                                        In the

         United States Court of Appeals
                       For the Seventh Circuit
                            ____________________  

No.  13-­‐‑1241  
DARREN  CUFF,  
                                                                Plaintiff-­‐‑Appellee,  
                                           v.  

TRANS  STATES  HOLDINGS,  INC.,  et  al.,  
                                                         Defendants-­‐‑Appellants.  
                            ____________________  

              Appeal  from  the  United  States  District  Court  for  the  
                Northern  District  of  Illinois,  Eastern  Division.  
               No.  10  C  1349  —  Harry  D.  Leinenweber,  Judge.  
                            ____________________  

   ARGUED  OCTOBER  30,  2013  —  DECIDED  SEPTEMBER  19,  2014  
                  ____________________  

        Before  EASTERBROOK,  RIPPLE,  and  WILLIAMS,  Circuit  Judg-­‐‑
es.  
    EASTERBROOK,   Circuit   Judge.   United   Airlines   contracts  
with  other  firms  for  regional  air  services  under  the  “United  
Express”   brand.   Trans   States   Holdings   (Holdings)   is   one   of  
United’s  suppliers.  It  owns  two  air  carriers:  Trans  States  Air-­‐‑
lines  (Trans  States)  and  GoJet  Airlines  (GoJet).  Our  case  pre-­‐‑
sents   the   question   whether   Darren   Cuff,   who   was   on   the  
2                                                                  No.  13-­‐‑1241  

payroll  of  Trans  States,  was  covered  by  the  Family  and  Med-­‐‑
ical  Leave  Act.  
      The   FMLA   applies   only   if   the   employer   has   at   least   50  
employees   within   75   miles   of   a   given   worker’s   station.   29  
U.S.C.  §2611(2)(B)(ii).  Cuff  worked  at  O’Hare  Airport  in  Chi-­‐‑
cago.   The   parties   agree   that   in   January   2010,   when   it   fired  
Cuff  after  he  took  leave  despite  its  denial  of  his  request  un-­‐‑
der  the  FMLA,  Trans  States  had  33  employees  at  or  within  75  
miles   of   O’Hare,   while   GoJet   had   343   and   Holdings   had  
none.  Cuff  contends  that  he  worked  for  Trans  States  and  Go-­‐‑
Jet   jointly.   The   district   court   granted   summary   judgment   in  
Cuff’s   favor   on   that   subject,   816   F.   Supp.   2d   556   (N.D.   Ill.  
2011),   and   a   jury   later   determined   that   Cuff   met   the   other  
standards  of  eligibility  for  leave.  It  awarded  Cuff  $28,800  in  
compensatory   damages,   to   which   the   judge   added   $14,400  
front   pay   in   lieu   of   reinstatement.   The   court   also   awarded  
Cuff  about  $325,000  in  attorneys’  fees  and  $6,000  in  costs  and  
interest.  2013  U.S.  Dist.  LEXIS  4467  (N.D.  Ill.  Jan.  11,  2013).  
    The  Department  of  Labor  has  issued  a  regulation,  whose  
validity  defendants  do  not  challenge,  providing  that  workers  
are  covered  by  the  FMLA  when  they  are  jointly  employed  by  
multiple  firms  that  collectively  have  50  or  more  workers.  29  
C.F.R.   §825.106(a).   A   separate   regulation   adds   that   two   or  
more   firms   may   be   treated   as   a   single   employer   when   they  
operate  a  joint  business.  29  C.F.R.  §825.104(c).  Cuff  invoked  
both   of   these   provisions,   but   the   district   judge   relied   exclu-­‐‑
sively   on   the   former.   Defendants   have   muddied   the   waters  
by  directing  much  of  their  appellate  presentation  to  the  joint-­‐‑
business   question.   They   observe,   for   example,   that   the   Na-­‐‑
tional   Mediation   Board   has   concluded   that   the   pilots   at  
Trans  States  and  GoJet  must  negotiate  separately  because  the  
No.  13-­‐‑1241                                                                 3  

