BRUMLEY v. CAMIN CARGO CONTROL, INC.
Filing
234
OPINION. Signed by Judge Jose L. Linares on 3/26/2012. (nr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
NATHAN BRUMLEY, et al.,
Civil Action No.: 08-1798 (JLL)
Plaintiff,
v.
OPINION
CAMIN CARGO CONTROL, INC., et al.,
Defendants.
SOLOMON GUEVERA, et al.,
Civil Action No.: 10-246 1 (JLL)
Plaintiff,
v.
CAMIN CARGO CONTROL, INC., et al.,
Defendants.
IVO JAMES, et al.,
Civil Action No.: 09-6 128 (JLL)
Plaintiff’,
v.
CAMIN CARGO CONTROL, INC., et al.,
Defendants.
This matter comes before this Court by way of Plaintiffs Nathan Brumley, Solomon
Guevera and Ivo James (“Plaintiffs”)’s unopposed motions to: (1) approve the Fair Labor
Standards Act (“FLSA”) collective action settlement; (2) consolidate the actions for settlement
purposes [Docket Entry Nos. 227, 228 and 2291; and (3) approve attorneys’ fees and reimburse
expenses [Docket Entry Nos. 230, 231, 232, and 233). The Court has considered the
submissions of the Plaintiffs in support of the instant motions, and decides the motions on the
papers pursuant to Fed. R. Civ. P. 78. For the reasons stated herein, the Court: (1) grants in part
and denies in part Plaintiffs’ Motion to Approve the FLSA Collective Action Settlement; (2)
grants the Plaintiffs’ Motion to Consolidate the Actions for Settlement Purposes; and (3) grants
Plaintiffs’ Motion for Approval of Attorneys’ Fees and Reimbursement of Expenses.
I. BACKGROUND
The above-cited actions were brought as separate FLSA collective actions in which a total
of 112 Plaintiffs, all current and former petroleum inspectors, alleged overtime violations against
Defendants Camin Cargo Control and the above-named officers. (PIs. Br. Supp. Mot. to
Approve Collective Action Settlement (“PIs. Settlement Approval Mot.”), at 1). Of those
Plaintiffs, five also alleged retaliation claims against Defendants pursuant to 29 U.S.C.
of the FLSA.
§
215(a)
(jJ. The above actions were extensively litigated for over four years, but the
Parties eventually negotiated a Settlement Agreement submitted with the instant Motions for the
Court’s review.
(, at 7).
On January 10, 2012, Defendants filed an unopposed motion to file the Parties’
Settlement Agreement under seal pursuant to Local Civil Rule 5.3(c). [Docket Entry No. 2231.
On January 30, 2012, this Court denied Defendants’ motion based, inter ija, on the strong
presumption in favor of keeping settlement agreements in FLSA wage-settlement cases unsealed
and available for public view as well as the public-private character of employee rights under the
FLSA. [Docket Entry Nos. 225, 226]. On February 1, 2012, the Plaintiffs filed the instant
unopposed Motions to Approve the Settlement, to Consolidate the Actions for Settlement
2
Purposes, and to Approve the Attorneys’ Fees and Reimbursement of Expenses.
II. LEGAL STANDARDS
Pursuant to the FLSA, a collective action “may be maintained.
.
.
by any one or more
employees for and in behalf of themselves and other employees similarly situated.” 29 U.S.C.
§
2 16(b) (1982). Employees have two avenues for compromising an FLSA claim: (1) a
compromise supervised by the Department of Labor pursuant to 29 u.s.c.
district court-approved compromise pursuant to 29 u.s.c.
§ 216(c); and (2) a
§ 216(b). If employees choose to
bring an FLSA collective action in federal court, section 216(b) requires collective action class
members to “opt-in” by affirmatively indicating their consent to be part of the Class, and “[nb
employee shall be a party plaintiff to any such action unless he gives consent in writing to
become such a party and such consent is filed in the court in which such action is brought.” jj.
An employee’s failure to opt in does not prevent him or her from bringing a separate suit at a
later date.
Pentland v. Dravo Corp., 152 F.2d 851, 853 (3d Cir. 1945); Lusardi v. Lechner,
855 F.2d 1062, 1070 (3d Cir. 1988).
When employees bring a private action under the FLSA, and present to the district court a
proposed settlement pursuant to that Act’s
§ 2 16(b), the district court may enter a stipulated
judgment if it determines that the compromise reached “is a fair and reasonable resolution of a
bona fide dispute over FLSA provisions.” $çç Lynn’s Food Stores. Inc. v. United States, 679
F.2d 1350, 1354 (1 1’ Cir. 1982); Bredbenner v. Liberty Travel. Inc., 2010 U.S. Dist. LEXIS
38663,
*
50-51 (D.N.J. Apr. 8,2011); see also H.R. Rep. No. 101-644, at 18-19 (1990). While
the Third Circuit has not directly addressed the factors to be considered in deciding motions for
3
approval of FLSA settlements, district courts have typically looked to the considerations set forth
in Lynn’s Food, cited ja. See. e.g., Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227, 1235-1237
(M.D. Fla. 2010); Poulin v. General Dynamic Shared Resources, 2010 U.S. Dist. LEXIS 47511,
*
1-2 (W.D. Va. May 5, 2010); Glass v. Krishna Krupa, LLC, 2010 U.S. Dist. LEXIS 110139,
2-3 (S.D. Ala. Oct. 15, 2010); Scott v, Memory Co., 2010 U.S. Dist. LEXIS 119832,
*
*
2-3 (M.D.
