DEHOLL V. ECKERD CORPORATION, ET AL.
Filing
37
MEMORANDUM OPINION AND ORDER, signed by JUDGE N. C. TILLEY, JR on 7/25/2019, that Plaintiff Christopher J. DeHoll's and Defendants Eckerd Corporation and Gregory Scott Norman's Joint Motion for Approval of FLSA Settlement and Motion to Dismiss with Prejudice [Doc. # 30 ] is GRANTED and this action is DISMISSED WITH PREJUDICE.(Butler, Carol)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
CHRISTOPHER J. DEHOLL,
Plaintiff,
v.
ECKERD CORPORATION d/b/a RITE
AID PHARMACY, RITE AID OF
NORTH CAROLINA, AND GREGORY
SCOTT NORMAN,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
1:18CV280
MEMORANDUM OPINION AND ORDER
This matter is before the Court on Plaintiff Christopher J. DeHoll’s (“DeHoll”)
and Defendants Eckerd Corporation and Gregory Scott Norman’s1 (collectively
“Defendants”) Joint Motion for Approval of FLSA Settlement and Motion to
Dismiss with Prejudice (“Joint Motion”) [Doc. #30]. This Court requested further
information from the parties in two orders, the first of which was issued on April
18, 2019 (“First Order”) [Doc. #32] and the second on May 2, 2019 (“Second
Order”) [Doc. #34]. The parties responded to the First Order in a Joint
Supplemental Memorandum (“First Supplemental Memorandum “) [Doc. #33], and
to the Second Order in a Joint Supplemental Memorandum (“Second Supplemental
Memorandum”) [Doc. #35]. For the reasons explained below, the Joint Motion is
GRANTED, and this action is DISMISSED WITH PREJUDICE.
1
Rite Aid of North Carolina was dismissed as a defendant on December 19, 2018.
(See Joint Stipulation of Dismissal with Prejudice [Doc. # 26].)
I.
Before approving an FLSA settlement, the court must determine if the
settlement is a “fair and reasonable compromise of disputed claims and issues
arising from a bona fide dispute raised pursuant to the FLSA.” Kirkpatrick v.
Cardinal Innovations Healthcare Sols., 352 F. Supp. 3d 499, 502 (M.D.N.C. 2018)
(citing Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir.
1982)). Thus, to approve a FLSA settlement, the court must make “finding[s] with
regard to (1) whether there are FLSA issues actually in dispute, (2) the fairness and
reasonableness of the settlement in light of the relevant factors from Rule 23, and
(3) the reasonableness of the attorneys’ fees, if included in the agreement.”
Duprey v. Scotts Co., LLC, 30 F. Supp. 3d 404, 408 (D. Md. 2014); see also Hood
v. Uber Techns., Inc., No. 1:16-CV-998, 2019 WL 93546, at *4 (M.D.N.C. Jan.
3, 2019).
A.
The Court must first determine whether a bona fide dispute exists. “A bona
fide dispute is one in which there is some doubt whether the plaintiff would
succeed on the merits at trial.” Kirkpatrick, 352 F. Supp. 3d at 502 (quoting Hall v.
Higher One Machs., Inc., No. 5-15-CV-670-F, 2016 WL 5416582, at *6 (E.D.N.C.
Sept. 26, 2016)). To determine this, the court looks to the pleadings and
proposed settlement agreement. Id. (citing Duprey, 30 F. Supp. 3d at 404.)
In this case, there is a bona fide dispute. DeHoll contends he is owed
overtime under the FLSA, while the Defendants argue DeHoll is exempted from the
2
FLSA as a highly-compensated employee and/or learned professional, and
therefore, he is owed no overtime. (Mem. in Supp. of Joint Mot. for Approval of
FLSA Settlement & Mot. to Dismiss with Prejudice (“Mem. in Supp. of Joint Mot.”)
