Grahovic v Ben's Richardson Pizza, Inc.
MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that the Parties Joint Motion for Court Approval of Settlement (Doc. 12 ) is GRANTED. This case is dismissed with prejudice. IT IS FURTHER ORDERED that, in light of the settlement, the pending Motion fo r Partial Dismissal (Doc. 5 ) is DENIED, as moot. 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. IT IS FINALLY ORDERED that the Court shall retain jurisdiction of this action for the sole purpose of determining whether the settlement should be enforced upon the motion of any party. Signed by Magistrate Judge Noelle C. Collins on 3/25/2016. (KCB)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
BEN’S RICHARDSON PIZZA INC.,
No. 4:15CV01659 NCC
MEMORANDUM AND ORDER
This matter is before the Court on the Parties’ Joint Motion for Court Approval of
Settlement. (Doc. 12). The Parties have consented to the jurisdiction of the undersigned United
States Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Doc. 11). For the following reasons,
the Court GRANTS the Parties’ Joint Motion for Court Approval of Settlement (Doc. 12).
On November 4, 2015, Plaintiff Dzenis Grahovic, a former delivery driver for Ben’s
Richardson Pizza Inc., an Imo’s Pizza franchise, filed this suit in his individual capacity for his
single-plaintiff claim on November 4, 2015, alleging that Defendant failed to pay minimum
wage in violation of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and in
violation of Missouri’s Wage and Hour Laws, § 290.505 R.S.Mo., et seq. (Doc. 1). Plaintiff
also alleges that Defendant was unjustly enriched through the unpaid wages. Id. Defendant,
Ben’s Richardson Pizza Inc., filed a motion to dismiss on November 24, 2015. (Docs. 5, 6).
Defendant alleges that the complaint should be partially dismissed and/or stricken “to limit the
statute of limitations of the ‘unjust enrichment’ claim as it relates to minimum wage and
overtime claims to two (2) years and to strike Plaintiff’s prayer for relief in Count III for
compensatory damages, liquidated damages and attorney’s fees and costs allowed by Section
290.527 R.S.Mo.” (Doc. 6 at 1). Plaintiff filed a response to Defendant’s Motion to Dismiss on
November 30, 2015. (Doc. 8). On January 13, 2016, the Parties filed a Joint Motion for Court
Approval of a Settlement and a Joint Memorandum in Support of the Joint Motion. (Docs. 12,
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.” Boland v.
Baue Funeral Home Co., No. 4:15-CV-00469 RLW, 2015 WL 7300507, at *1 (E.D. Mo. Nov.
18, 2015) (internal quotation marks emitted). See, e.g., King v. Raineri Const., LLC, No. 4:14CV-1828 CEJ, 2015 WL 631253, at *1 (E.D. Mo. Feb. 12, 2015) (citing Martin v. Spring Break
‘83 Prods., L.L.C., 688 F.3d 247, 257 (5th Cir. 2012) (enforcing private settlement agreement
entered without judicial consent where plaintiffs were represented by counsel and the court
determined a bona fide dispute existed at the time 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 case law 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”). 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 King, 2015 WL 631253, at *2; 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.”). “[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.” Carrillo, 2014
WL 2890309, at *8.
B. The Proposed Settlement
A district court may only approve a 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.” King, 2015 WL 631253, at *2 (citing D.A. Schulte, Inc. v. Gangi, 328 U.S. 108,
115 (1946); Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707 (1945)). Here, the Court notes
that the proposed settlement is the product of contested litigation because the Parties dispute the
amount of unpaid wages — specifically mileage compensation — and liability.
“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.” King, 2015
WL 631253, at *2 (citing Carrillo, 2014 WL 2890309, at *6 (taking into account the ‘totality of
the circumstances’ to determine the fairness of a FLSA settlement)). 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 to determine the reasonableness of
a FLSA settlement”) (quoting Bonetti v. Embarq Mgmt. Co., 715 F. Supp. 2d 1222, 1227 (M.D.