Ala. Nov. 10, 2010); Hogan v. Allstate Beverage Co., 2011 U.S. Dist. LEXIS 90767, *15.46
(M.D. Ala. Aug. 15, 2011); Kianpour v. Restaurant Zone, Inc., 2011 U.S. Dist. LEXIS 127865,
5-6 (D. Md. Nov. 4, 2011); Prescott v. Prudential Ins. Co., 2011 U.S. Dist. LEXIS 147724,
*
*
4..5
(D. Me. Nov. 28, 2011); Webb v. CVS Caremark Corp, 2011 U.S. Dist. LEXIS 147989 (M.D.
Ga., Dec. 23, 2011). In determining whether the compromise resolves a bona tide dispute, the
Court must be reassured that the settlement “reflect[s] a reasonable compromise of disputed
issues [rather] than a mere waiver of statutory rights brought about by an employer’s
overreaching,” and the bona fide dispute must be determined to be one over “factual issues” not
“legal issues such as the statute’s coverage or applicability.” Lignore v. Hosp. of the Univ. of
Pa., 2007 U.S. Dist. LEXIS 32169,
*
13-14 (ED. Pa. May 2, 2007); Lynn’s Food, 679 F.2d at
1354.
“The congressional purpose of the FLSA and the public’s interest in the transparency of
the judicial process decisively inform both the procedure and the standard applicable to a district
court’s review of an F LSA settlement.” Dees, 706 F. Supp. 2d at 1231. Thus, district courts
have scrutinized FLSA settlements for the bona fides of the dispute by investigating the existence
of “side deals” or other conditions not present on the face of the employer’s offer, including
constraints on employees beyond their full compensation under the FLSA. j, at 1239; see also
4
MacKenzie v. Kindred Hospitals East. LLC, 776 F. Supp. 2d 1211, 1213 (M.D. Fla. 2003). This
is because, as district courts have noted, “Lynn’s Food requires approval of each FLSA
compromise, regardless of the issue that underlies the compromise. In practice, leaving an FLSA
settlement to wholly private resolution conduces inevitably to mischief. An employer who pays
less than the minimum wage or who pays no overtime has no incremental incentive to comply
voluntarily with the FLSA, if, after an employee complains, the employer privately compromises
the claim for a discount—an amount less than the full amount owed under the FLSA (plus, with
savvy negotiation, a confidentiality agreement to preclude the spread to other employees of
information about the FLSA).” Dees, 706 F. Supp. 2d at 1236-37; see also Hogan, 2011 U.s.
Dist. LEXIS at *2122 (“keeping a settlement confidential.
.
.
.
can prove costly to the employee
himself, for they prevent the employee from alerting other workers to potential FLSA violations
on pain of personal liability.”). One example of such a “side deal” was illustrated as follows:
“the employer in an FL5A case might offer full monetary compensation to the employee for the
FLSA claim but might require the employee to refrain from informing fellow employees about
the result the employee obtained.
.
.
.
In [such] instance, the employee outwardly receives full
monetary compensation for his unpaid wages, but effectively the additional term (the ‘side deal’)
confers a partially offsetting benefit on the employer. To the extent that the employee receives a
full wage but relinquishes something else of value, the agreement (even if exhibited to the court
as a stipulation for ‘full compensation’ or an offer ofjudgment) involves a ‘compromise,’ and
Lynn’s Food requires judicial approval of the compromise.” Dees, 706 F. Supp. 2d at 1240; see
th
Silva v. Miller, 307 F. App’x 349, 351 (1 1 Cir. 2009).
Along with requesting the approval of the settlement, Plaintiffs also request that the Court
5
consolidate the above-captioned matters for purposes of settlement. Pursuant to Fed. R. Civ. P.
42, actions before a court may be consolidated if they “involve a common question of law or
fact.” Fed. R. Civ. P. 42(b). The purpose of consolidation is “to streamline and economize
pretrial proceedings so as to avoid duplication of effort, and to prevent conflicting outcomes in
cases involving similar legal and factual issues.” In re TMI Litig., 193 F.3d 613, 724 (3d Cir.
1 999)(citation omitted).
Finally, Plaintiffs request that the Court award attorneys’ fees in the amount of one-third
(3 3.33%) of the settlement fund plus costs. Under Third Circuit law, a Court may evaluate the
award of attorneys’ fees through two established methods: (1) the lodestar approach, and (2) the
percentage of the recovery approach. In re Diet Drugs Product Liability Litig., 582 F.3d 524, 540
(3d Cir. 2009); In re AT&T Corp., 455 F.3d 160, 164 (3d Cir. 2006). Under the common fund
doctrine, “a private plaintiff, or plaintiffs attorney, whose efforts create, discover, increase, or
preserve a fund to which others also have a claim, is entitled to recover from the fund the costs of
his litigation, including attorneys’ fees.” In re Cendant Corp. Sec. Litig., 404 F. 3d 173, 187 (3d
Cir. 2005)(citation omitted). When calculating attorneys’ fees in such cases, the percentage-ofrecover method is generally favored. In re Diet Drugs, 582 F.3d at 540 (citing Krell v. Prudential
Ins. Co., 148 F.3d 283, 333 (3d Cir. 1998)). In determining what constitutes a reasonable
percentage fee award in the Third Circuit, a district court must consider ten factors: (1) the size
of the fund created and the number of beneficiaries; (2) the presence or absence of substantial
objections by members of the class to the settlement terms and/or fees requested by counsel; (3)
the skill and efficiency of the attorneys involved; (4) the complexity and duration of the
litigation; (5) the risk of nonpayment; (6) the amount of time devoted to the case by plaintiffs’
6
counsel; (7) the awards in similar cases; (8) the value of benefits attributable to the efforts of
class counsel relative to the efforts of other groups, such as government agencies conducting
investigations; (9) the percentage fee that would have been negotiated had the case been subject
to a private contingent fee arrangement at the time counsel was retained; and (10) any innovative
terms of settlement. In re Diet Drugs, 582 F.3d at 541 (citing Gunter v. Ridgewood Energy
Corp., 223 F.3d 190, 195 (3d Cir. 2000) and Prudential, 148 F.3d at 342).
