Black v. Reynolds et al

Filing 109

ORDER denying 95 Motion in Limine. Signed by Chief Judge William H. Steele on 2/3/2016. Copy mailed to Plaintiff. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
KIMBERLY BLACK,
Plaintiff,
v.
GARY REYNOLDS, et al.,
Defendants.

)
)
)
)
) CIVIL ACTION 14-0442-WS-N
)
)
)
)
ORDER

In the joint pretrial document, the defendants identified “off-set” and
“unclean hands” as affirmative defenses. (Doc. 85 at 8-9). The Court ordered the
defendants to file a motion in limine addressing these defenses, (Doc. 86 at 3), and
the defendants have filed a motion in limine “to include evidence” of these
defenses. (Doc. 95). The plaintiff has filed a response, (Doc. 105 at 3-4), and the
motion is ripe for resolution.
The plaintiff alleges that, with the defendants’ awareness if not instruction,
she worked off the clock during her lunch period. The defendants assert that the
plaintiff “stole time from the company by failing to clock out for lunch breaks
when she was conducting personal business.” (Doc. 85 at 2). They argue the
plaintiff’s hands are unclean, and that they are entitled to an offset, because she
“falsified her time sheets by reporting time that she did not work” and (which is
apparently another way of describing the same conduct) because she “failed to
accurately report her hours worked.” (Id. at 9). This occurred, the defendants say,
“on several occasions” during the plaintiff’s ten-month employment. (Doc. 95 at
3).1

1

The plaintiff was employed from December 2012 to October 2013. (Doc. 78 at
1, 7 & n.8).

I. Unclean Hands.
In the joint pretrial document, the defendants’ only legal support for their
unclean hands defense was an Eleventh Circuit case addressing the defense in the
bankruptcy context. (Doc. 85 at 9 n.14). In their motion in limine, the defendants
cite five district court decisions from Florida for the proposition that the defense
applies in the FLSA context. (Doc. 95 at 1-2). The Court does not find them
persuasive.
The defendants’ authorities rely almost exclusively on McGlothan v.
Walmart Stores, Inc., 2006 WL 1679592 (M.D. Fla. 2006). The plaintiff in
McGlothan asserted an FLSA claim for failure to pay overtime and for retaliation,
and the defendant asserted an affirmative defense of unclean hands, id. at *1,
which the plaintiff challenged with a motion to strike. Id. at *2. The McGlothan
Court, after noting that the Supreme Court in McKennon v. Nashville Banner
Publishing Co., 513 U.S. 352 (1995), permitted after-acquired evidence of
wrongdoing to affect the remedies awarded in an ADEA case, concluded that a
defense of unclean hands should have a similar impact in FLSA cases because it
“serve[s] the same general purpose – to prevent a plaintiff from wrongfully
profiting from misconduct.” Id. at *2-3. None of the defendants’ other cited cases
expand upon this brief analysis.
The classical unclean hands defense “bar[s] the suitor from invoking the aid
of the equity court.” McKennon, 513 U.S. at 885. That is, a plaintiff with unclean
hands “must be denied equitable relief” in toto. Id. But this blanket prohibition
on relief “has not been applied where Congress authorizes broad equitable relief to
serve important national policies[, and] [w]e have rejected the unclean hands
defense where a private suit serves important public purposes.” Id. at 885
(internal quotes omitted). In Bailey v. TitleMax, Inc., 776 F.3d 797 (11th Cir.
2015), the Eleventh Circuit confirmed that “totally and entirely bar[ring] [an]
FLSA claim” based on the plaintiff’s misconduct – packaged in Bailey as unclean
hands and in pari delicto – contradicts McKennon. 776 F.3d at 804. To the extent
2

the defendants seek to assert unclean hands as an absolute defense, their position is
untenable.
While rejecting unclean hands as a complete bar to recovery, the
McKennon Court concluded that “[t]he employee’s wrongdoing must be taken into
account” in fashioning an appropriate remedy. 513 U.S. at 886. In the afteracquired evidence context, where the unknown misconduct by the sinceterminated plaintiff would have resulted in discharge had it been known, “neither
reinstatement nor front pay is an appropriate remedy,” and back pay generally will
run only “from the date of the unlawful discharge to the date the new information
was discovered.” Id. The question is whether a private FLSA plaintiff’s remedies
for overtime violations can be similarly limited.
The Eleventh Circuit in Bailey has suggested a negative answer to this
question. “While McKennon held that such defenses may limit relief under the
ADEA, the Court rested its reasoning on the fact that the ADEA provides both
equitable and legal remedies.” 776 F.3d at 804 n.5 (emphasis in original). “In
private FLSA actions, however, courts are empowered to grant only legal relief.”
Id. (emphasis in original). Because this portion of Bailey is dicta, it is not
controlling, but the Court finds it persuasive, and certainly more so than the
defendants’ authorities.
As the McKennon Court noted, 513 U.S. at 886, the ADEA provides that
“the court shall have jurisdiction to grant such legal or equitable relief as may be
appropriate.” 29 U.S.C. § 626(b).2 While the FLSA provides for similar relief in
retaliation cases, id. § 216(b), in the case of overtime violations, plaintiffs’ relief is
limited to “the amount of … their unpaid overtime compensation … and … an
additional equal amount as liquidated damages.” Id. Thus, “[f]or violations of the
2

