Wagner et al v. County of Inyo
Filing
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ORDER Requiring Supplemental Submission in Support of 20 Stipulation and Proposed Order for Approval of Settlement Agreement and Dismissal with Prejudice, signed by District Judge Dale A. Drozd on 6/27/2018. (Supplemental filings shall be submitted within twenty-one days of the service of this order. Upon receipt of the supplemental filings the court will issue an order addressing the proposed settlement and dismissal.) (Gaumnitz, R)
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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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AMANDA WAGNER and HEALTHER
LIND, et al., on behalf of themselves and
all similarly situated individuals,
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Plaintiffs,
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v.
COUNTY OF INYO,
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No. 1:17-cv-00969-DAD-JLT
ORDER REQUIRING SUPPLEMENTAL
SUBMISSION IN SUPPORT OF
STIPULATION AND PROPOSED ORDER
FOR APPROVAL OF SETTLEMENT
AGREEMENT AND DISMISSAL WITH
PREJUDICE
Defendant.
(Doc. No. 20)
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Nine plaintiffs join in this action brought against defendant County of Inyo (“defendant”)
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with allegations that they were denied proper compensation in violation of the Fair Labor
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standards Act (“FLSA”), 29 U.S.C. § 201, et seq. (Doc. No. 1.) Now before the court is the
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parties’ joint stipulation filed on June 13, 2018 for approval of the settlement agreement and
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dismissal of the action with prejudice. (Doc. No. 20.) After considering the papers filed in
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support of the parties’ stipulation, the court will defer consideration of thereof and direct the
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parties to supplement it with a declaration or declarations addressing those factors the court must
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make findings upon in determining whether the proposed FLSA settlement is fair, adequate, and
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reasonable.
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BACKGROUND
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On July 20, 2017, plaintiffs Amanda Wagner and Heather Lind commenced this action
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pursuant to the provisions of the FLSA to recover unpaid overtime and other compensation,
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interest, liquidated damages, costs of suit, and reasonable attorneys’ fees from defendant. (Doc.
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No. 1 at 1.) According to the complaint, plaintiffs are employed by the defendant and bring this
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action on behalf of themselves and all similarly situated individuals who defendant failed to
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properly compensate for overtime hours worked within the last three years. (Id. at 2.)
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Specifically, plaintiffs bring a single FLSA claim for failure to properly compensate employees
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for overtime work and allege that the defendant’s alleged failure to include cash-in-lieu payments
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for medical benefits in its calculation of the regular rate of pay for purposes of overtime
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compensation is in contravention of the Ninth Circuit’s decision in Flores v. City of San Gabriel,
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824 F.3d 890, 895 (9th Cir. 2016) (holding that cash payments in lieu of health benefits “must be
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included in the regular rate of pay and thus in the calculation of the overtime rate” under the
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FLSA). (Doc. No. 1 at 8–10.)
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On November 21, 2017, the court granted conditional certification of the putative class for
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the purposes of sending notice to the putative class members and permitting them to opt into the
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action. (Doc. No. 9.) Seven additional individuals opted into the action: Debra Baker, Katherine
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Bardonnex, Kimberly Geiger, Robert Miller, Denise Muniz, Matthew Picken, and Laura Wiegers
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(collectively “plaintiffs”). (Doc. Nos. 12–15.)
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On June 13, 2018, the parties submitted a stipulation for approval of the proposed
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settlement agreement. (Doc. No. 20.) The proposed settlement agreement provides for a total
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payment of $8,650.00, including back wages and liquidated damages made to all plaintiffs for the
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maximum liability period of three years. (Id. at 3.) The proposed settlement agreement also
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provides for $5,350.00 in attorneys’ fees and costs for the law firm of Mastagni Holstedt, which is
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conditioned upon court approval of the terms of this agreement. (Id. at 4.) The proposed
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settlement agreement provides that the two collective action representatives Wagner and Lind
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will receive an additional incentive award of $500.00. (Doc. No. 20-3 at 3.)
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LEGAL STANDARD
Settlement of claims under the FLSA requires court approval. See Jones v. Agilysys, Inc.,
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No. C 12–03516 SBA, 2014 WL 108420, at *2 (N.D. Cal. Jan. 10, 2014). “The FLSA establishes
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federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by
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contract.” Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69 (2013). Because an employee
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cannot waive claims under the FLSA, they may not be settled without supervision of either the
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Secretary of Labor or a district court. See Barrentine v. Ark.–Best Freight Sys., Inc., 450 U.S.
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728, 740 (1981); Yue Zhou v. Wang’s Restaurant, No. 05–cv–0279 PVT, 2007 WL 2298046, at
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*1, n.1 (N.D. Cal. Aug. 8, 2007).
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The Ninth Circuit has not established criteria for district courts to consider in determining
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whether a FLSA settlement should be approved. Dunn v. Teachers Ins. & Annuity Ass’n of Am.,
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No. 13-CV-05456-HSG, 2016 WL 153266, at *3 (N.D. Cal. Jan. 13, 2016). However, in this
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circuit, district courts have normally applied a widely-used standard adopted by the Eleventh
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Circuit, looking to whether the settlement is a fair and reasonable resolution of a bona fide
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dispute. Id.; see also Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352–53 (11th
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Cir. 1982); Selk v. Pioneers Memorial Healthcare District, 159 F. Supp. 3d 1164, 1172 (S.D. Cal.
