Morton et al v. Transcend Services, Inc.
ORDER. The parties' Joint Motion for Approval of Settlement Agreement and Release [Docket No. 32 ] is GRANTED. This case is dismissed with prejudice in its entirety. Signed by Judge Philip A. Brimmer on 03/13/2017. (athom, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 15-cv-01393-PAB-NYW
LINDA F. MORTON,
ELIZABETH A. SENNETT, and
TRANSCEND SERVICES, INC.,
This matter is before the Court on the parties’ Joint Motion for Approval of
Settlement Agreement and Release [Docket No. 32]. The parties request that the Court
approve their settlement of plaintiffs’ claims brought pursuant to the Fair Labor
Standards Act (“FLSA”), 29 U.S.C. § 201 et seq.
This case arises out of a wage dispute. Plaintiffs are former employees of
Transcend Services, Inc. (“Transcend”). Docket No. 1 at 1-2, ¶¶ 1-3. The plaintiffs in
this action were formerly part of a putative collective action filed in the Northern District
of Illinois, Cosentino v. Transcend Servs., Inc., No. 1:12-cv-03627, filed on May 11,
2012. See Docket No. 18 at 1; Docket No. 25 at 1. On June 30, 2015, plaintif fs filed a
complaint in this Court alleging violations of the FLSA during their employment as
medical transcriptionists for defendant. Id. Specifically, plaintiffs allege that defendant
failed to pay them minimum wage and overtime. Id. at 14-17. On August 2, 2016, the
parties filed their motion for approval of the settlement. Docket No. 32.
When employees file suit against their employer to recover back wages under
the FLSA, the parties must present any proposed settlement to the district court for
review and a determination of whether the settlement agreement is fair and reasonable.
See Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982).
District court approval of FLSA settlements effectuates the purpose of the statute to
“protect certain groups of the population from substandard wages and excessive hours
. . . due to the unequal bargaining power as between employer and employee.”
Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706 (1945). To approve the settlement
agreement, the Court must find that (1) the litigation involves a bona fide dispute, (2)
the proposed settlement is fair and equitable to all parties concerned, and (3) the
proposed settlement contains a reasonable award of attorneys’ fees. Lynn’s Food
Stores, 679 F.2d at 1354.
I. BONA FIDE DISPUTE
Parties requesting approval of an FLSA settlement must provide the Court with
sufficient information to determine whether a bona fide dispute exists. Dees v.
Hydradry, Inc., 706 F. Supp. 2d 1227, 1234 (M.D. Fla. 2010). T o meet this obligation,
the parties must present: (1) a description of the nature of the dispute; (2) a description
of the employer’s business and the type of work performed by the employees; (3) the
employer’s reasons for disputing the employees’ right to a minimum wage or overtime;
(4) the employees’ justification for the disputed wages; and (5) if the parties dispute the
computation of wages owed, each party’s estimate of the number of hours worked and
the applicable wage. Collins v. Sanderson Farms, Inc., 568 F. Supp. 2d 714, 718 (E.D.
La. 2008). The mere existence of an adversarial lawsuit is not enough to satisfy the
bona fide dispute requirement. Id. at 719-20.
Here the parties state that they dispute the amount of overtime hours worked by
plaintiffs Linda F. Morton and Elizabeth Sennett. Docket No. 32 at 6. T he parties also
state that they dispute whether the claims of plaintiff Linda Mathias are time barred. Id.1
Defendant “Transcend maintains that it properly paid plaintiffs based on the hours
plaintiffs reported, along with Transcend’s policies, which direct transcriptionists not to
work off the clock and contain a reporting mechanism if transcriptionists are asked to do
so.” Docket No. 32 at 5. Given the respective positions of the parties, the Court finds
that a bona fide dispute exists.
II. FAIR AND REASONABLE
To be fair and reasonable, an FLSA settlement must provide adequate
compensation to the employees and must not frustrate the FLSA policy rationales.
Courts considering both individual and collective settlements under the FLSA turn to the
factors for evaluating the fairness of a class action settlement. See, e.g., Dail v.
George A. Arab Inc., 391 F. Supp. 2d 1142, 1146 (M.D. Fla. 2005) (evaluating
individual action); Collins, 568 F. Supp. 2d at 721 (evaluating collective action). The
Tenth Circuit considers the following factors when deciding whether to approve a class
action settlement under Fed. R. Civ. P. 23(e): (1) whether the parties fairly and honestly
negotiated the settlement; (2) whether serious questions of law and fact exist which
This dispute was subject to a motion to dismiss that the Court denied without
prejudice. Docket No. 33.
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.
Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1188 (10th Cir. 2002).
