Gassel v. American Pizza Partners LP et al

Filing 110

ORDER. ORDERED that plaintiff's Unopposed Motion to Approve Collective Action Settlement [Docket No. 96] and Application for Fees, Costs and Expenses [Docket No. 98 (public entry at Docket No. 100)] are DENIED without prejudice. Entered by Judge Philip A. Brimmer on 09/08/15.(jhawk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 14-cv-00291-PAB-NYW
MIKE GASSEL, individually and on behalf of similarly situated persons,
Plaintiff,
v.
AMERICAN PIZZA PARTNERS, L.P.,
AMERICAN RESTAURANT PARTNERS, L.P.,
RMC AMERICAN MANAGEMENT, INC., and
HEART OF TEXAS PIZZA LP,
Defendants.

ORDER

This matter is before the Court on the Unopposed Motion to Approve Collective
Action Settlement [Docket No. 96] and the Application f or Fees, Costs and Expenses
[Docket No. 98 (public entry at Docket No. 100)] filed by named plaintiff Mike Gassel.1
Plaintiff requests Court approval of a collective action settlement pursuant to the Fair
Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq.
I. BACKGROUND
Defendants jointly operate a chain of 130 Pizza Hut stores in eight states.
Docket No. 26 at 3, ¶ 9. Defendants employ delivery drivers, who use their own
vehicles to deliver food to defendants’ customers. Id. at 1, ¶ 1. Between July 2009 and
September 2012, plaintiff worked for defendants as a delivery driver at their Pizza Hut

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16.

This order adopts the definitions set forth in the Agreement. Docket No. 99 at 6-

store in Greeley, Colorado. Id. at 3, ¶ 13. Plaintiff’s duties involved delivering pizzas
and other food items to customers’ homes or workplaces. Id. at 4, ¶ 15. Plaintiff
alleges that he averaged five miles per delivery and three deliveries per hour. Id. at 7,
¶¶ 30, 34. Plaintiff alleges that defendants’ delivery drivers incur costs for gasoline,
vehicle parts and fluids, repair and maintenance services, insurance, depreciation, and
other automobile expenses while making such deliveries. Id. at 4, ¶ 17. Plaintiff claims
that the driving conditions associated with pizza delivery result in above average
automobile expenses and rapid vehicle depreciation. Id. at 5, ¶ 21.
Plaintiff alleges that defendants reimburse their delivery drivers on a per delivery
basis. Id. at 4, ¶ 18. Plaintiff claims that defendants’ delivery reimbursement policy
does not accurately reflect the costs delivery drivers incur because the policy fails to
account for the miles actually driven. Id. at 4, ¶ 19. Further, plaintiff claims that
defendants’ delivery reimbursement policy equates to an unreasonably low per mile
reimbursement rate, id. at 5, ¶ 22, and results in an effective reimbursement rate of
approximately $0.172 per mile, which falls below the IRS business mileage
reimbursement rate. Id. at 4-5, 7, ¶¶ 19-20, 31.
Plaintiff asserts that a reimbursement range of between $0.42 and $0.565 is a
reasonable approximation of the actual costs incurred. Id. at 7, ¶¶ 32-33. Plaintiff
states that he bore costs associated with delivering pizzas and consistently “kicked
back” to defendants between $3.75 and $5.925 per hour f or such costs. Id. at 8, ¶ 35.
Plaintiff argues that the “kick backs” effectively lowered delivery drivers’ net hourly wage
to between $1.69 and $3.61. Id. These rates are below the federal minimum wage of

