Hardy et al v. Mid-South Bells LLC
MEMORANDUM OPINION. Signed by Judge Madeline Hughes Haikala on 10/28/2016. (KEK)
2016 Oct-28 PM 03:19
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
DEMANDA HARDY, et al.,
MID-SOUTH BELLS, LLC,
Case No.: 5:15-cv-01526-MHH
This opinion concerns three proposed FLSA settlements. In their complaint,
plaintiffs Demanda Hardy, Jamal Clark, and Rickey Green contend that their
employer, defendant Mid-South Bells, LLC, violated provisions of the Fair Labor
Standards Act, 29 U.S.C. §§ 201 et seq. The parties have agreed to settle the
plaintiffs’ FLSA claims, and they have asked the Court to approve the proposed
settlements. (Doc. 16). The Court will approve the FLSA settlements because the
settlements are a fair and reasonable compromise of a bona fide dispute.
Mid-South Bells owns and operates Taco Bell restaurants in Alabama,
Tennessee, and Georgia. (Doc. 1, ¶ 12). The plaintiffs worked for one of MidSouth Bells’ Taco Bell restaurants in Madison County, Alabama as non-exempt
hourly employees. (Doc. 1, ¶¶ 1, 13, 14, 15, 16).1 The plaintiffs prepared food,
cleaned equipment and facilities, and interacted with restaurant customers. (Doc.
1, ¶ 16).
According to the plaintiffs, Mid-South Bells required Mr. Clark and
Mr. Green to work approximately 50 hours per week and refused to
compensate the men for hours worked after 1:30 a.m. during every closing
shift. (Doc. 1, ¶ 17). Mid-South Bells required Ms. Hardy to work between
24 and 50 hours per week and refused to compensate her for hours worked
after 1:30 a.m. during every closing shift. (Doc. 1, ¶ 18). During closing
shifts, the plaintiffs would stay at the restaurant until 2:45 or 3:00 a.m., but
Mid-South Bells paid the plaintiffs only for work until 1:30 a.m. (Doc. 1, ¶
21). The plaintiffs complained to their supervisors, the store manager, and
Mid-South Bells’ regional manager that Mid-South Bells “denied [the]
[p]laintiffs compensation, including overtime pay, by permitting and/or
requiring [the] [p]laintiffs . . . to work off the clock.” (Doc. 1, ¶¶ 2, 19, 22).
Based on these allegations, all three plaintiffs assert a claim for overtime
violations under the FLSA and a common law claim for unjust enrichment.
Ms. Hardy worked for Mid-South Bells from August 2013 until October 2014. (Doc. 1, ¶ 13).
Mr. Clark started working for Mid-South Bells in April 2013, and he was still employed as of
September 3, 2015, which is the day that the plaintiffs filed their complaint. (Doc. 1, ¶ 14). Mr.
Green worked for Mid-South Bells from October 2012 until April 2015. (Doc. 1, ¶ 15).
(Doc. 1, ¶¶ 25-28; 33-38). Ms. Hardy also asserts a claim for minimum wage
violations under the FLSA. (Doc. 1, ¶¶ 29-32).
In its answer to the plaintiffs’ complaint, Mid-South Bells admits that the
plaintiffs worked for the company, but Mid-South Bells denies that it failed to
properly compensate the plaintiffs under the FLSA or that the company was
unjustly enriched. (Doc. 5, ¶¶ 13–15, 26–28; 30–32; 34–38; see also Doc. 16, pp.
For purposes of settlement, the parties reviewed Mid-South Bells’ payroll
and time records for each of the plaintiffs. (Doc. 16, ¶ 2). The plaintiffs then made
settlement demands, which the parties represent were supported by plaintiffs’
counsel’s calculations based on the pay history and time records for each plaintiff.
(Doc. 16, ¶ 2). Mid-South Bells has agreed to pay the plaintiffs an amount
representing 100% of the claimed and disputed unpaid wages, overtime wages,
liquidated damages, and unjust enrichment damages. (Doc. 16, ¶¶ 2–3). The
settlement agreements also provide for attorney’s fees for plaintiffs’ counsel.
