Todd v. Daewon America, Inc.

Filing 140

OPINION. Signed by Honorable Judge Myron H. Thompson on 3/24/2016. (wcl, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, EASTERN DIVISION
KELVIN TODD,

)
)
)
)
)
)
)
)
)

Plaintiff,
v.
DAEWON AMERICA, INC.,
Defendant.

CIVIL ACTION NO.
3:11cv1077-MHT
(WO)

OPINION
Plaintiff
America,
Standards

Inc.,
Act

Kelvin
for

Todd

sued

violations

(FLSA),

29

of

defendant
the

U.S.C.

Daewon

Fair
§§

Labor

201–219.

Jurisdiction is proper pursuant to 29 U.S.C. § 216(b)
(FLSA) and 28 U.S.C. § 1331 (federal question).

Now

before the court is Todd’s motion for approval of the
parties’ settlement agreement.

For the reasons below,

the motion will be granted, with the exception noted
below.

I. BACKGROUND
Todd filed his complaint against Daewon on behalf

of

himself

and

others

similarly

situated

employees,

asserting that the company docked their pay for meal
breaks

not

taken

and

underpaid

them

by

rounding the amount of their paychecks.
pay

for

a

three-year

period

and

improperly

He sought back

liquidated

damages.

Daewon denied that it had violated FLSA and that class
certification was appropriate.
After the court conditionally certified a plaintiff
class,

the

parties

negotiated

a

settlement.

The

settlement agreement states: "the Settlement Amount of
this Agreement is a lump sum payment by Defendant to
Plaintiffs
Thousand

in

the

Dollars

amount

of

One

($120,000.00)

Hundred

made

and

payable

Twenty
to

the

Plaintiffs' law firm, Arendall Law Firm, Inc., d/b/a
Arendall
Amended
The

&

Arnold,

Settlement

settlement

compromised
wages

and

as

Agreement

explains

payment

attorney

for

liquidated

for

Plaintiffs."

(doc.

no.

131-1)

at

5.

this

sum

represents

“a

that

Plaintiffs'

damages”

and

claimed
that

back-pay

“the

Opt-in

Plaintiffs and their attorneys will decide the amounts

2

to be distributed to each Plaintiff and the amount of
attorneys' fees, costs and expenses.”

Id. at 6.

Todd moved the court to set a fairness hearing to
approve

the

settlement.

At

the

fairness

hearing,

Todd’s attorney explained how the $ 120,000 lump-sum
settlement would be divided:

$ 29,771.91 would go to

award back pay for each member of the plaintiff class
for the two and half of the three years they originally
had sought; Todd would receive $ 4,981.81 in “incentive
pay,” to compensate primarily for the time he invested
in

the

lawsuit;

Todd’

attorneys

would

receive

$ 81,246.29 in attorneys’ fees; and $ 4,000.00 would go
towards

the

attorneys’

costs.

Transcript (doc. no. 136) at 3-4.

Fairness

Hearing

According to Todd’s

attorney, the $ 29,771.91 back-pay amount is equivalent
to approximately 45 % of the maximum amount that the
plaintiff

class

explained

that

could
this

possibly

was

a

win

at

reasonable

trial.

He

compromise

in

light of the uncertainty of recovery at trial and the
difficulty of proving that Daewon willfully violated

3

FLSA; proof of a willful violation would be required
both to obtain damages for a full three years instead
of two, 29 U.S.C. § 255 (establishing two-year statute
of

limitation

for

FLSA

“willful

at

of

FLSA),

violation”

recovery

claims

all

for

eight

but

three

and

opt-in

to

years

for

obtain

any

plaintiffs

whose

claims accrued more than two years before the complaint
was filed.
As for attorneys’ fees, Todd’s attorney represented
that he would receive $ 81,246.29 of the settlement as
payment in full of attorneys’ fees, and that this would
constitute a 53 % discount of the fees actually due;
and

that,

while

his

costs

were

over

$ 4,000.00,

he

would limit the charge to $ 4,000.00.
Counsel

further

explained

that

plaintiffs’

back

wages for the meal-break claims were calculated based
upon their testimony as to the number of meal breaks
they missed, while their rounding claims were based on
an analysis of time and pay records.
At

the

hearing,

Todd

4

testified

that

he

was

satisfied with the agreement and that the other class
members had authorized him to accept the settlement on
their behalf.
The court asked the parties to address whether the
settlement’s release provisions would preclude Todd or
other opt-in plaintiffs from bringing non-FLSA-related
claims against Daewon.