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$7.25 per hour. 29 U.S.C. § 206.
On January 31, 2014, plaintiff filed this case against defendants, bringing a claim
for violation of the FLSA and a claim for violation of the Colorado Minimum Wage of
Workers Act (“CMWWA”), Colo. Rev. Stat. § 8-6-101. Docket No. 1 at 1-2, ¶ 2. On
April 30, 2014, plaintiff filed an amended complaint deleting the CMWWA claim.
Docket No. 26. Plaintiff brings this case as a collective action pursuant to 29 U.S.C.
§ 216(b). Id. at 9, ¶¶ 41-42. Plaintiff alleges that he and defendants’ other delivery
drivers are similarly situated in multiple respects. See id. at 9-10, ¶ 44.
On May 14, 2014, the Court conditionally certified this case as a collective action
pursuant to the parties’ Joint Motion to Approve Stipulated Form of Notice of Collective
Action. Docket No. 28. Defendants produced to plaintiff’s counsel contact information
for all delivery drivers who worked for defendants on or after December 14, 2011, which
included: the name(s), the last known address(es), the telephone number(s), the last
four digits of the employee’s social security number, the dates of employment, the store
location, and the store number for each driver. Docket No. 27 at 2, ¶ 3(c). Plaintiff’s
counsel mailed notice to those persons defendants identified. Docket No. 99 at 2, ¶ 3;
see also Docket No. 27-1. Excluding plaintiff, 519 individuals responded to opt into the
Class. Docket No. 99 at 6. Individuals who opted in were required to sign a consent
form that delegated to Mr. Gassel the right “to make all decisions on [the Class
Member’s] behalf concerning the method and manner of conducting the case including
settlement, the entering of an agreement with Plaintiffs’ counsel regarding payment of
attorneys’ fees and court costs, and all other matters pertaining to this lawsuit.” Id. at 3,
¶ 5. The consent form also stated that the individual agreed to be represented by
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plaintiff’s counsel and “other attorneys with whom they may associate.” Id.
On October 1, 2014, after a day-long in-person settlement meeting, the parties
agreed to a collective action settlement. Docket No. 96 at 2. The Agreement provides
that defendants will pay $975,000 towards the creation of the Settlement Fund. Docket
No. 99 at 7, ¶ 1. Plaintiff’s counsel seeks “33 1/3% of the Settlement Fund”
(approximately $324,967), id. at 9, and $15,681.78 in expenses and costs related to
litigation. Docket No. 98 at 1. Plaintiff’s counsel also requests a service payment to Mr.
Gassel of not more than $5,000. Docket No. 99 at 8, ¶ 3. T he remaining funds will be
distributed to the Class Members pro rata pursuant to what the Agreement describes as
an “equitable formula” based on the number of deliveries driven, the wage rate earned,
and the reimbursement rate paid compared with other Class Members during the
relevant time period. Id. at 8, ¶ 4. Payments in the form of a check will be mailed by
plaintiff’s counsel to each Class Member at his or her last known address. Id. at 8, ¶ 5.
In exchange, each Class Member agrees to release defendants from his or her FLSA
claims as well as any other wage and hour claims that relate to, were asserted by, or
could have been asserted by the Named Plaintiff. Id. at 10, ¶¶ 1-2. If any check is not
negotiated within 180 days of issue, unclaimed funds will go to the unclaimed property
division of the state where the Class Member in question was last known to reside. Id.
at 9, ¶ 7. On November 5, 2014, Mr. Gassel executed the Agreement on behalf of
himself and the Class Members. Id. at 16.
On November 11, 2014, plaintiff filed the present motion, seeking Court approval
of the Agreement. Docket No. 96.

