Blackwood v. Hendrix Health Care Center Inc

Filing 19

MEMORANDUM OPINION. Signed by Judge Madeline Hughes Haikala on 12/16/13. (ASL)

FILED
2013 Dec-16 PM 12:18
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
JASPER DIVISION
AMY D. BLACKWOOD,
Plaintiff,
v.
HENDRIX HEALTH CARE
CENTER, INC.,
Defendant.

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Case No.: 6:12-cv-02836-MHH

MEMORANDUM OPINION
This opinion concerns a proposed FLSA settlement. In her complaint,
plaintiff Amy Blackwood contends that defendant Hendrix Health Care Center,
Inc. violated provisions of the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq.
The parties have agreed to settle Ms. Blackwood’s FLSA claim, and they have
asked the Court to review the proposed settlement. (Doc. 15). The parties also
move to dismiss the claims of two opt-in plaintiffs. (Doc. 11). For the reasons
stated below, the Court approves the settlement because it is a fair and reasonable
compromise of a bona fide dispute, and the Court will dismiss the claims of the
opt-in plaintiffs.
BACKGROUND
Ms. Blackwood filed this lawsuit on August 29, 2012. (Doc. 1). In her

complaint, she asserts that in 2010, she began working for Hendrix Health Care
Center as a CNA. (Doc. 1, ¶ 5). Ms. Blackwood contends that she “regularly
worked forty hours or more in a work week, but her overtime work was “off the
clock” because Hendrix Health did not allow her to “clock in until seven minutes
before the start of” her shift, even though she often began working as much as
one-half hour before her shift started, and because Hendrix Health “automatically
deducted thirty minutes for an unpaid meal break,” but the company did not
provide an uninterrupted meal break. (Doc. 1, ¶¶ 11-12, 14-16). She alleges that
she last earned $10.20 per hour for the work that she performed for Hendrix
Health. (Doc. 1, ¶ 7). Ms. Blackwood framed her lawsuit as an opt-in collective
action “pursuant to FLSA 16(b),” describing potential class members as nonexempt Hendrix Health employees whose wages fell below the Federal Minimum
Wage threshold because Hendrix Health allegedly did not pay them for certain
work. (Doc. 1, ¶¶ 21-29).
Hendrix Health admits that the FLSA authorizes this action and that the
Court has subject matter jurisdiction over Ms. Blackwood’s claims. (Doc. 6, ¶1).
Hendrix Health also concedes that Ms. Blackwood sometimes worked more than
40 hours in a week, but the company contends that Ms. Blackwood, “was paid for
all overtime hours that she worked at her overtime rate.” (Doc. 6, ¶ 9). Hendrix
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Health denies that Ms. Blackwood is entitled to relief under the FLSA, and the
company raises a number of affirmative defenses. (Doc. 6).
Hendrix Health produced to Ms. Blackwood her time and pay records and
other information relevant to her claims. After studying those records, the parties
negotiated a settlement, and they filed a joint motion for court approval of the
proposed settlement agreement. (Doc. 15). The parties have represented to the
Court that they believe that the agreement reflects a fair and reasonable
compromise of their dispute. (Doc. 15, p. 3).
In exchange for dismissal of the claims against it with prejudice, Hendrix
Health has agreed to settle Ms. Blackwood’s FLSA claim for $7,600.00. The
$7,600.00 consists of $2,385.00 in back wages, $2,385.00 in liquidated damages,
and $2,830.00 in attorney fees. (Doc. 15, p. 3). The parties assert that these
settlement payments represent a compromise of a bona fide dispute. (Doc. 15, p.
4).
Before Ms. Blackwood finalized a proposed settlement with Hendrix
Health, two Hendrix Health employees opted in to this action as individual
plaintiffs. (Doc. 10). To facilitate this settlement and the resolution of this action,
Ms. Blackwood asks the Court to dismiss the claims of the opt-in plaintiffs. (Doc.
11). She contends that in the three years preceding her lawsuit, neither opt-in
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plaintiff worked more than forty hours in a work week. (Doc. 11, p. 2). Ms.
Blackwood asserts that she no longer wishes to pursue this lawsuit as a collective
action. (Doc. 11, p. 1).
On this record, the Court considers the parties’ motion to approve the
proposed settlement of Ms. Blackwood’s FLSA claim and Ms. Blackwood’s
motion to dismiss two opt-in plaintiffs.
DISCUSSION
1.

