Williams et al v. Alimar Security, Inc.
OPINION and ORDER (1) Denying Without Prejudice Plaintiffs' 60 Motion for Approval of Class Settlement and (2) Denying as Moot Defendant's 55 Motion to Decertify Collective Action Class. Signed by District Judge Linda V. Parker. (RLou)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
MARCUS WILLIAMS, MICHAEL
TAYLOR, and AARON BRADFORD,
on behalf of themselves and all others
Civil Case No. 13-12732
Honorable Linda V. Parker
ALIMAR SECURITY, INC.,
OPINION AND ORDER (1) DENYING WITHOUT PREJUDICE
PLAINTIFFS’ MOTION FOR APPROVAL OF CLASS SETTLEMENT
AND (2) DENYING AS MOOT DEFENDANT’S MOTION TO DECERTIFY
COLLECTIVE ACTION CLASS
Plaintiffs filed this putative collective action on June 30, 2013, claiming that
Defendant violated the Fair Labor Standards Act (“FLSA”) by failing to pay its
alarm response security officers (“AROs”) time and a half for overtime work. The
Honorable Bernard Friedman, to whom this case originally was assigned,
conditionally certified the matter as a collective action on November 21, 2013.2
(ECF No. 19.) On April 28, 2016, Defendant filed a motion for decertification.
Dennis Stone initially was named as a plaintiff in this action. On August 20, 2014,
this Court signed a stipulated order dismissing his claims with prejudice. (ECF
The matter was reassigned to the undersigned on May 28, 2014. (ECF No. 33.)
(ECF No. 55.) Thereafter, the parties engaged in a settlement conference before
Magistrate Judge David Grand, where a settlement was reached. Plaintiffs
therefore filed a Motion for Approval of Class Settlement on August 16, 2016, and
submitted a settlement agreement for in camera review. (ECF No. 60.) Defendant
has not responded to the motion and presumably does not object to the motion.
The FLSA requires all qualifying employers to pay employees no less than
the minimum wage, and to compensate employees for hours worked in excess of
forty per work week at a rate not less than one-and-a-half times the regular rate of
pay. 29 U.S.C. §§ 206(a)(1), 207(a)(1). The statute authorizes collective actions
to recover damages for unpaid wages provided two conditions are satisfied: (1) the
employees are “similarly situated” and (2) all plaintiffs provide written consent to
becoming a party and such consent is filed with the court. 29 U.S.C. § 216(b).
“This section provides a mechanism that is ‘something akin to a class action.’ ”
Torres v. Gristede’s Operating Corp., No. 04 Civ 3316, 2006 WL 2819730, at *7
(S.D.N.Y. Sept. 29, 2006) (citing Scholtisek v. Eldre Corp., 229 F.R.D. 381, 386
(W.D.N.Y. 2005)). Nevertheless, there are differences between an FLSA
collective action and a class action certified under Federal Rule of Civil Procedure
(1) the collective action binds only potential plaintiffs
who “opt-in,” whereas Rule 23 requires class members to
opt-out, if they wish not to be included; and (2) FLSA
only requires employees be “similarly situated,” whereas
Rule 23 requirements are more detailed. Sipas v.
Sammy’s Fishbox, Inc., No. 05 Civ. 10319, 2006 U.S.
Dist. LEXIS 24318, at *4 (S.D.N.Y. Apr. 24, 2006).
Torres, 2006 WL 2819730, at *7.
Courts within the Sixth Circuit and in other Circuits generally apply a twostep procedure for determining whether an FLSA case should proceed as a
collective action. See, e.g., Waggoner v. U.S. Bancorp, 110 F. Supp. 3d 759, 764
(N.D. Ohio 2015); Watson v. Advanced Distrib. Servs., LLC, 298 F.R.D. 558, 561
(M.D. Tenn. 2014); see also Comer v. Wal-Mart Stores, Inc., 454 F.3d 544, 546-47
(6th Cir. 2006) (describing the two-step process). At the first step, commonly
referred to as conditional certification, the plaintiff must show that the employees
in the proposed class are “ ‘similarly situated.’ ” Comer, 454 F.3d at 546 (quoting
29 U.S.C. § 216(b)). “To satisfy this burden at this initial notice stage, the plaintiff
must only ‘make a modest factual showing’ that [the plaintiff] is similarly situated
to the other employees he [or she] is seeking to notify.” Waggoner, 110 F. Supp.
