CECILIA M. ALTONAGA, UNITED STATES DISTRICT JUDGE.
This Order assumes the reader is familiar with the case and earlier Orders, and consequently contains an abbreviated discussion of the facts and issues. On January 30, 2014, Plaintiff brought a claim for failure to pay overtime compensation against Defendants, pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. section 216(b). (See generally Compl. [ECF No. 1]). The central issue in this case is whether Defendants misclassified Plaintiff an independent contractor as opposed to an employee. At trial, Plaintiff seeks to establish: (1) Defendants willfully violated the FLSA and are subject to the extended three-year statute of limitations period (see Compl. [ECF No. 1] ¶¶ 19-20; Mot. ¶ 15); and (2) entitlement to liquidated damages (see Compl. ¶ 21b; Mot. ¶ 15). In her Motion, Plaintiff requests the Court preclude Defendants from presenting evidence Defendants consulted with counsel and relied on administrative agency decisions to refute Plaintiff's willfulness argument and establish a good faith defense to liquidated damages.
The question of willfulness and good faith presents a related inquiry, and "the judge and jury answer what is essentially the same question for two different purposes." Alvarez Perez v. Sanford-Orlando Kennel Club, Inc., 515 F.3d 1150, 1162 (11th Cir.2008)). First, the "willfulness or good faith question is answered... by the jury to determine the period of limitations...." Id. (alterations added). "The statute of limitations for a claim seeking unpaid overtime wages under the FLSA is generally two years." Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1280 (11th Cir.2008) (citing 29 U.S.C. § 255(a)). "But if the claim is one `arising out of a willful violation,' the statute of limitations is extended to three years." Id. (quoting 29 U.S.C. § 255(a)). To establish a willful violation, Plaintiff must prove by a preponderance of the evidence Defendants either knew their conduct was prohibited by the FLSA or showed reckless disregard — failure to make adequate inquiry — about whether it was. See id.
"[I]f there is a verdict for the employee," the willfulness or good faith question is answered "again by the judge to determine whether to award liquidated damages." Alvarez Perez, 515 F.3d at 1162 (alteration added). "When the jury finds an employer has violated the FLSA and assesses compensatory damages, the district court generally must acid an award of liquidated damages in an equal amount." Morgan, 551 F.3d at 1282 (citing 29 U.S.C. § 216(b); Alvarez Perez, 515 F.3d at 1163). "However, the district court has discretion to reduce or deny liquidated damages `if the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the [FLSA].'" Id. (quoting Alvarez Perez, 515 F.3d at 1163) (brackets in original; footnote call number omitted).
"The employer bears the burden of establishing both the subjective and objective components of that good faith defense against liquidated damages." Alvarez Perez, 515 F.3d at 1163 (citations omitted). "Subjective good faith means the employer has an honest intention to ascertain what the FLSA requires and to act in accordance with it." Friedman v. S. Fla. Psychiatric Assoc., Inc., 139 Fed.
To "demonstrate a lack of willfulness" and to "buttress [their] defense of good faith," Defendants intend to present evidence of the fact — on its own — they sought legal counsel in 2008 regarding whether the FLSA applied to their ticket drivers. (Resp. 2 (alteration added)). Defendants do not intend to present evidence of what advice counsel gave in response to their inquiry. Indeed, Defendants impeded Plaintiff's efforts to discover the content of their discussion with counsel and, at Azor's deposition, prevented Plaintiff from inquiring about the same because of an attorney-client privilege objection. (See Mot. 4-5). Plaintiff agreed not to challenge this objection based on Defendants' stipulation they would not later rely on the advice they received from counsel as evidence Defendants believed their classification of the ticket drivers as independent contractors complied with the FLSA.
Although the parties did not address it in their briefing, this appears, to the Court, to raise an issue of inferential hearsay. Black's Law Dictionary defines "inferential hearsay" as "Hearsay that is implied in testimony that suggests the contents of a conversation that is not explicitly disclosed by the testimony." BLACK'S LAW DICTIONARY (10th ed.2014); see also Hutchins v. Wainwright, 715 F.2d 512, 516 (11th Cir.1983) (Prosecution's proffer of evidence of what detectives did based on their conversations with non-testifying informant — even without offering content of conversations with informant — constituted hearsay because what the informant "knew was readily inferred").
Defendants wish to introduce evidence they consulted with counsel regarding their classification of the ticket drivers as independent contractors, without revealing the substance of the conversation. Their objective is clear: let the jury infer from the fact Defendants continued to classify their ticket drivers as independent contractors after consulting counsel; that — as Plaintiff aptly describes — "their attorney blessed their conduct." (Reply 3). Defendants have not identified an applicable exception to what is clearly inferential hearsay.
Notwithstanding the issue of hearsay and. Defendants' stipulation not to introduce
To the contrary, courts in this District have held "mere reliance on the advice of counsel is insufficient to satisfy defendants' burden in proving their good faith...." Fuentes v. CAI Int'l, Inc., 728 F.Supp.2d 1347, 1358 (S.D.Fla.2010) (alteration added; citation omitted) (denying summary judgment on defendants' defense of good faith reliance on advice of counsel where defendants failed "to identify record evidence to establish what they disclosed to their attorney in seeking and obtaining his advice and whether that legal advice was reasonable"); see also Rakip v. Paradise Awnings Corp., No. 10-20004-CIV, 2010 WL 4553675, at *7 (S.D.Fla. Nov. 3, 2010) (denying summary judgment on the defense of good faith reliance on the advice of counsel, finding a declaration "that simply states that Paradise Awnings received legal advice about whether it was properly paying the [p]laintiffs, and that the advice was that the [p]laintiffs were exempt from the FLSA," insufficient (alterations added)).
