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Rother v. Lupenko

United States District Court, D. Oregon, Portland Division

August 13, 2014

LESLIE LUPENKO, ANDREI LUPENKO and TELELANGUAGE INC., an Oregon corporation, Defendants.


MICHAEL W. MOSMAN, District Judge.

This is a collective action under the Fair Labor Standards Act ("FLSA") and Oregon wage and hour law. In this opinion, I explain my ruling on Plaintiffs' Motion for Judgment [298] and address Plaintiffs' Motion for Attorney Fees [304]. Plaintiffs' Motion for Attorney Fees [304] is GRANTED in part.


I. Procedural History

I recount the lengthy procedural history of this case only where relevant to my analysis. Before trial, I granted summary judgment for the Defendants on Plaintiffs' minimum wage claims based on late payment under the FLSA. (Order [144].) I granted summary judgment for Plaintiffs on their late payment claims, with damages to be determined at trial. Id. All other claims proceeded to trial. During trial, I dismissed the claims of those Plaintiffs who failed, without adequate explanation, to appear at trial to testify. (Tr. [271] at 273:11-25.) The jury returned a verdict in favor of remaining Plaintiffs under both the FLSA and Oregon law, and judgment was entered. (Jury Verdict [181]; J. Following Jury Verdict [185].) After trial, I granted Defendants' motion for judgment as a matter of law as to the amount of penalty wages allowable under Oregon law and entered an amended judgment in accordance with that ruling. (Opinion and Order [218] at 6-13, 15; Final J. [238].) This became the Court's final judgment on all claims.

I awarded attorney fees to Plaintiffs under the FLSA in two separate orders. First, Plaintiffs were awarded $129, 745.80 in attorney fees on August 1, 2011 [236]. On December 15, 2011, they were awarded supplemental attorney fees in the amount of $11, 937.53 and costs in the amount of $128.60 [278].

The parties cross-appealed, and the Ninth Circuit affirmed in part and reversed in part. Rother et al. v. Lupenko et al., 515 F.App'x 672, 677-78 (2013) (memorandum). On Defendants' appeal, the Ninth Circuit upheld the imposition of discovery sanctions against Defendants, affirmed the denial of Defendants' motion for summary judgment on the unpaid meal break claims, and upheld the award of attorney fees to Plaintiffs. Id. at 674-75. (Attorney fees based on Defendants' appeal are not at issue before this Court.)

On Plaintiffs' cross appeal, the Ninth Circuit affirmed this Court's grant of summary judgment for Defendants on the minimum wage claims brought under Oregon law, affirmed the exclusion from trial of wage and hour violations alleged for the first time after entry of summary judgment, and affirmed this Court's ruling on Defendants' motion for judgment as a matter of law on Oregon penalty wages and the consequent reduction of the verdict amount. Id. at 676-77. These claims are hereafter referred to as the "affirmed claims." The Ninth Circuit reversed this Court's rulings as to two categories of claims: first, the court reversed the grant of summary judgment for Defendants on the FLSA "late payment" claims, id. at 675; second, the court reversed this Court's dismissal of the claims brought by those plaintiffs who had not appeared at trial to testify. Id. at 676. Only these two categories of claims were remanded for trial, and hereafter they are referred to as the "remanded claims." Id. at 677.

Plaintiffs also appealed this Court's rulings on its previous requests for attorney fees. Plaintiffs contended that this court erred in holding that they were not entitled to attorney fees under Oregon law. Id. at 677. The Ninth Circuit affirmed, holding that this Court did not err in "concluding that Plaintiffs' prelitigation notice was deficient." Id. ( citing Belknap v. U.S. Bank NA, 235 Or.App. 658, 234 P.3d 1041 (2010) (prelitigation notice must include sufficient information to allow the defendant to evaluate the claim and seek promptly to settle it)). Plaintiffs also contended that this Court erred in reducing their fees based on their limited success. Id. The Ninth Circuit affirmed, concluding that it was not an abuse of discretion to "conclude[e] that Plaintiffs' reduction of some of the hours from the lodestar analysis did not yield a reasonable award under the circumstances." Id. The court noted that this affirmance would not preclude Plaintiffs from seeking a supplemental award of attorney fees, should they prevail on their remanded claims. Id. at 677 n.2.

II. Defendants' Rule 68 Offer of Judgment

The Ninth Circuit's mandate [283] issued on July 9, 2013. On August 9, 2013, Defendants tendered to Plaintiffs an offer of judgment under Federal Rule of Civil Procedure 68 ("Rule 68") in the amount of $12, 500.00 as damages, "plus plaintiffs' reasonable and necessary legally recoverable costs, attorney's fees and expenses, to be determined by the Court." (Decl. Egan [300] Ex. 4 at 3.) On August 13, 2013, after seeking to clarify the scope of the offer (as is discussed below), Plaintiffs accepted the offer of judgment and filed notice of their acceptance [296] with this Court.