(Doc. 16, ¶ 3). The parties have represented to the Court that they believe that
their proposed settlement agreements reflect fair and reasonable compromises of
their disputes. (Doc. 16, pp. 5–6).
On this record, the Court considers the parties’ motion to approve the
proposed settlement of the plaintiffs’ FLSA claims.
“Congress enacted the FLSA in 1938 with the goal of ‘protect[ing] all
covered workers from substandard wages and oppressive working hours.’ Among
other requirements, the FLSA obligates employers to compensate employees for
hours in excess of 40 per week at a rate of 1 ½ times the employees’ regular
wages.” Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 2162 (2012)
(quoting Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 739
(1981)); see also 29 U.S.C. §§ 202, 207(a). Congress designed the FLSA “to
ensure that each employee covered by the Act would receive ‘[a] fair day’s pay for
a fair day’s work’ and would be protected from ‘the evil of ‘overwork’ as well as
‘underpay.’” Barrentine, 450 U.S. at 739 (emphasis in original). In doing so,
Congress sought to protect “the public’s independent interest in assuring that
employees’ wages are fair and thus do not endanger ‘the national health and wellbeing.’” Stalnaker v. Novar Corp., 293 F. Supp. 2d 1260, 1264 (M.D. Ala. 2003)
(quoting Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706 (1945)).
If an employee proves that his employer violated the FLSA, then the
employer must remit to the employee all unpaid wages or compensation, liquidated
damages in an amount equal to the unpaid wages, a reasonable attorney’s fee, and
costs. 29 U.S.C. § 216(b). “FLSA provisions are mandatory; the ‘provisions are
not subject to negotiation or bargaining between employer and employee.’” Silva
v. Miller, 307 Fed. Appx. 349, 351 (11th Cir. 2009) (quoting Lynn’s Food Stores,
Inc. v. U.S. ex. Rel. U.S. Dep’t of Labor, 679 F.2d 1350, 1352 (11th Cir. 1982));
see also Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707 (1945). “Any amount
due that is not in dispute must be paid unequivocally; employers may not extract
valuable concessions in return for payment that is indisputably owed under the
FLSA.” Hogan v. Allstate Beverage Co., Inc., 821 F. Supp. 2d 1274, 1282 (M.D.
Consequently, parties may settle an FLSA claim for unpaid wages only if
there is a bona fide dispute relating to a material issue concerning the claim. To
compromise a claim for unpaid wages, the parties must “present to the district
court a proposed settlement, [and] the district court may enter a stipulated
judgment after scrutinizing the settlement for fairness.” Lynn’s Food, 679 F.2d at
1353; see also Hogan, 821 F. Supp. 2d at 1281-82.2 “[T]he parties requesting
In Lynn’s Food, the Eleventh Circuit Court of Appeals explained:
[t]here are only two ways in which back wage claims arising under the FLSA can
be settled or compromised by employees. First, under section 216(c), the
Secretary of Labor is authorized to supervise payment to employees of unpaid
wages owed to them. An employee who accepts such a payment supervised by
the Secretary thereby waives his right to bring suit for both the unpaid wages and
for liquidated damages, provided the employer pays in full the back wages. The
only other route for compromise of FLSA claims is provided in the context of
suits brought directly by employees against their employer under section 216(b)
to recover back wages for FLSA violations. When employees bring a private
action for back wages under the FLSA, and present to the district court a proposed
settlement, the district court may enter a stipulated judgment after scrutinizing the
settlement for fairness.
review of an FLSA compromise must provide enough information for the court to
examine the bona fides of the dispute.” Dees v. Hydradry, Inc., 706 F. Supp. 2d
1227, 1241 (M.D. Fla. 2010). The information that the parties provide also should
enable the Court “to ensure that employees have received all uncontested wages
due and that they have received a fair deal regarding any additional amount that
remains in controversy.” Hogan, 821 F. Supp. 2d at 1282. “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,” then a
court may approve a settlement. Lynn’s Food, 679 F.2d at 1354; see also Silva,
307 Fed. Appx. at 351 (proposed settlement must be fair and reasonable).
Based on the Court’s review of the proposed settlement agreements and the
information that the parties submitted regarding the terms of the proffered
settlement, the Court finds that there is a bona fide dispute between the parties, and
the settlement terms that the parties have negotiated are fair and reasonable. The
parties agreed to settle the plaintiffs’ claims in exchange for 100% of the plaintiffs’
claimed and disputed unpaid wages, overtime wages, liquidated damages, and
unjust enrichment damages.
