Hector v. Gulf Distributing Co. of Mobile, L.L.C.

Filing 27

ORDER granting 26 Motion to Approve Settlement Agreement. The settlement of the FLSA claims is approved as fair & reasonable. This action is dismissed with prejudice. Signed by District Judge William H. Steele on 8/14/2018. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
JAWARREN HECTOR,

)
)
Plaintiff,
)
)
v.
)
)
GULF DISTRIBUTING CO. OF MOBILE, )
LLC,
)
)
Defendant.
)

CIVIL ACTION 18-0065-WS-N

ORDER
This matter comes before the Court on the parties’ Joint Motion for Approval of
Settlement Agreement (doc. 26).
I.

Procedural History.
Plaintiff, Jawarren Hector, by and through counsel, brought this action against his former

employer, Gulf Distributing Company of Mobile, LLC. Hector contended that Gulf Distributing
violated the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (“FLSA”), by failing to pay him
overtime compensation as required by the statute. In particular, Hector alleged that he was
employed as a “Driver Helper” whose primary duty involved unloading Gulf Distributing’s
product from delivery vehicles at defendant’s customers’ locations. (Doc. 1, ¶¶ 16-20.)
According to the Complaint, Hector “was not paid at a rate of one and a half times [his] regular
rate for hours worked in excess of forty (40) in a workweek,” even though he “was a non-exempt
employee.” (Id., ¶¶ 24-25.)
In its Answer, Gulf Distributing asserted its position that Hector was not entitled to
overtime premium pay under the FLSA because, among other reasons, “he is subject to one or
more exemptions from the minimum wage and/or overtime requirements of the FLSA, including
but not limited to the Motor Carrier Act exemption, 29 U.S.C. § 213(b)(1).” (Doc. 8, at 3.) The
parties had substantial legal and factual disagreements as to whether the Motor Carrier Act
exemption applied to Hector, and thus whether Gulf Distributing had violated the FLSA by not
paying him overtime for hours worked in excess of 40 in a given workweek. Notwithstanding

the fact that plaintiff’s claims were highly disputed, the parties, by and through their counsel of
record, conducted a thorough and diligent investigation into the merits of the case, then engaged
in good-faith, arm’s-length, early settlement negotiations (including discovery and exchange of
information). On July 17, 2018, plaintiff filed a Notice of Settlement (doc. 22), announcing that
the parties had reached a settlement of all claims and causes of action asserted herein. In light of
this development, and as required by applicable law, the parties now jointly request judicial
approval of their settlement.
II.

Analysis.
A.

Statutory Requirement of Judicial Approval of FLSA Settlements.

In the overwhelming majority of civil actions brought in federal court, settlements are not
subject to judicial oversight, scrutiny or approval. However, FLSA settlements must be handled
differently. See, e.g., Moreno v. Regions Bank, 729 F. Supp.2d 1346, 1348 (M.D. Fla. 2010)
(“Settlement of an action under the FLSA stands distinctly outside the practice common to, and
accepted in, other civil actions.”). This is because “Congress made the FLSA’s provisions
mandatory; thus, the provisions are not subject to negotiation or bargaining between employers
and employees.” Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352 (11th Cir.
1982). “Despite this general rule, an employer and an employee may settle a private FLSA suit
under the supervision of the district court” where there is a “bona fide dispute over FLSA
coverage.” Hogan v. Allstate Beverage Co., 821 F. Supp.2d 1274, 1281 (M.D. Ala. 2011). The
mechanics of such a settlement are that “[w]hen 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.” Lynn’s Food, 679 F.2d
at 1353.
Where, as here, a district court is asked to approve an FLSA settlement between private
litigants, the court’s responsibility is to ascertain whether the parties’ negotiated resolution
comports with the statute’s terms. See, e.g., Nall v. Mal-Motels, Inc., 723 F.3d 1304, 1307-08
(11th Cir. 2013) (“[t]he purposes of the FLSA are undermined whenever an employer is allowed
to escape liability for violations of the statute”); Miles v. Ruby Tuesday, Inc., 799 F. Supp.2d
618, 622-23 (E.D. Va. 2011) (“the reason judicial approval is required for FLSA settlements is to
ensure that a settlement of an FLSA claim does not undermine the statute’s terms or purposes”).
A settlement may be approved upon confirmation that “employees have received all uncontested

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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. Thus, the touchstone of the inquiry is whether
the proposed settlement “constitutes a fair and reasonable compromise of a bona fide FLSA
dispute.” Crabtree v. Volkert, Inc., 2013 WL 593500, *3 (S.D. Ala. Feb. 14, 2013).
The caveat to such judicial oversight is that “[i]n reviewing FLSA settlements under
Lynn’s Food, courts should be mindful of the strong presumption in favor of finding a settlement
fair.” Parker v. Chuck Stevens Chevrolet of Atmore, Inc., 2013 WL 3818886, *2 (S.D. Ala. July
23, 2013) (citations and internal quotation marks omitted); see also Wingrove v. D.A.
Technologies, Inc., 2011 WL 7307626, *2 (N.D. Ga. Feb. 11, 2011) (recognizing “strong
presumption” that FLSA settlements are fair and reasonable). Such deference is warranted
because “the Court is generally not in as good a position as the parties to determine the
reasonableness of an FLSA settlement” and “[i]f the parties are represented by competent
counsel in an adversary context, the settlement they reach will, almost by definition, be
reasonable.” Bonetti v. Embarq Management Co., 715 F. Supp.2d 1222, 1227 (M.D. Fla. 2009).
B.

