Smith v. R.F. Fisher Electric Company, LLC

Filing 43

MEMORANDUM AND ORDER denying without prejudice to refiling 18 Motion for Preliminary Approval of Collective Action Settlement. IT IS FURTHER ORDERED THAT the parties must notify the court on or before June 29, 2018 of their intention either to: (1) file a revised settlement agreement and supporting documentation considering the rulings in this Order; or (2) abandon settlement and proceed to litigate this dispute. Signed by District Judge Daniel D. Crabtree on 6/4/18. (kao)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

MICHELLE C. SMITH, on behalf
of herself and all others similarly
situated,
Plaintiff,
Case No. 17-2457-DDC-KGG
v.
R.F. FISHER ELECTRIC
COMPANY, LLC,
Defendant.

MEMORANDUM AND ORDER
Plaintiff Michelle C. Smith, on behalf of herself and others similarly situated, filed this
lawsuit against defendant R.F. Fisher Electric Company, LLC. She alleges that defendant
violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. and the Kansas Wage
Payment Act (“KWPA”), Kan. Stat. Ann. § 44-313 et seq. Doc. 1. The parties have agreed on a
class-wide settlement.1 They now ask the court to grant preliminary approval of their collective
action settlement. Doc. 18. For reasons explained below, the court declines the parties’ request.
I.

Background
Plaintiff alleges that defendant required one administrative employee, each day, to work

over lunch without pay to answer phones and clean the kitchen and break area—responsibilities
commonly referred to as “kitchen duty.” Plaintiff alleges this “kitchen duty” required about 40

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Plaintiff also alleges, on behalf of herself only, that defendant violated the FLSA by terminating her
employment as retaliation for engaging in protected activity. The parties’ settlement does not include this
claim. Instead, the parties stipulated to the dismissal of this FLSA retaliation claim on May 30, 2018.
See Doc. 42.

minutes of work per day and defendant followed this practice for about two years—some 510
business days.
Plaintiff assumes an average hourly rate of pay of $20.40 for the administrative
employees. Using this assumption, she calculates defendant’s liability in this fashion: 510
business days x 2/3 of an hour (40 minutes per day) x $20.40 x 1.5 overtime rate = $10,404.
When liquidated, plaintiff contends, this unpaid overtime calculation amounts to a potential
judgment of $20,808.
Conversely, defendant asserts that it paid any employee working kitchen duty for that
time so long as she recorded the time on her timesheet. But, on December 20, 2016, its
administrative employees received an email. Defendant reports that some of the employees
misunderstood this email to direct them to stop recording time that they spent conducting kitchen
duty. Thereafter, plaintiff reported to her supervisor that employees were not recording their
time properly, and thus not being paid properly. Defendant then informed administrative
employees to record all kitchen duty time on their timesheets to ensure that they were paid for it.
Based on these events, defendant asserts, any unpaid kitchen duty occurred between December
20, 2016 and January 19, 2017—a period of 20 business days. Defendant’s theory of the case
results in, at most, 13 hours and 20 minutes of unpaid kitchen duty (20 days x 40 minutes).
Defendant assumes: (a) the unpaid kitchen duty was evenly divided among the five
administrative employees employed during the relevant timeframe (i.e., each worked 2.7 hours
of unpaid kitchen duty); and (b) defendant should have paid all unpaid kitchen duty at the timeand-a-half overtime rate. Based on these assumptions, defendant contends that its maximum
liability is $839.34. Defendant explains its theory of maximum exposure this way:

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Employee
Tammy Nodurft
Eva Steeples (Miller)
Lisa Herzog
Dena Kelley
Michelle Smith
Totals

Regular Rate/
Amount Owed (OT Liquidated
OT Rate
Rate x 2.7 hours)
(Amount Owed x2)
$24.62/$36.93
$99.71
$23.50/$35.25
$95.18
$18.00/$27.00
$72.90
$20.50/$30.75
$83.03
$17.00/$25.50
$68.85
$419.67
$839.34