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2016); Yue Zhou, 2007 WL 2298046, at *1. “A bona fide dispute exists when there are legitimate
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questions about the existence and extent of Defendant’s FLSA liability.” Selk, 159 F. Supp. 3d at
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1172 (internal quotation marks and citation omitted). A court will not approve a settlement of an
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action in which there is certainty that the FLSA entitles plaintiffs to the compensation they seek,
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because it would shield employers from the full cost of complying with the statute. Id.
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Additionally, because FLSA settlements require court approval, payment of attorneys’
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fees from settlement proceeds is also subject to review by the court. See Avila v. Los Angeles
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Police Dep’t, 758 F.3d 1096, 1104–05 (9th Cir. 2014) (reviewing an award of attorneys’ fees
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under the FLSA); Dunn, 2016 WL 153266, at *9 (N.D. Cal. Jan. 13, 2016) (“The Court retains
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the authority to determine what fees are reasonable [in an FLSA settlement].”); Selk, 159 F. Supp.
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3d at 1180 (“Where a proposed settlement of FLSA claims includes the payment of attorney’s
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fees, the court must also assess the reasonableness of the fee award.”) (quoting Wolinsky v.
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Scholastic Inc., 900 F. Supp. 2d 332, 336 (S.D.N.Y. 2012)).
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Once it is established that there is a bona fide dispute, courts often apply the Rule 23
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factors for assessing proposed class action settlements when evaluating the fairness of an FLSA
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settlement, while recognizing that some of those factors do not apply because of the inherent
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differences between class actions and FLSA actions. Khanna v. Inter-Con Sec. Sys., Inc., No.
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CIV S-09-2214 KJM, 2013 WL 1193485, at *2 (E.D. Cal. Mar. 22, 2013). To determine whether
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the proposed FLSA settlement is fair, adequate, and reasonable, courts in this circuit have
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balanced factors such as:
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the strength of the plaintiffs’ case; the risk, expense, complexity,
and likely duration of further litigation; the risk of maintaining class
action status throughout the trial; the amount offered in settlement;
the extent of discovery completed and the stage of the proceedings;
the experience and views of counsel; the presence of a
governmental participant; and the reaction of the class members to
the proposed settlement.
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Khanna v. Intercon Sec. Sys., Inc., No. 2:09-CV-2214 KJM EFB, 2014 WL 1379861, at *6 (E.D.
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Cal. Apr. 8, 2014), order corrected, No. 2:09-CV-2214 KJM EFB, 2015 WL 925707 (E.D. Cal.
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Mar. 3, 2015); see also Almodova v. City & Cnty. of Honolulu, Civil No. 07–00378 DAE–LEK,
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2010 WL 1372298, at *4 (D. Haw. Mar.31, 2010), recommendations adopted by 2010 WL
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1644971 (D. Haw. Apr.20, 2010) (adopting class action settlement factors in evaluating a FLSA
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collective action settlement even though some of those factors will not apply). District courts in
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this circuit have also taken note of the “unique importance of the substantive labor rights
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involved” in settling FLSA actions and adopted a “totality of circumstances approach that
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emphasizes the context of the case.” Selk, 159 F. Supp. 3d at 1173. With this approach, a
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“district court must ultimately be satisfied that the settlement’s overall effect is to vindicate,
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rather than frustrate, the purposes of the FLSA.” Id. Settlements that reflect a fair and reasonable
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compromise of issues that are actually in dispute may be approved to promote the efficiency of
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encouraging settlement of litigation. McKeen-Chaplin v. Franklin Am. Mortg. Co., No. C 10-
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5243 SBA, 2012 WL 6629608, at *2 (N.D. Cal. Dec. 19, 2012).
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ANALYSIS
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Here, the parties have submitted a stipulation and proposed order for court approval of a
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settlement along with the request to dismiss the action with prejudice. (Doc. No. 20.) Therein,
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the parties make only a cursory mention of what they characterize as three bona fide disputes: 1)
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a dispute about the proper methodology for calculating the regular rate and defendant’s
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entitlement to seek offsets and credits pursuant to 29 U.S.C. 207(h)(2); 2) whether defendant can
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present a good faith defense; and 3) whether defendant can present a defense to the extent of
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liability on the basis of willfulness. (Doc. No. 20 at 3–4.) The parties’ stipulation provides no
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factual representations or significant analysis as to why this settlement agreement is a fair and
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reasonable resolution of a bona fide dispute, as required under the FLSA. Selk, 159 F. Supp. 3d at
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1172. As a result, the court is not able to make the findings that are required in order to approve
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this proposed settlement agreement.
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Accordingly, the parties are directed to supplement their stipulation for approval and
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dismissal by way of declaration(s), briefing or both, addressing why the proposed settlement is a
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fair and reasonable resolution of a bona fide dispute, including with respect to the attorneys’ fees
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to be awarded. The supplemental filings shall be submitted within twenty-one days of the service
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of this order. Upon receipt of the supplemental filings the court will issue an order addressing the
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proposed settlement and dismissal.
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IT IS SO ORDERED.
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Dated:
June 27, 2018
UNITED STATES DISTRICT JUDGE
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