[Doc. #31] at 3; see also Compl. [Doc. #5] at 4-7; Defendant Eckerd Corp.’s
Answer [Doc. #11] at 6-7; & Defendant Gregory Scott Norman’s Answer [Doc.
#12] at 7-8.) “This disagreement is a genuine dispute that supports the concept of
a negotiated settlement of this FLSA claim.” Hood, 2019 WL 93546 at *4 (internal
quotations and brackets omitted) (quoting Rivera v. Dixson, No. TDC-14-cv-2901,
2015 WL 427031, at *3 (D. Md. Jan. 30, 2015)).
B.
The Court must next determine whether the settlement is fair and
reasonable. “Although the Fourth Circuit has not addressed directly the relevant
factors the court should consider when determining whether a FLSA settlement is
fair and reasonable, district courts within the circuit have generally considered the
fairness factors a court would consider under Federal Rule of Civil Procedure
23(e).” Kirkpatrick, 352 F. Supp. 3d at 502 (citing Hoffman v. First Student, Inc.,
No. WDQ-06-1882, 2010 WL 1176641, at *2 (D. Md. Mar. 23, 2010)). These
factors include “(1) the extent of discovery that has taken place; (2) the stage of
the proceedings, including the complexity, expense, and likely duration of the
litigation; (3) the absence of fraud or collusion in the settlement; (4) the experience
of counsel who have represented the plaintiff; (5) the probability of plaintiff’s
success on the merits and (6) the amount of the settlement in relation to the
3
potential recovery.” Id. at 502-03 (quoting Hargrove v. Ryla Teleservices, Inc., No.
2:11CV344, 2013 WL 1897027, at *2 (E.D. Va. Apr. 12, 2013); see also Hood,
2019 WL 93546, at * 4 & Duprey, 30 F. Supp. 3d at 409. In considering these
factors, “there is a strong presumption in favor of finding a settlement fair . . . .”
Id. (internal quotation marks omitted) (quoting Lomascolo v. Parsons Brinckerhoff,
Inc., No. 18CV1310, 2009 WL 3094955, at *16-*17 (E.D. Va. Sept. 28, 2009)).
In the present case, all six factors support a finding that the settlement is
fair and reasonable. First, while the parties have not engaged in extensive
discovery, they agree they have exchanged sufficient information to determine that
settlement is in the best interest of all parties. (First Supp. Mem. at 3-4.) At this
stage, the parties do not dispute how often DeHoll was paid, nor how much he
was paid, but instead only disagree on “the narrow issue of whether Plaintiff was
exempt under the FLSA . . . .” (Id. at 3.) Therefore, the parties agree that further
discovery will add little additional information that could influence their decision to
settle. (Id. at 4.).
Similarly, as to the second factor, the parties recognize that in ruling on
Defendants’ previous motion to dismiss, the Court has narrowed the issues in the
case to one issue and, because both parties already have the information
necessary to develop legal arguments related to this issue, “the parties would incur
substantial costs by engaging in discovery on information they both possess.” (Id.
at 3-4.)
4
As to the third factor, both the parties and the Court recognize that there is
a presumption that “no fraud or collusion occurred between counsel, in the
absence of any evidence to the contrary,” Lomascolo, 2009 WL 3094955, at *12.
(See First. Supp. Mem. at 5.) Here, there is no evidence of fraud or collusion, and
the parties represent that “[c]ounsel for Plaintiff aggressively pursued Plaintiff’s
claims and the matter was vigorously contested by Defendants.” (First Supp. Mem.
at 5.)
As to the fourth factor, counsel for both parties are experienced in FLSA
litigation. “Defendants’ counsel specialize[s] in employment law matters and has
handled or assisted in the defense of over twenty FLSA misclassification cases the
past ten years alone, is a member of his firm’s wage and hour practice group and
routinely advises clients on FLSA and wage and hour matters.” (Id. at 5-6.)
