Owens v. Interstate Safety Service, Inc.

Filing 23

MEMORANDUM (Order to follow as separate docket entry)re: Joint Motion Seeking Court Approval of Collective Action Settlement and Consented Motion for Approval and Award of Attorney's Fees and Costs. Signed by Honorable A. Richard Caputo on 11/21/17. (dw)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
MICHAEL OWENS, Individually and
on behalf of all others similarly
situated,

NO. 3:17-CV-0017
(JUDGE CAPUTO)

Plaintiffs,
v.
INTERSTATE SAFETY SERVICE,
INC.,
Defendant.
MEMORANDUM
Presently before me is a Joint Motion Seeking Court Approval of Collective
Action Settlement (Doc. 15) and a Consented Motion for Approval and Award of
Attorney’s Fees and Costs (Doc. 18). For the reasons that follow, the motions will be
granted.
I. Background
Plaintiff Michael Owens (“Plaintiff”) commenced this collective action pursuant
to the Fair Labor Standards Act (“FLSA”) on behalf of himself and all others similarly
situated. (See Doc. 1, generally). The Complaint alleges that Defendant Interstate
Safety Service, Inc. (“Defendant”) violated the FLSA by failing to pay overtime
compensation for travel and wait time hours to employees whose worked involved
travel to remote job locations. (See id.).
On June 3, 2017, the parties jointly filed a motion for approval of the collective
action settlement. (See Doc. 15, generally). The settlement agreement provides for
a total maximum payment of $80,000.00, inclusive of fees and costs, in exchange for
the release of claims as defined in the agreement. (See Doc. 15-1, ¶¶ 1.7, 1.12).
According to the parties, this settlement exceeds the aggregate amount that could be
owed to Plaintiff and all potential opt-ins based on their hours worked and rate of pay

by approximately $2,500.00. (See Doc. 16, 3). Participating members of the Class are
to receive a pro-rated portion of the settlement after payment of attorney’s fees and
costs. (See Doc. 15-1, ¶ 3.1). Additionally, the settlement agreement states that
Defendant would not oppose a request for attorney’s fees and costs not exceeding
$32,000.00 and $1,000.00, respectively. (See id. at ¶ 3.5). The settlement agreement
further sets forth, inter alia, the claims process, the duties of the parties, the dispute
resolution process, and provides that the parties and their counsel “will not issue any
press release or participate in any communication or contact with the media regarding
settlement or any other matter related to this litigation.” (Id., generally & ¶ 15.1).
On June 14, 2017, Plaintiff submitted an unopposed motion for attorney’s fees
and costs, seeking fees in the amount of $32,000.00 and costs totaling $1,000.00. (See
Doc. 18, generally). A hearing was held on the joint motion for settlement approval
and the request for fees and costs on November 16, 2017.
II. Discussion
The FLSA was designed 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.” Brooklyn Sav. Bank
v. O'Neil, 324 U.S. 697, 706, 65 S. Ct. 895, 89 L. Ed. 1296 (1945). Under the FLSA,
a collective action “may be maintained . . . by any one or more employees for and on
behalf of themselves and other employees similarly situated.” 29 U.S.C. § 216(b).
To safeguard employee rights, “a majority of courts have held that bona fide
FLSA disputes may only be settled or compromised through payments made under the
supervision of the Secretary of the Department of Labor or by judicial approval of a
proposed settlement in an FLSA lawsuit.” Bettger v. Crossmark, Inc., No. 13-2030,
2015 WL 279754, at *3 (M.D. Pa. Jan. 22, 2015) (citing, inter alia, Lynn's Food
Stores, Inc. v. U.S. ex rel. U.S. Dep't of Labor, 679 F.2d 1350, 1354 (11th Cir.1982)).
“Although the Third Circuit Court of Appeals has not addressed whether parties can
settle FLSA actions claiming unpaid wages without court approval, district courts
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within the Circuit have followed the approach endorsed by a majority of courts and
assumed that judicial approval is necessary.” Nwogwugwu v. Spring Meadows at
Lansdale, Inc., No. 16-2663, 2017 WL 2215264, at *1 (E.D. Pa. May 18, 2017) (citing
Howard v. Phila. Housing Auth., 197 F. Supp. 3d 773 (E.D. Pa. 2016); Kraus v. PA
Fit II, LLC, 155 F. Supp. 3d 516, 522 (E.D. Pa. 2016); Bettger, 2015 WL 279754, at
*3). A district court “may find a proposed settlement agreement resolves a bona fide
dispute when it ‘reflects a reasonable compromise over issues, such as FLSA coverage
or computation of back wages.’” Brown v. TrueBlue, Inc., No,10-0514, 2013 WL
5408575, at *1 (M.D. Pa. Sept. 25, 2013) (alteration omitted) (quoting Lynn’s Food
Stores, 679 F.2d at 1354). “If a reviewing court is satisfied that an agreement does in
fact decide a bona fide dispute, it proceeds in two phases: first, the court assesses
whether the agreement is fair and reasonable to the plaintiff employee; second, it
determines whether the settlement furthers or ‘impermissibly frustrates’ the
implementation of the FLSA in the workplace.” Bettger, 2015 WL 279754, at *4.
A.

