King v. Raineri Construction, LLC et al

Filing 52

MEMORANDUM AND ORDER re: 51 IT IS HEREBY ORDERED that defendants' consent motion for court approval of the settlement between the parties [Doc. # 51 ] is granted. IT IS FURTHER ORDERED that the Clerk of Court shall make an entry in thedo cket record reflecting the dismissal of this action with prejudice. See Fed. R. Civ. P. 41(a)(1)(A)(ii).IT IS FURTHER ORDERED that the Court shall retain jurisdiction of this action for the sole purpose of determining whether the settlement should be enforced upon motion of any party.. Signed by District Judge Carol E. Jackson on 2/12/15. (KKS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
RONNIE KING, et al.,
Plaintiffs,
vs.
RAINERI CONSTRUCTION, LLC, et al.,
Defendants.

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Case No. 4:14-CV-1828 (CEJ)

MEMORANDUM AND ORDER
This matter is before the Court on defendants’ consent motion for approval of
the settlement between the parties and to dismiss the action with prejudice.
I.

Background

On October 28, 2014, plaintiff Ronnie King filed this suit in his individual
capacity and on behalf of similarly situated hourly-paid construction employees at
Raineri Construction, LLC, alleging that defendants failed to pay overtime
compensation in violation of the Fair Labor Standards Act (FLSA), 29 U.S.C. §
207(a)(1), and the Missouri Minimum Wage Law (MMWL), Mo. Rev. Stat. § 290.505.1
(Count I-II); maintained systematic “time shaving” practices in violation of FLSA , the
MMWL, and Missouri common law (Counts III-VII); and refused to pay the “prevailing
hourly rates of wages” for labor performed on public works contracts in violation of
Missouri’s Prevailing Wage Act (MPWA), Mo. Rev. Stat. § 2901.210, et seq. (Count
VIII).1

Counts I and III initially were brought as an “opt-in” collective action under

1 Count VIII was added in the amended complaint filed November 21, 2014.

FLSA, 29 U.S.C. § 216(b). Counts II and IV-VIII were brought as a class action
pursuant to Rule 23 of the Federal Rules of Civil Procedure.
On January 30, 2015, plaintiff filed an amended complaint removing all class
and collective action claims but otherwise asserting the same claims on his own
behalf.

The amended complaint also added as named plaintiffs three individuals who

had previously “opted-in” to the putative collective action, Daniel Carbone, Steven
Hill, and Dominic Lawson. On February 3, 2015, defendants filed the instant motion
by joint request for court approval of the settlement between the named parties.
II.

Discussion
A.

Court Approval of FLSA Settlements

The Court first notes that the law is unsettled as to whether judicial approval of
a proposed settlement of FLSA claims is required in the absence of a certified class.
Martin v. Spring Break ’83 Prods., L.L.C., 688 F.3d 247, 257 (5th Cir. 2012) (enforcing
private settlement agreement entered into without judicial consent where plaintiff
were represented by counsel and the court determined a bona fide dispute had
existed when the settlement was entered); Carrillo v. Dandan Inc., Civ. No. 13-671
(BAH), 2014 WL 2890309, at *5 (D.D.C. June 26, 2014) (finding that “no binding
caselaw in this Circuit requires a district court to assess proposed FLSA settlements ex
ante); Lliguichuzcha v. Cinema 60, LLC, 948 F. Supp. 2d 362, 364-65 (S.D.N.Y. 2013)
(noting that “it is not clear that judicial approval of an FLSA settlement is legally
required”); Fernandez v. A-1 Duran Roofing, Inc., No. 12-CV-20757 (JLK), 2013 WL
684736, at *1 (S.D. Fla. Feb. 25, 2013) (finding approval of the parties’ private
settlement of FLSA claims unnecessary when both parties were represented by
counsel); Picerni v. Bilingual Seit & Preschool Inc., 925 F. Supp. 2d 368, 378 (E.D.N.Y.
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2013) (concluding that the parties’ private settlement for FLSA claims and voluntary
dismissal pursuant to Fed. R. Civ. P. 41(a) did not require judicial approval).
Nonetheless, because declining to review the proposed settlement agreement
would leave the parties in an uncertain position, the Court will review the settlement’s
FLSA-related terms for fairness.

See Carrillo, 2014 WL 2890309, at *5 (“If the

parties privately settle FLSA claims and seek dismissal of the suit by filing a Rule 41
motion, the private settlement may be held unenforceable if the employer attempts to
enforce the employees’ waiver of claims per the settlement at a later date.”); Picerni,
925 F. Supp. 2d at 372 (“[U]ntil some court determines that there was a bona fide
dispute as to how much plaintiff was owed in wages, and that the offer of judgment
fairly compromises it, the employer has not eliminated its risk [of exposure to future
litigation].”).

“[R]eview of a proposed FLSA settlement,” however, “is properly

limited only to those terms precisely addressing the compromised monetary amounts
to resolve pending wage and overtime claims.”
B.

Carrillo, 2014 WL 2890309, at *8.

The Proposed Settlement

A district court may only approve an FLSA settlement agreement after it
determines that the litigation involves a bona fide dispute and that the proposed
settlement is fair and equitable to all parties.

Fry v. Accent Mktg. Servs., L.L.C., No.

4:13-CV-59 (CDP), 2014 WL 294421, at *1 (E.D. Mo. Jan. 27, 2014); see also Lynn’s
Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982).
A settlement is bona fide if it reflects a reasonable compromise over issues
actually in dispute, since employees may not waive their entitlement to minimum
wage and overtime pay under FLSA.

D.A. Schulte, Inc. v. Gangi, 328 U.S. 108, 115

(1946); Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707 (1945). As a threshold
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matter, the Court finds that the proposed settlement is the product of contested
litigation as the parties dispute the amount of overtime hours plaintiffs actually
worked and whether defendants “shaved” work hours from their payroll records for
purposes of calculating overtime wages.

See Carrillo, 2014 WL 2890309, at *7

(identifying genuine disputes at issue when the parties contested the accuracy of the
plaintiffs’ time slips maintained by defendants, whether travel between work sites was
reasonably compensable, and the amount of money plaintiffs were “advanced”).
In determining whether a settlement is fair and reasonable under FLSA, factors
a court may consider include the stage of the litigation and amount of discovery
exchanged, the experience of counsel, the probability of plaintiffs’ success on the
merits, any “overreaching” by the employer in the settlement negotiations, and
whether the settlement was the product of arm’s length negotiations between
represented parties based on the merits of the case. See Carrillo, 2014 WL 2890309,
at *6 (taking into account the “totality of the circumstances” to determine the fairness
of an FLSA settlement); Fry, 2014 WL 294421, at *1 (considering the fairness factors
applied to a Rule 23 class action in the context of a FLSA collective action and
conditionally certified class).

This approach focuses on the fairness of the process

used by the parties in reaching a settlement and ensures “the agreement reflects a
reasonable compromise of disputed issues rather than a mere waiver of statutory
rights.”

Lliguichuzhca, 948 F. Supp. 2d at 365.

In reaching a determination, courts

“should be mindful of the strong presumption in favor of finding a settlement fair.”
Crabtree v. Volkert, Inc., No. 11-0529-WS-B, 2013 WL 593500, at *3 (S.D. Ala. Feb.
14, 2013) (noting that “the Court is generally not in as good a position as the parties

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to determine the reasonableness of an FLSA settlement”) (quoting Bonetti v. Embarq
Mgmt. Co., 715 F. Supp. 2d 1222, 1227 (M.D. Fla. 2009)).
Considering the totality of the circumstances, the Court finds the proposed
settlement fair and reasonable to all parties. The settlement provides payment for
unpaid overtime compensation as well as liquidated damages for each named
plaintiff.

The liquidated damages double the amount of compensation provided to

each plaintiff for unpaid overtime hours worked. The amounts provided for each
plaintiff surpass or are close to the alleged damages:

Ronnie King’s damages for

unpaid overtime were $2,116 and he receives a total of $8,000 under the proposed
settlement;
$27,757.92;

Danny

Carbone’s

Dominic

damages

Lawson’s

damages

were
were

$25,512.56

and

he

receives

$2,950.24

and

he

receives

$10,257.92; Stephen Hill’s damages were $32,880.62 and he receives $20,657.92.
See Carrillo, 2014 WL 2890309, at *7 (approving a proposed $15,500 settlement
when plaintiffs averred that damages amounted to $24,000).

A settlement that

provides total damages close to that asserted by plaintiff does not appear to be the
product of employer “overreaching.”

Id.

The settlement also was reached by arm’s length negotiation.

All parties

involved have been represented by experienced counsel throughout the litigation.
The parties engaged in settlement negotiations and exchanged a “large amount of
information and documents” for a month before submitting the proposed settlement.
See Defs.’ Mot. at 1-2 [Doc. #46].

A case management order was entered and a

sufficient amount of discovery materials exchanged for the parties to understand the
potential recovery and relative risks of proceeding to trial with their claims.

Fry,

2014 WL 294421, at *1 (“[Y]et the litigation is not so advanced that the parties will
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not realize significant benefits by settling before filing motions for summary judgment
and trial.”).

While the settlement negotiations were ongoing, plaintiffs consented to

multiple extensions of time for defendants to respond to the motion for conditional
certification, and defendants in return consented to tolling the statute of limitations on
putative class members’ claims.

The fairness of the process by which the proposed

settlement was reached, therefore, further ensures a just outcome.
The Court also must assess the reasonableness of plaintiffs’ attorney fees in a
proposed FLSA settlement, even when the fee is negotiated in the settlement rather
than through judicial determination.

Lliguichuzhca, 948 F. Supp. 2d at 366.

Attorney’s fees in FLSA settlements are examined “to ensure that ‘the interest of
plaintiffs’ counsel in counsel’s own compensation [did not] adversely affect the extent
of the relief counsel [procured] for the clients.’” Id. (quoting Wolinsky v. Scholastic
Inc., 900 F. Supp. 2d 332, 336 (S.D.N.Y. 2012)). In a private FLSA action where the
parties settled on the fee through negotiation, “there is a greater range of
reasonableness for approving attorney’s fees.” Wolinsky, 900 F. Supp. 2d at 336
(internal citations and quotations omitted).
Here, plaintiffs’ counsel did not submit billing records detailing the amount of
time expended on the case, but the terms of the proposed agreement provide
plaintiffs’ counsel $25,826.25 or 34% of the settlement amount negotiated by the
parties.

See Fry, 2014 WL 294421, at *2 (noting that the starting point in

determining attorney fees is the lodestar, which is calculated by multiplying the
number of hours reasonably expended by the reasonable hourly rate).

Plaintiffs’

attorneys, however, have undertaken substantial motion practice, discovery, and
negotiations with opposing counsel.

See id. (concluding that the attorney’s fees
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requested and unopposed were reasonable based on the amount of time and effort
expended in the case).

Moreover, the damages paid to the named plaintiffs

represent an amount greater than or close to the amount of uncompensated overtime
alleged.

See Carrillo, 2014 WL 2890309, at *7 (approving of attorney’s fees even

where plaintiff’s counsel received more in compensation than the plaintiffs
themselves when the damages paid to plaintiffs represented six times the overtime
amount reflected in the time slips).

The attorney’s fees also appear to have been

negotiated separately from the amount the plaintiffs will receive.

Id.

As such, any

reluctance of the Court to approve the settlement “is not sufficient to overcome the
presumption in favor of allowing parties to settle their own disputes, particularly
where, as here, the settlement represents a bona fide settlement of disputes of
material fact where the range of possible outcomes differs substantially.” Id.
The Court reiterates, however, that it has reviewed and approved only the
material terms of the proposed settlement as they relate to the FLSA-claims.

“No

opinion is necessary as to the enforceability of [other] terms and none is given.

The

Court's review of a proposed FLSA settlement is properly limited only to those terms
precisely addressing the compromised monetary amounts to resolve pending wage
and overtime claims.”

Id. at *8; see also Brumley v. Camin Cargo Control, Inc., Nos.

08-1798, 10-2461, 09-6128, 2012 WL 10919337, at *5-9 (D.N.J. Mar. 26, 2012)
(approving FLSA settlement in part but rejecting confidentiality and waiver provisions
in proposed settlement).
Accordingly,
IT IS HEREBY ORDERED that defendants’ consent motion for court approval
of the settlement between the parties [Doc. #51] is granted.
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IT IS FURTHER ORDERED that the Clerk of Court shall make an entry in the
docket record reflecting the dismissal of this action with prejudice. See Fed. R. Civ.
P. 41(a)(1)(A)(ii).
IT IS FURTHER ORDERED that the Court shall retain jurisdiction of this
action for the sole purpose of determining whether the settlement should be enforced
upon motion of any party.

CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 12th day of February, 2015.

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