Overtime Complaint Was Not Moot in Light of Open-Ended Allegation of Hours Worked

In Boutros v. JTC Painting, the Southern District of New York denied defendants’ motion to dismiss plaintiffs’ complaint seeking unpaid overtime under the Fair Labor Standards Act and the New York Labor Law.

Plaintiffs are painters who worked for defendant JTC, a painting contractor owned by co-defendant Caruso.  They allege that JTC failed to pay them overtime as required by their Collective Bargaining Agreement and the FLSA, and that they were instead paid for overtime “at their normal hourly rate, either in cash or by means of a non-payroll check.”

First, the court held that plaintiffs properly alleged that JTC was covered by the FLSA.  In order to be “covered”, defendant must be “engaged in interstate commerce” and have “gross annual sales above $500,000.”  Plaintiffs’ amended complaint was adequate in this regard, as it alleged that JTC’s painters (more than 100) are employees who use tools, paint, and other materials that travel in interstate commerce; that JTC offers services in the New York Tri-State area; and that its annual revenues exceed $500,000.

Second, the court considered and rejected JTC’s argument that one plaintiff’s FLSA claim was “moot”, and hence subject to dismissal, because it offered him “full compensation” in its FRCP 68 Offer of Judgment.

After considering and rejecting two arguments posed by plaintiffs as to why their claims were not moot (which were based on a supposedly pending motion to certify a collective action and plaintiff’s rejection of the offer), the court turned to what it considered the “decisive question” of fact:

The decisive question, then, is factual: Did defendants offer Boutros the “maximum recovery available” under the FLSA?  Only an offer of the maximum recovery possible would deprive Boutros of a personal stake in the outcome; if Boutros can plausibly argue that he might be able to obtain a greater recovery at trial, then there remains a live controversy between him and JTC. … Courts have … denied a defendant’s motion to dismiss on mootness grounds where the plaintiff potentially could recover more than the relief offered by defendant, such as where the offer is not comprehensive, or where the amount due to plaintiff is disputed.

Here, Boutros and JTC disagreed as to whether JTC has in fact offered Boutros the maximum amount he could recover under his FLSA claim.  JTC offered to compensate Boutros “exactly” 308 hours of overtime, which “match[ed] the total of the overtime hours enumerated in” Boutros’s complaint.

Plaintiff responded by pointing to his complaint, which alleges that JTC owes him for “at least 308 hours” of FLSA overtime.  He argued that this was an estimate based on his diary and on the payroll records which JTC turned over in initial discovery, and that JTC’s payroll records are “flawed” and may be incomplete, and hence cannot be taken as a reliable representation of his full work hours.  Plaintiff asserts that, in order to more accurately determine his full hours, “he will need to review other documents, such as sign-in sheets, sign-out sheets, job site documents, and cash disbursement journals, and possibly take depositions.”

The court sided with plaintiff, citing the use of the words “at least” in the complaint:

At the motion to dismiss stage, the Court cannot resolve this factual dispute against Boutros—it must accept as true all well-pleaded factual allegations in the TAC. That includes Boutros’s factual allegation that JTC failed to pay him for at least 308 hours worked in excess of 40 hours in a week. Given that, defendants’ Offer based on only 308 hours does not assuredly give Boutros his maximum possible recovery. Boutros and JTC still have a live controversy. Boutros’s FLSA claim is not moot.

This case also contains a practice tip for plaintiffs’ counsel regarding settlement communications.  In response to plaintiff’s argument that he will need additional information to determine his full work hours,

defendants point to an email exchange between counsel, made in the context of informal efforts to resolve this case, in which the defense pressed for “a hard number as to what your clients are claiming in unpaid overtime, based on hours over forty (40) in a work week, so that we can proceed towards resolution.” Plaintiffs responded by referencing a chart of Boutros’s hours that he had previously provided. Defendants used the 308 hours in that chart (which dovetailed with the 308 hours listed in the [Third Amended Complaint]) to calculate their Rule 68 Offer. JTC effectively argues that Boutros is estopped from claiming higher damages. But that is unpersuasive. Plaintiffs’ counsel may fairly be faulted for imprecision for failing to state that the chart was subject to the possibility that discovery would reveal a basis for claiming additional overtime hours. But that lapse does not undo the [Third Amended Complaint]’s explicit pleading that there were “at least 308 hours” that went uncompensated. Nor would it preclude Boutros from arguing for greater FLSA overtime damages at trial, assuming that evidence adduced in discovery supports that claim.  (Emphasis added.)

So, in the end, plaintiff’s complaint was saved from dismissal due to its use of the open-ended term “at least” when describing plaintiff’s work hours.  It is therefore worthwhile to utilize such language, even during settlement discussions, to reduce the risk that such communications will operate to plaintiff’s detriment (and, at the very least, to avoid having a federal judge “fault” counsel’s work).

Finally, the court noted that plaintiff Boutros did “run[] a risk in not accepting the Rule 68 Offer”, since “[i]f he cannot establish greater FLSA damages than those offered by JTC, under Rule 68, he will be obligated to compensate JTC for the costs [it] incurred after the offer was made.”