Dino et al v. Commonwealth of Pennsylvania, Department of Corrections et al

Filing 118

MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that the 115 Motion for Approval of Settlement and Dismissal of the Case is GRANTED. Signed by Chief Judge Yvette Kane on Aug. 7, 2013. SEE ORDER FOR DETAILS. (sc)

Dino et al v. Commonwealth of Pennsylvania, Department of Corrections et al

Doc. 118

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JAY T. DINO, et al.,
Plaintiffs,
v.
COMMONWEALTH OF
PENNSYLVANIA, et al.
Defendants

:
:
:
:
:
:
:
:

No. 1:08-cv-01493

(Chief Judge Yvette Kane)

MEMORANDUM
On August 8, 2008, Plaintiff Jay T. Dino and twenty-six other named plaintiffs initiated
this action by filing a complaint against the Commonwealth of Pennsylvania, Department of
Corrections (DOC), and then-Secretary of Corrections, Jeffrey A. Beard, under the collective
action provisions of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 207. (Doc. No. 1.) Now
before the Court is a joint motion for an order granting approval of the parties’ settlement
agreement and dismissing this action with prejudice. (Doc. No. 115.) For the reasons stated
more fully herein, the Court will grant the motion.
I.

BACKGROUND
Twenty-seven plaintiffs, all current or former employees of the Pennsylvania DOC who

hold or have held the position of Corrections Officer III (CO3), brought this FLSA collective
action against the Commonwealth of Pennsylvania and Jeffrey A. Beard, Ph.D., on August 8,
2008, alleging that Defendants failed to properly compensate them and similarly situated
employees in Pennsylvania for overtime by forcing them to accept compensatory time in lieu of
overtime payment for hours worked over 40 in a workweek. (Doc. No. 1.) On December 4,
2009, the Court dismissed Plaintiffs’ claims against the DOC, holding that it was immune from

1

Dockets.Justia.com

suit under the Eleventh Amendment. (Doc. No. 41.) Defendant Beard denies any alleged
violations of law and any liability, asserting that the executive and administrative exemptions of
the FLSA defeat Plaintiffs’ claims for overtime compensation, that DOC has properly
compensated Plaintiffs, and that Defendant Beard is entitled to qualified immunity. (Doc. No.
115-1 at 2.) Moreover, Defendant contends that if the case were to be further litigated, collective
action treatment would be inappropriate and that Defendant would prevail on the merits. (Id.)
On April 19, 2010, the Court granted the parties’ joint motion for conditional
certification, and approval of notice to potential opt-in Plaintiffs. (Doc. No. 51.) The Court
conditionally certified this case as a class action, and Plaintiffs’ counsel provided notice to all
persons who are or were employed by the DOC as a CO3 within the three years preceding the
April 19, 2010 order that they could opt in to the lawsuit. 250 individuals opted into the action,
but three of the opt-ins later withdrew from the action. (Doc. Nos. 61, 66.) Thus, the conditional
class currently consists of 247 present and former CO3s.
On October 25, 2011, Defendant Beard filed a motion for sanctions against members of
the conditional class, seeking various sanctions for a number of Plaintiffs who allegedly
provided deficient responses to written discovery requests or failed to respond altogether. (Doc.
No. 81.) The motion remains pending before the Court; however, the Court stayed discovery
and disposition of the motion pending referral of the matter to a judicial settlement officer to
supervise settlement discussions between the parties. (See Doc. Nos. 86, 87.) Beginning in
March 2012, the parties engaged in seven full-day mediation sessions and telephonic discussions
with Magistrate Judge Martin C. Carlson. In January 2013, the parties reached a settlement, and
they submitted a settlement agreement to the Court for approval on July 19, 2013. (Doc. Nos.

2

110, 111, 115-3.) Following arms-length negotiations, the parties propose the following
settlement:
(a) Monetary Terms of Settlement.
Defendant
Commonwealth will pay Class Members, Named Plaintiffs, Class
Leaders and Plaintiffs’ Counsel a Total Settlement Payment of Five
Hundred Thousand Dollars ($500,000.00). This is an amount agreed
to among the parties to compromise, settle and satisfy the disputed
claims of Named Plaintiffs and the Opt-in Plaintiffs for all amounts
potentially recoverable in an FLSA collective action. These
payments are in settlement of all amounts sought in this litigation and
break down as follows:
(i)

Two Hundred Forty Seven (247) members in the
conditionally certified class who will be compensated
on a per capita basis in the amount of $1,270.45 per
plaintiff, for a total of $313,800.