II!. DISCUSSION
A. Motion for Approval of the FLSA Collective Action Settlement
Plaintiffs contend that: (1) the settlement is fair with minimal due process concerns due to
the “opt-in” nature of the settlement, which does not preclude employees who have not opted in
from bringing their own suits at a later date; (2) the Parties have bona fide disputes over legal and
factual issues compromised by the instant Agreement, including the appropriate statute of
limitations applicable to Plaintiffs’ claims, Defendants’ liability for liquidated damages, the
amount of hours Plaintiffs worked, the formula for calculating damages, whether retaliation
occurred and the correct measure of damages for all claims; (3) the settlement is fair due to the
adversarial nature of the case, the Parties’ extensive engagement in settlement negotiations, the
Parties’ representation by experienced counsel, the positive reaction of every Plaintiff who has
spoken with counsel, the substantial discovery and litigation that has occurred informing the
parties of the legal issues and evidence, and the amount of Plaintiffs’ recovery; (4) the settlement
is consistent with the public policy favoring settlement; and (5) the service payments are
reasonable and appropriate. (PIs. Settlement Approval Br., at 11-19).
7
The FLSA was enacted “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 the national health and efficiency and as a result the free movement of goods
in interstate commerce.” Brooklyn Say. Bank v. O’Neil, 324 U.S. 697, 706 (1945). For this
purpose, the Act imposes a minimum wage and an overtime wage for each of several categories
of employee. See 29 U.S.C.
§ 206 (establishing a minimum wage); 29 U.S.C. § 207 (providing
that no employer shall require an employee to work “for a workweek longer than forty hours
unless such employee receives compensation for his employment in excess of the hours above
specified at a rate not less than one and one-half times the regular rate at which he is
employed.”). To enforce these worker protections, the FLSA provides that “any employer who
violates the provisions of section 206 or 207 of this title shall be liable to the employee.
affected in the amount of unpaid wages, or their unpaid overtime compensation, as the case may
be, and an additional equal amount as liquidated damages.
.
.
.
The court in [an action to recover
under the FLSA] shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a
reasonable attorney’s fee to be paid by the defendant, and costs of the action.” 29 U.S.C.
§
2 16(b).
1. Evaluating the FLSA Compromise: Reasonableness and Fairness
A compromise may be scrutinized for fairness in two steps: “First, the court should
consider whether the compromise is fair and reasonable to the employee (factors ‘internal’ to the
8
compromise). If the compromise is reasonable to the employee the court should inquire whether
the compromise otherwise impermissibly frustrates implementation of the FLSA (factors
‘external’ to the compromise). The court should approve the compromise only if the
compromise is reasonable to the employee and furthers implementation of the FLSA in the
workplace.” Dees, 706 F. Supp. 2d at 1241.
a. Internal and External Factors: Fairness and Reasonableness of the Compromise to the
Employee in Light of Furthering the Implementation of the FLSA in the Workplace
While factors for evaluating “fairness” of a settlement in an FLSA collective action have
not been definitively set out by the Third Circuit, district courts in this Circuit have utilized the
Girsh factors established for approving Rule 23 class action settlements, which are:
(1) the complexity, expense and likely duration of the litigation; (2) the reaction of
the class to the settlement; (3) stage of the proceedings and the amount of
discovery completed; (4) risks of establishing liability; (5) risks of establishing
damages; (6) risks of maintaining the class action through the trial; (7) ability of
the defendants to withstand a greater judgment; (8) the range of reasonableness of
the settlement fund in light of the best possible recovery; and (9) the range of
reasonableness of the settlement fund to a possible recovery in light of all the
attendant risks of litigation.
Girsh v. Jepson, 521 F.2d 153, 157-57 (3d Cir. l975)(citation omitted); ç Bredbenner v.
Liberty Travel. Inc., 2011 U.S. Dist. LEXIS 38663,
*
31 (D.N.J. Apr. 8,2011).