Ms. Blackwood’s FLSA claim.
“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
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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, 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 indisputedly owed under the FLSA.”
Hogan v. Allstate Beverage Co., Inc., 821 F. Supp. 2d 1274, 1282 (M.D. Ala.
2011).
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
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judgment after scrutinizing the settlement for fairness.” Lynn’s Food, 679 F.2d at
1353; see also Hogan, 821 F. Supp. 2d at 1281-82.1 “[T]he parties requesting
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).

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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.” 679 F.2d at 1352-53 (footnotes omitted). The Eleventh Circuit recently
reiterated the import of Lynn’s Food. See Nall v. Mal–Motels, Inc., 723 F.3d 1304 (11th Cir.
2013).

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Based on the Court’s review of the proposed settlement agreement and the
information that the parties submitted regarding the terms of the proffered
settlement, the Court finds that there is a bona fide dispute in this matter that
supports the proposed settlement. The settlement proceeds represent a fair and
reasonable compromise based on the existing evidence regarding unpaid wages. If
they accepted Ms. Blackwood’s testimony, reasonable jurors could award her
actual and liquidated damages. The amount of a damage award is uncertain
because there is little documentation of the hours that Ms. Blackwood worked
during her lunch breaks. (Doc. 18, p. 1). Consequently, the settlement is fair and
reasonable under the circumstances of this case.2
The Court approves the final draft of the settlement agreement that the
parties submitted to the Court. The Court was not willing to approve the parties’
original agreement because it contained provisions that generally are not
appropriate in FLSA settlement agreements. For example, the settlement
agreement initially contained a confidentiality provision and a general release
provision. “[C]onfidentiality clauses and pervasive release provisions generally
render a FLSA settlement agreement unfair and unreasonable.” Vinson v. Critter
Control, Inc., 2012 WL 6737508, at *2 (S.D. Ala. Dec. 28, 2012); Hogan, 821 F.
Supp. 2d at 1282 (same). Confidentiality provisions in FLSA settlements are
particularly problematic because they “have the potential to hinder unfairly the
congressional goal of universal compliance with the FLSA,” thereby affecting
both the private and public interests that the FLSA protects. Id.; see also
Stalnaker, 293 F. Supp. 2d at 1264 (“Absent some compelling reason, the sealing
from public scrutiny of FLSA agreements between employees and employers
would thwart the public’s independent interest in assuring that employees’ wages
are fair and thus do not endanger ‘the national health and well-being.’”) (quoting
Brooklyn Savings Bank, 324 U.S. at 706); Dees, 706 F. Supp. 2d at 1242 (“a
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2.

Dismissal of Opt-In Claims
In anticipation of her settlement with Hendrix Health, Ms. Blackwood asked

