Co-authored by Steve Shardonofsky and Tiffany Tran
Resolving a split in the lower courts and deciding an issue of first impression for the Court, the Fifth Circuit earlier this week held that prevailing plaintiffs in FLSA retaliation cases may recover emotional distress damages. While perhaps not unexpected, since the result joins with the majority rule in other Circuits, the outcome means that the costs to litigate these claims and the potential exposure may increase dramatically by the inclusion of possible emotional distress damages. The number of claims will likely increase as well, since plaintiffs with little or no economic damages now have another reason to sue.
In Pineda v. JTCH Apartments, LLC, Santiago Pineda filed an FLSA lawsuit to recover overtime for maintenance work he performed for the property owner (JTCH Apartments, LLC) at the apartment complex where he and his wife, Maria Pena lived. In exchange for the work, Pineda claimed he received discounted rent, but was not paid overtime. Three days after Pineda filed suit, Pineda and Pena received a notice to vacate their apartment for non-payment of rent equal to the amount of the prior rent discounts. After leaving the apartment, Pena (who leased the apartment) subsequently joined her husband’s lawsuit and both of them asserted retaliation claims, alleging that the eviction notice and demand for rent owed were meant to punish them for the initial overtime suit. A jury ultimately found for Pineda on both his overtime and retaliation claims. The district court refused to instruct the jury on Pineda’s emotional distress damages for his retaliation claim and also dismissed Pina’s retaliation claim because she was not an “employee” of JTCH Apartments and therefore could not assert claims under the FLSA.
Numerous federal appellate courts (including the First, Second, Sixth, Seventh, and Ninth Circuits) have directly and indirectly allowed for the recovery of emotional distress damages in in FLSA retaliation cases. Acknowledging this background, the Fifth Circuit found that the language in the FLSA’s damages provision allowing “such legal or equitable relief as may be appropriate ” should be read expansively to include compensation for emotional distress that is typically available for intentional torts like retaliatory discharge. In so holding, the Fifth Circuit distinguished its prior ruling that emotional distress damages are not available under the ADEA, even though both statutes contain somewhat similar language and should be interpreted consistently. The Court also found that Pineda’s testimony regarding marital discord, sleepless nights, and anxiety about where his family would live after the eviction was sufficient to have the jury decide this issue.
Citing Thompson v. N. Am. Stainless, LP, Pena alleged that as the spouse of an employee who was retaliated against she was within the “zone of interests” protected by the statute. The Fifth Circuit, however, rejected this argument because Thompson applied under Title VII, which applies to a “person claiming to be aggrieved,” whereas the anti-retaliation provision of the FLSA makes it unlawful to discharge or discriminate against “any employee.” The Court affirmed dismissal of Pena’s claim and remanded the case for a determination about whether Pineda is entitled to compensation for emotional distress.
Although not unexpected, the result in Pineda means that potential exposure, settlements, and jury awards for FLSA retaliation claims in the Fifth Circuit may increase dramatically by the inclusion of possible emotional distress damages. The cost to defend these claims will increase as well, as parties will be required to investigate and litigate these fact-intensive damages issues. The number of claims may increase over time as well, since plaintiffs with little or no economic damages now have another reason to pursue their claims. On the other hand, with a resounding “no,” the Fifth Circuit has quashed any lingering doubt about whether a Thompson-style “zone of interests” test applies under the FLSA.