Aside from Sections E and H for reasons detailed supra, the Court finds that the
Settlement Agreement is fair under the Girsh factors. The settlement, which provides time and
one half of each employee’s hourly rate, liquidated damages, minimum recovery values for each
Plaintiff, recovery for retaliation claims for five Plaintiffs, and service payments to
representatives is a “reasonable compromise of disputed issues [rather] than a mere waiver of
statutory rights brought about by an employer’s overreaching.” Lynn’s Food Stores, 679 F.2d at
9
1354. As stated supra in the discussion of the reasonableness of the attorneys’ fees requested by
Plaintiffs’ counsel, the three-above cited actions involve 112 Plaintiffs and complex wage-andhour disputes over an extensive period of time, requiring substantial calculations, negotiations
regarding inclusion and exclusion from the statute’s protections, and the resolution of retaliation
claims. Given the four-year period in which this matter has been litigated and negotiated, and the
discovery and motion practice resulting from counsels’ efforts, the Court finds that expected
factual and legal issues at trial would be complex, possibly resulting in appeal. By reaching a
settlement at this time, the parties avoid the costs of a lengthy and complex trial which would be
both time-consuming and expensive. See, e.g., Ebreheart v. Verizon Wireless, 609 F.3d 590, 595
(3d Cir. 2010). In addition, as stated supra, Plaintiffs have not objected either to the settlement
terms or to the attorneys’ fees award request. (Pls. Mot. for Approval of Attorneys’ Fees and
Reimbursement of Expenses (“Pls. Attorneys’ Fees Mot.”), at 4). Further, the Court is satisfied
with the degree of case development accomplished by counsel prior to the submissions of these
Motions, particularly in light of the four years of extensive discovery to establish “an adequate
appreciation of the merits of the case before negotiating.” In re Gen. Motors Pick-Up Truck Fuel
Tank Prods. Liab. Litig., 55 F.3d 768, 813 (3d Cir. 1995). The risks of establishing liability and
damages for Plaintiffs in the above matters is uncertain due to: (1) the considerable risks entailed
by trial on the merits; (2) the technical nature of calculating appropriate damages and the scope
of protections; (3) whether the statute of limitations would bar some of Plaintiffs’ claims; and (3)
whether the quantum of damages Plaintiffs would collect would match the common fund
achieved in the memorialized terms of the Settlement Agreement. $çç Weiss v. Mercedes-Bens
of N. Am., Inc. 899 F. Supp. 1297, 1301 (D.N.J. 1995); Pignataro v. Port Auth. of N.Y. and N.J.,
10
593 F.3d 265, 273 (3d Cir. 2010). Whether Plaintiffs could withstand a greater judgment is
uncertain, particularly since the payouts would be largely based on figures from payroll records.
However, as explained supra in Section C discussing the approval of Plaintiffs’ counsel’s
attorneys’ fees request, the Court finds the settlement fund reasonable in light of the best possible
recovery and as compared to other common funds achieved in wage-and-hour cases.
However, as stated infra, one significant component of the analysis of the fairness of
FLSA settlement agreements is whether the compromise resolves a bone fide dispute.
Settlements “are intended principally to resolve controversy over any FLSA terms actually in
dispute.” Hogan, 2011 U.S. Dist LEXIS 90767, at
*
14 (citing Lynn’s Food, 679 F.2d at 1353)).
Therefore, the Parties are required to provide the Court with enough information for the Court to
examine the bona tides of the dispute, providing a description of “the nature of the dispute (for
example, a disagreement over coverage, exemption, or computation of hours worked or rate of
pay) resolved by the compromise.” Dees, 706 F. Supp. 2d 1241. Since the terms of the
Settlement Agreement deal specifically with the resolution of a bona fide dispute over FLSA
provisions, and the Parties have submitted descriptions of the nature of the dispute resolved by
said compromise—including a description of the employer’s business, the type of work performed
by the employees, the reasons the employer disputed the employee’s right to overtime and the
reasons justifying the employees’ right to the disputed wages—the Court is assured as to the bona
tides of the dispute. However, two components of the Settlement Agreement must be rejected
pursuant to the purposes of the FLSA: the confidentiality and release provisions contained in
Sections E and H of the Settlement Agreement. (PIs. Settlement Approval Mot., Declaration of
Matthew Dunn (“Dunn Dccl.”), Ex. 2, “Settlement Agreement and Release of Claims,” Sections
11
E and H). The Court will assess in turn why each of these provisions must be rejected as unfair.
i. Confidentiality Provision
The confidentiality provision contained in the Parties’ Settlement Agreement provides, in
pertinent part, “Plaintiffs shall not disclose either orally, visually or written, either directly or
indirectly, in any manner the terms of the Agreement to any person or organization, including but
not limited to members of the press and media, present and former officers, employees and
agents of Camin Cargo Control, future prospective employers, customers of Camin Cargo
Control, entities which have or do business with Camin Cargo Control and other members of the
public... Should Plaintiffs be asked by any third party.
.
.
.
as to the outcome of the Complaints,
Plaintiffs will respond only with ‘the matter has been resolved and I cannot talk about it.’ Should
any immediate family members or life partners of any the Plaintiffs be asked as to the outcome of
the Complaints, such family members or life partners will respond only with ‘the matter has been
resolved and I cannot talk about it.”
The provision further details the limited nature of the
case descriptions permitted on Plaintiffs’ law firm’s website status reports.
Ji. Finally, the
provision describes the steps required for Court filings regarding the Agreement, specifically
with respect to filings made under seal, which this Court has already denied in its Opinion and
Order dated January 30, 2012, as contravening the purposes of the FLSA and the strong
presumption in favor ofjudicial records being available to the public. [Docket Entry Nos.225,
226].