Bona Fide Dispute.
A proposed settlement resolves a bona fide dispute where its terms “reflect a

reasonable compromise over issues, such as . . . back wages, that are actually in
dispute.” Lynn's Food, 679 F.2d at 1355. “A bona fide dispute is one that involves
factual issues rather than legal issues such as the statute’s coverage and applicability.”
Nwogwugwu, 2017 WL 2215264, at*2 (quotation omitted). Although “[t]he recital
in the release of the existence of a ‘bona fide dispute’ is . . . merely the declaration of
a legal conclusion,” Stilwell v. Hertz Drivurself Stations, 174 F.2d 714, 717 (3d Cir.
1949), the terms of the settlement agreement demonstrate that a bona fide dispute
exists, including whether Defendant paid its employees all compensation due and
whether liquidated damages are recoverable here. Moreover, the terms of the
settlement agreement reflect Defendant’s position that it properly compensated its
employees as required by the FLSA. (See Doc. 15-1, ¶ 2.4); see also Nwogwugwu,
2017 WL 2215264, at *2. The proposed settlement resolves a bona fide dispute.
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B.

Fair and Reasonable Settlement.
“[T]he Third Circuit has not provided FLSA-specific criteria for district courts

to use when evaluating the fairness and reasonableness of any proposed settlement
agreement.” Brown, 2013 WL 5408575, at *2. District court in this Circuit, though,
have applied the factors set out by the Third Circuit for approving class action
settlements under Federal Rule of Civil Procedure 23. See Girsh v. Jepsen, 521 F.2d
153, 157 (3d Cir. 1975); see also Nwogwugwu, 2017 WL 2215264, at *2 (applying
Girsh factors); Kraus, 155 F. Supp. 3d at 523 n.3 (same); Bettger, 2015 WL 279754,
at *7 (same); Brown, 2013 WL 5408575, at *2 (same). The Girsh factors are as
follows:
(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.
Girsh, 521 F.2d at 157 (citation omitted).
Applying the pertinent Girsh factors, the proposed settlement is fair and
reasonable. First, given the amount of unpaid wages in dispute, lengthy litigation
would likely result in attorney’s fees that far exceed the maximum possible recovery
in this litigation. Second, Class Counsel has indicated that he has reviewed the terms
of the proposed settlement with twenty (20) of the twenty-three (23) potential class
members, and those individuals have affirmatively indicated there intention to accept
the terms of the settlement. Further, the parties have clearly set forth the challenges
that Plaintiff would face in establishing his case in this litigation, including whether
Defendant acted “willfully” so as to trigger application of a three (3) year limitations
period. Under the settlement, however, damages are calculated assuming that the three
(3) year statute of limitations applies even though Defendant contests that Plaintiff
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would be able to establish a “willful” violation of the FLSA.
Lastly, the final two Girsh factors require an assessment of “‘whether the
settlement represents a good value for a weak case or a poor value for a strong case.
The factors test two sides of the same coin: reasonableness in light of the best possible
recovery and reasonableness in light of the risks the parties would face if the case went
to trial.’” Altnor v. Preferred Freezer Servs., Inc., 197 F. Supp. 2d 746, 763 (E.D. Pa.
2016) (quoting In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 538 (3d Cir.
2004)). Given the value of the proposed settlement and the risks at issue in litigating
the action as stated previously, these factors weigh in favor of settlement. See, e.g.,
Creed v. Benco Dental Supply Co., No. 12-1571, 2013 WL 5276109, at *4 (M.D. Pa.
Sept. 17, 2013).
Based on the foregoing and considering the relevant Girsh factors, approval of
the settlement is warranted in light of the risks of proceeding to trial and the relative
costs of continued litigation.
C.