DeHoll’s counsel is also experienced, having handled “approximately ten FLSA
cases, some of which were resolved through pre-suit negotiation . . .” and
“recently pursued a complex claim with FLSA causes of action in 2017 through
2019 . . . [which] likewise involved allegations of uncontested work and a failure
to pay at least minimum wage for qualifying work.” (Second Supp. Mem. at 1.)
As to the fifth factor, the parties agree that the “Defendants have a
significant chance of prevailing on the merits of their learned professional
exemption defense.” (First Supp. Mem. at 6.) Therefore by settling DeHoll avoids
the risk of an unfavorable verdict or summary judgment decision.
5
As to the final factor, DeHoll’s counsel calculated a “best-case scenario”
amount of back wages by “multiplying the alleged additional weekly unpaid hours
Plaintiff worked . . . by Plaintiff’s overtime hourly rate . . . and multiplying by the
number of weeks Plaintiff worked for Defendants.” The parties then negotiated
over four weeks to arrive at the settlement amount, which represents
approximately thirty-eight percent of DeHoll’s “best-case scenario” amount, and
which the parties “both believe[] to be a fair settlement given the facts and law of
the case.” (Second Supp. Mem. at 2.) Thus, the sixth factor, and all preceding
factors, support a finding that the settlement is fair and reasonable.
C.
Finally, this Court must determine if the attorney’s fees in this case are
reasonable. “Under the FLSA, the court is authorized to award a reasonable
attorney’s fee to be paid by the defendant, and costs of the action, in addition to
any judgment awarded to the Plaintiff.” Kirkpatrick, 352 F. Supp. 3d at 503
(internal quotations omitted) (quoting 29 U.S.C. § 216(b)). There are two
approaches used for calculating attorney’s fees within the Fourth Circuit: the
percentage of the fund method and the lodestar method. Id. at 504.
The percentage of the fund method provides that the court award
attorneys’ fees as a percentage of the common fund, while the
lodestar method requires the court to determine the hours reasonably
expended by counsel that created, protected, or preserved the fund,
then to multiply that figure by a reasonable hourly rate.
Id. (internal quotations and brackets omitted) (quoting Phillips v. Triad Guar., Inc.,
No. 1:09CV71, 2016 WL 2636289, at *2 (M.D.N.C. May 9, 2016)). Regardless
6
of the method used to calculate fees, the Fourth Circuit typically considers twelve
factors to evaluate the reasonableness of the requested attorney’s fees in FLSA
cases:
(1) the time and labor expended; (2) the novelty and difficulty of the
questions raised; (3) the skill required to properly perform the legal
services rendered; (4) the attorney’s opportunity costs in pressing the
instant litigation; (5) the customary fee for like work; (7) the time
limitations imposed by the client or circumstances; (8) the amount in
controversy and the results obtained; (9) the experience, reputation
and ability of the attorney; (10) the undesirability of the case within
the legal community in which the suit arose; (11) the nature and
length of the professional relationship between attorney and client;
and (12) attorneys’ fees awards in similar cases.
Barber v. Kimbrell’s, Inc., 577 F.2d 216, 226 n.28 (4th Cir. 1978); see Kirkpatrick,
352 F. Supp. 3d at 504-06 (applying the Barber factors to attorney’s fees
calculated by the percentage of the fund method) & Hood, 2019 WL 93546, at *7
(applying the Barber factors to attorney’s fees calculated using the lodestar
method).
In this case, the attorney’s fees have been calculated as a percentage of the
fund. To determine if the fees requested are reasonable, the Court will evaluate
the Barber factors, and can use the lodestar method as a cross-check. See
Kirkpatrick, 352 F. Supp. at 504. In this case, DeHoll’s counsel have requested
approximately 33.33 percent of the gross settlement, plus reimbursement for their
expenses of $243.96, which totals $3,243.96. (Second Supp. Mem. at 3.)