Employers in FLSA collective actions may seek and have sought to maintain the
confidentiality of settlement agreements due to worries that settling with one employee will
encourage other employees to assert FLSA rights, particularly in cases such as this where opting
12
into the distributions resulting from the instant Agreement do not preclude employees who have
failed to opt in from bringing separate actions against the employer. However, courts have found
that a confidentiality provision in an FLSA collective action settlement agreement
furthers resolution of no bona fide dispute between the parties; rather, compelled silence
unreasonably frustrates implementation of the ‘public-private’ rights granted by the FLSA
and thwarts Congress’s intent to ensure widespread compliance with the statute. To
further Congress’s intent, the Department of Labor requires the employer of an employee
covered by the FLSA to display conspicuously in the workplace a detailed notice of the
employee’s FLSA rights. By including a confidentiality provision, the employer thwarts
the informational objective of the notice requirement by silencing the employee who has
vindicated a disputed FLSA right.. An employee’s right to a minimum wage and
overtime is unconditional, and the district court should countenance the creation of no
condition, whether confidentiality or any other construct, that offends the purpose of the
FLSA. An employer is obligated unconditionally to pay a minimum wage and overtime
to the complainant and his fellow employees; the district court should not become
complicit in any scheme or mechanism designed to confine or frustrate every employee’s
knowledge and realization of FLSA rights.
.
.
Dees, 706 F. Supp. 2d at 1242-47 (citing Brooklyn Savings Bank v. O’Neil, 324 U.S. 697, 70408 (1945)). In addition, the FLSA is explicit in prohibiting employers from retaliating against
employees for asserting their rights under the FLSA under Section 1 5(a)(3). If an employee
under this Settlement Agreement discusses the FLSA with fellow employees or otherwise asserts
FLSA rights, the confidentiality provision in the instant Agreement would allow Defendants to
sue the employee for breach of contract, and Defendants “most proximate damages from the
employee’s breach are the unpaid FLSA wages due other employees who learned of their FLSA
rights from the employee who breached the confidentiality agreement. A confidentiality
agreement, if enforced, (1) empowers an employer to retaliate against an employee for exercising
FLSA rights, (2) effects a judicial confiscation of the employee’s right to be free from retaliation
for asserting FLSA rights, and (3) transfers to the wronged employee a duty to pay his fellow
employees for the FLSA wages unlawfully withheld by the employer. This unseemly prospect
13
vividly displays the inherent impropriety of a confidentiality agreement in settlement of an FLSA
dispute.”
Therefore, district courts have rejected as unreasonable settlement agreements that
contain confidentiality provisions, finding them unenforceable and operating in contravention the
FLSA. See, e.g., Poulin, 2010 U.S. Dist. LEXIS 47511, at
*
6 (“a confidentiality provision in an
FLSA settlement agreement undermines the purposes of the Act, for the same reasons that
compelled the Court to deny the parties’ motion to seal their Settlement Agreement); Valdez v.
T.A.S.O. Prop., Inc., 2010 U.S. Dist. LEXIS 47952, at *1 (M.D. Fla. Apr. 28, 2010)(citing Dees
in its rejection of the parties’ joint motion to approve a settlement containing a confidentiality
agreement); Glass, 2010 U.S. Dist. LEXIS 1120139, at
settlement agreement.
.
.
*
2 (citing Dees in rejecting the “parties
as unreasonable because it contains a confidentiality provision.
.
While the additional consideration paid to Glass may satisfy the above concerns of retaliation by
Days Inn against Glass, this additional amount does not remedy this court’s concern about the
possible frustration of the notice requirement to other employees.”); Hogan, 2011 U.S. Dist.
LEXIS 90767, at
*
18 (finding a proposed settlement’s confidentiality provision unfair under the
FLSA); Scott, 2010 U.S. Dist. LEXIS 119832, at
*
6 (citing Dees in declining to approve the
confidentiality provision contained in the parties’ proposed settlement agreement); Webb, 2011
U.S. Dist. LEXIS 147989, at
*
7 (finding the settlement agreements fair and reasonable with the
exception of the confidentiality and release clauses, stating that “in light of the Court’s ruling that
it will not seal any settlement agreements, it is likely the confidentiality provisions are
unenforceable,” and citing Dees in further stating that a confidentiality provision in an FLSA
agreement would contravene the legislative purpose of the FLSA and undermine the Department
of Labor’s notice requirement).
District courts have also found confidentiality provisions
14
unenforceable in light of the public filing of FLSA settlement agreements. çç Head v. V&L
Services 111. Inc., 2009 U.S. Dist. LEXIS 99784, at *3 (M.D. Fla. Oct. 27, 2009)(noting that “the
settlement agreements contain terms that this Court would not approve, such as the
confidentiality provisions, which are partially unenforceable in light of the public filing of the
agreements”).
ii. Release of Claims Provision
Section E of the Parties’ Settlement Agreement provides, in pertinent part,
The Plaintiffs, on behalf of themselves and their heirs, estates, executors, administrators,
assigns, transferees and representatives release and forever discharge the Defendants and
their predecessors, successors, parents, subsidiaries, affiliates, assigns, and all of their
present and former directors, officers, employees, agents, shareholders, and
representatives. from any and all claims, causes of actions, demands, debts,
obligations, damages or liability of any nature, whatsoever, known or unknown, which
concern or relate in any way to the payment of wages or bonuses or any other form of
compensation under the FLSA and any and all claims for retaliation under the FLSA or
state wage-and-hour statutes, whether those claims exist, or allegedly exist, at law or in
equity under the common law, contract law, statutory law, the [FLSA], and state wage
laws, as well as any and all derivative claims under the [ERISA].
