Cole et al v. USA Travel Centers, LLC et al

Filing 45

OPINION. Signed by Honorable Myron H. Thompson on 5/10/2011. (jg, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

KATIE COLE, LEAH DAWSON,
and KRISTY HOWARD,
individually and on behalf
of all others similarly
situated,
Plaintiffs,
v.
USA TRAVEL CENTERS, LLC
and RAY McCULLOUGH,
Defendants.

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CIVIL ACTION NO.
2:09cv1143-MHT
(WO)

OPINION
This case is currently before the court on the joint
motions of plaintiffs Katie Cole, Leah Dawson, and Kristy
Howard and defendants USA Travel Centers, LLC and Ray
McCullough to approve a settlement of the plaintiffs’
claims under the Fair Labor Standards Act (FLSA), 29
U.S.C. §§ 201-219.

In addition to the three named

plaintiffs, 13 others have consented to the terms of the
proposed

settlement:

Tameka

Yvette

Bullock,

Brittany

Catrett, Amy Griggs, Ethel Pearl Hall, Kimberlee G. Hall,

Haley Hawsey, Brenda L. Johnson, Susie Knight, Jimmy E.
McCormick, Ernestine J. Moisan, Sandra F. Moore, Willie
Earl

Skipper,

and

Beverly

Tillery.

Based

on

the

representations made during a hearing on March 9, 2011,
and for the reasons that follow, the motions will be
granted and the settlement will be approved.
Because the FLSA was enacted to protect workers from
the poor wages and long hours that can result from great
inequalities in bargaining power between employers and
employees,

the

FLSA's

provisions

are

mandatory

and,

except in two narrow circumstances, are generally not
subject

to

bargaining,

contract or settlement.

waiver,

or

modification

by

Brooklyn Savings Bank v. O'Neil,

324 U.S. 697, 706 (1945).

The first exception is that

the Secretary of Labor may supervise the payment of back
wages to employees; employees who accept such payments
waive their rights to bring suits for liquidated damages,
provided the employer pays the back amount in full.

29

U.S.C. § 216(c); Lynn's Food Stores, Inc. v. United
States, 679 F.2d 1350, 1352-53 (11th Cir. 1982).

2

The second route to settlement, and the one that is
applicable here, occurs when an employee brings a private
action for back wages under 29 U.S.C. § 216(b); the
employee and employer present a proposed settlement to
the district court, and the district court reviews the
settlement and enters an appropriate judgment.
Food Stores, 679 F.2d at 1354.

Lynn's

The Eleventh Circuit

Court of Appeals has explained the rationale for court
approval of such settlements:
“Settlements may be permissible in the
context of a suit brought by employees
under the FLSA for back wages because
initiation
of
the
action
by
the
employees provides some assurance of an
adversarial context. The employees are
likely to be represented by an attorney
who can protect their rights under the
statute. Thus, when the parties submit
a settlement to the court for approval,
the settlement is more likely to reflect
a reasonable compromise of disputed
issues than a mere waiver of statutory
rights brought about by an employer's
overreaching.”
Id.
In reviewing a settlement of an FLSA private claim,
a court must “scrutiniz[e] the settlement for fairness,”

3

id. at 1353, and determine that the settlement is a “fair
and reasonable resolution of a bona fide dispute over
FLSA provisions,” id. at 1355.

“If a settlement in an

employee FLSA suit does reflect a reasonable compromise
over issues, such as FLSA coverage or computation of back
wages, that are actually in dispute[,] the district court
[may] approve the settlement in order to promote the
policy of encouraging settlement of litigation.”

Id. at

1354.1
In this case, there are bona-fide disputes over FLSA
provisions,
backpay.

namely

FLSA

coverage

and

the

amount

of

Further, after hearing from two out of the

three named plaintiffs and nine out of the 13 other
recipients

who

have

consented

to

the

terms

of

the

proposed settlement and after reviewing the settlement

1. In Lynn's Food Stores, the appellate court
disallowed a compromise because it was not brought in the
context of an employee lawsuit, but rather was an attempt
by an employer to “settle” back pay claims because of a
pending investigation by the Secretary of Labor.
The
“compromise” was unfair and reflected the extreme
inequalities of bargaining position against which the
FLSA was designed to protect.
4

agreement, the court concludes that the settlement is a
fair

and

reasonable

resolution

of

these

bona-fide

disputes.2
Pursuant to the settlement, USA Travel Centers will
tender a cash payment in the amount of $ 15,000 and the
court will enter a consent judgment against USA Travel
Centers in the amount of $ 54,000, with the result that
the total value of the settlement will equal $ 69,000.
With respect to the initial payment of $ 15,000,
$ 6,000 will be deducted for attorney’s fees and $ 350

2. The court did not hear from plaintiff Howard or
from the following recipients: Griggs, McCormick, Moore,
and Skipper.
However, these persons received written
notice of the settlement hearing. Further, subsequent to
the settlement hearing, they filed affidavits explaining
that
they
consent
to
the
proposed
settlement.
Accordingly, they will be bound by the settlement’s
terms.
In addition to these persons, two others, Angela
Adams and Kim Robinson, have filed consents to join the
lawsuit.
However, they did not attend the settlement
hearing, nor did they provide affidavits explaining that
they consented to the proposed settlement. Accordingly,
the parties agree that the terms of the settlement will
not encompass their claims and will therefore in no way
compromise any claims that these individuals may have
under the FLSA.
5

will be deducted for costs, leaving a cash balance of
$ 8,650.

From this amount, payments totaling $ 4,415.24

will be made to those recipients who did not receive
those back wages that the Department of Labor determined
were owed to them pursuant to its 2009 investigation of
the defendants.

The remaining balance of $ 4,234.76 will

be equitably distributed among the recipients as follows.
First, plaintiffs’ counsel will determine how much each
recipient is owed under the FLSA’s three-year statute of
limitations.

Second, counsel will divide this amount by

the total amount owed to all of the recipients, with the
result that, for each recipient, counsel will calculate
a percentage of the total amount that is owed to that
recipient.

Third, for each recipient, this percentage

will be multiplied by the remaining cash balance in order
to arrive at an equitable distribution.
Upon enforcement of the $ 54,000 consent judgment,
$ 21,600 will be deducted for attorney’s fees and the
remaining balance will likewise be equitably distributed
among the recipients.

6

Pursuant

to

the

settlement,

the

case

is

dismissed in all other respects.
An appropriate judgment will be entered.
DONE, this the 10th day of May, 2011.

/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE

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