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II. ANALYSIS
The “prime purpose” in enacting the FLSA “was to aid the unprotected,
unorganized and lowest paid . . . employees who lack[] sufficient bargaining power to
secure for themselves a minimum subsistence wage.” Brooklyn Sav. Bank v. O’Neil,
324 U.S. 697, 707, n.18 (1945). In suits f iled directly by employees against their
employer under the FLSA for back wages, the parties must present any proposed
settlement agreement to the court for assessment of whether such settlement is fair
and reasonable. Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th
Cir. 1982).
A. FLSA Collective Action Certification
1. Final Collective Action Certification
The FLSA provides that an employee or multiple employees may bring an action
“[on] behalf of himself or themselves and other employees similarly situated.” 29
U.S.C. § 216(b). There is a two-step approach to determining whether plaintiffs are
“similarly situated” for purposes of FLSA collective action certification. Thiessen v. GE
Capital Corp., 267 F.3d 1095, 1105 (10th Cir. 2001). 2 A court’s initial certification
comes at the notice stage, where courts use a fairly lenient standard to determine
whether plaintiffs are similarly situated for purposes of sending notice to putative class
members. Id. at 1102. After discovery, a court makes a final class certification using a
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Thiessen involved a collective action under the Age Discrimination in
Employment Act (“ADEA”), 29 U.S.C. § 621 et seq. Because the ADEA adopts the
collective action mechanism set forth in FLSA § 216(b), courts apply Thiessen to FLSA
collective actions. See Kaiser v. at the Beach, Inc., 2010 WL 5114729, at *4 n.9 (N.D.
Okla. Dec. 9, 2010); see also Brown v. Money Tree Mortg., Inc., 222 F.R.D. 676, 679
(D. Kan. 2004).
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stricter standard. See id. at 1102-03. In deciding whether to certify a collective action,
courts consider several factors, including: (1) the disparate factual and employment
settings of individual plaintiffs; (2) various defenses available to defendant which
appear to be individual to each plaintiff; and (3) fairness and procedural
considerations.3 See id. at 1103. Courts generally make a final certification ruling
before approving a collective action settlement. See Whittington v. Taco Bell of Am.,
Inc., No. 10-cv-01884-KMT-MEH, 2013 WL 6022972, at *2 (D. Colo. Nov. 13, 2013);
see also Tommey v. Computer Scis. Corp., 2015 WL 1623025, at *1 (D. Kan. Apr. 13,
2015); Barbosa v. Nat’l Beef Packing Co., LLC, 2014 WL 5099423, at *5 (D. Kan. Oct.
10, 2014) (citing 29 U.S.C. § 216(b)); Goldsby v. Renosol Seating, LLC, 2013 WL
6535253, at *4 (S.D. Ala. Dec. 13, 2013); Gambrell v. Weber Carpet, Inc., 2012 WL
5306273, at *3 (D. Kan. Oct. 29, 2012); Burton v. Utility Design, Inc., 2008 WL
2856983, at *2 (M.D. Fla. July 22, 2008) (citing Anderson v. Cagle’s, Inc., 488 F.3d 945,
953 (11th Cir. 2007)).
The parties fail to address this issue and have not otherwise moved for final
collective action certification. The fact that the Court conditionally certified the collective
action for notice purposes is insufficient to satisfy this requirement. See Thiessen, 267
F.3d at 1102, 1105. Although plaintiff’s complaint contains allegations concerning how
defendants’ delivery drivers are “similarly situated,” defendants have not admitted such
allegations are true, Docket No. 33 at 7, ¶ 44, and the alleg ations are not specific to the

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Thiessen lists a fourth factor, i.e. whether plaintiffs made the filings required by
the ADEA before instituting suit. See Theissen, 267 F.3d at 1103. That factor does not
apply in FLSA cases. See Kaiser, 2010 WL 5114729, at *3 n.6.
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519 opt-in Class Members. Thus, there is no basis for the Court to issue a final
certification ruling, which is by itself a sufficient basis for denying the present motion.
Should the parties wish to reapply for Court approval of the Agreement, any
renewed motion for approval of the Agreement should also address the issues
discussed below.
B. Notice
Although § 216(b) may not require that a court hold a fairness hearing before
approving a collective action settlement, courts generally require, at minimum, that optin plaintiffs be given notice of any settlement and an opportunity to object. Tommey,
2015 WL 1623025, at *1; see also Goldsby, 2013 WL 6535253, at *10 (“[T]he majority
of the courts approve [an FLSA collective action] settlement only after notice has been
provided to the opt-in plaintiffs and a fairness hearing conducted, or at the least, what is
required is a statement to the Court that the opt-in plaintiffs have had notice of the
settlement and an opportunity to object.”).
Plaintiff has not provided any indication that the Class Members were given
notice of the Agreement and an opportunity to object. Cf. Lazarin v. Pro Unlimited, Inc.,
2013 WL 3541217, at *4 (N.D. Cal. July 11, 2013) (“One hundred percent of all Class
Members have received notice [of the Settlement Agreement.]”); In re Am. Family Mut.
Ins. Co. Overtime Pay Litig., No. 06-cv-17430-WYD-CBS, 2010 WL 9593848, at *1 (D.
Colo. Oct. 6, 2010) (providing for notice of settlement and opportunity to object or
withdraw consent); Moore v. Ackerman Inv. Co., 2009 WL 2848858, at *1 (N.D. Iowa
Sept. 1, 2009) (“The plaintiffs’ attorney notified each plaintiff of the proposed settlement