two   carriers   do   not   conduct   joint   air   operations.   But   that   is  
irrelevant   to   the   question   whether   Trans   States   and   GoJet  
jointly   used   Cuff’s   services.   The   joint-­‐‑employment   inquiry  
under   §825.106(a)   is   person-­‐‑specific;   it   is   possible   for   one  
person   to   be   employed   jointly   by   two   firms   that   otherwise  
have  distinct  labor  forces.  
     Regulation  825.106(a)  supplies  a  list  of  factors  to  consid-­‐‑
er—all   relevant,   none   dispositive.   We   remarked   in   Molden-­‐‑
hauer   v.   Tazewell-­‐‑Pekin   Consolidated   Communications   Center,  
536  F.3d  640,  644  (7th  Cir.  2008),  that  open-­‐‑ended  lists  do  not  
decide  concrete  cases.  Often  a  set  of  factors  to  be  considered  
and   balanced   implies   the   need   for   a   trial,   but   summary  
judgment   is   possible   when   the   facts   allow.   Cf.   Secretary   of  
Labor  v.  Lauritzen,  835  F.2d  1529  (7th  Cir.  1987).  And,  like  the  
district   court,   we   think   the   summary-­‐‑judgment   record   al-­‐‑
lows  only  one  answer.  The  two  lead  factors  identified  by  the  
regulation   are   whether   “there   is   an   arrangement   between  
employers   to   share   an   employee’s   services”   and   whether  
“one  employer  acts  directly  or  indirectly  in  the  interest  of  the  
other  employer  in  relation  to  the  employee”.  Both  questions  
must  be  answered  “yes,”  none  of  the  remaining  factors  helps  
defendants,  and  it  follows  that  Cuff  was  a  joint  employee  of  
at  least  Trans  States  and  GoJet,  if  not  of  Holdings  too.  
     Cuff  was  the  “regional  manager”  of  Trans  States  and  rep-­‐‑
resented   the   three   firms   in   their   dealings   with   United   and  
O’Hare.   His   business   card   bore   the   logos   of   all   three   firms.  
Terry   Basham,   the   Vice   President   for   Customer   Services   at  
Holdings  (the  corporate  parent  of  the  two  air  carriers)  testi-­‐‑
fied   by   deposition   that   Cuff   had   been   hired   to   provide   ser-­‐‑
vices  to  both  Trans  States  and  GoJet.  The  internal  directories  
of   Holdings   and   United   Express   identified   Cuff   as   the   per-­‐‑
4                                                                 No.  13-­‐‑1241  

son  to  contact  with  any  question  about  how  Trans  States  or  
GoJet  operated  at  O’Hare.  Cuff’s  supervisor  notified  United  
and  other  airlines  in  2008  that,  “[e]ffective  immediately,  Dar-­‐‑
ren  Cuff,  Regional  Manager,  Trans  States  Holdings,  Inc.  [sic:  
his  official  employer  was  Trans  States  Airlines]  will  be  your  
go   to   person   if   there   are   any   operational   issues   or   concerns  
with   Trans   States   or   GoJet   Airlines   flights   operating   in   and  
out   of   your   cities.”   Cuff   related   by   deposition   and   affidavit  
that   he   worked   with   Trans   States   and   GoJet   every   day.  
Cuff’s   replacement   was   put   on   the   payroll   of   Holdings   be-­‐‑
cause,  Basham  explained,  “We  made  the  decision  to  put  the  
support  positions  that  support  both  [Trans  States  and  GoJet]  
where   we   can   into   a   Holdings   position.”   There’s   more,   but  
this  is  quite  enough.  
      This  case  had  to  be  tried,  notwithstanding  the  resolution  
of   the   joint-­‐‑employer   question,   because   defendants   made   a  
blizzard   of   other   contentions.   They   insisted,   for   example,  
that   the   FMLA   did   not   apply   because   Cuff   would   not   have  
needed  medical  leave  had  he  been  more  conscientious  in  fol-­‐‑
lowing   his   physicians’   recommendations.   The   district   judge  
ultimately   squelched   that   defense   on   legal   grounds   but  
could  not  so  easily  dispatch  others,  which  depended  on  the  
principle,   established   in   McKennon   v.   Nashville   Banner   Pub-­‐‑
lishing   Co.,   513   U.S.   352   (1995),   that   after-­‐‑acquired   evidence  
of   an   employee’s   misconduct   can   limit   damages   even   if   the  
evidence  does  not  retroactively  erase  the  violation.  Although  
McKennon   was   decided   under   the   Age   Discrimination   in  
Employment   Act,   its   analysis   is   generalizable   to   remedies  
under  other  federal  statutes.  Every  court  of  appeals  that  has  
considered  the  subject  has  concluded  that  McKennon  applies  
to  the  FMLA.  See,  e.g.,  Dotson  v.  Pfizer,  Inc.,  558  F.3d  284,  298  
No.  13-­‐‑1241                                                                  5  

