Black et al v. DMNO, LLC et al

Filing 133

AMENDED ORDER AND REASONS - IT IS ORDERED that the 131 Joint Motion to Approve Settlement is GRANTED and the Parties' settlement agreement is APPROVED. IT IS FURTHER ORDERED that Plaintiffs Mark Gandy; Ashley Newton; David Pierce-Feith; Austi n Lane; Patrice Jones; Erin Lawrence; Zachary Adams; Asaria Crittenden; Elizabeth Kuzmovich; Larry Hunt, Jr.; James Black; Barbara Stamatelatos; and Carlos Ayestas' claims against Defendants DMNO, LLC; Doron Moshe Rebi-Chia; Itai Ben Eli; and It amar Levy be and hereby are DISMISSED WITH PREJUDICE in accordance with the terms of the settlement agreement. Attorneys' fees and costs are paid in accordance with the contingency fee contract between Plaintiffs and attorneys. Signed by Judge Susie Morgan.(bwn)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JAMES BLACK, ET AL.,
Plaintiffs

CIVIL ACTION

VERSUS

NO. 16-2708

DMNO, LLC, ET AL.,
Defendants

SECTION: “E”

AMENDED ORDER AND REASONS
Before the Court is the Parties’ Joint Motion to Approve the Settlement and to
Dismiss Plaintiffs Mark Gandy; Ashley Newton; David Pierce-Feith; Austin Lane; Patrice
Jones; Erin Lawrence; Zachary Adams; Asaria Crittenden; Elizabeth Kuzmovich; Larry
Hunt, Jr.; James Black; Barbara Stamatelatos; and Carlos Ayestas’ claims with prejudice. 1
For the reasons that follow, the motion is GRANTED. 2
BACKGROUND
Plaintiffs filed this collective action, individually and on behalf of all others similarly
situated, on March 31, 2016. 3 Plaintiffs allege Defendants DMNO, LLC; Doron Moshe RebiChia; Itai Ben Eli; and Itamar Levy (collectively “Doris Metropolitan”) violated the Fair
Labor Standards Act, 29 U.S.C. § 201 by, inter alia: (1) paying its servers $2.15 per hour
instead of the national minimum wage of $7.25 per hour, claiming a tip credit, but requiring
the servers to participate in a tip pool that included managers; 4 (2) failing to pay Plaintiffs
one and one half times their hourly rate for the hours they work in excess of forty hours per

R. Doc. 191.
The Court originally approved the parties’ proposed settlement on July 30, 2018. R. Doc. 132. In that
order, the Court inadvertently omitted James Black and Barbara Stamatelatos. This amended order
addresses that omission; no other changes have been made.
3 R. Doc. 1. The named parties in the complaint also included Shannon McSwain, whose claims were settled
on May 21, 2018, R. Doc. 98, and Jeffery Blair, whose claims were dismissed on May 3, 2018, R. Doc. 87.
4 R. Doc. 1 at I, IV.
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week; 5 and (3) requiring Plaintiffs to attend mandatory Monday meetings, without paying
Plaintiffs an hourly wage. 6
The Court certified the collective class on June 1, 2018. 7 The class includes those
“employed as a server or assistant server at Doris Metropolitan, paid less than $7.25 per
hour in direct cash wages (e.g., you were paid $2.13/hour), and you were required to tip out
a portion of your tips to managers and/or owners/managers.” 8
On June 4–5, 2018, the Court held a two-day bench trial. 9 During the trial, the
parties reached a stipulation with respect to: (1) Defendants’ liability regarding payment for
mandatory Monday meetings and to damages in the amount of $1,124.44; (2) Defendants’
liability regarding the overtime claims and to damages in the amount of $443.45; and (3)
with respect to the damage calculation only, the parties stipulated that, in the event the
Court find Defendants liable, Defendants would be liable for “damage amounts regarding
the unpaid minimum wage claims in the amount of $87,765.98 for a 2 year look back period
and $85,451.31 for a 3 years look back period.” 10
On July 20, 2018, following the trial, but before the Court’s ruling, the Parties jointly
moved to approve the proposed settlement agreement and dismiss Plaintiffs’ remaining
claims with prejudice. 11
STANDARD OF LAW
The Court “must approve any settlement reached by the parties which resolves the