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by letter, including notice of each plaintiff’s potential maximum recovery and the amount
that each plaintiff would receive pursuant to the settlement.”). Moreover, plaintiff does
not indicate whether Class Members have been apprised of the formula class counsel
will use to calculate each Class Member’s share of the Settlement Fund. Docket No.
99 at 12-28. Plaintiff’s failure to address this issue is, like the lack of final collective
action certification, a sufficient basis to deny the present motion. Cf. Tommey, 2015
WL 1623025, at *1 (directing the parties to provide plaintiffs notice of the settlement
and an opportunity to object).
C. The Settlement
To approve an FLSA settlement, a court must find that: (1) the agreement is the
result of a bona fide dispute, (2) the proposed settlement is a fair and reasonable
resolution to all parties involved, and (3) the proposed settlement contains a reasonable
award of attorneys’ fees and costs. Lynn’s Food Stores, 679 at 1355; Baker v. Vail
Resorts Mgmt. Co., No. 13-cv-01649-PAB-CBS, 2014 WL 700096, at *1 (D. Colo. Feb.
24, 2014).
Turning to the second factor, an FLSA settlement must provide adequate
compensation to the employees and must not frustrate the FLSA’s policy rationales.
See Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227, 1245-46 (M.D. Fla. 2010); see also
Felix v. Thai Basil at Thornton, Inc., No. 14-cv-02567-MSK-CBS, 2015 WL 2265177, at
*1 (D. Colo. May 6, 2015); Hartley v. Time Warner NY Cable LLC, No. 13-cv-00158RM-MJW, 2014 WL 4437282, at *2 (D. Colo. Sept. 9, 2014). T o determine the fairness
of a proposed collective settlement, courts regularly apply the same fairness factors

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used for evaluating proposed class action settlements under Fed. R. Civ. P. 23(e),
which are: (1) whether the parties fairly and honestly negotiated the settlement, (2)
whether serious questions of law and fact exist which place the ultimate outcome of the
litigation in doubt, (3) whether the value of an immediate recovery outweighs the mere
possibility of future relief after protracted litigation, and (4) the judgment of the parties
that the settlement is fair and reasonable. Baker, 2014 WL 700096, at *2 (citing Rutter
& Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1188 (10th Cir. 2002)).
The Court must also determine whether the settlement agreement undermines
the purpose of the FLSA, which is to protect employees’ rights from employers who
generally wield superior bargaining power. Baker, 2014 WL 700096, at *2; see also
Castorena v. El Trompito, Inc., No. 14-cv-00326-KLM, 2014 WL 5564339, at *2 (D.
Colo. Nov. 3, 2014); Hartley, 2014 WL 4437282, at *2. To determine whether a
settlement agreement is consistent with the purpose of the FLSA, courts look at the
following factors: (1) presence of other similarly situated employees; (2) a likelihood that
plaintiffs’ circumstances will recur; and (3) whether defendants had a history of noncompliance with the FLSA. Dees, 706 F. Supp. 2d at 1244.
Plaintiff fails to provide sufficient facts upon which to conclude that the
settlement award will be distributed in a fair and reasonable manner. Plaintiff states
that, after payment of attorneys’ fees and expenses and any service award, the
remainder of the Settlement Fund will be distributed pro rata to class members
according to an “equitable formula” based primarily on: (1) the total number of deliveries
made by each class member; (2) the wage rate earned by each class member; and (3)