The parties have reached an agreement that settles their dispute over defendant’s potential
liability. Under the agreement, defendant will pay up to $10,000. The Settlement Agreement
defines the settlement class as all non-exempt administrative employees who performed “kitchen
duty” during the two years before plaintiff filed her Complaint with the court. This settlement
class includes a total of 10 individuals. The agreement proposes to distribute the settlement
proceeds as follows: nothing to plaintiff’s counsel—he has waived his fee; $1,000 to plaintiff as
a service payment; and the remaining $9,000 to be apportioned among the settlement class
members pro rata based upon the number of days each worked within the two-year period. The
following table represents the proposed pro rata distribution.
Name
Faith Base
Tammy Nodurft
Nancy Snowdy
Eva Steeples (Miller)
Lisa Herzog
Dena Kelley
Michelle Smith
Beth Winkler
Diane Bayer
Pam Krueger
Totals

Work Started
04/20/15
04/20/15
04/06/17
04/20/15
07/28/16
04/20/15
12/21/15
06/06/16
04/20/15
04/20/15

Work Ended
12/21/16
04/20/17
04/20/17
04/20/17
04/20/17
04/04/17
03/03/17
07/21/16
06/10/16
05/26/16

Days Worked
611
731
14
731
266
715
438
45
417
402
4370

Payment
$1,258.35
$1,505.49
$28.83
$1,505.49
$547.83
$1,472.54
$902.06
$92.68
$858.81
$827.92
$9,000.00

Under the Settlement Agreement, each class member will receive notice of this lawsuit
and the proposed settlement by mail and also will receive information disclosing the specific
amount the respective class member would receive. Each class member will have 60 days from
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the Notice’s mailing to consent to join the collective action and settlement. The Notice and
Consent Form will be mailed to class members within five days of the court’s preliminary
approval of the parties’ settlement. Class members who return the Consent Form will receive
their pro rata share of the settlement proceeds, as already described. Any class members who do
not return the Consent From will receive nothing, but they will remain free to bring a wage and
hour claim against defendant.
The parties seek the court’s preliminary approval of their collective action settlement.
II.

Legal Standard
The parties to an FLSA action must present a settlement of those claims to the court for

review, and the court must determine whether the settlement is fair and reasonable. Barbosa v.
Nat’l Beef Packing Co., LLC., No. 12-2311-KHV, 2015 WL 4920292, at *3 (D. Kan. Aug. 18,
2015) (citing Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982)).
“To approve an FLSA settlement, the Court must find that the litigation involves a bona fide
dispute and that the proposed settlement is fair and equitable to all parties concerned.” Id. (citing
Lynn’s Food Stores, Inc., 679 F.2d at 1353). Also, when parties settle FLSA claims before the
court has made a final certification ruling, the court must make some final class certification
finding before it can approve an FLSA collective action settlement. Barbosa, 2015 WL
4920292, at *3 (citing McCaffrey v. Mortg. Sources, Corp., No. 08-2660-KHV, 2011 WL 32436,
at *2 (D. Kan. Jan. 5, 2011)).
III.

Analysis
In the following three sections, the court discusses final collective action certification, the

fairness and reasonableness of the proposed settlement agreement, and the fairness and
reasonableness of the proposed service payment to plaintiff. Ultimately, the court cannot

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determine whether the proposed service payment is fair and reasonable so the court cannot
preliminarily approve the parties’ collective action settlement.
A.

Final Collective Action Certification

Before the court can approve the parties’ FLSA collective action settlement, it must make
a final certification ruling. Barbosa, 2015 WL 4920292, at *3 (citing McCaffrey, 2011 WL
32436, at *3). To determine if the putative class members are similarly situated, the court
considers: “(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.” Grove v. ZW Tech, Inc., No. 11-2445-KHV, 2012 WL 1789100,
at *4 (D. Kan. May 17, 2012) (citing Thiessen v. GE Capital Corp., 267 F.3d 1095, 1103 (10th
Cir. 2001)) (other citation omitted).
First, the court finds that plaintiff and putative class members share similar factual and
employment settings. All potential class members worked as defendant’s administrative
employees. Plaintiff’s allegations assert that defendant required administrative employees to
perform kitchen duty, but no other employees. And the alleged kitchen duty requirements were
the same for all administrative employees—answer the phones and clean defendant’s kitchen
located in the workplace. The administrative employees within the proposed class were the only
employees who defendant expected to perform kitchen duty, and kitchen duty was the only
allegedly uncompensated work. So, plaintiff and the putative class members occupied similar
employment settings. This conclusion favors final collective action certification.
Second, the types of defenses available to defendant are common to all class members.
See Gambrell v. Weber Carpet, Inc., No. 10-2131-KHV, 2012 WL 5306273, at *2 (D. Kan. Oct.
29, 2012) (finding this factor favors final collective action certification when the “type of

