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FLSA Does Not Explicitly Authorize Expert Fee Awards: Second Circuit
Practical Law Legal Update 2-617-8053 (Approx. 4 pages)
FLSA Does Not Explicitly Authorize Expert Fee Awards: Second Circuit
by Practical Law Labor & Employment
| Published on 03 Aug 2015 • USA (National/Federal) |
In Gortat v. Capala Bros. Inc., the US Court of Appeals for the Second Circuit, in a matter of first impression, held that 29 U.S.C. § 216(b) of the Fair Labor Standards Act (FLSA) does not explicitly authorize expert fee awards and that a district court may not award expert fees under that provision.
On July 29, 2015, in Gortat v. Capala Bros. Inc., the US Court of Appeals for the Second Circuit, in a matter of first impression, held that 29 U.S.C. § 216(b) of the FLSA does not explicitly authorize expert fee awards. The Second Circuit vacated the district court's award of costs reimbursing the plaintiffs' expert fees under that provision and remanded the case to the district court to determine whether the New York Labor Law authorizes the award of such expert fees (No. 14-3304-CV, (2d Cir. July 29, 2015).)
Background
Several former employees of Capala Bros. Inc. sued the company under the FLSA and the New York Labor Law (NYLL) for unpaid regular and overtime pay, punitive damages, liquidated damages, attorneys' fees and costs.
The employees prevailed in a jury trial. In a separate damages proceeding, the district court awarded the employees nearly $300,000 in damages. On a motion for fees and costs by the employees' counsel, the district court rejected the employer's objections and adopted the magistrate's recommendation awarding $582,578.50 in attorneys' fees and costs. As part of the order, the employees' counsel were awarded $10,245 for expert fees incurred to pay an accounting expert for the plaintiffs' affirmative case (the court denied plaintiffs' counsel's request for expert fees incurred to defend the employer's counterclaims).
The employer appealed on the basis that the FLSA did not permit an award of expert fees.
Outcome
The Second Circuit, in a matter of first impression:
- Held that a district court may not award expert fees under 29 U.S.C. § 216(b) of the FLSA.
- Vacated the district court's award of costs reimbursing the employees' expert fees under the FLSA.
- Remanded the case to the district court to:
- determine whether the NYLL authorizes expert fees; and
- decide whether to award expert fees to the employees under the NYLL.
The Second Circuit noted that:
- It had not previously addressed whether a district court may award expert fees (beyond per diem and travel) to a prevailing plaintiff under Section 216(b), which states that when Sections 206, 207 or 215(a)(3) are violated, the court shall allow "a reasonable attorneys' fee to be paid by the defendant, and costs of the action."
- The US Supreme Court has found that:
- a district court may not award reimbursement for expert fees beyond a per diem and travel expenses, without explicit statutory authorization; and
- the word "costs" is a term of art that typically does not include expert fees.
- Unlike other statutory provisions, Section 216(b) of the FLSA does not explicitly authorize expert fee reimbursement.
- Section 216(b)'s reference to "costs" does not provide explicit statutory authorization to award expert fees.
The Second Circuit found that:
- Since Section 216(b) of the FLSA does not explicitly authorize courts to award reimbursement for expert fees, courts cannot award a prevailing plaintiff's costs for expert fees beyond per diem and travel.
- The district court should not have awarded $10,245 in costs for the accounting expert fees under Section 216(b) of the FLSA.
Practical Implications
In Gortat, the Second Circuit made it clear that in an FLSA matter, courts cannot award prevailing plaintiffs the cost of expert fees beyond per diem and travel. Parties should consider the effect of Gortat when:
- Engaging experts in an FLSA case.
- Evaluating the amounts included in settlement offers.