It appears that almost immediately after this filing the parties began to dispute what form of judgment would properly embody the Rule 68 offer that had been accepted. After a flurry of correspondence to the Court from both sides, Plaintiffs filed a Motion for Judgment [298], asking that the court enter judgment in a form that would make clear that the judgment encompassed all claims, not only the remanded claims. (Pl.'s Mem. re: Motion for J. [299].) Defendants objected, arguing that this Court was without jurisdiction to enter judgment on the affirmed claims pursuant to the rule of mandate and the doctrine of law of the case. I then entered the Supplemental Judgment [303] against Defendants. The Supplemental Judgment reflects the terms of Defendants' Rule 68 offer, and provides as follows:

SUPPLEMENTAL JUDGMENT IS HEREBY GRANTED against all Defendants in favor of all Plaintiffs, in the amount of TWELVE THOUSAND FIVE HUNDRED DOLLARS ($12, 500.00) as damages, plus Plaintiffs' reasonable and necessary costs, attorneys fees and expenses in an amount to be determined by the Court.

(Supp. Jgmt. [303].)[1]

Plaintiffs now seek the costs and attorney fees contemplated by the terms of the Rule 68 offer. On the theory that they were rendered prevailing parties on all claims pursuant to the Supplemental Judgment [303], Plaintiffs seek "the award of fees previously sought but denied, as well as supplemental fees incurred since Plaintiffs' previous fee petitions." (Pl.'s Mem. Att'y Fees [305] at I, 3-7.)


"At least fourteen days before the date set for trial, " a defendant may serve an opposing party with an offer of judgment "on specified terms, with the costs then accrued." Fed.R.Civ.P. 68(a). If this offer is accepted by written notice within fourteen days of service, the parties may file notice of the offer and its acceptance, and "[t]he clerk must then enter judgment." Fed.R.Civ.P. 68(a). If the offer is not accepted and the offeree's recovery "is not more favorable than the unaccepted offer, " then the offeree bears the risk of paying "the costs incurred after the offer was made." Fed.R.Civ.P. 68(d).

If the underlying law entitles the prevailing party to seek attorney fees, a Rule 68 offer may include the amount for attorney fees (if this inclusion is expressly stated) or may contemplate that the court will entertain requests for attorney fees after acceptance. See Nusom v. Comh Woodburn, Inc., 122 F.3d 830, 834 (9th Cir. 1997). In this case, the offer explicitly contemplated a later determination of attorney fees. Of course, an accepted Rule 68 offer always includes recovery of costs. Fed.R.Civ.P. 68(a).

That a party accepts a Rule 68 offer and has judgment entered in its favor does not automatically entitle it to attorney fees. Sea Coast Foods, Inc. v. Lu-Mar Lobster & Shrimp, Inc., 260 F.3d 1054, 1059 (9th Cir. 2001). "[T]he mere existence of an accepted offer does not establish a right to [attorney fees]. It permits the plaintiffs to seek to recover them." Id. (citing Nusom, 122 F.3d at 835). The court must determine whether the acceptance results in entitlement to attorney fees based on a careful review of the record, including all the claims in the case and the damages sought for each. Id. at 1059-60.


I. Express Terms of the Rule 68 Offer

Plaintiffs explain that they accepted the Rule 68 offer on the understanding that it encompassed all of the claims in the case, both those that had been remanded for trial by the Ninth Circuit and those on which this Court's judgments in favor of Defendants had been affirmed by the Ninth Circuit. (Pl.'s Mem. re: Motion for Entry of J. [299] at 3-4.) Before Plaintiffs accepted the Offer, Plaintiffs' counsel requested clarification of its scope by sending the following letter to defense counsel:

Is the Offer of Judgment intended to cover all claims in the case (whether currently before the trial court, on appeal, or with potential for further appeal), or is it limited to only those claims that have already been remanded and are currently before the District Court? My guess would be that your clients are attempting to resolve the entire case, but I'm not certain of that from reading the language of the actual offer.

(Decl. Egan [300] Ex. 5 at 2.)

Defense counsel responded as follows:

[T]he Offer of Judgment is intended as resolution of all claims against Telelanguage, Inc., Andre Lupenko and Leslie Lupenko (i.e., the named defendants). If accepted, the only remaining issue to be resolved is the reasonable and necessary fees, costs and expenses, which would be determined by the Court.

Id. Ex. 6 at 1.

Courts are to "apply general principles of contract law to determine the meaning of [a Rule 68] agreement, " and thus normal rules of contract interpretation apply. Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1022 (9th Cir. 2012). Ambiguities in an ...

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