the Court to dismiss the action’s two opt-in plaintiffs, Tammy Stromatt and
Wynnel Vickery. (Doc. 11). In Adams v. School Bd. of Hanover County, 2008
WL 5070454 (E.D. Va. Nov. 26, 2008), the district court observed that, “[n]o
published case discusses the procedures a court must undertake when a party who
has opted-in seeks to withdraw.” Id. at *17.
The few opinions that address an FLSA opt-in plaintiff’s motion to
withdraw make clear that FLSA plaintiffs may neither casually invoke the
opt-in mechanism nor subsequently remove themselves from an FLSA
action without seeking leave of court. Congress amended the FLSA in 1947
to include the opt-in provision in order to prevent ‘large group actions ...
brought on behalf of employees who had no real involvement in, or
knowledge of, the lawsuit.’ Cameron-Grant v. Maxim Healthcare Servs.,
Inc., 347 F.3d 1240, 1248 (11th Cir. 2003) (citation omitted). Thus, the optin provision ensures that ‘no person can become a party plaintiff and no
person will be bound by or may benefit from judgment unless he [or she]
has affirmatively ‘opted into’ the class; that is, given his [or her] written,
filed consent.’ LaChapelle v. Owens-Ill, Inc., 513 F.2d 286, 288 (5th Cir.
1975) . . .
confidentiality provision furthers resolution of no bona fide dispute between the
parties; rather, compelled silence unreasonably frustrates implementation of the
‘private-public’ rights granted by the FLSA and thwarts Congress’s intent to
ensure widespread compliance with the statute.”). The Court recognizes that there
may be instances in which confidentiality provisions and other pervasive release
provisions may be appropriate, but those instances are rare, and the parties must
provide compelling reasons for the Court to approve an agreement containing such
provisions. Stalnaker, 293 F. Supp. 2d at 1264; Crabtree v. Volkert, Inc., 2012
WL 6093802 (S.D. Ala. Dec. 7, 2012).
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When a party files written consent to opt-in, as the moving parties have
already done, they become parties to the litigation . . . The Fourth Circuit
has noted that “[t]he purpose of the consent forms is ‘to make ... uncertain
plaintiffs certain, and actual participants, so that defendants could know the
parties and the charges with which they were to be faced.” [Lee v. Vance
Exec. Protection, Inc., 7 Fed. Appx. 160 (4th Cir. 2011)] at *6 (quoting
Deley v. Atl. Box & Lumber Corp., 119 F.Supp. 727, 728 (D.N.J.1954).
Adams, 2008 WL 5070454 at *17-18.
In Adams, the district court decided that because it, at the parties’ request,
had not certified an FLSA collective class yet, there was “no bar against these
Plaintiffs choosing to withdraw their opt-in status.” Adams, 2008 WL 5070454 at
*18. There were, however, consequences. “[U]pon opting out, the withdrawing
Plaintiffs should lose both the detriment and any benefit of participating in this
case.” Id. at *19. In reaching this conclusion, the district court considered its
power, “‘to manage the process of joining multiple parties in a manner that is
orderly, sensible, and not otherwise’ in violation of statutes or rules. Hoffmann-La
Roche Inc. v. Sperling, 493 U.S. 165, 170, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989).
Because of a potential for abuse, a court has ‘both the duty and the broad authority
to exercise control ... governing the conduct of counsel and the parties.’ Id. at
171.” Id.
Although the Court does not sanction the practice of having plaintiffs opt-in
to an FLSA action and then opt-out less than two months later, purportedly
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because neither opt-in plaintiff worked more than forty hours in a work week
during the time period relevant to this lawsuit, the Court will grant Ms.
Blackwood’s request to dismiss the opt-in plaintiffs’ claims. The Court has not
certified an opt-in class, so there is no obstacle to the opt-in plaintiffs’ decision to
dismiss their claims. The Court assumes that plaintiff’s counsel has advised the
opt-in plaintiffs of the risks attendant to dismissing their claims.
CONCLUSION
For the reasons stated, the Court approves the parties’ proposed settlement
of Ms. Blackwood’s FLSA claims. The Court concludes that there is a bona fide
dispute and that the terms that the parties have negotiated constitute a fair and
reasonable resolution of that dispute. The Court will enter a separate order
dismissing Ms. Blackwood’s FLSA claims with prejudice. The Court also will
dismiss the opt-in plaintiffs’ claims without prejudice.
DONE and ENTERED this 16th day of December, 2013.

MADELINE HUGHES HAIKALA
U.S. DISTRICT JUDGE

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