CHICAGO - A split federal appeals panel said a Milwaukee law firm shouldn’t be sanctioned for filing lawsuits on behalf of workers against a manufacturer even though the defendant corporation showed the plaintiffs’ allegations lacked evidentiary support.
Hawks Quindel sued Metalcraft, of Mayville, on behalf of hourly employees, alleging the company failed to pay them for time before and after their scheduled shifts. When Metalcraft moved for summary judgment - a ruling to end the case before trial - U.S. District Judge Brett Ludwig ruled in its favor.
The company then sought sanctions against Hawks Quindel for filing a frivolous lawsuit. When Ludwig denied that request, Metalcraft brought the issue to the U.S. Seventh Circuit Court of Appeals in Chicago.
The Seventh Circuit handles appeals from federal courts in the states of Illinois, Indiana and Wisconsin.
Judge Candace Jackson-Akiwumi wrote the panel’s opinion, filed Aug. 2; Judge Michael Scudder concurred. Judge Thomas Kirsch dissented.
According to court records, machinist Richard Mazurek initiated the litigation in October 2017 with a collective action accusing Metalcraft of violating the Fair Labor Standards Act at its plants in West Bend and Mayville. The class was decertified in April 2020, which led to 24 additional individual cases. Ludwig consolidated those cases and, after nine were dismissed for various reasons, he asked the parties to each select two cases for briefing on summary judgment.
Ludwig granted summary judgment to Metalcraft on all four cases, saying even the FLSA’s lenient standard for such claims wasn’t meant to allow plaintiffs to “guess or invent working hours post hoc.” He asked Hawks Quindel to file a statement for the remaining 12 cases to offer facts or arguments that might preserve those claims, but all 12 plaintiffs voluntarily dismissed their cases with prejudice.
When Ludwig denied Metalcraft’s request for sanctions, though, he said he didn't believe the lawsuits were inherently improper, but rather insufficiently argued. On appeal, Metalcraft argued the employees had no factual claims and also said established precedent should’ve foreclosed the claims. Jackson-Akiwumi said the record supports neither argument.
“Metalcraft forgets that FLSA claims can be made through reconstructed memories of the claimants,” Jackson-Akiwumi wrote. “When an employer does not keep accurate records of time worked, employees have a lower burden for proving FLSA damages.”
She then quoted Ludwig in his sanctions denial: “Plaintiffs came forward with the kind of evidence that courts hearing FLSA actions have come to expect; they just failed to come forward with enough of this type of evidence. This failure was not sanctionable.”
Kirsch opened his dissent by agreeing with the majority’s reasoning as related to Mazurek’s lawsuit, then went on to explain his belief Judge Ludwig didn’t look at the facts of the other 15 plaintiffs before issuing a blanket denial of sanctions. Jackson-Akiwumi said both the workers and Metalcraft focused “on the near identical nature of the cases” and Ludwig properly exercised his discretion to rule accordingly.
Regarding the claims themselves, the majority rejected Metalcraft’s position the workers’ claims were never legally viable. Jackson-Akiwumi noted Mazurek alleged the activities for which he claimed Metalcraft denied compensation were “integral and indispensable” to his job duties and joined other plaintiffs in carefully outlining the reasons the minutes they alleged weren’t properly paid for weren’t insignificant.
“It is not difficult to imagine, had there been better factual substantiation of the workers’ claims, the district court would have looked more closely at the briefing on these FLSA exceptions and come to a different conclusion,” Jackson-Akiwumi wrote.
The majority did suggest Judge Ludwig possibly invited a motion for sanctions through the strong language used in granting summary judgment, such as calling the lawsuits “speculative,” “internally inconsistent” and an attempt to “extract and weaponize” a “morass of contradictory allegations.”
Kirsch insisted Ludwig’s references to “plaintiffs” when writing about just Mazurek’s claims did not, as the majority held, imply he considered the evidence of all 16 cases, saying “that conclusion contravenes the context of the district court’s discussion, which wholly hinged on the evidence it reviewed at summary judgment.”
The dissent went on to note Metalcraft filed sanctions motions for each individual case, and although many portions of each motion were identical across all 16, “each motion also contained unique evidence and argument as to the named plaintiff. For example, in Jeffrey Anders’ case, Metalcraft’s motion emphasized the absurdity of the lawsuit within Anders’ specific employment context, focusing on his substantial involvement in non-work-related activities and noting that he received overtime pay even when he was not working. The district court should have addressed this motion (and the others) separately.”
On July 10, Hawks Quindel announced it is opening a Chicago office. The firm did not respond to a request for comment.
Metalcraft is represented by Thomas Krukowski. He issued the following statement:
“These cases never had any evidence to support a FLSA lawsuit. There never were any facts, just speculation and guesswork to support their complaints. The court incorrectly cites to the record to support its affirming the district court’s denial of sanctions. The court finds ‘…Mazurek stated that he had memories, but not written records, of the times he worked before the start of his shift.’ However, the record and Mazurek sworn testimony provides that this is not true. As argued to the court Mazurek’s testimony was ‘Q. And when you say you have no proof, are you talking about you don’t have any written proof? A. Written, verbal, any kind of pictures, nothing.’ Nothing means nothing including a memory of the past.
"Likewise, the court relies on the district court’s decision, after finding there is only speculation and as afterthought ‘the district court stated that the plaintiffs marshalled a 'handful of facts that might support a FLSA action.' Neither court cites one fact that might support a case, or any evidence to support a lawsuit. That quote came before the lawsuits were filed and during the collective action. They say there were facts, but where? Speculation is not evidence, and they were not facts. I thought the review of discretion required an “objective and reasonable” analysis. Retired Judge Posner once said, ‘It is imperative that federal courts impose sanction … designed to discourage groundless litigation…’
"What happened?” Krukowski said.