2d at 764 (quoting Comer, 454 F.3d at 546-47.) This “ ‘certification is conditional
and by no means final.’ ” Comer, 454 F.3d at 546 (quoting Pritchard v. Dent
Wizard Int’l, 210 F.R.D. 591, 595 (S.D. Ohio 2002)). As indicated earlier, Judge
Friedman granted Plaintiffs’ motion for conditional certification. (ECF No. 19.)
At the second step, the court “examine[s] more closely the question of
whether particular members of the class are, in fact, similarly situated.” Comer,
454 F.3d at 547. The court’s focus is on whether the individuals who have opted
into the litigation are similarly situated. See Ruiz v. Citibank, N.A., 93 F. Supp. 3d
279, 297, (S.D.N.Y. 2015). The Sixth Circuit has provided that “plaintiffs are
similarly situated when they suffer from a single, FLSA-violating policy, and when
proof of that policy or of conduct in conformity with that policy proves a violation
as to all the plaintiffs.” O’Brien v. Ed Donnelly Enter., Inc., 575 F.3d 567, 585
(6th Cir. 2009). The court may decertify the class if it determines at this step that
the plaintiffs are not similarly situated.
In its motion to decertify the class, Defendant does not argue that Plaintiffs,
generally, are not similarly situated. Instead, Defendant contends that varying
circumstances render the following six individuals not entitled to relief: Jeremy
Ray, Mark Allen, Darrell Cragway, Jerome Cabell, Keith Deramus, and Darren
Malone. In fact, it is evident that the name Plaintiffs and the other individuals who
have opted into the litigation are similarly situated as they claim to suffer a
violation of the FLSA based on a single decision by Defendant-- i.e., to classify on
call time as not constituting working time under the FLSA. The parties’ settlement
agreement, which includes payments to all of the individuals listed above (except
Ray), suggests that Defendant no longer is challenging final certification of this
matter as a collective action.3
Whether or not a lawsuit proceeds as a collective action, most courts agree
that “ ‘employees’ claims under the FLSA are non-waivable and may not be settled
without supervision of either the Secretary of Labor or a district court.’ ” Snook v.
Valley Ob-Gyn Clinic, P.C., No. 14-cv-12302, 2015 WL 144400, at *1 (E.D. Mich.
Jan. 12, 2015) (quoting Gentrup v. Renovo Servs., LLC, No. 1:07cv430, 2011 WL
2532922, at *2 (S.D. Ohio Jun 24. 2011) (citing Lynn’s Food Stores, Inc. v. United
States, 679 F.2d 1350, 1352-53 (11th Cir. 1982)); see also Steele v. Staffmark
Investments, LLC, -- F. Supp. 3d --, 2016 WL 1156744, at *1 (W.D. Tenn. 2016)
(citing cases). Courts reach this conclusion having considered Congress’ intent
when enacting the FLSA:
“The legislative history of the Fair Labor Standards Act
shows an intent on the part of Congress to protect certain
groups of the population from substandard wages and
excessive hours which endangered the national health
and well-being and the free flow of goods in interstate
commerce. The statute was a recognition of the fact that
due to the unequal bargaining power as between
employer and employee, certain segments of the
population required federal compulsory legislation to
prevent private contracts on their part which endangered
national health and efficiency and as a result the free
movement of goods in interstate commerce.”
The Court, therefore, is denying Defendant’s Motion to Decertify Collective
Action Class as moot.
Steele, 2016 WL 1156744, at *1-2 (quoting Brooklyn Sav. Bank v. O’Neil, 324
U.S. 697, 706-07 (1945)) (footnotes omitted in Steele). “ ‘Recognizing that there
are often great inequalities in bargaining power between employers and employees,
Congress made the FLSA’s provisions mandatory; thus, the provisions are not
subject to negotiation or bargaining between employers and employees.’ ” Id. at
*2 (quoting Lynn’s Food Stores, 679 F.2d at 1352); see also Barrentine v. Ark.Best Freight Sys., Inc., 450 U.S. 728, 740 (1981) (noting that the Supreme Court
has “frequently emphasized the nonwaivable nature of an individual employee’s
right to a minimum wage and to overtime pay under the Act.”).
When reviewing a proposed FLSA settlement, the court must determine
whether the settlement is a “fair and reasonable resolution of a bona fide dispute
over FLSA provisions.” Lynn’s Food Stores, 679 F.2d at 1355. There are several
factors courts consider in making this determination:
(1) the plaintiff’s range of possible recovery; (2) the
extent to which the settlement will enable the parties to
avoid anticipated burdens and expenses in establishing
their respective claims and defenses; (3) the seriousness
of the litigation risks faced by the parties; (4) whether the
settlement agreement is the product of arm’s-length
bargaining between experienced counsel; and (5) the
possibility of fraud or collusion.
Wolinsky v. Scholastic, Inc., 900 F. Supp. 2d 332, 335 (S.D.N.Y. 2012) (internal
quotation marks and citation omitted); see also Dees v. Hydradry, Inc., 706
F.Supp.2d 1227, 1241 (M.D. Fla. 2010). Courts also find the inclusion of a
confidentiality provision relevant to deciding whether an agreement settling FLSA
claims is fair and reasonable.
Some courts conclude that a confidentiality provision is contrary to the
FLSA’s purpose and the presumption of public access to any judicial document.
See Steele, 2016 WL 1156744, at *5 (citing Brown & Williamson Tobacco Corp. v.
FTC, 710 F.2d 1165, 1169 (6th Cir. 1983); Guareno v. Vincent Perito, Inc., No.
14cv1635, 2014 WL 4953746, at *1 (S.D.N.Y. Sept. 26, 2014)). As the district
court stated in Steele: “ ‘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.’ ” Id. (quoting Dees, 706 F. Supp. 2d at 1242). One of the FLSA’s goals is
“to ensure that all workers are aware of their rights.” Guareno, 2014 WL 4953746,
at *1 (citing Dees, 706 F. Supp. 2d at 1242). If the parties want the court to
approve a settlement agreement with a confidentiality provision, it is their burden
“ ‘to articulate a real and substantial interest that justifies depriving the public of
access to the records that inform [the court’s] decision-making process.’ ” Alewel
v. Dex One Serv., Inc., No. 13-2312, 2013 WL 6858504, at *4 (D. Kan. Dec. 30,
2013) (quoting Helm v. Kansas, 656 F.3d 1277, 1292 (10th Cir. 2011)).
Finally, where the settlement agreement includes the payment of attorney’s
fees, the court must assess the reasonableness of that amount. Wolinsky, 900 F.
Supp. 2d at 336 (citing cases finding judicial review of the fee award necessary).
“[T]he Court must carefully scrutinize the settlement and the circumstances in
which it was reached, if only to ensure that ‘the interest of [the] plaintiffs’ counsel
in counsel’s own compensation did not adversely affect the extent of the relief
counsel procured for the clients.’ ” Id. (quoting Cisek v. Nat’l Surface Cleaning,
Inc., 954 F. Supp. 110, 110-11 (S.D.N.Y. 1997)).
As an initial matter, although not addressed in Plaintiffs’ pending motion,
the Court does not doubt that the parties’ proposed settlement represents a
resolution of a bona fide dispute. As this Court’s March 16, 2016 opinion and
order denying Defendant’s summary judgment motion reflects, there are several
genuine disputes at issue, for example: (1) whether the time Plaintiffs spent “on
call” or “waiting to be engaged” constitutes working time under the FLSA; (2)
whether the parties agreed to a fluctuating work week schedule; and (3) whether
Defendant acted in good faith. Due to these disputes, bona fide issues remain as to
the amount of wages, if any, still owed Plaintiffs and the ultimate amount they
could recover if they prevail.
In their pending motion, Plaintiffs do not ask the Court to find the settlement
fair and reasonable-- in fact, that term appears nowhere in their motion or brief.
Plaintiffs also offer no reasons why the settlement is fair and reasonable. More
importantly, they do not provide the Court with sufficient information to make that
determination. Most obviously missing from Plaintiffs’ motion is any indication of
the amount of unpaid wages Plaintiffs claim they are owed and the amount of
liquidated damages they could recover if they prevail. As such, the Court has no
means for analyzing whether the settlement is a reasonable compromise of their
Plaintiffs also have not provided the Court with adequate information to
assess the reasonableness of the attorney’s fee award. The indication that the
parties completed extensive discovery, briefed dispositive motions, and engaged in
lengthy negotiations with the magistrate judge prior to reaching the settlement
suggests that counsel expended significant time in this litigation. Nevertheless,
courts usually consider the actual hours expended by counsel and counsel’s hourly
rate to evaluate the reasonableness of an attorney fee award. See, e.g., Wolinsky,
900 F. Supp. 2d at 336-37; see also Gentrup, 2011 WL 2532922, at *4 (citing
Rawlings v. Prudential-Bache Properties, Inc., 9 F.3d 513, 517 (6th Cir. 1993)).
Finally, Plaintiffs present no argument as to why the settlement agreement
should remain confidential and the presumption of public access to that document
should not apply. It may be that one or both of the parties has legitimate interests
supporting the agreement’s confidentiality. In that case, the Court might find that
those interests outweigh the public’s interest in disclosure. Most courts scrutinize
confidentiality provisions in FLSA agreements by balancing those competing
interests. See, e.g., Alewel, 2013 WL 6858504, at *5 (“The court agrees with other
courts in finding that the public’s interest outweighs the parties’ interest in keeping
confidential the amount of settlement.”); Crabtree v. Volkert, Inc., No. 11-0529,
2013 WL 593500, at *4 (S.D. Ala. Feb. 14, 2013) (“[A]ll but the most doctrinaire
opinions on the subject acknowledge that there may be circumstances where
confidentiality provisions may be appropriate and should be accepted.”); Wolinsky,
900 F.Supp.2d at 340 (“[T]he Court concludes that there is no basis to keep the
Agreement out of the public record.”); Hens v. Clientologic Operating Corp., No.
05-CV-381S, 2010 WL 4340919, at *3 (W.D.N.Y. Nov. 2, 2010) (“This Court
recognizes ... that it must balance the strong presumption of public access against
any interests favoring nondisclosure.”); Stalnaker v. Novar Corp., 293 F.Supp.2d
1260, 1264 (M.D. Ala. 2003) (“A court faced with a request to seal judicial
documents should weigh the interests protected by the presumption of openness,
namely judicial transparency (especially in FLSA cases) and the first-amendment
values of freedom of speech and of the press, against the parties' interest in
secrecy.”). This Court cannot engage in that balancing, however, without
understanding the parties’ rationale for seeking to keep their agreement
For these reasons, at this time, the Court is not able to conclude that the
parties’ agreement is fair and reasonable. The Court is obligated to make this
evaluation rather than simply rubber-stamp the parties’ agreement as approved.
The Court, therefore, DENIES WITHOUT PREJUDICE Plaintiffs’ Motion for
Approval of Class Settlement (ECF 60). In light of the terms of the settlement
agreement, however, the Court DENIES AS MOOT Defendant’s Motion to
Decertify Collective Action Class (ECF No. 55.)
IT IS SO ORDERED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: October 31, 2016
I hereby certify that a copy of the foregoing document was mailed to counsel of
record and/or pro se parties on this date, October 31, 2016, by electronic and/or
U.S. First Class mail.
s/ Richard Loury
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