The parties represent that each plaintiff will receive an amount from the
settlement that exceeds the amount of her damages calculations. Docket No. 32 at 56. With respect to plaintiffs Linda F. Morton and Elizabeth Sennett, the parties
represent that discovery revealed their initial claims overestimated their hours. Id. For
plaintiff Linda Mathias, the parties represent that the amount she stands to receive in
the settlement is greater than her damages even if her claims were proven. Id. Based
on the parties’ representations, the Court finds that the first two factors are satisfied.
The Court further finds that, given the disputed issues of law and fact, the value of
immediate recovery to plaintiffs outweighs the possibility of future relief. Plaintiffs and
defendant are represented by experienced counsel who believe that the settlement is
fair and reasonable and the Court finds no reason to disagree with this assessment. Id.
at 5. Accordingly, the Court finds that the settlement is fair and reasonable and reflects
an adequate compromise that considers the risks of continuing with this litigation for
Next, the Court must 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. To determine whether a settlement
agreement frustrates the FLSA, courts look to factors including: (1) presence of other
similarly situated employees; (2) a likelihood that plaintiff’s circumstances will recur; and
(3) whether defendants have a history of non-compliance with the FLSA. Dees, 706 F.
Supp. 2d at 1244. Here, although there appear to be similarly-situated parties and
plaintiffs have alleged that defendant’s failure to comply with the FLSA is part of
widespread conduct, the Court finds that the settlement does not undermine the
purpose of the FLSA. The settlement only resolves plaintiffs’ individual claims and
does not affect the rights of other employees of defendant.
III. ATTORNEYS’ FEES
In order to approve the proposed settlement agreement, the Court must examine
whether the award of attorneys’ fees and costs is reasonable. See Silva v. Miller, 307
F. App’x 349, 351-52 (11th Cir. 2009) (unpublished) (holding that a contingency
contract between counsel and plaintiff did not abrogate the court’s duty to review the
reasonableness of legal fees in an FLSA settlement). To determine the
reasonableness of a fee request, a court must begin by calculating the “lodestar
amount,” which represents the number of hours reasonably expended multiplied by a
reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); Balkind v.
Telluride Mountain Title Co., 8 P.3d 581, 587-88 (Colo. App. 2000). T he lodestar
amount may be adjusted based upon several factors, including the time and labor
required, novelty and difficulty of the question presented by the case, the skill requisite
to perform the legal service properly, preclusion of other employment by the attorneys
due to acceptance of the case, customary fee, whether the fee is fixed or contingent,
any time limitations imposed by the client or circumstances, amount in controversy and
results obtained, experience, reputation, and ability of the attorneys, undesirability of
the case, the nature and length of the professional relationship with the client, and
awards in similar cases. Fulton v. TLC Lawn Care, Inc., 2012 WL 1788140, at *5 (D.
Kan. May 17, 2012) (citing Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (5th
Cir. 1974); Rosenbaum v. MacAllister, 64 F.3d 1439, 1445 (10th Cir. 1995)).
The parties request only $300 in attorneys’ fees to plaintiffs’ counsel, stating that
this low total is due to the request being just one part of a global settlement. Docket
No. 32 at 8 n.8. The parties attach an invoice of plaintiffs’ attorneys’ fees reflecting
74.20 hours of attorney time for a total of $12,030.00 in fees. Docket No. 32-4.
Additionally, they claim that plaintiffs’ counsel incurred $1,841.00 in costs, plaintiffs’
counsel’s billing rates are between $150 and $450 per hour, and that the representation
was on a contingency fee basis. Docket No. 32 at 7-8.
A “reasonable rate” is defined as the prevailing market rate in the relevant
community for an attorney of similar experience. Guides, Ltd. v. Yarmouth Group Prop.
Mgmt., Inc., 295 F.3d 1065, 1078 (10th Cir. 2002). T he party requesting fees bears
“the burden of showing that the requested rates are in line with those prevailing in the
community.” Ellis v. Univ. of Kan. Med. Ctr., 163 F.3d 1186, 1203 (10th Cir. 1998). In
order to satisfy their burden, plaintiffs must produce “satisfactory evidence – in addition
to the attorney’s own affidavits – that the requested rates are in line with those
prevailing in the community for similar services by lawyers of reasonably comparable
skill, experience and reputation.” Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984).
Because of the extremely low requested attorneys’ fees in this case relative to
the prevailing hourly rate and time invested, any specific lodestar amount calculated
would far exceed the requested $300. Therefore, the Court finds that the parties’
attorneys’ fee request is reasonable. The Court will approve the parties’ settlement
agreement and will dismiss this action with prejudice pursuant to Federal Rule of Civil
For the foregoing reasons, it is
ORDERED that the parties’ Joint Motion for Approval of Settlement Agreement
and Release [Docket No. 32] is GRANTED. It is further
ORDERED that this case is dismissed with prejudice in its entirety.
DATED March 13, 2017.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge
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