Shipes et al v. Amurcon Corporation

Filing 83

ORDER Denying 62 Motion for Reconsideration. Signed by District Judge Victoria A. Roberts. (LVer)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ALLISON SHIPES and THERESA JULL,
individually and on behalf of
similarly situated people,
Plaintiffs,

CASE NUMBER: 10-14943
HONORABLE VICTORIA A. ROBERTS

v.

AMURCON CORPORATION, a Michigan
Corporation,
Defendant.
/
ORDER DENYING RECONSIDERATION OF ORDER GRANTING
JANI PLATZ’S MOTION FOR VOLUNTARY DISMISSAL
I.

INTRODUCTION
This matter is before the Court on Defendant Amurcon Corporation’s (“Amurcon”)

Motion for Reconsideration of this Court’s Order Granting Plaintiff Jani Platz’s Motion for
Voluntary Dismissal. (Doc. # 62).
The Court DENIES Defendant’s Motion.
II.

BACKGROUND
On March 15, 2012, this Court granted Plaintiff Jani Platz’s motion to dismiss her

Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq. lawsuit against her former
employer, Amurcon, with prejudice and without an award of damages, costs, or attorney
fees to either side under Fed. R. Civ. P. 41(a)(2). (Doc. # 61). The rule provides that
an action may be dismissed at the plaintiff’s request only by court order, on terms that

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the court considers proper. Fed. R. Civ. P. 41(a)(2).
On March 16, 2012, Amurcon moved for reconsideration. (Doc. # 62). Amurcon
does not contest that Platz’s motion for voluntary dismissal should be granted; rather, it
requests that the Court award it costs and attorney fees under Fed. R. Civ. P. 41(a)(2)
and 29 U.S.C. § 1927, calling Platz’s action “frivolous.” (Doc. # 62). The Court ordered
Platz to respond to Amurcon’s motion to reconsider. (Doc. # 73). In particular, the
Court asked Platz to address why a review of her December 6, 2011 deposition
testimony did not cause her to immediately dismiss her action in view of the
shortcomings of that testimony.
On April 20, 2012, Platz responded. (Doc. # 79). She says: (1) generally an
award of costs and fees is not appropriate unless a plaintiff dismisses her claim without
prejudice and re-files the same claim, exposing the defendant to duplicative expenses,
or there are extraordinary circumstances warranting an award of fees and costs; (2)
Platz’s December 2011 deposition testimony was not the sole reason for her motion for
voluntary dismissal as she testified to several facts that supported her claim during the
deposition, despite the shortcomings of her testimony; (3) Platz decided to dismiss her
claims in March 2012 largely because the litigation was taking a toll on her health,
causing her to suffer from depression, anxiety, and sleep deprivation; (4) Amurcon
drafted its summary judgment motion prior to seeking concurrence, did not explain the
nature of the proposed motion when it asked counsel to concur, and did not give Platz
time to consult with her attorney about the motion before filing it; and (5) Platz did not
move to dismiss her claims until March 13, 2012 because Amurcon ignored her
attorney’s efforts to contact it to discuss settlement.
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III.

ANALYSIS
A.

Standard of Review

A court will only reconsider and reverse a prior ruling if the movant demonstrates
“a palpable defect by which the court and the parties and other persons entitled to be
heard on the motion have been misled [and] that correcting the defect will result in a
different disposition of the case.” E.D. Mich. LR 7.1(h)(3).
B.

There are no exceptional circumstances warranting an award of
attorney fees under Fed. R. Civ. P. 41(a)(2).

