Donaldson v. MBR Central Ill. Pizza, LLC et al
Filing
17
OPINION AND ORDER: The parties' Joint Motion to Approve Settlement, d/e 13 , is GRANTED, and Defendants' Unopposed Motion for Leave to File Document Under Seal, d/e 14 , is DENIED. SEE WRITTEN OPINION AND ORDER. Entered by Judge Sue E. Myerscough on 09/16/2019. (SKN, ilcd)
E-FILED
Tuesday, 17 September, 2019 03:24:48 PM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
DYLAN DONALDSON, on behalf
of himself and others similarly
situated,
Plaintiffs,
v.
MBR CENTRAL ILLINOIS PIZZA, LLC,
MBR MANAGEMENT CORP., and
MARK RATTERMAN,
Defendants.
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No. 18-cv-3048
OPINION AND ORDER
SUE E. MYERSCOUGH, U.S. District Judge.
Now before the Court is the parties’ Joint Motion to Approve
Settlement, d/e 13, and Defendants’ Unopposed Motion for Leave to
File Document Under Seal, d/e 14. Because the Court finds that
the settlement is the product of contested litigation and is a fair and
reasonable resolution of a bona fide dispute, the parties’ Joint
Motion to Approve Settlement, d/e 13, is GRANTED. Defendants’
Unopposed Motion for Leave to File Document Under Seal, d/e 14,
Page 1 of 13
however, is DENIED because Defendants have not given the Court
sufficient reason for the settlement agreement to remain under seal.
I.
BACKGROUND
Plaintiff Dylan Donaldson brings this suit on behalf of himself
and other similarly situated individuals under the Fair Labor
Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., the Illinois
Minimum Wage Law (“IMWL”), 820 ILCS 105/1 et seq., and the
Illinois Wage Payment and Collection Act (“IWPCA”), 820 ILCS
115/1 et seq. Class and Collective Action Compl. (“Compl.”) 1.
After the complaint was filed, four other individuals filed consents
to join this suit. See d/e 3, 6. Defendants MBR Management
Corporation and MBR Central Illinois Pizza, LLC, are Domino’s
franchisees that own and operate eighty-three Domino’s stores.
Compl. 2. Defendant Mark Ratterman is the founder, owner, and
president of the corporate defendants. Id. at 4. Plaintiffs allege
that Defendants failed to pay delivery drivers the legally mandated
minimum wage for their hours worked. Id. at 3. Defendants deny
any liability to Plaintiffs. Settlement Agreement and Release 1, d/e
15.
Page 2 of 13
On September 28, 2018, the parties filed a Stipulated Motion
to Compel Arbitration and Stay, d/e 10, seeking to individually
arbitrate the Plaintiffs’ claims and to stay this action pending
arbitration. The Court granted the motion and directed the parties
to file status reports concerning the arbitration. Text Order, Oct. 9,
2018. The parties subsequently reported that they were negotiating
an agreement to resolve their dispute prior to filing arbitrations.
Joint Status Report 1, Jan. 2, 2019, d/e 11. The parties now move
the Court to approve the settlement agreement that is the product
of their negotiations.
II. LEGAL STANDARD
Before approving an FLSA settlement, a court must find that
the settlement “represents a fair and equitable resolution of a bona
fide dispute” under the FLSA. Salcedo v. D’Arcy Buick GMC, Inc.,
227 F. Supp. 3d 960, 961 (N.D. Ill. 2016). If a court is satisfied that
an FLSA settlement is the product of contested litigation, approval
of the settlement is usually appropriate. Koszyk v. Country Fin.
a/k/a CC Servs., Inc., No. 16 Civ 3571, 2016 WL 5109196, at *1
(N.D. Ill. Sept. 16, 2016).
Page 3 of 13
III.
ANALYSIS
The parties contend that the settlement agreement is the
product of arms-length negotiations by experienced counsel. Joint
Mot. to Approve Settlement Agreement 2. They further claim that
the settlement agreement provides fair relief to Plaintiffs while
eliminating the risks the parties would bear if litigation continued to
resolution on the merits. Id. The Court agrees that the settlement
agreement is a reasonable compromise over contested issues. See,
e.g., Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1354
(11th Cir. 1982) (noting that the adversarial nature of a litigated
FLSA case “provides some assurance of an adversarial context” and
therefore indicia of fairness to a settlement reached as a result).
Further litigation on the merits would pose risks for both sides
as the parties maintain. Here, the parties represent that there are
disputed factual and legal issues, including but not limited to,
whether Plaintiffs were in fact paid the minimum wage and whether
Plaintiffs are entitled to liquidated damages. Joint Mot. to Approve
Settlement Agreement 2. There is also the possibility that each
Plaintiff may be forced to individually arbitrate their claims, rather
than proceed as a collective action.
Page 4 of 13
That said, the Court’s determination of whether the proposed
settlement is both fair and reasonable also includes an evaluation
of the reasonableness of the attorneys’ fees sought. See Bligh v.