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the reimbursement rate paid to each class member who worked during the applicable
class period. Docket No. 99 at 8, ¶ 4. Plaintiff does not, however, further define or
explain the “equitable formula.” See id. Although plaintiff attaches a chart showing the
amount each Class Member will receive, plaintiff does not explain how those numbers
were calculated or why such amounts reflect a fair and reasonable distribution of the
Settlement Fund. Id. at 17-28. Thus, the Court lacks a sufficient basis upon which to
find that the distribution is fair and reasonable. Cf. McCaffrey v. Mortg. Sources Corp.,
2011 WL 32436, at *4 (D. Kan. Jan. 5, 2011) (denying approval because plaintiff
provided insufficient facts to assess the equatability of the pro rata calculation for
plaintiffs’ awards).
D. Placing the Settlement Agreement Under a Filing Restriction
In order to promote the goals of the FLSA, many courts give FLSA settlements a
presumption in favor of public access:
[A]n agreement settling an FLSA claim that is submitted for court approval
is indisputably a document that is relevant to the performance of the judicial
function and useful in the judicial process, and thus a “judicial document”
subject to the presumption of access. Further, insofar as such an agreement
goes to the heart of the matter being adjudicated–and implicates the
underlying policies of the FLSA– the presumption of public access that
attaches to judicial documents is at its strongest.
Alewel v. Dex One Serv., Inc., 2013 WL 6858504, at *3 (D. Kan. Dec. 30, 2013) (internal
citations omitted) (citing Wolinsky v. Scholastic Inc., 900 F. Supp. 2d 332, 337-38
(S.D.N.Y. 2012)); see also Dees, 706 F. Supp. 2d at 1244-45; Tran v. Thai, 2009 WL
2477653, at *1 (S.D. Tex. Aug. 12, 2009). Limitation on public access “contravenes the
legislative purpose of the FLSA and undermines the Department of Labor’s regulatory

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effort to notify employees of their FLSA rights.” Dees, 706 F. Supp. 2d at 1242; see also
Blockin v. Black Pepper Pho, LLC, No. 14-cv-1252-WJM-KLM, 2014 WL 6819894, at *3
(D. Colo. Dec. 3, 2014) (finding fair and reasonable a public FLSA settlement agreement
because it gives notice to future plaintiffs of prior allegations of defendant’s improper
conduct); Castorena, 2014 WL 5564339, at *2 (same); Hartley, 2014 WL 4437282, at *2
(noting importance of public access to FLSA settlement agreements). Thus, parties
seeking to restrict access to an FLSA settlement agreement bear the burden of
“articulat[ing] a real and substantial interest that justifies depriving the public of access to
the records.” Helm v. Kansas, 656 F.3d 1277, 1292 (10th Cir. 2011); see also Dees,
706 F. Supp. 2d at 1245-46 (judicial seal of an FLSA settlement is “warranted only under
‘extraordinary circumstances’ typically absent in an FLSA case.”); Tran, 2009 WL
2477653, at *1 (“The presumption of public access to settlements of FLSA actions is
particularly strong . . . Absent an ‘extraordinary reason,’ the court cannot seal such
records.”).
The parties filed a Joint Motion to File Settlement Agreement and Supporting
Declarations and Motion for Attorneys’ Fees Under Seal [Docket No. 97], seeking leave
to file the Agreement and motion for attorneys’ fees under a filing restriction. The
magistrate judge granted the motion, concluding that the parties satisfied
D.C.COLO.LCivR 7.2. Docket No. 103. However, satisfaction of D.C.COLO.LCivR 7.2
does not mean that the parties have overcome the presumption that FLSA settlements
should be made public. In fact, none of the justifications for placing the Agreement
under restriction are sound. The motion to restrict speculates that public disclosure of
the Agreement will encourage or foment additional lawsuits against defendants. Docket
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No. 97 at 2. The parties do not, however, provide any evidence in support of such an
assertion. The Agreement prohibits the parties from disclosing details of the settlement
to third parties, Docket No. 99 at 11, ¶ G, but provides no rationale for doing so other
than that “[defendants] could incur and sustain significant and substantial damage if any
of the confidentiality provisions of this Agreement are breached.” Docket No. 99 at 11,
¶ 2. This statement is conclusory and insufficiently specific. See Alewel, 2013 WL
6858504, at *5 (denying parties request to seal FLSA settlement “when presented with
only generic confidentiality concerns.”). The parties also contend that the public policy
encouraging settlement merits maintaining the Agreement under seal, but the Court is
not convinced that this concern is, by itself, a sufficient basis for maintaining the
Agreement under restriction or approving a settlement agreement containing a
confidentiality provision. See Dees, 706 F. Supp. 2d at 1242 (“A confidentiality provision
in an FLSA settlement agreement both contravenes the legislative purpose of the FLSA
and undermines the Department of Labor’s regulatory effort to notify employees of their
FLSA rights.”). Privacy concerns may weigh in favor of redacting certain information
from the settlement documents, see, e.g., Docket No. 99 at 17-28, but any renewed
motion for approval of the Agreement should address these concerns with a full
justification for a proposed redaction. 4