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defenses available to defendants appear similar among all class members”). Defendant’s
defenses here include ones asserting that: class members were paid for kitchen duty; defendant
did not know class members were no longer recording kitchen duty on their timesheets; any
unrecorded time was de minimus; and kitchen duty was not compensable because administrative
employees could pursue personal endeavors during kitchen duty stints. This factor thus favors
final collective action certification.
Third, final collective action certification is appropriate because it promotes “the policy
encouraging settlement of litigation.” See id. (citing Lynn’s Food Stores, Inc., 679 F.2d at 1354).
The parties contend that a class-wide settlement will eliminate any conceivable procedural
issues—and will not create such issues. The court agrees. This third factor—like the other two
factors—favors final collective action certification.
B.

Proposed Settlement Agreement

When parties settle FLSA claims, they must present the settlement to the court and it
must decide whether the settlement is fair and reasonable. Tommey v. Computer Sciences Corp.,
No. 11-CV-02214-EFM, 2015 WL 1623025, at *1 (D. Kan. April 13, 2015); see also Gambrell,
2012 WL 5306273, at *2 (explaining that “[w]hen 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 whether the settlement is fair and reasonable”
(citing Lynn’s Food Stores, Inc., 679 F.2d at 1353). To approve an FLSA settlement, the court
must determine whether: (1) the litigation involves a bona fide dispute, (2) the proposed
settlement is fair and equitable to all parties, and (3) the proposed settlement contains an award
of reasonable attorneys’ fees. Barbosa, 2015 WL 4920292, at *5 (citing McCaffrey, 2011 WL
32436, at *2). The next three subsections discuss these requirements.

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1.

Bona Fide Dispute

To demonstrate a bona fide dispute, the parties should provide: “(1) a description of the
nature of the dispute (for example, a disagreement over coverage, exemption or computation of
hours worked or rate of pay); (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.” McCaffrey, 2011 WL 32436, at *4.
Trying to satisfy these requirements, the parties make the following assertions:
1. Plaintiff and class members are current and former administrative employees of
defendant, an electrical contractor;
2. Plaintiff contends that defendant did not compensate her and other administrative
employees for kitchen duty—i.e., answering the phones over lunch and cleaning the
kitchen area;
3. Plaintiff contends that none of the time that administrative employees spent performing
lunch duty was compensated;
4. Defendant contends that it did pay administrative employees for kitchen duty except for
one month and, even during that month, not all employees construed the December 20,
2016 email to instruct them not to record time for kitchen duty;
5. Defendant also contends that any time spent answering phones was de minimis, and
employees were free to clean the kitchen whenever they wished throughout the paid
working day;
6. The parties dispute the computation of wages owed;

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7. Defendant contends that, at most, 13 hours and 20 minutes of straight time or overtime
went unpaid across the entire class—capping its liability at $839.34;
8. Conversely, plaintiff contends that 510 hours of overtime was unpaid, making defendant
liable for $20,808 in unliquidated and liquidated damages.
Collectively, these assertions suffice to establish a bona fide dispute. See Gambrell, 2012
WL 5306273, at *4 (finding a bona fide dispute when the parties asserted a dispute existed
“whether all work hours were recorded and whether defendant properly compensated [class
members] for overtime hours worked”).
2.

Fair and Equitable

To determine whether the proposed settlement is fair and equitable, the court considers
the factors specified in Fed. R. Civ. P. 23(e). Gambrell, 2012 WL 5306273, at *4. The factors
are: “(1) whether the proposed settlement was fairly and honestly negotiated; (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 and expensive litigation; and (4) the judgment of the parties that the
settlement is fair and reasonable.” Id. (citing McCaffrey, 2011 WL 32436, at *5); see also
Jackson v. Ash, No. 13-2504-EFM-JPO, 2015 WL 751835, at *2 (D. Kan. Feb. 23, 2015). These
factors do not exclude consideration of other appropriate circumstances. Id. (citing McCaffrey,
2011 WL 32436, at *5). The court also must consider “factors relevant to history and policy of
the FLSA.” Id. (citation omitted).
The relevant factors do not commission the court to “‘conduct a foray into the wilderness
in search of evidence that might undermine the conclusion that the settlement is fair.’” Jackson,
2015 WL 751835, at *2 (quoting Gottlieb v. Wiles, 11 F.3d 1004, 1015 (10th Cir. 1993),