The cases Amurcon relies on discuss the imposition of an award of fees against
counsel as a sanction for bad faith or reckless conduct on counsel’s part. As the district
court recognized in Degussa Admixtures, Inc. v. Burnett, 471 F. Supp. 2d 848, 853
(W.D. Mich. 2007), “[r]ule 41(a)(2) . . . does not support the award of attorney fees in
conjunction with a dismissal with prejudice.” 471 F. Supp. 2d. 848, 853 (W.D. Mich.
2007); see also Smoot v. Fox, 353 F.2d 830, 833 (6th Cir. 1965) (discussing the reason
for allowing attorney fees under Fed. R. Civ. P. 41(a)(2) against the dismissing party
where an action is dismissed without prejudice and indicating that the same reasoning
does not apply to dismissals with prejudice).
An award of attorney fees under Rule 41(a)(2) is generally only appropriate when
a lawsuit is voluntarily dismissed without prejudice. Colombrito v. Kelly, 764 F.2d 122,
133 (2d Cir. 1985). “The purpose of such awards is . . . to reimburse the defendant for
the litigation costs incurred, in view of the risk (often the certainty) faced by the
defendant that the same suit will be refiled and will impose duplicative expenses upon
him.” Id. “The reason for denying a fee award upon dismissal of clams with prejudice is
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simply that the defendant, unlike a defendant against whom a claim has been dismissed
without prejudice, has been freed of the risk of relitigation of the issues just as if the
case had been adjudicated in his favor after a trial, in which event (absent statutory
authorization) the American Rule would preclude such an award.” Id. at 134.
Therefore, an award of attorney fees following a dismissal with prejudice must be
pursuant to Fed. R. Civ. P. 11 or independent statutory authority. Burnett, 471 F. Supp.
2d at 853; Colombrito, 764 F.2d at 134 (“Several courts have held that a Rule 41(a)(2)
award of fees [when a lawsuit is dismissed with prejudice] is appropriate only when
there is independent statutory authority for such an award. This Circuit has previously
assumed as much.” (citations omitted)).
This case is very different from Tesma v. Maddox-Joines, Inc., 254 F.R.D. 699
(S.D. Fla. 2008) on which Amurcon principally relies. There, the plaintiff brought a
FLSA action against the wrong defendant (the plaintiff attempted to sue his employer
but later admitted that he was employed by a different corporation–not the
defendant–during the relevant time period) and ultimately admitted that his claims were
meritless. Id. at 700. The court noted that the matter was the subject of a previously
filed suit that was dismissed for the plaintiff’s failure to comply with a court order. Id.
The plaintiff violated local rules when he re-filed the same Complaint against the same
defendant, but indicated it was an “Original Proceeding,” and refused to agree with
defense counsel to transfer the case to the judge presiding over the first suit. Id. at 70001.
After the case was transferred, the court noted that the plaintiff’s intentions were
“further suspect.” Id. at 701. Namely, in his sur-reply to the defendant’s motion to
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dismiss, the plaintiff offered to pay $960.00 in costs to defendant, but within an hour of
filing the sur-reply (and without a logical explanation), he withdrew that offer. Id. The
same day he filed his sur-reply, he moved to voluntarily dismiss with prejudice. Id. The
court granted the plaintiff’s motion to voluntarily dismiss with prejudice, but ordered the
plaintiff to pay the defendant’s reasonable costs and attorney fees, explaining:
Defendant has been forced to litigate this case without reason. The pay
stubs that Plaintiff himself attached to his Response (DE 7) clearly show
that he was employed by another corporation during the period in
question. If Plaintiff had litigated this claim th[r]ough judgment and lost,
but had a colorable claim, the Court could not reward Defendant for its