.
.
(Dunn Decl., “Settlement Agreement and Release of Claims,” Section E, at 9-10). While
workers seeking to recover backpay may be willing to waive unknown claims in order to access
wrongfully withheld wages as soon as possible, “a pervasive release in an FLSA settlement
[that] confers an uncompensated, unevaluated, and unfair benefit on the employer’ should be
examined closely.” Hogan, 2011 U.S. Dist. LEXIS 90767, *24 (citing Moreno v. Regions Bank,
729 F. Supp. 2d 1346, 1352 (M.D. Fla. 2010)). The Court finds the release provision to be
pervasive to the extent that it incorporates any and all FLSA claims the Plaintiffs may allege
regarding violations that Defendants might commit subsequent to the final approval of a
settlement in the above-captioned actions by this Court. The Supreme Court and lower courts
15
have consistently rejected broad waivers of FLSA rights, beginning with the Supreme Court’s
holding in Brooklyn Savings Bank v. O’Neil that “[nb one can doubt but that to allow waiver of
statutory wages by agreement would nullify the pulposes of the Act.” 324 U.S. at 705-08; see
also D.A. Schulte v. Gangi, 328 U.S. 108, 114 (1946)(broadening the holding in Brooklyn
Savings Bank in its determination that “the remedy of liquidated damages cannot be bargained
away by bona fide settlements of disputes over coverage”); Lynn’s Food, 679 F.2d at 1352
(“FLSA rights cannot be abridged by contract or otherwise waived”); Dees, 706 F. Supp. 2d at
1243 (“an employee may not prospectively waive his right to a minimum wage or to overtime
compensation.
.
.
.
The district court should reject a compromise that includes a prospective
waiver, approval of which would ‘nullify the purposes of the [FLSAI.”). The FLSA was
enacted in part to address “inequalities in bargaining power between employers and employees.”
Lynn’s Food, 679 F.2d at 1352 (citing Brooklyn Savings Bank, 324 U.S. at 706). Given the
legislative intent, purpose and context of the FLSA, it would be unfair for the Court to enforce
this settlement’s prospective waiver of Plaintiffs’ FLSA rights.
Therefore, excluding the confidentiality and release provisions of the Settlement
Agreement, the Court finds that Settlement Agreement to be fair as a reasonable compromise to a
bona fide dispute under the FLSA to the extent that it finds: (1) the amount to be paid to each
Plaintiff for overtime and liquidated damages fair and reasonable; and (2) the terms governing
service payments and payments for Plaintiffs’ retaliation claims fair and reasonable.
B. Motion for Consolidation of Actions for Purposes of Settlement
The Court finds that the respective FLSA classes should be certified and consolidated
into one action for the purposes of settlement. Pursuant to Fed. R. Civ. P. 42, the Court may
16
consolidate the above-captioned matters if they “involve a common question of law or fact.”
Fed. R. Civ. P. 42(b). The purpose of consolidation is “to streamline and economize pretrial
proceedings so as to avoid duplication of effort, and to prevent conflicting outcomes in cases
involving similar legal and factual issues.” In re TMI Litig., 193 F.3d at 724. District courts in
this and other Circuits have consolidated FLSA actions involving common underlying facts or
law. See, e.g., Bredbenner v. Liberty Travel, Civ. No. 09-905, Docket Entry No. 82 (D.N.J. Mar.
5, 2010); Clark v. Ecolab. Inc., 2010 U.S. Dist. LEXIS 47036,
*
(S.D.N.Y. May ii, 2010).
The above-cited actions involve common Defendants, common claims brought pursuant
to the FLSA, and a common class of employees as petroleum and gas inspectors who alleged that
FLSA violations had occurred within overlapping time frames. (Pls. Settlement Approval Mot.,
at 21). Further, the Settlement Agreement submitted for this Court’s review resolves all three
actions on a common basis, thus streamlining and economizing the proceedings by both allowing
a single judgment to resolve all three cases and facilitating the administration and distribution of
the settlement ftind to the Plaintiffs. Therefore, the Court consolidates the three matters and
designates Civil Action No. 08-1798 as the “Lead Case,” ordering the administrative termination
of Civil Action Nos. 10-246 1 and 09-6 128.
C. Motion for Approval of Attorneys’ Fees and Reimbursement of Expenses
Plaintiffs’ counsel are entitled to reasonable attorneys’ fees to compensate them for their
work in recovering unpaid wages on behalf of a class under the FLSA. 29 U.S.C.
§ 216(b). To
determine the reasonableness of an attorneys’ fee award in a FLSA collective action, judicial
review is required “to assure both that counsel is compensated adequately and that no conflict of
interest taints the amount the wronged employee recovers under a settlement agreement.” Silva,
17
307 Fed. App’x at 351; see also Maddrix v. Dize, 153 F.2d 274, 275-76
(4t
Cir. 1946). As stated
jft_a, the percentage-of-recovery method has been accepted as an established approach to
evaluating the award of attorneys’ fees in the Third Circuit, and in fact it is “generally favored in
common fund cases because it allows courts to award fees from the fund ‘in the manner that
rewards counsel for success and penalizes for failure.” In re Rite Aid, 396 F.3d at 300 (citation
omitted). Further, district courts in this Circuit have favored the percentage-of-recovery method
in wage-and-hour cases such as this where a common fund is established. See. e.g. Bredbenner,
2011 U.S. Dist. LEXIS 38663,
*
*
19; Chemi v. Champion Mortg., 2009 U.S. Dist. LEXIS 44860,
8 (D.N.J. May 26, 2009). For the reasons listed below, the Court finds the attorneys’ fees
requested—one-third of the common fund amount—reasonable under the percentage-of-recovery
method based on the factors established in Guntner and Prudential.