Considering the totality of the circumstances, the Court finds the Parties’ proposed
settlement fair and reasonable to all parties. The settlement provides payment for compensation
roughly equal to the difference between the minimum wages received, after deduction for jobrelated expenses, for the three years Grahovic worked for Ben’s Richardson Pizza. It provides
for attorney’s fees as well as liquidated damages and costs for Grahovic in the amount of
$1,500.00. The Court finds no evidence of overreaching on the part of Defendant based upon the
amount of the settlement proceeds provided to Grahovic due to the de minimus nature of the
damages involved. Furthermore, the settlement is a product of arm’s length negotiation; all
parties involved have been represented by experienced counsel throughout the litigation.
Bonetti, 715 F. Supp. 2d at 1227 (“If the parties are represented by competent counsel in an
adversary context, the settlement they reach will, almost by definition, be reasonable.”).
Usually, settlement proposals occur after discovery. See Risch v. Natoli Engineering
Co., LLC, No. 4:11-CV-1621 (AGF), 2012 WL 4357953, at *3 (E.D. Mo. Sept. 24, 2012) (the
Settlement Agreement occurred after the parties engaged in “extensive fact discovery,
exchanging and reviewing significant numbers of documents … all documents necessary to
evaluate the class claims and damages.”); King, 2015 WL 631253, at *3 (“The parties engaged in
settlement negotiations and exchanged a ‘large amount of information and documents’ for a
month before submitting the proposed settlement.”); Fry, 2014 WL 294421, at *1 (finding the
settlement fair and reasonable to all parties when the negotiations were “achieved only after
extensive motion practice, discovery, and mediation”). However, the failure to engage in formal
discovery is not fatal to the Court’s approval of the Parties’ settlement. See Istre v. Louisiana
Tank Specialties, LLC, No. CV 14-339, 2016 WL 866709, at *3 (E.D. La. May 7, 2016) (“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.”) (citing Newberg on Class Actions § 13:50 (5th ed.)); Pitts v. Levy Family
Associates, LLC, No. PJM 14-1682, 2015 WL 1962147, at *3 (D. Md. April 27, 2015) (the
Parties’ representation of engagement in informal discovery was sufficient for the parties to
“evaluate their claims and defenses as to these disputed legal and factual issues and to engage in
informed arms-length settlement negotiations.”); Duprey v. Scotts Co. LLC, 30 F. Supp. 3d 404,
409 (S.D. Md. 2014) (holding the settlement fair and reasonable, even though “formal discovery
has not commenced, [because] the parties represent that they have engaged in informal
discovery, including the exchange of certain information related to Plaintiffs alleged damages”)
(internal quotation marks omitted). In this case, the Parties exchanged all relevant documentation
concerning Grahovic’s compensation while employed with Ben’s Richardson Pizza, and agreed
that there was a lack of evidence demonstrating Grahovic’s claim of unpaid wages. (Doc. 12 at
1; Doc. 13 at 1-2). Also, the Court recognizes that, due to the de minimus nature of the damages
here and the simplicity of the facts, it is advantageous for both parties to avoid formal discovery
costs. (Doc. 12 at 1).
Normally, the Court also must assess the reasonableness of a plaintiff’s attorney’s 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
settlement 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).
The case is not a collective action. Grahovic and his counsel have not requested
attorney’s fees outside the $1,500.00 proposed settlement. (Doc. 12-1). Therefore, the Court
need not analyze any such fees in making a determination as to the fairness or reasonableness of
this settlement. Moreover, “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.”
King, 2015 WL 631253, at *4 (citing Carrillo, 2014 WL 2890309, at *7).
The Court reiterates 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.” King, 2015 WL 631253, at *4
(citing Carrillo, 2014 WL 2890309, at *8).
IT IS HEREBY ORDERED that the Parties’ Joint Motion for Court Approval of
Settlement (Doc. 12) is GRANTED. This case is dismissed with prejudice.
IT IS FURTHER ORDERED that, in light of the settlement, the pending Motion for
Partial Dismissal (Doc. 5) is DENIED, as moot.
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.
IT IS FINALLY ORDERED that the Court shall retain jurisdiction of this action for the
sole purpose of determining whether the settlement should be enforced upon the motion of any
Dated this 25th day of March, 2016.
/s// Noelle C. Collins
NOELLE C. COLLINS
UNITED STATES MAGISTRATE JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?