Id.
Id.
7 R. Doc. 115.
8 Id. at 2.
9 R. Docs. 127, 128.
10 R. Doc. 126.
11 R. Doc. 131.
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claims in this action brought under [29 U.S.C. § 216(b)].”12 “In order to approve a
settlement proposed by an employer and employees of a suit brought under the FLSA and
enter a stipulated judgment, a court must determine that the settlement is a fair and
reasonable resolution of a bona fide dispute over FLSA provisions.” 13 The Court must
scrutinize the proposed settlement agreement to verify that parties are not circumventing
the “clear FLSA requirements” by entering into a settlement agreement. 14 When deciding
whether to approve a proposed settlement, the Court must assess whether the proposed
settlement is both (1) the product of a bona fide dispute over the FLSA’s provisions and
(2) fair and reasonable. 15
ANALYSIS
I.

The Settlement is the Product of a Bona Fide Dispute
When deciding whether a bona fide dispute exists, the Court considers whether

there is a “genuine dispute as to the Defendant’s liability under the FLSA,” 16 as “[w]ithout
a bona fide dispute, no settlement could be fair and reasonable.” 17 This is particularly
true in an “FLSA [action because its provisions] are mandatory, and not subject to
negotiation and bargaining between employers and employees.” 18
The Court finds a bona fide dispute exists between Plaintiffs and Defendants with
regard to whether Defendants violated the FLSA. Numerous matters are currently in
dispute, including whether Plaintiffs were properly paid regular and overtime

Collins v. Sanderson Farms, Inc., 568 F. Supp. 2d 714, 717 (E.D. La. 2008).
Id. at 719.
14 See id.
15 Domingue v. Sun Electric & Instrumentation, Inc., No. 09-682, 2010 WL 1688793, at *1 (E.D. La Apr.
26, 2010).
16 Allen v. Entergy Operations, Inc., No. 11-1571, 2016 WL 614687, at *1 (E.D. La. Feb. 11, 2016).
17 Collins, 568 F. Supp. 2d at 719.
18 Allen, 2016 WL 614687, at *1.
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compensation, whether Defendants properly claimed a tip credit, and whether Defendants
maintained accurate employment and payroll records. During the trial of this matter, the
parties offered various witnesses and substantial evidence into the record in support of
their respective positions. The Court finds this sufficient to conclude that, in this case, there
was “both aggressive prosecution and strenuous defense” to prove a bona fide dispute. 19
II.

The Settlement is Fair and Reasonable
In determining whether a negotiation is fair and reasonable under the FLSA, courts

are guided by Reed v. General Motors Corporation, in which the Fifth Circuit enumerated
factors to determine whether a settlement is fair in a class action under Rule 23 of the
Federal Rules of Civil Procedure. 20 Courts, however, “adopt or vary these factors in their
application in light of the special role of the Court in settlement of FLSA claims.” 21 There
are six factors: (1) the existence of fraud or collusion behind the settlement; (2) the
complexity, expense, and likely duration of the litigation; (3) the stage of the proceedings
and the amount of discovery completed; (4) the probability of the plaintiffs’ success on
the merits; (5) the range of possible recovery; and (6) the opinions of class counsel, class
representatives, and absent class members. 22
A. Application of the Factors
1. The existence of fraud or collusion behind the settlement
With respect to the “fraud or collusion” factor, there are several presumptions that
guide a court’s determination of whether a settlement is fair and reasonable. “[T]here is a