(4th  Cir.  2009);  Edgar  v.  JAC  Products,  Inc.,  443  F.3d  501,  514  
(6th  Cir.  2006).  We  agree  with  that  conclusion.  
     Defendants   contended   (among   other   things)   that   Cuff  
had  a  sexual  relationship  with  a  subordinate,  lied  about  it  in  
an   internal   investigation,   failed   to   report   an   arrest   for   driv-­‐‑
ing   while   intoxicated,   and   was   taking   so   many   narcotic  
drugs  for  his  medical  conditions  that  he  was  not  fit  for  work.  
The   judge   allowed   defendants   to   introduce   evidence   that  
Cuff   had   lied   during   an   internal   investigation   but   excluded  
other   evidence   for   problematic   reasons.   For   example,   the  
judge  wrongly  believed  that  defendants  could  not  introduce  
any  evidence  about  misconduct  unless  they  could  show  that  
they   had   fired   another   worker   for   doing   exactly   what   they  
belatedly   learned   about   Cuff.   That’s   not   what   McKennon  
holds;  it  says  that  damages  can  be  curtailed  if  the  employer  
would  have  fired  this  employee,  in  particular,  on  learning  of  
the   worker’s   misconduct.   That   principle   is   not   an   anti-­‐‑
discrimination   norm   that   requires   a   comparison   with   how  
the  employer  has  treated  other  workers.  
     The  district  judge  also  excluded  some  of  defendants’  evi-­‐‑
dence  under  Fed.  R.  Evid.  403  on  the  ground  that  it  would  be  
used  to  impeach  Cuff.  This  misunderstands  the  reason  why  
it  was  offered  and  is  wrong  on  its  own  terms.  The  question  
under   Rule   403   is   not   whether   evidence   is   “prejudicial”;   all  
defense   evidence   is   designed   to   undermine   the   plaintiff’s  
case;   it   is   whether   the   evidence   is   unfairly   prejudicial.   Any  
evidence  within  the  scope  of  McKennon  will  cast  the  plaintiff  
in  a  poor  light.  The  worse  the  light,  the  more  likely  the  belat-­‐‑
edly  discovered  facts  would  have  produced  a  discharge.  It  is  
inappropriate  to  exclude  evidence  under  Rule  403  because  it  
casts   the   plaintiff   in   a   really   bad   light,   because   doing   that  
6                                                                No.  13-­‐‑1241  

would  effectively  nullify  the  strongest  of  the  class  of  defens-­‐‑
es  that  McKennon  recognizes.  
     When   a   district   judge   excludes   evidence,   the   party   ag-­‐‑
grieved   by   that   decision   must   make   an   offer   of   proof   if   it  
wants  to  raise  the  issue  on  appeal.  Fed.  R.  Evid.  103(a)(2).  An  
offer   of   proof   in   a   situation   like   this   would   be   something  
along   the   lines   of:   “Manager   X   would   testify   that,   had   he  
known   Fact   Y   [the   fact   excluded   from   evidence],   he   would  
have  fired  Cuff.”  Cuff’s  brief  asks  us  to  hold  that  defendants  
forfeited   their   appellate   arguments   by   not   making   offers   of  
proof.   In   response,   defendants’   reply   brief   says—nothing.  
When  we  explored  this  subject  at  oral  argument,  defendants’  
lawyer  resisted  giving  an  answer  but,  after  an  extended  col-­‐‑
loquy,  finally  conceded  that  the  defense  had  not  made  even  
one  offer  of  proof  at  trial.  That  scuttles  a  McKennon  defense,  
because   without   anyone   in   authority   testifying   that   Cuff  
would   have   been   sacked   when   the   truth   came   out   (had   he  
still  been  on  the  payroll),  there  was  no  basis  to  stop  the  run-­‐‑
ning  of  damages.  The  jury’s  verdict  therefore  stands.  
     FMLA  authorizes  an  award  of  reasonable  attorneys’  fees  
to   the   prevailing   party.   29   U.S.C.   §2617(a)(3).   Defendants  
concede   that   Cuff   prevailed,   and   they   do   not   contest   either  
the  number  of  hours  counsel  devoted  to  the  case  or  the  hour-­‐‑
ly  rate  counsel  charged.  Defendants’  sole  argument  is  that  an  
award   of   almost   $325,000   is   not   reasonable   in   relation   to  
Cuff’s  recovery,  which  is  less  than  $50,000.  
     The  ratio  certainly  seems  high.  Rational  people  do  not  set  
out   to   invest   $325,000   in   order   to   obtain   $50,000.   But   then  
Cuff’s  lawyers  surely  did  not  expect  at  the  outset  of  this  case  
to   invest   that   much   legal   time   in   its   pursuit.   Sometimes  
events   during   the   litigation   change   the   calculus,   and   a   law-­‐‑
No.  13-­‐‑1241                                                                  7  