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Plaintiff’s counsel state that they have been involved in settling at least six pizza
delivery driver class or collective actions, and plaintiff’s attorney Mark Potashnick further
claims that he is currently involved in at least eight other actions. Docket No. 98-1 at 34, ¶ 4; Docket No. 98-2 at 3-8, ¶¶ 10-11. Plaintif f’s counsel also contends that “pizza
delivery drivers across the country [] are oppressed by the pizza delivery industry’s
unreasonably low vehicle reimbursements.” Docket No. 98 at 1. This suggests the

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E. Attorneys’ Fees
Pursuant to 29 U.S.C. § 216(b), “[t]he court in [an FLSA action] shall . . . allow a
reasonable attorney’s fee to be paid by the defendant, and costs of the action.” In the
context of a collective action, the Court must determine the reasonableness of attorneys’
fees. See Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980); Brown v. Phillips
Petroleum Co., 838 F.2d 451, 454 (10th Cir. 1988). Because defendants do not oppose
the award of attorneys’ fees, the proposed fee award must be carefully examined.
Barbosa, 2014 WL 5099423, at *9 (“[Because] defendant has no incentive to bargain for
lower fees . . . the Court intends to skeptically examine and analyze the fee and cost
proposal.”).
Here, plaintiff’s counsel has not provided sufficient information regarding how
attorneys’ fees were negotiated, including whether those fees were negotiated
separately from the Class’ recovery. See Goldsby v. Renosol Seating, LLC, 294 F.R.D.
649, 655 (S.D. Ala. 2013) (expressing concern whether attorneys’ fees were negotiated
separately from plaintiffs’ recovery in FLSA collective action settlement); see also
Vogenberger v. ATC Fitness Cape Coral, LLC, 2015 WL 1883537, at *1 n.2 (M.D. Fla.
Apr. 24, 2015) (stating that parties’ first motion for FLSA collective action settlement
approval was denied because the parties failed to state whether attorneys’ fees were

possibility that other pizza franchisers may be engaging in conduct similar to that
alleged in plaintiff’s complaint, which would seem to weigh in favor of ensuring that the
Agreement is a public document. See Dees, 706 F. Supp. 2d at 1242 (“[T]he employer
thwarts the informational objective of the notice requirement by silencing the employee
who has vindicated a disputed FLSA right.”).

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negotiated separately); King v. Raineri Constr., LLC, 2015 WL 631253, at *4 (E.D. Mo.
Feb. 12, 2015) (noting that attorneys’ fees were separately negotiated from plaintiffs’
award in holding such fees reasonable in FLSA collective action settlement approval);
Moore, 2009 WL 2848858, at *3 (denying attorneys’ fees in FLSA collective action
settlement as counsel did not provide information concerning how such fees were
determined). Any renewed motion for approval of the Agreement should provide
additional information on this issue.
III. CONCLUSION
The above-identified deficiencies preclude approval of the Agreement at this time.
The Court will deny the present motion without prejudice should the parties wish to
reapply for approval of the current Agreement. See Docket No. 99 at 12, ¶ H. For the
foregoing reasons, it is
ORDERED that plaintiff’s Unopposed Motion to Approve Collective Action
Settlement [Docket No. 96] and Application for Fees, Costs and Expenses [Docket No.
98 (public entry at Docket No. 100)] are DENIED without prejudice.

DATED September 8, 2015.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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