See Atkins v. Worley Catastrophe Response, LLC, No. 12-2401, 2014 WL 1456382, at *2 (E.D. La. Apr.
14, 2014).
20 Allen, 2016 WL 614687, at *2; Reed v. Gen. Motors Corp., 703 F.2d 170, 172 (5th Cir. 1983); see also
Collins, 568 F. Supp. 2d at 722 (noting “Rule 23 does not control FLSA collective actions, [but] many courts
have adopted many of Rule 23’s procedures” given the court’s discretion under §216(b)).
21 Collins, 568 F. Supp. 2d at 722.
22 Id. (citing Camp v. Progressive Corp., No. 01-2680, 2004 WL 2149079 (E.D. La. Sept. 23, 2004)).
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strong presumption in favor of finding a settlement fair,” 23 and, absent evidence to the
contrary, there is a presumption that no fraud or collusion occurred between counsel. 24
In light of these presumptions, however, “it is clear that the court should not give rubberstamp approval.” 25 The Court has found no indication of fraud or collusion. The Parties
have engaged in discovery, motions practice, and negotiations to resolve this matter. The
case proceeded to trial, where both sides presented witnesses and evidence. This factor
indicates the settlement is fair and reasonable.
2. The complexity, expense, and likely duration of the litigation
The instant case has been pending for more than two years. Although the discovery
period concluded on March 27, 2018,26 and the Court heard evidence at a two-day bench trial
on which the Court has not yet ruled,27 there remain numerous unresolved issues. For
example, the Court has not yet issued its findings of fact and conclusions of law with respect
to whether Doris Metropolitan’s practice of including managers in the tip pool violates the
FLSA, and, if so, whether that violation was willful. The Court finds that the unresolved issues
and the complexity of the litigation indicate the settlement is fair and reasonable.
3. The stage of the proceedings and the amount of discovery completed
A court will consider how much formal discovery has been completed for two
reasons: (1) “extensive discovery [by the parties indicates] a good understanding of the
strengths and weaknesses of their respective cases and hence that the settlement’s value
is based upon such adequate information,” and (2) “full discovery demonstrates that the
parties have litigated the case in an adversarial manner and . . . therefore . . . settlement

Domingue, 2010 WL 1688793, at *1 (internal quotations omitted).
Akins, 2014 WL 1456382, at *2.
25 Id. (quoting 4 NEWBERG ON CLASS ACTIONS §11.41 (4th ed.)).
26 R. Doc. 65.
27 R. Docs. 119, 121, 127, 128.
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is not collusive but arms-length.” 28 The lack of much formal discovery is not necessarily
fatal, however, and a court may look to informal avenues of gathering information or may
approve a settlement with no formal discovery conducted. 29
In this case, the Parties have engaged in both pre-certification discovery as well as
extensive “merits” discovery for the last two years. The parties have exchanged thousands
of pages of documents and undergone two rigorous settlement conferences. 30 The case
proceeded to trial, 31 and the parties reached a settlement only after evidence had been
presented. 32 The Court, therefore, finds the Parties have litigated the case in an adversarial
manner and are sufficiently familiar with the facts of this case to reach a fair settlement.
This factor weighs in favor of finding the settlement fair and reasonable.
4. The probability of Plaintiffs’ success on the merits
It is uncertain at this point whether and the extent to which Plaintiffs would be
successful. The Parties have reviewed and analyzed the defenses asserted by Defendants.
Although the Parties do not agree about all inferences that might be properly drawn from
the undisputed facts, they submit they are confident that continued litigation of Plaintiffs’
claims would not produce results more economically beneficial than this stipulated
compromise settlement.33 The Parties have taken into account the uncertain outcome and
the risk of continued litigation, as well as the difficulties and delays inherent in such
litigation and the likelihood of protracted appellate review. The Court finds that given the

