NEW ORLEANS – The U.S. Court of Appeals for the Fifth Circuit has ruled in favor of CITGO in an employee wage case.
Twenty-six plaintiffs filed suit against their employer CITGO Refining and Chemicals Company LLP with claims that they were misclassified as exempt from Fair Labor Standards Act requirements for overtime pay.
The district court dismissed all but three plaintiffs for abandoning their claims and “failu[re] to participate in discovery, fail[ure] to properly supplement responses, and fail[ure] to preserve documents.”
Remaining plaintiffs were instructed by the court to produce emails or personal email addresses and passwords without deleting any emails. Three plaintiffs deleted their emails and one did not divulge the necessary information. They opted to dismiss their case with prejudice, an option from the court in lieu of monetary sanctions for $100 per deleted email.
The district court found the final plaintiffs unable to prove damages and granted the defendant’s request for summary judgment, but awarded only $5,000 of CITGO’s $50,000 billing “based on a finding of CITGO’s ‘enormous wealth’ and plaintiffs’ ‘limited resources.'”
Both parties appealed the district court’s decision—the plaintiffs for unwarranted dismissal and the defendant for an unfair cost award.
The appeals court found that because the plaintiffs’ disobeyed orders by the court in failing to render and preserve documents, the court did not abuse its discretion as “this failure evidences a blatant disregard for the judicial process, and constitutes willful and contumacious conduct.”
The appeals court reversed the district court’s cost award and rendered a judgment in favor of CITGO in the amount of $53,065.72, arguing that even profitable corporations should be able to collect in litigation involving good-faith individuals.
Dissenting Judge James Dennis disagreed with the majority, asserting that the district court’s limiting of the award was warranted due to the gap between the parties’ financial stations. He wrote that he dissented for “fear that the majority’s rule will prohibit district courts from considering the relative wealth of the parties, consequently chilling potential bona fide claims by plaintiffs who lack disposable income.”
Circuit Court Judges Jerry E. Smith and Stephen A. Higginson made up the majority panel.
Case no. 12-41292/12-41175.