(ii)

Twenty-seven (27) Named Plaintiffs, who will be
compensated in the amount of $500 per named
plaintiff, for a total of $13,500;

(iii)

Six (6) Class Leaders, who will be compensated in the
amount of $3,000 per Class Leader, for a total of
$18,000;

(iv)

$4,700 for litigation costs;

(v)

$150,000 for attorneys’ fees, subject to approval by
the Court;1

(vi)

All payments in subparts (i)-(iii) will be less
applicable taxes at the appropriate rate and are
contingent on the individual plaintiff (or his/her
representative in the case of death) signing the
acknowledgement of release set forth in paragraph 6
below; if the individual (or representative) does not
sign the acknowledgement, the payment(s) will revert
to the Department of Corrections.

1

The parties have agreed that Plaintiffs’ counsel will separately petition the Court for
approval of the attorneys’ fees and cost set forth in the settlement agreement.
3

(b) In addition, for any plaintiff who is an active CO3 and
whose compensatory time bank exceeds 100 hours as of the date the
Court approves the settlement, the Department of Corrections has
indicated that it will pay such plaintiff at his/her current hourly rate
for each such hour in excess of 100 as of the date of payment
processing, and will reduce the compensatory time bank to 100 hours.
(c) Non-Monetary Terms of Settlement. DOC will establish
the following policies, both of which are subject to the DOC’s
discretion to amend or modify said policy(ies) in the future,
particularly in light of budget constrain[t]s and/or changes of
administration:
(i)

Disciplinary Suspension Policy. DOC will issue an
amended Disciplinary Suspension Policy, to be
applied in all State Correctional Institutions (“SCIs”),
specifying that partial workweek suspensions of CO3s
will be handled in strict compliance with the FLSA.

(ii)

Compensatory Time Policy. DOC will adopt a new
Compensatory Time Policy applicable to CO3s in all
SCIs that:
(1)

Governs the payment of overtime as follows:
(a)

CO3s will have the option to receive
cash at the rate of one and one-half
times the CO3’s regular rate for up to
32 premium hours worked (i.e.
overtime or holiday if worked) per
fiscal year.

(b)

The Department of Corrections retains
the discretion to adopt policies and
directives from time-to-time for each
SCI regarding the degree of discretion
the SCI has to pay for additional
premium hours in the form of cash (as
compared to compensatory time), for
example the current 88-hour
discretionary policy.

(c)

The policy will provide for a
maximum accrual in one’s
4

compensatory leave bank of 240 hours
of compensatory leave. If a CO3
works overtime that would result in
compensatory leave over 240 hours,
he/she shall be paid cash overtime for
those excess hours.
(2)

Allows CO3s to use their compensatory time
within a reasonable period upon request,
subject to DOC’s right to schedule CO3s’
compensatory time off and to deny requests
based on operational and/or staffing needs.

(3)

Provides that a CO3 who is promoted to a
CO4 position will carry his/her accrued
compensatory time bank into the new
position.

(4)

Provides that an individual who separates
from Commonwealth employment as a CO3
will receive payment of up to 240 hours of his
or her accrued and unused compensatory
leave bank, paid out at 100% of the CO3’s
hourly base rate of pay as of the separation
date.

(d) Additional terms of the Settlement. The settlement will
acknowledge that the Compensatory Time Policy constitutes an
agreement to pay compensatory time within the meaning of the
FLSA. The settlement agreement will acknowledge that CO3s are
properly classified as exempt under the FLSA.
(Doc. No. 115-1 at 6-10.)
II.

LEGAL STANDARD
Claims arising under the FLSA may be settled where either the Secretary of Labor

supervises an employer’s payment of unpaid wages to employees or a district court enters a
stipulated judgment after scrutinizing a proposed settlement for fairness. 29 U.S.C. § 216(c);
Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352 (11th Cir. 1982). In the latter

5

situation, a district court may enter a stipulated judgment after determining that the proposed
settlement “is a fair and reasonable resolution of a bona fide dispute over FLSA provisions.”
Lynn’s Food Stores, 679 F.2d at 1354. In the absence of direct guidance from the United States
Court of Appeals for the Third Circuit regarding the applicable standard for assessing settlement
agreements under the FLSA, district courts in this circuit have referred to the considerations set
forth in Lynn’s Food Stores. See, e.g., Brumley v. Carmin Cargo Control, Inc., No. 08-cv-1798,
2012 WL 1019337, at *2 (D.N.J. Mar. 26, 2012) (collecting cases). Under Lynn’s Food Stores,
a proposed settlement agreement resolves a bona fide dispute where it “reflect[s] a reasonable
compromise over issues, such as FLSA coverage or computation of back wages, that are actually
in dispute” and is not a “mere waiver of statutory rights brought about by an employer’s
overreaching.” 679 F.2d at 1354. In scrutinizing the agreement for reasonableness and fairness,
courts generally proceed in two steps, first considering whether the agreement is fair and
reasonable to the plaintiff-employees and, if found to be fair and reasonable, then considering
whether it furthers or “impermissibly frustrates” the implementation of the FLSA in the
workplace. Brumley, 2012 WL 1019337, at *4; Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227,
1241 (M.D. Fla. 2010).
III.

DISCUSSION
The parties contend that their proposed settlement agreement is fair and reasonable

because it resolves a number of disputes over legal and factual issues, including Eleventh
Amendment immunity, qualified immunity, the potential that compensatory time would offset a
substantial number of overtime hours, and Plaintiffs’ status as exempt employees under the
FLSA. Moreover, the parties recognize that Defendant’s pending motion for sanctions calls into

6

question the participation of a substantial number of the Plaintiffs in this lawsuit, all of whom are
entitled to payment under the proposed settlement. (Doc. No. 115-1 at 13.) Despite these legal
and factual hurdles that Plaintiffs would need to overcome, Defendant has agreed to the proposed
settlement in order to avoid the expenses of further litigation, which he described as contrary to
his best interests. (Id.) While Plaintiffs dispute Defendant’s arguments on the merits, they agree
that the disputed issues illustrate why the proposed settlement is fair, reasonable, and adequate
under the circumstances, recognizing the expense of trial and possible appeals. (Id. at 13-14.)
The Third Circuit has not addressed the factors that district courts should consider in
assessing the fairness and reasonableness of an agreement settling a FLSA collective action, but
district courts in this circuit have applied the factors set forth in Girsh v. Jepson, 521 F.3d 157
(3d Cir. 1975), for approving class action settlements under Rule 23 of the Federal Rules of Civil
Procedure. See, e.g., Brumley, 2012 WL 1019337, at *4-*5 (collecting cases). The nine Girsh
factors 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) risk of establishing damages; (6) risk 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.
521 F.2d at 157-58 (citation omitted).
Applying the Girsh factors to the parties’ proposed settlement agreement, the Court finds
that the agreement is fair and reasonable. The agreement reasonably compromises disputed
issues by compensating Plaintiffs for their FLSA claims and, by agreeing to a settlement at this

7

time, the parties will avoid the costs of a potentially lengthy and complex trial as well as
potential appeals. Moreover, a settlement agreement appears to be a prudent course of action
because Plaintiffs would need to overcome a number of legal hurdles, including, inter alia, the
potential application of the doctrine of qualified immunity and Defendant’s pending motion for
sanctions, resolution of which could result in the dismissal of some of the opt-in Plaintiffs from
this action. Additionally, counsel for the parties have thoroughly litigated this action, having
conducted extensive discovery and fully briefed several motions, demonstrating an appreciation
of the merits and risks of proceeding to trial before negotiating the settlement agreement.
Finally, the fact that the parties participated in extensive case discussions over the course of
seven days during mediation with Judge Carlson weighs heavily in favor of a finding that the
parties are fully apprised of the strengths and weaknesses of their positions such that the
proposed settlement is fair and reasonable. The Court is satisfied that the proposed settlement is
the product of good faith arms’ length negotiations and resolves a bona fide dispute between the
parties.
IV.

CONCLUSION
For the foregoing reasons, the Court finds that the parties’ proposed settlement agreement

is fair and reasonable and does not frustrate the implementation of the FLSA in the workplace.
Therefore, the Court will grant the parties’ joint motion for an order granting approval of the
parties’ settlement agreement. An order consistent with this memorandum follows.

8

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JAY T. DINO, et al.,
Plaintiffs,

:
:
:
:
:
:
:
:

v.
COMMONWEALTH OF
PENNSYLVANIA, et al.
Defendants

No. 1:08-cv-01493

(Chief Judge Yvette Kane)

ORDER
AND NOW, on this 7th day of August 2013, IT IS HEREBY ORDERED THAT the
joint motion for an order granting approval of the settlement and dismissing the case with
prejudice (Doc. No. 115) is GRANTED, and the parties’ proposed settlement agreement (Doc.
No. 115-3) is APPROVED. The Clerk of Court is directed to close the case, subject to the right
of Plaintiffs’ counsel to file his fee petition and subject to either party’s right to request Court
intervention to address issues related to implementation of the agreement for a period of sixty
calendar days following the date of this order.

S/ Yvette Kane
Yvette Kane, Chief Judge
United States District Court
Middle District of Pennsylvania

9