Restitution, front pay and back pay have all been viewed as equitable remedies.
E.g., West v. Gibson, 527 U.S. 212, 217 (1999) (identifying reinstatement and backpay as
equitable remedies); Pollard v. E.I. du Pont de Nemours & Co., 532 U.S. 843, 853 & n.3
(2001) (front pay awards consistently viewed as the functional equivalent of
reinstatement).
3

wage and overtime provisions, the FLSA does not list equitable relief as an
available remedy in an employee suit.” Bailey v. Gulf Coast Transportation, Inc.,
280 F.3d 1333, 1335 (11th Cir. 2002).
This is not a distinction without a difference. As the McKennon Court
recognized, unclean hands is an equitable doctrine that operates against “equitable
relief.” 513 U.S. at 885. The Bailey Court confirmed that unclean hands is an
“equitable defens[e].” 776 F.3d at 800. It would be strange indeed for an
equitable defense to impact legal remedies, as a number of lower court opinions
addressing the defense in the FLSA context have remarked. See Campbell v.
A.S.A.P. Assembly, Inc., 2013 WL 6332975 at *2 (W.D. Okla. 2013); Uto v. Job
Site Services Inc., 269 F.R.D. 209, 213 (E.D.N.Y. 2010); Torres v. Gristede’s
Operating Corp., 628 F. Supp. 2d 447, 464 (S.D.N.Y. 2008); Lopez v. Autoserve,
LLC, 2005 WL 3116053 at *1 (N.D. Ill. 2005).
Because the only issue before the Court is whether the defendants have
made an adequate showing that they may pursue an unclean hands defense, the
Court makes no definitive ruling regarding the availability vel non of such a
defense in the context of a private FLSA action for overtime compensation. For
the reasons set forth above, the defendants’ motion in limine to allow evidence in
support of an unclean hands defense is denied. The defendants will not be
permitted at trial to advance such a theory by evidence or jury argument.
II. Offset.
“Set-offs against back pay awards deprive the employee of the ‘cash in
hand’ contemplated by the Act, and are therefore inappropriate in any proceeding
brought to enforce the FLSA minimum wage and overtime provisions ….”
Brennan v. Heard, 491 F.2d 1, 4 (5th Cir. 1974), overruled in part on other
grounds, McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988). The defendants

4

nevertheless rely on Heard – not for the general rule quoted above, but for one of
“three exceptions,” id. at 3 n.2, which they assume applies here. (Doc. 95 at 3).3
“Where the employee has previously misappropriated funds, temporary
reductions below the statutory minimum have been permitted in order that the
employer might recoup the losses.” Heard, 491 F.2d at 3 n.2. The defendants
argue the plaintiff “misappropriated” funds by failing on several occasions to
clock out when she was engaged in personal business, and they conclude they are
entitled to have such sums as they can prove offset against any recovery by the
plaintiff in this action.
The defendants appear to be mixing apples with oranges. The “three
exceptions” identified in Heard are not exceptions to the rule prohibiting setoffs
against awards in FLSA litigation but exceptions to the rule that each periodic
wage payment to an employee must be made “free and clear” of paybacks to the
employer.4 That is, setoffs may sometimes be used in the employment relationship
and, if properly employed, can reduce an employee’s wage without triggering an
FLSA violation. Nothing in that proposition, however, negates Heard’s ban on
setoffs in FLSA litigation.
Because the only issue before the Court is whether the defendants have
made an adequate showing that they may pursue a setoff of any damages awarded
the plaintiff in this lawsuit, the Court makes no definitive ruling regarding the
availability vel non of such a defense in the context of a private FLSA action for
3

In the only other authority cited by the defendants, a trial court simply accepted
the plaintiff’s concession that setoff was permissible. Thus, the defendants’ motion in
limine depends completely on Heard.
4

The Heard Court specifically stated that it was identifying exceptions to “this
requirement,” that is, the requirement that “‘the minimum wage required must normally
be paid “free and clear.”’” 491 F.2d at 3 & n.2 (quoting Brennan v. Veterans Cleaning
Service, Inc., 482 F.2d 1362, 1369 (5th Cir. 1973)). Veterans Cleaning Service involved
“payroll deductions,” Heard, 491 F.2d at 3, as did the case establishing the
“misappropriation” rule on which the defendants rely. Mayhue’s Super Liquor Stores,
Inc. v. Hodgson, 464 F.2d 1196, 1197-99 (5th Cir. 1972); Veterans Cleaning Service, 482
F.2d at 1369 (Mayhue’s involved “paycheck deductions”).
5

overtime compensation. For the reasons set forth above, the defendants’ motion in
limine to allow evidence in support of an off-set defense is denied. The
defendants will not be permitted at trial to advance such a theory by evidence or
jury argument.
DONE and ORDERED this 3rd day of February, 2016.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

6