1. Size of the Fund Created and Number of Beneficiaries
The size of the common fund is $3.9 million, providing an average recovery of $34,821
for the 112 class members that it benefits. (Pis. Attorneys’ Fees Mot., at 12). Compared to other
common funds that have resulted from settlements in wage-and-hour cases, the one established
here is significant. See. e.g., Bredbenner, 2011 U.S. Dist. LEXIS 38663 (common fund of $3
million for over 1,000 class members); Chemi, 2009 U.S. Dist. LEXIS 44860 (common fund of
$1.2 million for 917 class members found significant); In re Janney Montgomery Scott LLC Fin.
Consultant Litig., 2009 U.S. Dist. LEXIS 60790 (E.D. Pa. July 16, 2009)(common fund of $2.88
million for 1,310 class members found significant).
2. Presence of Objections by Class Members to the Settlement Terms and Counsel Fees
The Court first notes that each of the Plaintiffs, included the Named Plaintiffs, agreed to a
18
common fee arrangement at the outset of the litigation in signing a consent to sue or retainer
providing that:
By signing and returning this consent to sue, I understand that, if accepted for
representation, I will be represented by the above Counsel without prepayment of costs or
attorneys’ fees. I understand that if plaintiff is successful, costs expended by attorneys on
my behalf will be deducted from my settlement or judgment amount on a pro rata basis
with all other plaintiffs. I understand Counsel may petition the court for an award of fees
and costs to be paid by defendants on my behalf. I understand that the fees retained by
Counsel will be either the amount received from the defendant or 1/3 of my gross
settlement or judgment amount, whichever is greater.
(Pis. Attorneys’ Fees Mot., at 4; Dunn Decl., ¶J 48-49). Such common fee arrangements agreed
to by plaintiffs have been found to be presumptively reasonable under Third Circuit law.
$. j
re Cendant, 264 F.3d at 281-82 (finding presumptively reasonable such fee arrangements entered
into through retainer agreements under the Private Securities Litigation Reform Act).
Plaintiffs’ counsel has represented that all of the Plaintiffs have spoken with all of the
Named Plaintiffs and several other Plaintiffs about the settlement, including the attorneys’ fee
request, and they unanimously support both without voicing any objections. (Pis. Attorneys’
Fees Mot., at 14). The absence of objections indicates that the settlement terms and the
attorneys’ fees are reasonable. In re Rite Aid, 396 F.3d at 305. Therefore, based on the
Plaintiffs’ prior consent to the allocation of one-third of the settlement fund for attorneys’ fees as
well as the absence of any objections by Plaintiffs, the Court finds that this factor favors the
reasonableness of the fee award.
3. Skill and Efficiency of Attorneys Involved
In evaluating the skill and efficiency of the attorneys involved, courts have looked to “the
quality of the result achieved, the difficulties faced, the speed and efficiency of the recovery, the
standing, experience and expertise of the counsel, the skill and professionalism with which
1
counsel prosecuted the case and the performance and quality of opposing counsel.” Chemi, 2009
U.S. Dist, LEXIS 44860,
*
11 (internal quotations omitted). Both this Court and other district
courts around the country have recognized Plaintiffs’ counsel’s experience and skill in
prosecuting wage-and-hour class litigation. See, e.g., Bredbenner, 2011 U.S. Dist. LEXIS 38663,
at
*
7 and
*
20; Morangelli v. Chemed Corp., 275 F.R.D. 99, 119 (E.D.N.Y. 2011); Clark, 2010
U.S. Dist. LEXIS 47036,
111931,
*
*
26; Martinez-Hernandez v, Butterball. LLC, 2008 U.S. Dist. LEXIS
13 (E.D.N.C. Nov. 14,2008).
Counsel’s skill in these matters has been demonstrated by the substantial cash settlement
for the 112 Plaintiffs, their involvement in extensive discovery, motion practice, a favorable
rulings in summary judgment motions, the wide-ranging experience counsel has accrued in
complex FLSA litigation and wage-and-hour actions over time, and counsel’s participation in
wage-and-hour briefing and lecturing around the country. (Pis. Attorneys’ Fees Mot., at 15-16;
Dccl. of Michael J .D. Sweeney (“Sweeney Decl.”),
¶ 5).
The Court thus finds that this factor
weighs in favor of the reasonableness of Plaintiffs’ counsel’s fee request.
4. Complexity and Duration of the Litigation
FLSA claims and wage-and-hour law enforcement through litigation has been found to be
complex by the Supreme Court and lower courts. See. e.g. Barrentine v. Arkansas-Best Freight
$y, 450 U.S. 728, 743 (1981); Lenahan v. Sears, Roebuck, and Co., 2006 U.S. Dist. LEXIS
60307,
*
61-62 (D.N.J. July 24, 2006). The Court finds the above-captioned matters and the
settlement negotiations to resolve them to have contained complex factual and legal issues
relating to overtime, retaliation and improper class communications claims. The negotiations
occurred over a span of over three years, with multiple meetings, the enlisting of a professional
20
mediator experienced in wage-and-hour litigation, analysis of wage-and-hour records for more
than 112 plaintiffs, the formulation of damage models, and the negotiation of recoveries. The
Court thus concurs with Plaintiffs’ counsel that this factor weighs in favor of approving their fee
request as reasonable.
5. Risk of Nonpayment
The Court also finds that Plaintiffs’ counsel risked non-payment during the period of their
representation since they represented Plaintiffs entirely on a contingent basis, with no retainer
fees or expenses paid at the beginning of the litigation. (Pls. Attorneys’ Fees Mot., at 17).
Counsel took on the costs of litigation despite their lack of certainty that the Court would find
that Defendants violated the FLSA, constant negotiations with Defendants regarding the
Plaintiffs’ recovery based on the number of hours worked, the potential for decertification of the
class once conditionally certified, and risks in changes in the law and appeals. (Denn Dccl.,
14-18). Given these considerations, the Court finds that the risk of non-payment weighs in favor
of the requested fee. See, e.g., Lenahan, 2006 U.S. Dist. LEXIS 60307,
Wachovia Sec. LLC, 2009 U.S. Dist. LEXIS 27992,
*
*
63-64; Serio v.
33 (D.N.J. Mar. 31, 2009).
6. Amount of Time Devoted to the Case by Plaintiffs’ Counsel
Plaintiffs’ counsel spent over 5,200 hours over the course of the four years of litigation in
litigating and attempting to settle the above-captioned matters. (Pls. Attorneys’ Fees Mot., at
18). This work included: investigation and prosecution of the claims, taking and defending
depositions, interviewing putative class members and opt-in Plaintiffs, obtaining declarations
from putative class members, reviewing documents produced by Camin Cargo in discovery,
reviewing and analyzing time and payroll data, drafting and filing three motions for conditional
21
certification pursuant to 29 U.S.C.
§ 2 16(b), drafting and responding to summary judgment
motions, advocating for Plaintiffs who alleged retaliation, engaging in discovery motion practice,
and engaging in extensive settlement negotiations. (Ii, at 18-19). Plaintiffs’ counsel will also
engage in administering the settlement if and when it is approved by this Court, including
addressing distribution issues and answering Plaintiffs’ questions. The Court therefore finds that
Plaintiffs’ counsel devoted a significant amount of time in vindicating Plaintiffs’ rights under the
FLSA, and this factor weighs in favor of granting counsel’s attorneys’ fees request.
7. Awards in Similar Cases and Percentage Fee Likely Negotiated if Case Subject to
Private Contingent Fee
The Third Circuit has noted that fee awards generally range from 19% to 45% of the
settlement fund when the percentage-of-recovery method is utilized to assess the reasonableness
In re Gen. Motors, 55 F.3d at 822. Counsel’s request for one-
of requested attorneys’ fees.
third of the settlement fund falls within the range of reasonable allocations in the context of
awards granted in other, similar cases. See, e.g., Bredbenner, 2011 U.S. Dist. LEXIS 38663,
*
52 (approving an award of 32.6% of the settlement fund); Gilliam v. Addicts Rehab. Ctr. Fund,
2008 U.S. Dist. LEXIS 23016,
*
8 (S.D.N.Y. Mar. 24, 2008)(approving an award of one-third of
the settlement fund); deMunecas v. Bold Food, LLC, 2010 U.S. Dist. LEXIS 87644,
*
24
(S.D.N.Y. Aug. 23, 2010)(same); Rotuna v. West Customer Mgmt. Grp., LLC, 2010 U.S. Dist.
LEXIS 58912,
*
19 (N.D. Ohio Mar. 8, 2010). The attorneys’ fees request of one-third of the
settlement fund also comports with privately negotiated contingent fees negotiated on the open
market. See Bredbenner, 2011 U.S. Dist. LEXIS 38663,
*
60. Further, a lodestar cross-check
supports counsels’ fee request since counsel worked 5,200 hours, at an average rate of $263/hour,
resulting in a lodestar of $1,368,195. This rate exceeds the $1.3 million request of counsel, and
22
it does not include the expenses counsel will incur following the final approval of the settlement
to administer said settlement. (Pls. Attorneys’ Fees Mot., at 22-24). The Court thus finds that
this factor weighs in favor of finding said request reasonable.
8. Value of Benefits Attributable to Efforts of Class Counsel and Innovative Terms of
Settlement
Counsel did not rely in seeking recovery for Plaintiffs on ongoing governmental
investigations into Defendants, but rather utilized their own resources to litigate the abovecaptioned matters. While their settlement does not appear to contain innovative terms, the Court
finds that, overall, the fee requested is reasonable in light of the above-considered factors.
IV. CONCLUSION
For the reasons set forth above, the Court: (1) grants in part and denies in part Plaintiffs’
Motion to Approve the FLSA Collective Action Settlement; (2) grants the Plaintiffs’ Motion to
Consolidate the Actions for Settlement Purposes; and (3) grants Plaintiffs’ Motion for Approval
of Attorneys’ Fees and Reimbursement of Expenses. An appropriate Order accompanies this
Opinion.
DATED: March4, 2012
States District Judge
23
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