7
Using both the Barber factors and the lodestar method, this fee is
reasonable. While not all the Barber factors are present in this case2, those that
are support a finding that the attorney’s fees are reasonable. DeHoll’s legal team
spent 41.20 hours on this case. They contend that during that time they zealously
litigated the case, by preparing the complaint, conferencing with DeHoll,
conducting legal research, communicating with Defendants’ counsel, responding to
Defendants’ motions, preparing a joint 26(f) report, and preparing a joint
settlement agreement. (Second Supp. Mem. at 3-4.)
While the issues in this case are neither novel nor complex, this is reflected
in the relatively low award of attorney’s fees. Nevertheless, pursuing a FLSA case
still requires skill and competency on the part of the litigating attorneys as they
cases are usually tried in federal court and involve the interpretation and
application of a federal statute that governs fair pay and workers in a broad
spectrum of fields. Given the experience of DeHoll’s counsel in litigating FLSA
cases, they likely possess both the skill and competency required in a FLSA case.
(See supra at 5.)
2
The parties have not argued the effect, if any, of Barber factors 4, 7, 10 or 11 on
this analysis, and the Court cannot discern any effect under these facts. While
factor 9 surely could affect the analysis, DeHoll’s counsel has provided no
evidence of its experience or reputation in the legal community, except to say the
numbers of FLSA cases they’ve pursued. (See generally Mem. in Supp. of Joint
Mot., First Supp. Mem, & Second Supp. Mem.) Nevertheless, there is certainly
nothing before the Court to suggest that they do not enjoy a favorable reputation
in the legal community.
8
While DeHoll’s legal team does not have a customary fee for FLSA cases,
had this case been billed on an hourly rate, the attorney’s fees requested would
have vastly exceeded the requested award. Attorney Adam L. White spent 33.9
hours on this case and would have billed at least $200 an hour. (Id. at 3.)
Attorney Jon Ward spent 3.6 hours on this case and would have billed at least
$250 an hour, and a paralegal spent 3.7 hours on this case and would have billed
at least $75 an hour. (Id.) Therefore, had this case been billed on an hourly rate,
the attorney’s fees would have totaled at least $7,957.50. Thus, the attorneys’
fees of $3,000 sought here are less than half of what could have been sought had
the case been billed on an hourly basis.
This award of attorney’s fees is further justified by the results obtained for
DeHoll by his legal team. As noted previously, the parties agree that “Defendants
have a significant chance of prevailing on the merits of their learned professional
exemption defense.” (See supra at 5 (citing First Supp. Mem. at 6.).) Under the
settlement agreement, DeHoll will receive 38 percent of the “best-case” amount he
and his attorney’s calculated, (Second Supp. Mem. at 2), and will do so without
having to risk unfavorable summary judgment decisions or trial.
Finally, the percentage of the gross settlement is reasonable when compared
to other awards that have been approved in other cases within this circuit.
Kirkpatrick, 352 F. Supp. at 505 (approving an award of 33.9 percent award and
citing other district court cases within the circuit approving awards between 25
9
and 30 percent). Therefore, under the Barber factors, the requested attorney’s
fees are reasonable.
Using the lodestar method as a cross-check, this attorney’s fee award is still
reasonable. The hourly fees charged by DeHoll’s counsel fall below many of the
hourly rates that courts within this District have held to be reasonable. See id.
(approving fees of $125 an hour for a paralegal, and fees of $400 and $575 an
hour for attorneys). Therefore, the requested attorney’s fees are reasonable.
II.
For the reasons stated above, IT IS HEREBY ORDERED that Plaintiff
Christopher J. DeHoll’s and Defendants Eckerd Corporation and Gregory Scott
Norman’s Joint Motion for Approval of FLSA Settlement and Motion to Dismiss
with Prejudice [Doc. #30] is GRANTED and this action is DISMISSED WITH
PREJUDICE.
This the 25th day of July, 2019.
/s/ N. Carlton Tilley, Jr.
Senior United States District Judge
10
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?