679 F.2d at 1352-53 (footnotes omitted). The Eleventh Circuit reiterated the import of Lynn’s
Food in Nall v. Mal–Motels, Inc., 723 F.3d 1304 (11th Cir. 2013).
The Court also approves the negotiated attorney’s fee included in the
settlement amount for each plaintiff. The “FLSA requires judicial review of the
reasonableness of counsel’s legal fees to assure both that counsel is compensated
adequately and that no conflict of interest taints the amount the wronged employee
recovers under a settlement agreement.” Silva, 307 Fed. Appx. at 351 (citing
Lynn’s Food, 679 F.2d at 1352); see also Briggins v. Elwood TRI, Inc., 3 F. Supp.
2d 1277, 1291 (N.D. Ala. 2014) (noting that even where payment of attorney’s fees
does not reduce the compensation negotiated for and payable to an FLSA plaintiff,
“the court is required to review for fairness and approve the fee and expenses
proposed to be paid by the defendants in the settlement.”) (citing Silva, 307 Fed.
Appx. at 349). Plaintiffs’ counsel submitted to the Court time records for the
Court’s review. Based upon the information submitted to the Court, the Court
finds that the fee amount included in each settlement agreement adequately
compensates counsel for the time invested in the action.3
negotiated fees do not compromise the plaintiffs’ recovery.
In addition, the
compensation paid to the plaintiffs is “separate and distinct from the settlement
agreement to pay [counsel’s] fees and expenses.” Briggins, 3 F. Supp. 2d at 1291.
Plaintiffs’ counsel agreed to reduce his total time and expenses by 50% to settle these FLSA
In addition to the settlement amount, confidentiality provisions in FLSA
settlement agreements require scrutiny.
Typically, absent a showing of good
cause, the Court does not allow the parties to file sealed or redacted FLSA
settlement agreements because omitting the agreements from the public record can
frustrate the goals of the FLSA. See, e.g., Stalnaker, 293 F. Supp. 2d at 1264
(quoting O’Neil, 324 U.S. at 706 and discussing the public interest behind the
In this case, the Court permitted the parties to submit the proposed
settlement agreements in camera for the Court’s review because the agreements
contain a confidentiality provision. The parties have represented to the Court that
this is an isolated case and that the supervisor responsible for the FLSA violations
no longer works for Mid-South Bells. (Doc. 16, p. 4). The Court accepts this joint
representation. In addition, this settlement covers not only FLSA claims but also a
state law claim. Therefore, in these circumstances, the Court will allow the parties
to maintain the confidentiality provision in the settlement agreement.
The broad claim-release provisions contained in the settlement agreements
normally would give the Court pause. See Hogan, 821 F. Supp. 2d at 1284 (stating
that pervasive release language in an FLSA settlement is “overbroad and unfair”
and should be “closely examined”). The Court makes an exception and approves
those provisions in this case because the settlements cover the plaintiffs’ state-law
claims for unjust enrichment. The settlement of the unjust enrichment claim is a
matter of private contract that requires no oversight from the Court.4
For the reasons stated above, the Court approves the parties’ proposed
settlement of the plaintiffs’ claims. The Court concludes that there is a bona fide
dispute regarding the plaintiffs’ FLSA claims, and the terms that the parties have
negotiated constitute a fair and reasonable resolution of that dispute. The Court
will enter a separate order dismissing the plaintiffs’ claims with prejudice.
DONE and ORDERED this October 28, 2016.
MADELINE HUGHES HAIKALA
UNITED STATES DISTRICT JUDGE
The Court also has taken into account the fact that the release does not embrace rights or claims
that may arise after the plaintiffs sign the settlement agreements. (See Settlement Agreement, ¶
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