Both parties represented that

the

in

release

provision

the

settlement

agreement

applied solely to claims arising out of FLSA.

II.

ANALYSIS

When an employee brings a private action under the
FLSA and presents a proposed settlement agreement to
the district court, “the district court may enter a
stipulated judgment after scrutinizing the settlement
for

fairness.”

States,

679

F.2d

Lynn’s
1350,

Food
1353

Stores,
(11th

Inc.
Cir.

v.

United

1982).

A

district court may approve the settlement of a FLSA
suit if the agreement reflects “a reasonable compromise
over issues, such as FLSA coverage or computation of

5

back wages, that are actually in dispute....”

Id. at

1354.
Having reviewed the agreement, heard the evidence
and argument of the parties at the fairness hearing,
and reviewed the record in the case, the court finds
that the parties have reached a settlement based on a
negotiated,

good-faith

compromise

of

a

dispute over wages owed under the FLSA.

bona-fide
Under the

settlement, the plaintiffs would not recover liquidated
damages,

but

would

receive

full

back

wages

for

two

years plus half of the extra year of back wages they
would receive if they were able to prove willfulness at
trial.

This is a reasonable compromise given the risk

of not winning at trial and the likely difficulty of
proving the willful violation of FLSA required for the
third year’s recovery and for eight opt-in plaintiffs
to receive any recovery at all.

Furthermore, the court

finds, with one exception, that the agreement reflects
a fair and reasonable resolution of the dispute between
the parties.

6

As explained in the opinion denying Daewon’s motion
to file the settlement under seal and in other prior
opinions of this court, this court will not approve a
FLSA

settlement

that

includes

a

confidentiality

provision, as such a provision unfairly subjects Todd
and the opt-in plaintiffs to the specter of contempt.
See Todd v. Daewon America, Inc., 2014 WL 2608454 (M.D.
Ala. June 11, 2014); Hogan v. Allstate Beverage Co.,
Inc., 821 F. Supp. 2d 1274, 1283-4 (M.D. Ala. 2011)
(Thompson, J.) (finding that confidentiality provisions
unequally

benefit

the

employer

and

frustrate

FLSA

goals); see also Dees v. Hydradry, Inc., 706 F. Supp.
2d

1227,

1242

(M.D.

Fla.

2010)

(Merryday,

J.);

Elizabeth Wilkins, Silent Workers, Disappearing Rights:
Confidential Settlements and the Fair Labor Standards
Act, 34 Berkeley J. Emp. & Lab. L. 109, 113 (2013)
(“Congress’s
interest
vulnerable
dynamics

in

intent
a

to

protect

well-functioning

worker
militates

subject
against

7

to

both

the

economy
unequal

secret

public’s
and

the

bargaining

settlements.”).

Accordingly, this court will only grant approval of the
settlement on the condition that the confidentiality
agreement is stricken, so that Todd and other opt-in
plaintiffs
existence

are
and

not
terms

prevented
of

the

from

disclosing

settlement

the

agreement,

including the amount of the settlement.
Further, the court’s conclusion that the settlement
is fair is premised on the finding, based on parties’
representation,

that

the

release

provision

in

the

settlement agreement does not preclude Todd or other
opt-in plaintiffs from bringing non-FLSA-related claims
against Daewon.
Finally, the court’s approval is contingent on the
requirement that Todd’s counsel provide the members of
the plaintiff class with the tax documentation required
for them to correctly report their recoveries on their
tax returns.

8

* * *
With the understanding that the proposed settlement
incorporates

the

modification

and

is

based

on

the

understandings discussed above, the court will approve
it, and an appropriate judgment will be entered to that
effect.
DONE, this the 24th day of March, 2016.
/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE