Hatter et al v. OB Enterprise LLC

Filing 24

Memorandum Opinion Approving Settlement. Signed by Magistrate Judge T Michael Putnam on 8/13/2014. (MSN)

FILED
2014 Aug-13 PM 04:33
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

FRANK HATTER and
RICK STRONG,
Plaintiffs,
v.
OB ENTERPRISES, LLC,
Defendant.

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CASE NO. 2:13-CV-1076-TMP

MEMORANDUM OPINION APPROVING SETTLEMENT
This cause is before the court 1 for judicial approval of a proposed settlement,
pursuant to Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir.
1982). The parties have jointly submitted to the court for in camera review the
settlement agreement reached by them, as well as the affidavits of plaintiffs Frank
Hatter and Rick Strong, expressing their understanding and acceptance of the
provisions of the settlement agreement. Having carefully considered the proposed
settlement agreement in light of the expressed acceptance of the settlement
agreement by the plaintiffs, the court concludes that the settlement is fair and
adequate and is due to be approved.

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The parties have consented to the exercise of dispositive jurisdiction by the
undersigned magistrate judge pursuant to 28 U.S.C. § 636(c). See docket no. 19.

As a threshold matter, the court concludes that it can assess the
reasonableness and adequacy of the proposed settlement on the basis of the papers
before the court, without the necessity of a hearing. The purpose of the fairness
hearing required by Lynn’s Food Store is to assure that the proposed settlement
was fairly arrived at, not the product of “great inequalities in bargaining power
between employers and employees.” Id. at 1352; Hamilton v. Frito-Lay, Inc.,
2007 WL 328792 (M.D. Fla. Jan. 8, 2007) report and recom’n adopted, 2007 WL
219981 (M.D. Fla. Jan. 26, 2007). The court explained:
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. 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, we allow the
district court to approve the settlement in order to promote the policy
of encouraging settlement of litigation.

Id. at 1354. In determining whether a proposed settlement represents a fully
voluntary compromise of disputed issues, it is not necessary to hold a hearing
when the facts needed to make that assessment are otherwise presented to the
court. While the court must carefully review the proposed settlement, neither
Lynn’s Food nor any cases following it expressly mandate an in-court hearing.
2

In this case, the court can assess the fairness of the proposed settlement on
the basis of the settlement agreement itself and the affidavits submitted by the
plaintiffs. This is an FLSA case in which the plaintiffs allege that they were not
paid overtime and minimum wages while they worked repairing and restoring cars
for the defendant. Although the defendant is an LLC corporation, its principal,
Ousmane Bah, is currently involved in immigration deportation proceedings. He
has denied that the plaintiffs were his employees, but were independent contractors
paid for each individual automobile repair. There are few if any records of the
time spent by plaintiffs allegedly working for the defendant. Thus, both FLSA
coverage and the calculation of damages are in actual, bona fide dispute. The
plaintiffs initiated this action with the assistance of counsel, and they have been
and continue to be represented vigorously by counsel. There does not appear to be
an ongoing employment or business relationship between plaintiffs and defendant
through which the defendant can exercise undue influence or pressure on the
plaintiffs for settlement.
The essential provisions of the settlement agreement call for the defendant to
pay plaintiffs’ counsel $2,000.00 in full settlement of counsel’s fees, costs, and
expenses. In return for the plaintiffs’ agreement to dismiss this action, defendant
will forgive a debt each plaintiff incurred in purchasing an automobile from
defendant. Defendant will convey and transfer to each plaintiff full and clear title
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to the respective automobiles purchased by them and shall forgive and waive the
remaining balance of the debts owed by plaintiffs for the purchase of the
automobiles described in the settlement agreement.

Plaintiffs’ affidavits make

clear that they understand these essential terms of the settlement agreement and
that they agree this represents a bona fide compromise of a real controversy in
dispute. They acknowledge the difficulty they may have in proving the amount of
damages to which they may be entitled given the lack of time records. They also
acknowledge that part of the basis for the compromise is the difficulty they may
encounter collecting any monetary judgment from the defendant due to his pending
immigration proceedings and potential deportation. There is no evidence that the
settlement agreement is the product of unequal bargaining power or undue
influence or pressure from the employer or its principal. Additionally, the payment
of plaintiffs’ counsel’s fees does not diminish the recovery achieved by the
plaintiffs as defendant has agreed to pay those fees separately from the
conveyance/forgiveness of debt constituting the recovery of each plaintiff. On the
whole, the court finds that the proposed settlement agreement is a fair and
reasonable compromise of genuinely disputed claims arrived at fairly and
voluntarily.

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By separate order the court will approve the proposed settlement and dismiss
this action with prejudice based upon the parties’ joint motion (doc. 21).
DATED this 13TH day of August, 2014.

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T. MICHAEL PUTNAM
U.S. MAGISTRATE JUDGE

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