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abrogated on other grounds by Devlin v. Scardelletti, 536 U.S. 1 (2002)). “But the court also
may not ‘rely solely upon the assertions of the proponents of the settlement [about] what the
evidence shows.’” Id. (quoting Gottlieb, 11 F.3d at 1015). Instead, the court must undertake “an
independent analysis of ‘the evidence before it’ to reach its conclusion.” Id. (quoting Gottlieb,
11 F.3d at 1015). “The proponents of the settlement bear the burden to provide sufficient
evidence to enable the court to conclude that the settlement is fair.” Id. (citing Gottlieb, 11 F.3d
at 1015).
First, the parties assert that the proposed settlement was fairly and honestly negotiated.
In Jackson, our court determined a proposed settlement was fair and honestly negotiated when
“the agreement represented the cooperative and good faith result” of arm’s-length negotiation by
skilled counsel. Id. The court found: counsel for both parties were familiar with the specific
legal issues in the case; the parties had engaged in a time-consuming discovery process; the
parties aggressively litigated the issue of certification; and they undertook several mediation
sessions. In sum, Jackson concluded, “the Agreement [was] the product, not of collusion or
other impropriety, but of both parties’ deliberate consideration of the action’s merits and
uncertainties.” Id.
While the parties here have provided no information about the discovery they conducted
or attempts to mediate the disputes, the raw economics suggest an arm’s-length negotiation has
occurred. Indeed, counsel reports that they have “exchanged several offers, damage
computations, and evaluations of the merits.” Doc. 19-3 (Affidavit of Defendant’s Counsel) at ¶
10. The court finds that the proposed settlement agreement is a product of “deliberate
consideration of the action’s merits and uncertainties.” See Jackson, 2015 WL 751835, at *2.

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Second, serious questions of fact exist and collectively, they place the outcome of the
litigation in doubt. Specifically, while plaintiff contends that defendant failed to compensate
class members for kitchen duty for about two years, defendant’s records reflect that, at most, it
did not compensate some of the administrative employees for kitchen duty during a one-month
period. This dispute over the number of uncompensated hours at issue places the case’s outcome
in doubt.
Third, the value of an immediate recovery outweighs the mere possibility of future relief
after protracted and expensive litigation. While plaintiff contends that this lawsuit is worth about
$20,808, defendant argues that its exposure cannot exceed $839.34. And defendant’s theory
suggests that only five of the 10 class members could recover. With this settlement, the class
members would divide about $10,000—or half of what plaintiff believes the FLSA guarantees
them. They would receive this $10,000 without additional delay or the disruption attendant to
ongoing litigation. The proposed settlement thus “provides meaningful, immediate recovery to
all class members that might otherwise be unrecoverable after a decision on the merits.” See
Jackson, 2015 WL 751835, at *2.
Fourth, the parties agree that the proposed settlement is fair and reasonable. While the
court should “hesitate to substitute its own judgment for that of counsel,” Lengel v.
HomeAdvisor, Inc., No. CV 15-2198-KHV, 2017 WL 364582, at *8 (D. Kan. Jan. 25, 2017)
(citations omitted), courts nevertheless must consider whether the parties believe the settlement
is fair and reasonable, Gambrell, 2012 WL 5306273, at *4. Here, both parties’ counsel have
confirmed their judgment that the proposed settlement is fair and reasonable. Doc. 19-2
(Affidavit of Plaintiff’s Counsel) at ¶ 2; Doc. 19-3 (Affidavit of Defendant’s Counsel) at ¶ 2.

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In sum, the Rule 23(e) factors suggest that the proposed settlement is fair and equitable,
and the history and policies of the FLSA do not counsel for a different result.
3.