NEWBERG ON CLASS ACTIONS § 13:50 (5th ed.)
See id.; In re Chicken Antitrust Litig. Am. Poultry, 669 F.2d 228, 241 (5th Cir. 1982) (explaining that
formal discovery is not “a necessary ticket to the bargaining table” where the parties and the court are
adequately informed to determine the fairness of the settlement) (citing In re Corrugated Container
Antitrust Litigation, 643 F.2d 195, 211 (5th Cir. 1981)).
30 R. Docs. 45, 82.
31 R. Docs. 119, 121, 127, 128.
32 R. Doc. 131.
33 See R. Doc. 131-1 at 5–6.
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unresolved disputes between the parties and the stage at which this litigation remains, it is
unclear whether and to what extent Plaintiffs would be meritorious. This factor indicates
the settlement is fair and reasonable.
5. The range of possible recovery
The settlement amounts for Plaintiffs are based on a negotiated number of hours
Plaintiffs allegedly worked but for which they were not paid overtime and the
compensation due to them for allegedly being forced to participate in a tip pooling system
that violated the FLSA. 34 Under the proposed settlement, Plaintiffs will be compensated
for half of their claimed minimum wage/tip credit and/or overtime claim and an amount
equal to liquidated damages on that amount. 35 A portion of the settlement amount due to
Plaintiffs is designated as wages and subject to applicable income and payroll taxes and
withholding. 36 The remaining portion is designated as damages and not subject to any
taxes or withholdings. 37 The Court finds that all of the agreed-upon amounts are within a
range of possible recovery for the Plaintiffs, indicating the settlement is fair and
reasonable. 38
6. The opinions of class counsel, class representatives, and absent class members
The only parties to the settlement are Plaintiffs Mark Gandy; Ashley Newton; David
Pierce-Feith; Austin Lane; Patrice Jones; Erin Lawrence; Zachary Adams; Asaria
Crittenden; Elizabeth Kuzmovich; Larry Hunt, Jr.; and Carlos Ayestas and Defendants
DMNO, LLC; Doron Moshe Rebi-Chia; Itai Ben Eli; and Itamar Levy. There are no “absent
class members,” as no other servers or server assistants consented to join the collective

Id. at 4–5.
Id. at 5.
36 Id.
37 Id.
38 See Collins, 568 F. Supp. 2d at 726–27.
34
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action on or before July 31, 2017, the date on which the opt-in period for the class
expired. 39 Both parties are represented by counsel. 40 The Parties jointly seek judicial
approval of a settlement agreement that addresses a bona fide dispute and was negotiated
in good faith. The Court finds the final factor indicates the settlement is fair and
reasonable.
B. Conclusion
All six of the factors indicate the proposed settlement is fair and reasonable. As a
result, the Court finds the proposed settlement agreement is fair and reasonable.
Accordingly;
CONCLUSION
IT IS ORDERED that the Joint Motion to Approve Settlement is GRANTED and
the Parties’ settlement agreement is APPROVED. 41
IT IS FURTHER ORDERED that Plaintiffs Mark Gandy; Ashley Newton; David
Pierce-Feith; Austin Lane; Patrice Jones; Erin Lawrence; Zachary Adams; Asaria
Crittenden; Elizabeth Kuzmovich; Larry Hunt, Jr.; James Black; Barbara Stamatelatos; and
Carlos Ayestas’ claims against Defendants DMNO, LLC; Doron Moshe Rebi-Chia; Itai Ben
Eli; and Itamar Levy be and hereby are DISMISSED WITH PREJUDICE in
accordance with the terms of the settlement agreement. Attorneys’ fees and costs are paid

R. Doc. 35; see LaChapelle v. Owens-Illinois, Inc., 513 F.2d 286, 288 (5th Cir. 1975) (“Under [29 U.S.C.
§ 216(b)], . . . no person can become a party plaintiff and no person will be bound by or may benefit from
judgment unless he has affirmatively ‘opted into’ the class; that is, given his written, filed consent.”); Brown
v. United Furniture Industries, Inc., No. 13-246, 2015 WL 1457265, at *5 (N.D. Miss. Mar. 30, 2015) (“[I]n
an FLSA collective action, there are no absent class members; only those who have opted in are considered
parties to the suit and bound by the results of the action.”). The Court dismissed Plaintiff Jeffrey Blair on
May 3, 2018, R. Doc. 87; attorneys Laura Catlett and Jessica Vasquez, who represent Plaintiffs, withdrew
as counsel for Blair on May 24, 2018, R. Doc. 102.
40 “‘The Court is entitled to rely on the judgment of experienced counsel in its evaluation of the merits of a
class action settlement.’” Lackey v. SDT Waste & Debris Servs., LLC, No. 11-1087, 2014 WL 4809535, at *2
(E.D. La. Sept. 26, 2014) (quoting Collins, 568 F. Supp. 2d at 727).
41 R. Doc. 131.
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in accordance with the contingency fee contract between Plaintiffs and attorneys.
New Orleans, Louisiana, this 27th day of August, 2018.
_______ _ __ _______ __ _______
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE

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