Fairness/Reasonableness of Settlement.

The parties’ filings reflect that this action does, indeed, involve a bona fide FLSA dispute
as to whether Hector was owed any unpaid overtime compensation under the FLSA and, if so,
how much. The information before the Court at this time supports a determination that the
validity of plaintiff’s FLSA claims is actually, reasonably contested by Gulf Distributing. Most
notably, the parties have a good-faith dispute as to whether Hector was exempt from the FLSA’s
overtime requirements under the Motor Carrier Act exemption. This bona fide dispute gives rise
to the possibility of a Lynn’s Food compromise.
Against this backdrop of litigation uncertainty, the parties negotiated a settlement to
resolve these FLSA claims in their entirety. In doing so, the parties calculated the full amount of
unpaid compensation, including overtime compensation, to which Hector would be entitled
under the FLSA if he prevailed. They agreed that the total unpaid compensation, including
overtime compensation, claimed by Hector in this action equals $2,492.00. (Doc. 26, ¶ 6; doc.
26, Exh. A, at ¶ 3.) As part of a negotiated, good-faith compromise, defendant has agreed to pay
that entire sum to plaintiff, as well as an additional one-half that amount (or $1,246.00) as
liquidated damages, to settle plaintiff’s FLSA claims in their entirety. (Id.) Gulf Distributing

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will also pay Hector an additional $5,000 for plaintiff’s attorney’s fees and costs in connection
with these claims.
In conducting the mandatory Lynn’s Food fairness review of the proposed settlement, the
Court finds that numerous factors favor approval here. First, the court file reflects that this
settlement was the product of arm’s-length, good-faith negotiations, with each side represented
by counsel and exchanging information to facilitate the informed evaluation of settlement
proposals in a timely and efficient manner. Second, and importantly, this agreement would
result in Hector receiving all unpaid compensation that he claims to be owed under the FLSA, as
well as half of the liquidated damages he has sought. Third, while attorney’s fee settlements in
FLSA cases may be problematic for a Lynn’s Food analysis where the attorney’s fee payment
adversely impacts the plaintiff’s recovery, there is no indication and no reason to believe that
such is the case here. To the contrary, the parties have expressly represented that “[t]he amount
of fees and expenses did not diminish the amount Plaintiff received as settlement for his FLSA
claims.” (Doc. 26, ¶ 7.) Fourth, while the settlement agreement does include a general release of
claims by Hector, the parties represent that he has a full understanding of what he is releasing in
exchange for the settlement award, which again includes payment of reasonably disputed sums
that are the subject of a bona fide disagreement between the parties. (Id., ¶ 8.)
Based on these considerations, the Court has no qualms or reservations about approving
this settlement as fair and reasonable to Hector. Specifically, the undersigned is satisfied that the
parties’ agreed-upon settlement is a fair and reasonable resolution of a bona fide dispute as to the
FLSA claims, for purposes of Lynn’s Food and its progeny. The proposed attorney’s fee award
to plaintiff’s counsel elicits no concerns that counsel is being compensated inadequately or that a
conflict of interest has tainted the amount received by Hector (i.e., that Hector’s recovery on his
FLSA claims has been adversely affected by the amount of fees paid to his attorneys). As a
result of the parties’ agreement, no uncontested wages will remain unpaid. In short, and with
due regard for the strong presumption in favor of finding FLSA settlements reasonable when
negotiated by competent counsel in an adversary context, the Court concludes that the proposed
settlement represents a fair deal to resolve and settle Hector’s FLSA claims.
III.

Conclusion.
For all of the foregoing reasons, it is ordered as follows:

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1.

The parties’ Joint Motion for Approval of Settlement Agreement (doc. 26) is
granted, and the settlement of Hector’s FLSA claims is approved as fair and
reasonable pursuant to the analysis required by the Eleventh Circuit in Lynn’s
Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982); and

2.

To effectuate the terms of Paragraph 2 of the parties’ Settlement Agreement and
Release, this action is dismissed with prejudice on settlement pursuant to Rule
41(a), Fed.R.Civ.P.

DONE and ORDERED this 14th day of August, 2018.
s/ WILLIAM H. STEELE
UNITED STATES DISTRICT JUDGE

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