Frustration of the FLSA.
Because the settlement is fair and reasonable, consideration must be given to

whether the agreement frustrates the implementation of the FLSA. See, e.g., Kraus,
155 F. Supp. 3d at 532; Bettger, 2015 WL 279754, at *8; Brown, 2013 WL 5408575,
at *3. Here, the agreement does not include broad waiver provisions and the
confidentiality provision is limited to comments to the media. See, e.g., Nwogwugwu,
2017 WL 2215264, at *3 (finding that settlement did not frustrate the FLSA where it
did not include a broad waiver or confidentiality provisions); see also Schwartz v.
Pennsylvania State Univ., No. 15-2176, 2017 WL 1386251, at *5 (M.D. Pa. Apr. 18,
2017); Diclemente v. Adams Outdoor Advertising, Inc., No. 15-0596, 2016 WL
3654462, at *4 (M.D. Pa. July 8, 2016) (approving settlement agreement with a
confidentiality provision allowing for disclosure of the case's conclusion without any
allowable sanctions or retaliation for breach). The proposed settlement does not
frustrate the implementation of the FLSA.
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D.

Attorney’s Fees.
The FLSA also states that the court “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. § 216(b). “Percentage of recovery is the
prevailing method used by courts in the Third Circuit for wage and hour cases.”
Diclemente, 2016 WL 3654462, at *4 (citation omitted). “The percentage-of-recovery
method awards a fixed portion of the settlement fund to counsel. Courts have
approved attorneys' fees in FLSA collective and class action settlement agreements
from roughly 20-45% of the settlement fund.”

Id. (citation, internal citation,

alteration, and quotation omitted). Under the percentage of recovery method, courts
consider the following factors:
(1) the size of the fund created and the number of persons
benefitted; (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' counsel; and (7) the
awards in similar cases.
Id. (quoting Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 195 n.1 (3d Cir.
2000)).
In the matter sub judice, Plaintiff’s counsel seeks a fee, including costs, that is
41.25% of the $80,000.00 settlement figure. In support of the requested fee, Plaintiff’s
counsel indicates that his fee in this case is already $36,000.00, which is $4,000.00
more than he seeks to recover in fees. (See Doc. 18-14, ¶ 16; Doc. 18, ¶ 36).
Plaintiff’s counsel further estimates that while he will likely spend an additional thirtytwo (32) hours on this case if the settlement is approved, he represents that he will not
amend his petition and seek fees for those activities. (See Doc. 18, ¶ 37). In view of
the facts of this case, the evidence submitted by Plaintiff’s counsel in support of his
requested fee, and the Gunter factors, all of which support granting the proposed fee,
I will approve the requested attorney’s fee of $32,000.00 and award costs in the
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amount of $1,000.00. Cf. Diclemente, 2016 WL 3654462, at *5 (approving fee of
50.00% of total settlement); Mabry v. Hildebrandt, No. 14-5525, 2015 WL 5025810,
at *4 (E.D. Pa. Aug. 24, 2015) (approving fee of 40.00% of the total recovery).
III. Conclusion
For the above stated reasons, the joint motion for approval of collective action
settlement and the consented motion for approval and award of attorney’s fees and
costs will be granted.
An appropriate order follows.
November 21, 2017
Date

/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge

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