PONTILENA v. MORGAN STANLEY SMITH BARNEY LLC
Filing
178
OPINION. Signed by Judge William J. Martini on 12/19/17. (gh, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
IN RE MORGAN STANLEY SMITH
BARNEY LLC WAGE AND HOUR
LITIGATION
Civ. No. 2:11-3121
OPINION
MDL 2280
WILLIAM J. MARTINI, U.S.D.J.:
Plaintiffs Jimmy Kuhn, Nick Pontilena, Howard Rosenblatt and Denise Otten
(collectively “Plaintiffs”) bring this putative collective action under the Fair Labors
Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and three putative wage and hour class
actions against Defendants Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.,
Inc. (together “MSSB”). This matter comes before the Court on the parties’ joint motion
for judicial approval of their settlement agreement. There was no oral argument. Fed. R.
Civ. P. 78(b). For the reasons set forth below, the parties’ motion is DENIED.
I.
BACKGROUND
The Court assumes the parties’ familiarity with the facts and procedural history of
the instant case and writes solely for their benefit.1 On February 28, 2017, the Court
granted summary judgment in favor of MSSB and dismissed all of Plaintiffs’ outstanding
claims with prejudice. See Order, ECF No. 168. Plaintiffs subsequently filed an appeal.
See Notice of Appeal, ECF No. 169. The parties now jointly move for judicial approval of
their settlement agreement. See Joint Mot. in Supp. of Judicial Approval of Settlement
(“Joint Mot.”), ECF No. 175-1.
II.
LEGAL STANDARD
“When employees bring a private action under the FLSA, and present to the district
court a proposed settlement . . ., 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 the FLSA provisions.’” See Brumley v. Camin Cargo Control, Inc., No. 08cv-1798, 2012 WL 1019337, at *2 (D.N.J. Mar. 26, 2012) (quoting Lynn’s Food Stores,
Inc. v. United States, 679 F.2d 1350, 1354 (11th Cir. 1982)). “While the Third Circuit has
not directly addressed the factors to be considered in deciding motions for approval of
FLSA settlements, district courts have typically looked to the considerations set forth in
Lynn’s Food, cited infra.” Id. (citing multiple cases). “While factors for evaluating
1
For a detailed summary of the case history, see the Court’s summary judgment opinion. ECF No. 167.
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‘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 . . . .” See id. at *4–5 (citing Girsh v. Jepson,
521 F.2d 153, 156–57 (3d Cir. 1975)).
III.
DISCUSSION
The parties’ motion essentially requires that the Court reverse itself. As a threshold
matter, the Court finds that the Lynn’s Foods holding is inapplicable here. In that case, the
Eleventh Circuit was concerned with a settlement agreement between an employer and
employees reached outside of the adversarial context of a lawsuit. See 679 F.2d at 1354.
In that same opinion, however, it noted that when parties reach an agreement within the
adversarial context, the “employees are likely to be represented by an attorney who can
protect their rights under the [FLSA]” and the agreement is, therefore, “more likely to
reflect a reasonable compromise.” See id. Here, competent attorneys have duly
represented the parties at all times and the concern voiced in Lynn’s Foods is not present.
Furthermore, as noted above, the Court previously granted summary judgment in
favor of MSSB and dismissed all claims with prejudice. In so doing, the Court undertook
an extensive review of the facts in the record and determined that under no circumstance
would Plaintiffs’ claims prevail. “[A] bona fide dispute must be determined to be one over
factual issues . . . .’” See Brumley, 2012 WL 1019337, at *2 (citing Lynn’s Foods, 679
F.2d at 1354) (quotation omitted). In granting summary judgment for MSSB, the Court
specifically determined that there are no genuine disputes as to any material fact that a
reasonable jury could find in favor of Plaintiffs. Consequently, there is no “bona fide
dispute over the FLSA provisions” currently before the Court.2
Notwithstanding the above, the Court is mindful of the parties’ desire to end this
litigation after more than six years. In the Third Circuit, “[a] strong public policy exists in
favor of settlements.” See Edwards v. Born, Inc., 792 F.2d 387, 390 (3d Cir. 1986). The
settlement agreement consists of wage payments to the four named plaintiffs and attorneys’
fees that amount to the expenses incurred by counsel throughout the course of litigation.
See Joint Mot. at 4, 8. The parties entered into this agreement because Plaintiffs would
rather receive the payment than risk receiving nothing after appeal and because MSSB
prefers to avoid incurring the substantial costs of defending the appeal. See id. at 4.
Assuming this Court’s approval was required, it would find the agreement fair and
reasonable under the circumstances.
Nonetheless, this Court cannot approve a settlement of a case when it has already
determined the outcome. When an appeal has been docketed, as here, the parties are free
to make whatever agreement they deem reasonable and voluntarily dismiss that appeal on
2
The Girsh factors are equally inapplicable here. The factors were designed to protect the rights of absentee class
members from an unfavorable settlement agreement in which they had no say. See Girsh, 521 F.2d at 157 (citing
Greenfield v. Villager Indus., Inc., 483 F.2d 824, 832 (3d Cir. 1973). In the instant case, the Court expressly denied
class certification. See Order, ECF No. 147. Consequently, there are no absentee class members to protect.
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their own undertaking. See Fed. R. App. P. 42(b); Clarendon Ltd. v. Nu-West Indus., Inc.,
936 F.2d 127, 128 (3d Cir. 1991) (“The parties may make whatever arrangement they agree
on and need not notify or involve the court of appeals panel.”). Moreover, when confronted
with a joint motion for settlement approval after the district court’s grant of summary
judgment, the Third Circuit provided:
“‘When a clash between genuine adversaries produces a precedent, . . . the
judicial system ought not allow the social value of that precedent, created
at a cost to the public and other litigants, to be a bargaining chip in the
process of settlement. The precedent, a public act of a public official, is
not the parties’ property.’”
Clarendon, 936 F.2d at 129 (quoting In re Mem’l Hosp. of Iowa Cnty., Inc., 862 F.2d 1299,
1302 (7th Cir. 1988)).
This Court’s “duty lies not in the direction of an automatic acquiescence to the
parties’ request, but rather with a deliberate consideration of the policy that will best serve
the public good.” See id. The Court’s summary judgment opinion produced a precedent
concerning the FLSA’s application at considerable cost to the public in the form of the
Court’s time and resources, which it will not diminish by approving the parties’ agreement.
Simply put, there is nothing to settle. The parties are free to dismiss their appeal of the
rulings in this case at a price acceptable to them, for which they do not need this Court’s
permission. See Clarendon, 936 F.2d at 128. Accordingly, the parties’ joint motion for
settlement approval is DENIED.
IV.
CONCLUSION
For the reasons stated above, the parties’ joint motion for judicial approval of
settlement is DENIED. An appropriate order follows.
/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: December 19, 2017
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