Sometimes, no matter what you do; no matter what evidence you present; no matter what the law says – a judge is going to do whatever the judge wants to do.
A good example of this proposition is found in the case of Edge v. TLW Energy Services, L.L.C., No. 22-50288, 2023 WL 3267847 (5th Cir. May 5, 2023). In January 2021, Charles Edge filed a collective action against TLW Energy Services, L.L.C. and Troy Watkins, asserting that these employers violated the Fair Labor Standards Act (“FLSA”) by paying employees on a day-rate basis without overtime.
After answering the Complaint through counsel, the defendant employers took a very interesting strategy – they opted to stop paying their own attorneys (which is ironic in a failure to properly pay employees claim). So, defendants attorneys, who like to get paid as they go for their work, withdrew from the case. The Judge from the United States District Court for the Western District of Texas ordered the Defendants to get new counsel and advised them that the corporate entity could not represent itself – meaning that it absolutely needed to hire new counsel. The defendant employers ignored the date given by the Judge. The defendant employers then refused to participate in discovery.
So, the plaintiff employees filed a motion for summary judgment requesting the Court to enter judgement in their favor because the payment of a day rate that did not account for overtime pay was a per se (automatic) violation of the FLSA. The Defendant employers missed the date to respond. So, the Judge set a new date to give them another chance to respond. The Defendant employers missed that as well. The Judge then ordered the employers to appear before him to “show cause” for their failure to comply with his Orders. Defendant employers did not respond to that either.
So, guess what the Judge did. He ruled in favor of the defendant employers in denying the employees’ Motion for Summary Judgment. Specifically, the Judge held that insufficient law was cited and that the employees could not present clear evidence – you know the evidence that the employers refused to provide in discovery.
The Court then ordered the employees to move for default judgment and provide the law and evidence that he previously identified. While the plaintiffs did timely file with the Court, they captioned their pleading as a Motion to Reconsider – instead of Motion for Default. In it, the employees pointed to the fact that liability had not been contested and the employers should not be rewarded for refusing to provide the documents in discovery. Again, the employers did not oppose this Motion. It was uncontested.
Want to guess what the Court did? The Judge ruled, as before, that there was insufficient evidence to determine whether the proper overtime had been paid. And then to put a cherry on top of the pile of poop, the Judge dismissed all claims with prejudice and directed the clerk to close the case because the employees did not properly caption the pleading as a Motion for Default.
Oh, and by the way, the Judge never ordered any consequences for the employers for ignoring multiple orders and deadlines.
So, the employees appealed.
Now, keep in mind that according to the United States Court of Appeals for the Fifth Circuit’s own statistics, it only reversed lower court rulings in 6.2 percent of the cases. That’s it.
Thankfully, the Fifth Circuit Court of Appeals did reverse in Edge, holding:
It goes without saying that, in this default scenario, it was not in plaintiffs’ interest to delay. Rather, the delays were the fault of defendants. They were given several opportunities to explain and cure their lack of participation; yet, plaintiffs’ action was dismissed for failing to comply with a single deadline.
Second, “there has been no showing of the futility of lesser sanctions”. Berry, 975 F.2d at 1192. “Lesser sanctions include assessments of fines, costs, or damages against plaintiff, conditional dismissal, dismissal without prejudice, and explicit warnings.” Thrasher v. City of Amarillo, 709 F.3d 509, 514 (5th Cir. 2013) (citation omitted). Because plaintiffs had complied with all prior deadlines and orders, there is little to support any sanctions being needed to secure future compliance, much less that these lesser sanctions would not have been effective. See Campbell, 988 F.3d at 802; see also Rogers v. Kroger Co., 669 F.2d 317, 320 (5th Cir. 1982) (providing dismissal with prejudice “is reserved for the most egregious of cases”).
Id. at *3. In so holding, the Court of Appeals made clear their intent to insulate the employees from any sanction on remand.
The Fifth Circuit did not stop there. It ordered the Judge to reevaluate the employees’ claims using the proper standard:
On remand, plaintiffs are to have an opportunity to move for default judgment in accordance with the procedure provided in Rule 55(b)(2) and the principles mentioned below. See Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 497–500 (5th Cir. 2015) (Rule 55 allows plaintiffs to submit evidence to “‘establish the truth of any allegation [in their complaint]’ … [and] flesh[ ] out [their] claim”. (quoting FED. R. CIV. P. 55(b)(2)(C))). In this regard, “[t]he role of a district court in adjudicating a motion for default judgment is limited”, and the “court takes as true the facts asserted by a plaintiff against a defaulting defendant”. Escalante v. Lidge, 34 F.4th 486, 492 (5th Cir. 2022).
In addition, the court should consider the effect, if any, of plaintiffs’ contention that defendants’ unavailability for supplemental discovery (and perhaps insufficient prior discovery) prevents plaintiffs from producing the evidence the court requested, and, relatedly, whether appropriate sanctions pertaining to that lack of evidence are warranted against defendants. See Grunberg v. City of New Orleans, 1994 WL 574194, at *2 (5th Cir. 1994) (unpublished, but precedent pursuant to 5th Cir. R. 47.5.3) (“If precise evidence of hours worked by the employee is not available due to the employer’s failure to keep adequate records, the employee may satisfy his burden with admittedly inexact or approximate evidence.” (citation omitted)); U.S. For Use of M-CO Const., Inc. v. Shipco Gen., Inc., 814 F.2d 1011, 1012–13 (5th Cir. 1987) (affirming default judgment where defendant answered, denied liability, and asserted affirmative defenses, but because defendant subsequently failed to comply with discovery orders, court struck defendant’s pleadings as sanctions and granted plaintiff default judgment).
Id. at * 5.
Now that the Court of Appeals has given clear instructions for the process and being fair to the employees, this should be a relatively clear indication of what should happen on remand to the district court Judge. But do you want to guess what happens next? No, neither do I.
The moral of the story is that in litigation there is never any certainty or guarantees. No matter what you think really should happen, it might not. The only way for the parties to litigation to truly control their own destiny is through settlement.
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