Attorneys’ Fees

The FLSA requires the parties submitting a settlement agreement to include an award of
reasonable attorneys’ fees and the costs of the action. 29 U.S.C. § 216(b); see also McCaffrey,
2011 WL 32436, at *2 (citing Lee v. The Timberland Co., No. C 07-2367-JF, 2008 WL 2492295,
at *2 (N.D. Cal. June 19, 2008)). The court has discretion to determine the amount and
reasonableness of the fee, but the FLSA fee award nevertheless is mandatory. Barbosa, 2015
WL 4920292, at *4 (citations omitted).
Here, plaintiff’s counsel asks for zero fees and costs. This outcome, counsel reports, will
ensure plaintiff and class members receive the maximum possible recovery. A fee award of zero
is within the court’s discretion. See Sahyers v. Prugh, Holliday & Karatinos, P.L., 560 F.3d
1241, 1244–45 (11th Cir. 2009). In that case, the Eleventh Circuit affirmed a district court
decision granting no fee award to plaintiff’s counsel. A spate of uncivilized conduct among
counsel convinced the court that it should not award fees. Id.
Here, the potential for zero fee award originates in far different circumstances. Plaintiff’s
counsel reports that he voluntarily has elected not to seek an award. This decision does not
conflict with the essential reason for fee awards under the FLSA. The purpose of a fee award is
to ensure “effective access to the judicial process by providing attorney fees for prevailing
plaintiffs with wage and hour grievances; ‘[o]bviously Congress intended that the wronged
employee should receive his full wages . . . without incurring any expense for legal fees or
costs.’” United Slate v. G & M Roofing & Sheet Metal Co., 732 F.2d 495, 502 (6th Cir. 1984)

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(citing Maddrix v. Dize, 153 F.2d 274, 275–76 (4th Cir. 1946)) (ellipsis in original).
Accordingly, the court approves counsel’s request for no fee and cost award.
In sum, a bona fide dispute exists here, the settlement is fair and equitable, and the
settlement agreement adequately considers the issue of attorneys’ fees and costs—albeit in an
unusual fashion. For these reasons, the court concludes that the proposed settlement agreement
is fair and reasonable.
But as the next section explains, the court cannot preliminarily approve the agreement
because the court cannot determine whether the service payment requested is fair and reasonable.
C.

Proposed Service Payment

The court also must examine any proposed service payments to determine whether they
are fair and reasonable. See Tommey, 2015 WL 1623025, at *2–3; Grove, 2012 WL 1789100, at
*7 (citations omitted). The “Collective Action Settlement Agreement and Release” allows
plaintiff to receive a $1,000 service payment. Doc. 19-1 at ¶ N.6. Plaintiff provides no
information about the nature of her assistance to counsel during the litigation or an estimate of
the number of hours she expended.
Our court evaluates the reasonableness of a requested service award by considering
whether the proposed award adequately reflects the time that the designated recipient spent
working on the lawsuit. See In re Sprint Corp. ERISA Litig., 443 F. Supp. 2d 1249, 1271 (D.
Kan. 2006) (reducing requested service awards to each of the four named plaintiffs from $15,000
to $5,000, even though the total settlement exceeded $25 million, because the $5,000 award
adequately compensated each plaintiff for the 80 hours of time each one devoted, on average, to
the lawsuit); see also Barbosa, 2015 WL 4920292, at *6 (rejecting proposed service award of
$3,500 to each of two named plaintiffs who spent 24.1 hours and 9.6 hours on the case and

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concluding instead that $20 per hour for the time plaintiffs spent on the case was a fair and
reasonable service award); Bruner v. Sprint/United Mgmt. Co., Nos. 07-2164-KHV, 08-2133KHV, 08-2149-KHV, 2009 WL 2058762, at *11 (D. Kan. July 14, 2009) (rejecting $10,000
proposed service award to the named plaintiff in an $8.7 million settlement because plaintiff
failed to provide specific details about the amount of time she invested in the suit and awarding a
$5,000 service award instead).
Plaintiff may have the wherewithal to convince the court that she deserves a $1,000
award. But so far, the court lacks any information about the time plaintiff has devoted to the
case. Given that absence and the legal standard that the court must apply, the court cannot
preliminarily approve the proposed settlement.
IV.

Conclusion
In sum, final collective action certification is appropriate and the proposed settlement

agreement is fair and reasonable. But the court cannot determine whether the proposed service
award is fair and reasonable. The court therefore cannot approve the proposed settlement
agreement. The court thus denies the parties’ Joint Motion for Preliminary Approval of
Collective Action Settlement without prejudice to refiling a new motion that cures the deficiency
of the present one.
IT IS THEREFORE ORDERED BY THE COURT THAT the parties’ Joint Motion
for Preliminary Approval of Collective Action Settlement (Doc. 18) is denied without prejudice
to refiling.
IT IS FURTHER ORDERED THAT the parties must notify the court on or before
June 29, 2018 of their intention either to: (1) file a revised settlement agreement and supporting

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documentation considering the rulings in this Order; or (2) abandon settlement and proceed to
litigate this dispute.
IT IS SO ORDERED.
Dated this 4th day of June, 2018, at Topeka, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge

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