Constr. Res. of Ind., Inc., Cause No. 1:15-cv-00234-JD-SLC, 2016
WL 5724893, at *3 (N.D. Ind. Aug. 10, 2016). As to the amount of
attorneys’ fees awarded under the settlement agreement,
“[p]roportionality is the comparison between a plaintiff’s damages
and attorneys’ fees.” Dominguez v. Quigley’s Irish Pub, Inc., 897 F.
Supp. 2d 674, 686 (N.D. Ill. 2012) (citing Anderson v. AB Painting &
Sandblasting, Inc., 578 F.3d 542, 546 (7th Cir. 2009)). An award of
attorneys’ fees “that is a large multiple of the amount awarded
should cause the court to pause and reflect on the fee requested.”
Id.
In this case, applying proportionality principles gives the Court
pause. The parties’ proposed settlement contains an award of
attorneys’ fees in an amount that is more than twice the amount to
be received by Plaintiffs. Settlement Agreement and Release 2–3.
Nonetheless, the disproportionality here need not be treated as fatal
as it might in the context of the approval of a Federal Rule of Civil
Procedure 23 class action settlement. See Binissa v. AMB Indus.,
Page 5 of 13
Inc., 13 cv 1230, 15 cv 6729, 2017 WL 4180289, at *5 (N.D. Ill.
Sept. 21, 2017) (utilizing the Seventh Circuit’s proportionality
analysis in the Rule 23 consumer class action context set out in
Redman v. RadioShack Corp., 768 F.3d 622, 630 (7th Cir. 2014), as
guidance in determining whether to approve an FLSA settlement).
“There is no strict rule of proportionality, and the Seventh Circuit
has ‘repeatedly rejected the notion that the fees must be calculated
proportionally to damages.’” Dominguez, 897 F. Supp. 2d at 686
(quoting Estate of Enoch ex rel. Enoch v. Tienor, 570 F.3d 821, 823
(7th Cir. 2009)).
In the context of FLSA collective actions where the recovery for
each individual plaintiff may be relatively modest, the Supreme
Court has recognized a Congressional intent to give “plaintiffs the
advantage of lower individual costs to vindicate rights by the
pooling of resources.” Hoffman-LaRoche Inc. v. Sperling, 493 U.S.
165, 170 (1989). Indeed, in many such cases, “plaintiffs can ‘hardly
be expected to pursue these small claims individually, so there is
little likelihood that their rights will be vindicated in the absence of
a collective action.’” Epenscheid v. DirectSat USA, LLC, 09-cv-625bbc, 2011 WL 13209269, at *14 (W.D. Wis. Feb. 10, 2011) (quoting
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Bradford v. Bed Bath and Beyond, Inc., 184 F. Supp. 2d 1342,
1351 (N.D. Ga. 2002)). As a result, courts routinely approve FLSA
settlements even when the amount of attorneys’ fees is
disproportionate to the plaintiffs’ recovery. See, e.g., Bligh, 2016
WL 5724893, at *3 (approving settlement where counsel received
$1,500 of a total recovery of $2,500); Paredes v. Monsanto Co., No.
4:15-CV-088 JD, 2016 WL 1555649, at *2 (N.D. Ind. Apr. 18, 2016)
(approving $6,000 in attorneys’ fees payable to plaintiffs’ counsel
where plaintiffs' total recovery was $3,500).
Here, each Plaintiff will receive amounts ranging from just over
$440 to about $975, totaling a little more than $4,000, while
counsel will receive $10,000. Settlement Agreement and Release 2–
3. The parties’ Motion to Approve Settlement is supported by a
supplemental declaration from Plaintiffs’ attorneys. Andrew
Kimble’s Decl. in Support of Pl.’s Mot. for Approval of Attorney’s
Fees in Settlement Agreement, d/e 16 (“Kimble Decl.”). In the
declaration, Plaintiffs’ attorneys set forth the time expended on the
case and the attorneys’ typical hourly rates. Id. at 3–4. The
declaration shows that Plaintiffs’ attorneys’ have expended over
$16,000 in fees to date. Id. at 3. The request for $10,000 in
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attorneys’ fees in the Motion to Approve Settlement, then,
represents an approximately forty percent discount from the value
of the fees reported in the declaration. Plaintiffs’ attorneys and
paralegals have billed at rates between $125 and $400 per hour
and Plaintiffs’ attorneys cite to several cases from the Southern and
Northern Districts of Ohio in which the attorneys’ hourly rates have
been approved. Id. at 3–5 (collecting cases). The attorneys’ hourly
rates range from $250 per hour on the low end to $4001 per hour
on the high end. Id. at 3.
These rates, even before factoring in the approximately forty
percent reduction in total fees sought, are in line with rates that
have recently been approved in this District. See, e.g., Abellan v.
HRDS Le Roy IL, LLC, Case No. 16-1037, 2018 WL 6247260, at *10
(C.D. Ill. Nov. 29, 2018) (approving award of fees where attorneys
and paralegals billed at rates between $150 and $400 per hour).
