Ferguson et al v. Arkansas Support Network, Inc.
Filing
57
OPINION AND ORDER approving the proposed confidential settlement agreement in its entirety and GRANTING 53 Joint Motion to Dismiss and the case is DISMISSED WITH PREJUDICE. Signed by Honorable P. K. Holmes, III on December 11, 2018. (lgd)
Case 5:17-cv-05257-PKH Document 57
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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION
SHAY FERGUSON and JOSHUA COLEMAN,
individually and on behalf of all others similarly situated
v.
PLAINTIFFS
No. 5:17-CV-5257
ARKANSAS SUPPORT NETWORK, INC.
DEFENDANT
OPINION AND ORDER
Before the Court is the parties’ joint motion (Doc. 53) to approve the settlement agreement
and dismiss and a brief in support. The parties have also submitted by email a proposed
confidential settlement agreement for the Court’s review. The motion will be granted.
Plaintiffs filed this lawsuit on December 12, 2017, claiming that Defendant failed to pay
minimum and overtime wages in violation of section 216(b) of the Fair Labor Standards Act
(“FLSA”). On May 9, 2018, the Court conditionally certified the case as a collective action
pursuant to 29 U.S.C. § 216(b) and authorized notice to be sent to potential opt-in plaintiffs.
(Doc. 20). The parties now seek Court approval of their settlement agreement and a dismissal of
all claims. The Court has reviewed the joint motion and confidential settlement agreement and
will now approve the settlement agreement and grant the motion to dismiss.
“There are only two ways in which wage claims 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.” Lynn’s Food Stores, Inc. v.
United States, 679 F.2d 1350, 1352-53 (11th Cir. 1982). Second, “[w]hen employees bring private
actions 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.”
Id. at 1353; Beauford v. ActionLink, 781 F.3d 396, 405 (8th Cir. 2015). The parties here propose
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a stipulated judgement. The parties have set out in their settlement agreement the amounts due to
each opt-in Plaintiff for unpaid wages and the amounts of liquidated damages agreed upon.
Defendant will also continue making payments of back wages to Arkansas Support Network
employees pursuant to an existing agreement with the U.S. Department of Labor. The parties have
further agreed as to the amount of attorneys’ fees that Defendant will pay Plaintiffs’ counsel. The
parties have agreed that Plaintiffs will voluntarily waive all wage or overtime related claims for
compensation, including FLSA and Arkansas Minimum Wage Act claims.
Settlement agreements conditioned on confidentiality run counter to the policy of public
access to judicial documents. There is a presumption of public access to judicial documents. Thus,
in order for the Court to approve a confidential settlement agreement, the parties must demonstrate
a need for confidentiality that outweighs the strong presumption to public access. Wolinsky v.
Scholastic Inc., 900 F. Supp. 2d 332, 337 (S.D.N.Y. 2012). The Court finds that Defendant in this
case has demonstrated such necessity to overcome the presumption of public access for the reasons
communicated to the Court and included in the settlement agreement. The Court is also satisfied
that maintaining the confidentiality of the settlement agreement will not prevent other potential
plaintiffs from receiving notice of a potential claim against Defendant for unpaid wages because
all potential plaintiffs have received two notices of a potential claim.
Thus, the Court will analyze the parties’ joint settlement. A district court may only approve
a settlement agreement and enter a stipulated judgment that includes a waiver of FLSA claims
after it determines that the litigation involves a bona fide dispute and that the proposed settlement
is fair and equitable to all parties. Lynn’s Food, 679 F.2d at 1353 n.8. The Court finds a bona fide
dispute exists. Plaintiffs argued in their motion for partial summary judgment that Defendant
willfully violated the FLSA, rather than acting in good faith based on a reasonable interpretation
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of the FLSA. However, Defendant argues in opposition that its violation was not willful, but rather
was based on the belief that the Department of Labor’s Final Rule precluding application of the
companionship services exemption to home health workers would be appealed and overturned.
The Court determined that their was a bona fide dispute regarding the willfulness of Defendant’s
action denying summary judgment on that issue. Because a bona fide dispute exists as to whether
Plaintiffs are entitled to minimum wage and overtime for their work, the Court must evaluate
whether the settlement is fair.
The factors a court should consider in evaluating the fairness of a settlement depend on the
unique circumstances of each case. Lewis-Ramsey v. Evangelical Lutheran Good Samaritan
Soc’y, 3:16-cv-00026, 2017 WL 821656 *5 (S.D. Iowa, Jan.10, 2017). Among the factors courts
have considered are: (1) the amount of overtime to which class members may be entitled; (2) how
close to full compensation of class members’ claims the proposed settlement provides; (3) whether
the proposed settlement includes or excludes liquidated damages and/or attorney’s fees and
expenses; (4) the likely complexity, expense, and duration of the litigation if the settlement is not
approved; and (5) what additional claims class members must release in order to receive
compensation under the proposed settlement agreement. See Lewis-Ramsey, 2017 WL 821656 at
*4; Loseke v. Depalma Hotel Corp., 4:13-cv-3191, 2014 WL 3700904 (D. Neb. July 24, 2014).
In reviewing these factors in relation to the joint motion and settlement agreement, the
Court finds that the agreement is fair and reasonable. The agreement appears to adequately
compensate Plaintiffs for the amount of overtime pay which they allege was wrongfully withheld.
The agreement also includes liquidated damages, even though the validity of liquidated damages
is contested by the parties. Plaintiffs waive only wage or overtime related claims and avoid an
expensive and time-consuming trial that would likely reach a similar result to the settlement
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agreement.
Finally, the parties provide billing records for the proposed attorneys’ fees, costs, and
expenses. A reasonable rate is requested, and in light of the relief this settlement affords to each
Plaintiff, the Court finds that this requested fee is reasonable. This settlement appears to be the
result of an arms-length negotiation between the parties based on the merits of the case. It is
informed by the facts revealed during discovery; it provides a substantial recovery to Plaintiffs
considering the existing bona fide disputes, the merits of their case, and the likelihood of their
success; and it contains no hallmarks of collusion.
IT IS THEREFORE ORDERED that the proposed confidential settlement agreement is
approved in its entirety as fair and reasonable.
IT IS FURTHER ORDERED that the parties’ joint motion to dismiss (Doc. 53) is
GRANTED and this case is DISMISSED WITH PREJUDICE.
IT IS SO ORDERED this 11th day of December, 2018.
/s/P. K. Holmes, III
P.K. HOLMES, III
CHIEF U.S. DISTRICT JUDGE
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