victory. See Kreager v. Solomon & Flanagan, P.A., 775 F.2d 1541, 154243 (11th Cir. 1985) (approving the award of attorney’s fees to an FLSA
defendant only when the plaintiff acts in bad faith, vexatiously, wantonly,
or for oppressive reasons) (citation omitted). In contrast, this Final Order
of Dismissal is not simply a judgment in favor of Defendant; it is Plaintiff’s
voluntary dismissal of this case because he recognizes that it lacks all
merit. In fairness to Defendant, though, this action cannot be dismissed
without some protection afforded to it.
Id. at 701- 02 (citation omitted).
The Tesma court found that the unique and exceptional circumstances of the
case warranted an award of attorney fees under Rule 41(a)(2). Other courts have
likewise observed that assessing attorney fees against the dismissing party following a
dismissal with prejudice may be warranted in extraordinary circumstances. In Aerotech,
Inc. v. Estes, when faced with a challenge to the district court’s refusal to assess
attorney fees against a plaintiff who dismissed claims with prejudice, the Tenth Circuit
opined:
Today, we continue to adhere to the rule that a defendant may not recover
attorneys’ fees when a plaintiff dismisses an action with prejudice absent
exceptional circumstances. When a plaintiff dismisses an action without
prejudice, a district court may seek to reimburse the defendant for his
attorneys’ fees because he faces a risk that the plaintiff will refile the suit
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and impose duplicative expenses upon him. In contrast, when a plaintiff
dismisses an action with prejudice, attorneys’ fees are usually not a proper
condition of dismissal because the defendant cannot be made to defend
again. Of course, when a litigant makes a repeated practice of bringing
claims and then dismissing them with prejudice after inflicting substantial
litigation costs on the opposing party and the judicial system, attorneys’
fees might be appropriate. But such exceptional circumstance is not
present here.
110 F.3d 1523, 1528 (10th Cir. 1997); see also Kreager, 775 F.2d at 1542-43
(observing that courts have the “inherent power” to assess attorney fees when a party
willfully disobeys a court order, or when a losing party acts in bad faith, vexatiously,
wantonly, or for oppressive reasons); Gap, Inc. v. Stone Int’l Trading, Inc., 169 F.R.D.
584, 588 (S.D.N.Y. 1997) (“Although a court may impose attorneys’ fees and costs
under Rule 41(a)(2), it should do so only when justice so demands.”).
Even if this Court were to agree that in exceptional circumstances an award of
fees under Rule 41(a)(2) where a plaintiff seeks voluntary dismissal with prejudice is
appropriate absent independent statutory authority, Platz’s attorney’s conduct
throughout this litigation was substantially different from that of the plaintiff’s attorney in
Tesma. Most notably, the attorney in Tesma admitted that his case lacked merit
because he sued the wrong company and could not give the court an explanation for his
failure to name the proper corporate defendant. Id. at 700.
On the other hand, Platz sued the appropriate party and believed, even after her
deposition, that her claim had merit. During her deposition she testified about several
facts that supported the claim. (See Doc. # 79 at 8). She said she was required to
perform the duties of hourly employees because Amurcon was short-staffed; her
primary job duties were not managerial, despite the written job description; at one point
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she only had one hourly employee reporting to her; she complained to supervisors
about not getting paid overtime; and she was aware of another salaried employee who
was paid overtime. In addition, Platz is not a repeat litigant; she has not made a habit
of “bringing claims and then dismissing them with prejudice after inflicting substantial
costs on the opposing party and the judicial system . . . .” Estes, 110 F.3d at 1528.
C.