The attorneys have pursued this litigation diligently and it appears
1
The $400 per hour rate applies to only 2.6 hours of the total 55.2 hours
reported. Most of the hours are reported by Attorneys Andrew Kimble and
Philip Krzeski, whose rates were, respectively, $325 and $250 per hour until
January 1, 2019, at which time they were raised to $385 and $270 per hour.
Applying a reduction of approximately forty percent as the total request for fees
has been reduced, to the new, higher rates effectively yields rates of
approximately $231 and $162 per hour.
Page 8 of 13
from the declaration that basic tasks have been performed by
employees charging lower rates.2 Further, the parties explored
settlement negotiations early on, avoiding incurring additional
charges that would accrue with further contested litigation. The
Court, therefore, finds the request for attorneys’ fees to be
reasonable and appropriate for Plaintiffs’ counsels’ work in this
litigation.
While, as already stated, this proportion does give the Court
pause, it is unlikely that any Plaintiff’s individual claim would
otherwise have been pursued in the absence of this collective
action, given each Plaintiffs’ small claim for damages. In sum, the
Court concludes that the settlement agreement is fair and
reasonable in light of Plaintiffs’ modest claims and the risk and
expense that further litigation would entail.
IV.
MOTION TO SEAL
In conjunction with the parties’ motion to approve their
settlement agreement, Defendants have filed an Unopposed Motion
2 The Court notes, however, that $150 per hour for a paralegal’s work is still
high, and is, in fact, comparable to the hourly rates of many attorneys in this
district. By way of comparison, the current hourly rate for a lawyer appointed
to a non-capitol case under the Criminal Justice Act, 18 U.S.C. § 3600A, is
$148 per hour.
Page 9 of 13
for Leave to File Document Under Seal, seeking to file the
settlement agreement under seal. Defendants have not, however,
provided the Court with a compelling reason to allow the settlement
agreement to be filed under seal. The main reason given for sealing
the settlement agreement is that the parties have mutually
bargained to maintain the confidentiality of their settlement terms.
Defs.’ Unopposed Mot. for Leave to File Document Under Seal (“Mot.
to Seal”) 1. Defendants also perfunctorily assert that the parties
have “distinct but substantial interests in the nondisclosure of the
settlement terms (e.g., the avoidance of future claims, protection of
personal information, etc.).” Id.
The Seventh Circuit has made clear in which instances the
Court may or may not seal documents. See Baxter Int’l, Inc. v.
Abbot Laboratories, 297 F.3d 544, 546 (7th Cir. 2002) (denying
request to seal which was largely based on parties’ agreement and
assertion that documents for which sealing was sought were
commercial documents). Defendants’ motion “d[oes] not analyze
the applicable legal criteria or contend that [the settlement
agreement] contains a protectable trade secret or otherwise
legitimately may be kept from public inspection despite its
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importance to the resolution of the litigation.” Id. (citing Composite
Marine Propellers, Inc., v. Van Der Woude, 962 F.2d 1263, 1266
(7th Cir. 1992), for the proposition that “a litigant must do more
than just identify a kind of information and demand secrecy”).
Defendants’ concern about avoiding future claims is
insufficient to justify sealing the settlement agreement. See
Salcedo, 227 F. Supp. 3d at 962 (denying request to seal FLSA
settlement agreement where the request was based on the
defendant’s concern that public disclosure of the settlement’s terms
might affect future litigation); Adams v. Walgreen Co., No. 14-CV1208-JPS, 2015 WL 4067752, at *2 (E.D. Wis. July 2, 2015)
(denying request to seal settlement agreement in FLSA case where
the defendant expressed concerns that disclosure might affect
pending and future litigation). If a settlement agreement is made a
part of the court record, because—as in this case—judicial approval
of the terms is required, the presumption of the right of public
access to court documents applies. Goesel v. Boley Int’l (H.K.) Ltd.,
738 F. 3d 831, 834 (7th Cir. 2013).
Defendants’ concerns about the protection of personal
information similarly do not provide a sufficient basis for sealing.
Page 11 of 13
Having closely reviewed the settlement agreement and release, it
does not, for example, contain Social Security numbers or taxpayer
identification numbers, dates of birth, the names of individuals
known to be minors, or financial account numbers. See Fed. R.
Civ. P. 5.2(a)(1)–(4). The signatures on the document may be
protected by redaction. See CDIL-LR 5.11(A). Accordingly, while
the court grants the parties’ Joint Motion to Approve Settlement,
Defendants’ Unopposed Motion for Leave to File Document Under
Seal is denied.
Having found that the settlement agreement may not be filed
under seal, the Clerk is directed to unseal the settlement
agreement, redacting the signatures it contains. See CDIL-LR
5.10(A)(4) (“The Court may, in its discretion, order a sealed
document to be made public if . . . the document is so intricately
connected with a pending matter that the interests of justice are
best served by doing so.”).
V. CONCLUSION
For the reasons stated herein, the parties’ Joint Motion to
Approve Settlement, d/e 13, is GRANTED, and Defendants’
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Unopposed Motion for Leave to File Document Under Seal, d/e 14,
is DENIED.
ENTER: September 16, 2019
/s/ Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE
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