yer   must   avoid   the   sunk-­‐‑cost   fallacy.   If,   after   spending  
$25,000  in  legal  time,  a  lawyer  is  confronted  with  a  defense  
that  will  cost  $30,000  to  defeat,  counsel  will  not  say:  “It  is  ir-­‐‑
rational   to   spend   $55,000   to   get   $50,000.”   The   $25,000   is  
sunk;   if   the   suit   is   abandoned   the   recovery   will   be   zero,   so  
the   right   question   is   whether   it   is   reasonable   to   spend  
$30,000  more  to  get  $50,000,  and  the  answer  is  yes.  Suppose  
the   same   thing   happens   over   and   over   in   a   suit,   with   one  
unexpected   development   after   another   raising   the   costs  
without   raising   the   expected   recovery.   It   can   be   reasonable  
to  meet  each  of  these  events  by  investing  more,  even  though  
an   analysis   that   looks   only   at   the   bottom   line   ($325,000   in-­‐‑
vested  to  get  $50,000)  makes  the  total  seem  unreasonable.  
     Something   like   our   example   may   have   happened   in   this  
litigation.   At   each   turn   the   defendants   injected   new   issues  
and  arguments  into  the  case.  And  the  defense  was  conduct-­‐‑
ed   in   blunderbuss   fashion.   We   have   mentioned   one   of   the  
examples:  defendants  contended  that  Cuff  was  not  qualified  
for  FMLA  leave  because  he  was  not  taking  all  of  the  medica-­‐‑
tions  his  physician  prescribed.  The  defense  did  not  cite  any  
statute,  regulation,  or  judicial  decision  in  support  of  this  ar-­‐‑
gument.   That   thrust   on   Cuff’s   lawyers   (and   the   judge)   the  
burden   of   legal   research.   Cuff’s   lawyers   did   the   work   and  
discovered   that   the   defense   argument   was   nothing   but   hot  
air.   The   right   question   under   the   FMLA   is   whether   the   em-­‐‑
ployee   has   a   medical   need   for   leave   at   the   time   he   requests  
time  off,  not  whether  he  could  have  managed  his  life  better  
to  avoid  needing  time  off.  
   Later   in   the   case,   defendants’   attempts   to   use   McKennon  
required   extensive   discovery   and   a   trial,   and   it   was   all   a  
waste  because  the  defense  did  not  take  a  basic  step  such  as  
8                                                                    No.  13-­‐‑1241  

making   an   offer   of   proof.   We   said   earlier   that   the   district  
judge   erred   in   excluding   some   of   the   evidence   that   the   de-­‐‑
fense  proffered,  but  it  is  hard  to  blame  the  judge,  who  asked  
the   defense   for   legal   argument   in   support   of   the   evidence’s  
admissibility—only  to  be  met  with  silence.  The  defense  had  
not  done  its  homework;  it  was  content  to  leave  the  labor  to  
Cuff’s  team  and  the  judge.  And  so  it  goes  for  issue  after  issue  
in  this  litigation.  Defendants  do  not  argue  that  the  number  of  
hours  Cuff’s  lawyers  devoted  to  refuting  their  defenses  was  
unreasonable;  defendants  contest  only  the  aggregate  outlay,  
yet   the   high   total   is   the   expected   result   of   the   way   the   de-­‐‑
fense  was  conducted.  
     Fee-­‐‑shifting   statutes   such   as   §2617(a)(3)   are   designed   to  
prevent   the   potentially   high   costs   of   litigation   from   stifling  
justified   claims.   Without   such   a   statute,   defendants   might  
have  said  to  Cuff  at  the  outset:  “We  concede  violating  your  
rights   under   the   Act,   and   we   also   concede   that   your   loss   is  
$50,000,  but  we  plan  to  wage  an  all-­‐‑out  defense  that  will  cost  
at  least  $200,000  to  overcome.  You  might  as  well  capitulate,  
because  you  will  lose  on  net.”  A  business  that  can  establish  a  
reputation  for  intransigence  may  end  up  not  paying  damag-­‐‑
es  and  not  having  to  defend  all  that  often  either,  because  if  a  
prevailing   party   who   litigates   to   victory   gets   only   a   small  
award   of   fees   the   next   would-­‐‑be   victim   will   see   that   litiga-­‐‑
tion  is  futile  and  the  employer  won’t  have  to  repeat  the  cost-­‐‑
ly  defense.  That’s  why  we  held  in  BCS  Services,  Inc.  v.  BG  In-­‐‑
vestments,  Inc.,  728  F.3d  633  (7th  Cir.  2013),  that  hyperaggres-­‐‑
sive  defendants  who  drive  up  the  expense  of  litigation  must  
pay  the  full  costs,  even  if  legal  fees  seem  excessive  in  retro-­‐‑
spect.   That   principle   controls   here—or,   more   properly,   the  
district  judge  did  not  abuse  his  discretion  in  thinking  that  it  
No.  13-­‐‑1241                                                       9  

controls   and   deeming   Cuff’s   legal   expenses   reasonable   in  
light  of  the  defendants’  conduct.  
                                                           AFFIRMED  