"[T]o reap the benefit of the good faith defense of [29 U.S.C. section] 260 based on the advice of counsel the defendant must honestly and truly seek the advice of counsel, counsel must give advice that is reasonable in a legal sense, and the defendant must act in strict conformity with that advice." Fuentes, 728 F.Supp.2d at 1358 (alterations added; citation omitted); see also Dybach, 942 F.2d at 1567 (assuming, arguendo, defendant satisfied the subjective component of good faith, "the employer still must shoulder the additional requirement of showing that the employer had reasonable grounds for believing that its conduct comported with the [FLSA]." (alterations added; internal quotation marks and citation omitted)).
The single case Defendants cite (see Resp. 2) — Powell v. Carey International, Inc., 483 F.Supp.2d 1168 (S.D.Fla. 2007) — also supports the proposition Defendants must do more than merely "indicate[ ] that they sought" advice of counsel to satisfy the related inquiry into lack of willfulness. Id. at 1175 (alteration added). In Powell, the court denied plaintiffs' motion for summary judgment on the issue of willfulness because defendants not only "indicated that they sought" advice of counsel as to their FLSA obligations, but also revealed the substance of the advice received from counsel,
Defendants are not permitted to use the attorney-client privilege as both a sword and a shield. Defendants refused to produce the very evidence they need to support their lack of willfulness and good faith defense, including, "what advice was sought, what disclosures were made by the [D]efendants to their counsel, whether the legal advice was reasonable, and whether the [D]efendants strictly complied with the legal advice." Fuentes, 728 F.Supp.2d at 1359 (alterations added; internal quotation marks and citation omitted). Because the fact Defendants consulted counsel, without more, constitutes hearsay, and is furthermore irrelevant, misleading, and unfairly prejudicial to Plaintiff, this evidence is inadmissible.
Plaintiff also seeks to exclude various administrative agency decisions Defendants wish to introduce and rely on to indicate their lack of willfulness and good faith. (See Mot. 8-10; Resp. 3). The parties provide little actual description of the form of these agency decisions or their content, but they seem to consist of: (1) Internal Revenue Service ("IRS") audits of Zuni's books and operations, wherein the IRS found no tax violations except for a gas tax credit Zuni took for gas allowances for its ticket drivers (see Resp. 3-4); (2) a Florida Department of Revenue audit of Zuni examining "all aspects of the arrangements with Handy Wash and the independent drivers ... to determine, among other things, [Zuni's] unemployment tax obligations" (id. (alterations added)); and "an unemployment compensation claim asserted by a former independent contractor that found Zuni was not the [contractor's] employer" (id. 3 (alteration added)).
The parties acknowledge these agency decisions and audits did not apply the relevant FLSA "economic reality" test to determine
The following principles guide the Court's determination. Relevant evidence is evidence having "any tendency to make a fact more or less probable than it would be without the evidence" and "the fact is of consequence in determining the action." FED. R. EVID. 401. Relevant evidence may be excluded if its probative value is "substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence." Id. "`Unfair prejudice' within its [sic] context means an undue tendency to suggest decision on an improper basis, commonly, though not necessarily, an emotional one." Id. advisory committee's note (alteration added). A motion in limine seeks "to exclude anticipated prejudicial evidence before the evidence is actually offered," Lace v. United States, 469 U.S. 38, 40 n. 2, 105 S.Ct. 460, 83 L.Ed.2d 443 (1984), and an order addressing it does not "determine the sufficiency of the evidence or merits of an issue." Soliday v. 7-Eleven, Inc., No. 2:09-cv-807-FtM-29SPC, 2011 WL 1837807, at *1 (M.D.Fla. Apr. 20, 2011) (citing id.). Exclusion of relevant evidence due to the danger of unfair prejudice is an "extraordinary remedy which the district court should invoke sparingly," and "the balance should be struck in favor of admissibility." United States v. Dodds, 347 F.3d 893, 897 (11th Cir.2003) (alterations, internal quotation marks, and citations omitted).
Plaintiff relies on Werner v. Bell Family Medical Center, Inc., No. 3:09 C 0701, 2012 WL 1514872 (M.D.Tenn.2012), to argue the agency decisions should be excluded under Rule 403. (See Mot. 9). Like the instant case, the central issue in Werner was whether plaintiff was properly classified an employee or an independent contractor. See Werner, 2012 WL 1514872, at *2. Plaintiff sought to introduce, and defendants moved to exclude, an IRS determination plaintiff was an employee for federal tax purposes. See id. The court noted the "IRS' analysis does not mirror the economic realities test," its findings were not binding on the court or the jury, and agreed with defendants that "the marginal relevance of the IRS' determination [was] outweighed by its potential to mislead the jury." Id. (alteration added). Ultimately, although plaintiff could not offer the evidence to prove he was an employee within the meaning of the FLSA, the Werner court nonetheless admitted the IRS determination for the "narrow purpose" of demonstrating defendants' willfulness, lack of good faith, and knowledge or notice of the FLSA violations. Id.; see also Heath v. Perdue Farms, Inc., 87 F.Supp.2d 452, 461 (D.Md.2000) (noting
Because the agency decisions may be probative of Defendants' willfulness and good faith, and Plaintiff has not shown their relevance is substantially outweighed by the risk of confusing the jury — particularly in light of any limiting jury instructions — the Court denies Plaintiff's motion to exclude this evidence.
In accordance with the foregoing, it is
(Dep. J. Azor, [ECF No. 128-7] 81:24-82:16 (alterations added)).
(Decl. Vincent A. Wolfington [ECF No. 288-12] ¶¶ 9-10, in Case No. 1:05-cv-21395-PAS (alterations added and in original)).