Platz’s attorney’s failure to dismiss her claims against Amurcon
sooner does not warrant imposition of attorney fees and costs under
28 USC §1927.

Defendant does not seek attorney fees under Rule 11 or the statutory provisions
of the FLSA. Instead, it relies on 28 U.S.C. § 1927. Under that provision, “An attorney
or other person admitted to conduct cases in any court of the United States or any
Territory thereof who so multiples the proceedings in any case unreasonably and
vexatiously may be required by the court to satisfy personally the excess costs,
expenses, and attorneys’ fees reasonably incurred because of such conduct.” 28
U.S.C. § 1927.
An award of attorney fees and costs is warranted under § 1927 “when an
attorney ‘objectively falls short of the obligations owed by a member of the bar to the
court and which, as a result, causes additional expense to the opposing party.’” Bailey
v. Papa John’s USA, Inc., 236 F. App’x 200, 204 (6th Cir. 2007) (quoting In re Ruben,
825 F.2d 977, 984 (6th Cir. 1987)). “[T]he section is designed as a sanction against
dilatory litigation practices and is intended to require an attorney to satisfy personally
the excess costs attributable to his misconduct.” Ruben, 825 F.3d at 833 (emphasis in
original). A court need not find that an attorney acted in bad faith to sanction him under
§ 1927. Bailey, 236 F. App’x at 204. “Instead, a district court may impose liability for
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attorney fees under section 1927 when it determines that ‘an attorney reasonably
should know that a claim pursued is frivolous.’” Id. (quoting Jones v. Continental Corp.,
789 F.2d 1225, 1230-31 (6th Cir. 1986)); see also Ortiz v. D & W Foods, Inc., 657 F.
Supp. 2d 1328, 1330 (S.D. Fla. 2009) (“Section 1927 provides relief against an attorney
who knowingly or recklessly pursues a frivolous claim.”). But “simple inadvertence or
negligence that frustrates the trial judge will not support a sanction under section 1927.”
Ruben, 825 F.2d at 984; cf. Bailey, 236 F. App’x at 204 (“An attorney becomes
sanctionable when he intentionally abuses the judicial process or knowingly disregards
the risk that his actions will needlessly multiple proceedings.”).
In Ortiz, cited by Amurcon, a Florida district court awarded attorney fees against
the plaintiff’s attorney under § 1927 after the plaintiff voluntarily dismissed his FLSA
action with prejudice. 657 F. Supp. 2d at 1331. The Ortiz court observed that
defendants were entitled to judgment because they were not subject to enterprise
coverage, in part because the defendant restaurant’s revenue was not over $500,000,
and plaintiff was not entitled to individual coverage. Id. The defendants argued that the
action was frivolous because plaintiff’s counsel “was on notice of the enterprise
coverage standard of the FLSA and could have engaged in pre-suit actions, such as the
filing of a pure bill of discovery or a demand letter, to ascertain whether Defendant D &
W Foods, Inc. had gross revenue that exceeded $500,000.” Id. The court agreed with
the plaintiff that the suit was frivolous and awarded fees against plaintiff’s attorney
primarily because “Plaintiff[’]s counsel did not submit an affidavit attesting to his pre-suit
investigations or to his good faith belief that the action was not frivolous.” Id.
Here, Platz’s attorney Jesse Young filed an affidavit attesting to the events
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leading to the filing of the motion for voluntary dismissal. The actions he took indicate a
good faith belief in the merit of his client’s contention that she was misclassified as
FLSA-exempt because she performed many of the same non-managerial functions as
hourly Amurcon employees. Mr. Young voluntarily dismissed at Platz’s request after
reviewing Amurcon’s summary judgment motion and discussing with her the strengths
and weaknesses of her case, as well as the resources it would take to continue the
litigation and her recent medical problems. (See Doc. # 79-4; Ex. C, Affidavit of Jesse
L. Young). Platz’s affidavit supports these statements. (See Doc. # 79-3; Ex. B,
Affidavit of Jani Platz).
Moreover, Amurcon’s defense to Platz’s claim -- that she was FLSA-exempt -was not as cut-and-dry as the defense in Ortiz. In Ortiz, there was no way around the
facts that the plaintiff, as a waiter at the defendants’ small restaurant, was not entitled to
individual FLSA coverage because he was not engaged in commerce or in the
production of goods for commerce, and that the defendant did not have enterprise
coverage because its revenue did not exceed the statutory threshold for coverage of
$500,000 per year. 657 F. Supp. 2d at 1330; see also 29 U.S.C. §§ 207(a)(1) and
203(s); Guzman v. Irmadan, Inc., 551 F. Supp. 2d 1368, 1370-71 (S.D. Fla. 2008).
On the other hand, Platz’s contention all along has been that while she was
classified as a Community Manager, she did not perform managerial functions but
instead performed the same work as many of Amurcon’s non-managerial, hourly
employees. Misclassification claims in FLSA suits are not uncommon, are factintensive, and are certainly not as “easily decided” as the issues in Ortiz. See, e.g.,
Guzman, 552 F. Supp. 2d at 1370 (“The issue of enterprise coverage is easily
