was a cartoon of one of its products in a Santa hat with a greeting attached. As such, it was a de minimis use of the mark.”

So the next time someone tells you that Christmas has been commercialized, tell them (at least in this portion of the southeast), that they are wrong as a matter of law.

Nothing in here is legal advice.  It is just a comment on a newly released legal decision.

11th Circuit Rejects Equitable Defense to FLSA Unpaid Overtime Claim

In Bailey v. Titlemax of Georgia, No. 14-11747, 11th Cir. (January 15, 2015), the Eleventh Circuit ruled that when “an employer knew or had reason to know that its employee underreported his hours, it cannot invoke equitable defenses based on that underreporting to bar the employee’s FLSA claim.”

Bailey worked at TitleMax.  He worked overtime hours for which he was not paid.  This happened for two reasons:  Bailey under-reported his time, and, Bailey’s supervisor changed Bailey’s time records to show fewer hours worked than Bailey himself reported. Bailey did this, and was complicit in it occurring, because his supervisor told him to do so.

TitleMax, presumably at a level higher than Bailey’s supervisor, argued that Bailey’s conduct violated TitleMax’s polices against misreporting time; against verifying time records; and for failure to report supervisor misconduct over an anonymous hotline.  TitleMax moved for summary judgment, arguing that Bailey was responsible for his own failure to receive overtime, and that his actions made him in pari delicto; and that he came to court with unclean hands.  The district court granted the motion for summary judgment.

In reversing the grant of summary judgment, the court took it upon itself to create block-quote fodder for FLSA briefwriters throughout the circuit.  As a service to all such attorneys, here are the excerpts you’ll be wanting, pre-blocked:

• Nice background language:  “Nearly seventy years ago, the Supreme Court wrote that the “the prime purpose” of the FLSA is “to aid the unprotected, unorganized and lowest paid of the nation’s working population; that is, those employees who lacked sufficient bargaining power to secure for themselves a minimum subsistence wage.” Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707 n.18, 65 S. Ct. 895, 902 n.18 (1945). The Court explained that Congress passed this law as “a recognition of the fact that due to the unequal bargaining power as between employer and employee, certain segments of the population required federal compulsory legislation to prevent private contracts on their part which endangered national health and efficiency and as a result the free movement of goods in interstate commerce.” Id. at 706–07, 65 S. Ct. at 902.”  (That’s my emphasis added.)
• Gratuitous stringcite:  “This Court has, in the decades since O’Neil, echoed the same principle: the goal of the FLSA is to counteract the inequality of bargaining power between employees and employers. See, e.g., Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326, 1332 (11th Cir. 2014) (quoting O’Neil); Hogan v. Allstate Ins. Co., 361 F.3d 621, 625 (11th Cir. 2004) (same); Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352 (11th Cir. 1982)”
• Concise statement of elements:  “An unpaid-overtime claim has two elements: (1) an employee worked unpaid overtime, and (2) the employer knew or should have known of the overtime work.”  (There’s another stringcite backing that one up.)

So, if you practice in the FLSA arena, this case is probably useful.

The real meat of the opinion concerned the issue of whether equitable defenses could even be asserted under the circumstances of this case.  Of key importance was the fact that “Mr. Bailey worked off the clock at the behest (demand) of his supervisor . . .No one disputes that his supervisor knew he was working off the clock. The supervisor’s knowledge may be imputed to TitleMax, making it liable for the FLSA violation.”

TitleMax did not focus on its own knowledge.  Rather, it focused on Bailey, arguing that his own actions formed the basis of the equitable defenses.  The court viewed “this distinction as one without a difference.”  Ultimately the court explained that “Barring FLSA actions for wage and overtime violations where the employer is aware that an employee is underreporting hours would undermine the Act’s deterrent purpose.”

As usual, nothing here is legal advice, just a report on a publicly released court opinion.