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decided.”); Bailey, 236 F. App’x at 205 (“[T]he standard for exemption under the [FLSA]
is general and open to interpretation . . . .”).
The Court appreciates Amurcon’s argument at pages 2 and 3 of its Motion
regarding the deposition testimony that was damaging to Platz’s case. For instance,
Platz stated at one point that her primary duties were in line with the written Community
Manager job description. (See Doc. 62-1; Ex. 1, Platz Dep. at 38). These duties were
managerial in nature -- and, if they were her primary duties, she was certainly exempt
from the FLSA overtime pay requirements. In addition, Platz testified she decided to
sue Amurcon when she “realized the injustice, the humiliation, the intimidation, the
threats, the hostility, the absolute [lack of] value for human employment or staffing . . . .”
(Id. at 15). Claims such as these may form the basis of a lawsuit against a former
employer, but they are not enough to make out a claim for a violation of the FLSA.
While there is merit to Amurcon’s argument regarding this testimony, the Court is
cognizant that the standard for granting attorney fees to a prevailing employer is more
stringent than that for awarding fees to a prevailing employee. Bailey, 236 F. App’x at
203; cf. Kreager, 775 F.2d at 1542-43 (“Section 216(b) of the [FLSA] makes fee awards
mandatory for prevailing plaintiffs. Unlike other legislation which authorizes fee awards
to prevailing parties, the Fair Labor Standards Act does not specifically provide
attorney’s fees to prevailing defendants.” (citation omitted)). “[A] claim is not groundless
simply because it was ultimately unsuccessful. Whether a case is well-grounded in fact
will sometimes not be evident until a plaintiff has been given a chance to conduct
discovery.” Bailey, 236 F. App’x at 203 (citations omitted). As Platz emphasizes,
discovery was ongoing: “It would have been improper to voluntarily dismiss Platz’s claim
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based upon her deposition testimony alone, especially when discovery was ongoing and
other depositions could have been taken in connection with her claim. Importantly, the
parties were also waiting for the Court’s decisions on several discovery motions . . . .”
(See Doc. # 79 at 8).
Although some of Platz’s deposition testimony harmed her case, other testimony
was helpful and was consistent with her contention that she was misclassified as a
manager. For example, Platz testified:
I was sent [to Lake Village of Auburn Hills] to be the property manager.
That wasn’t the role that I was taking. . . . That wasn’t the role that was –
that I ended up doing. . . . I got heavily involved with leasing apartments,
cleaning apartments, painting apartments, picking up curbside trash on a
2-mile property, 40 buildings, planting flowers, talking with people for
renewals, short-staffed, and covering for that.
(Doc. 62-1; Ex. 1, Platz Dep. at 26-27). She said when she complained to her
supervisor about performing trash removal services, he told her there was a hiring
freeze and that she and her staff would be responsible for physically maintaining the
property. (Id. at 29-32). She also indicated that she complained to superiors that she
felt she was performing work outside of the Community Manager job description and
was working “excessive . . . overtime.” (Id. at 52). Platz knew of another salaried
employee receiving overtime pay from Amurcon. (Id. at 56). She testified further that
she often worked “side by side with hourly employees doing the same duties . . . .” (Id.
at 61)
Thus, it was not unreasonable for Platz’s attorney not to seek voluntary dismissal
immediately after the deposition. He may have been able to successfully argue that the
inconsistencies in Platz’s deposition testimony created factual disputes that required
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submission of her case to a jury.
IV.

CONCLUSION
No bad faith or otherwise exceptional circumstances are evident from the record,

nor does the Court believe that Platz’s attorney knowingly or recklessly pursued a
frivolous claim. Instead, the Court is persuaded by Platz’s Response Brief and the
attached affidavits that a number of factors led to Platz’s decision to dismiss her
suit–not just her deposition testimony, and that Platz’s attorney reasonably believed she
had a meritorious case, even after Amurcon moved for summary judgment, as evinced
by counsel’s continued attempts to reach a settlement. Thus, there is no reason to
depart from the rule that attorney fees are not appropriate under Fed. R. Civ. P. 41(a)(2)
when an action is dismissed with prejudice, or to sanction Mr. Young under 28 U.S.C. §
1927.
Defendant does not show that the Court was misled by a “palpable defect” when
it dismissed Platz’s claim against Amurcon without an award of fees and costs.
Defendant’s Motion for Reconsideration is DENIED.

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IT IS ORDERED.

/s/ Victoria A. Roberts
Victoria A. Roberts
United States District Judge
Dated: May 2, 2012
The undersigned certifies that a copy of this
document was served on the attorneys of
record by electronic means or U.S. Mail on
May 2, 2012.
S/Linda Vertriest
Deputy Clerk

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