Kline v. Hobby Lobby Stores, Inc.

Filing 20

ORDER granting 13 Motion for Settlement. Signed by Magistrate Judge Susan K Lee on 7/7/11. (GRE, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT CHATTANOOGA
JOHN KLINE,
Plaintiff,
v.
HOBBY LOBBY STORES, INC.,
Defendant.

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No. 1:10-CV-180
Lee

ORDER
Before the Court is the joint motion of Plaintiff John Kline (“Plaintiff”) and Defendant
Hobby Lobby Stores, Inc. (“Defendant”) to approve a settlement of Plaintiff’s claims under the Fair
Labor Standards Act (“FLSA”), 29 U.S.C.A. §§201-219 [Doc. 13]. A hearing on the joint motion
was held on July 7, 2011, during which Plaintiff was represented by attorney Alan G. Crone and
Defendant was represented by attorney Marc H. Harwell. For the reasons that follow, the settlement
will be approved and the motion [Doc. 13] will be GRANTED.
When an employee’s rights under the FLSA are violated, the statute provides for back pay
in the amount of unpaid minimum wages and overtime compensation plus an equal amount as
liquidated damages. See 29 U.S.C. § 216(b). Because Congress perceived an imbalance of
bargaining power between employers and wage-hour employees, see Brooklyn Savings Bank v.
O’Neil, 324 U.S. 697, 708 (1945), these remedies are mandatory and not subject to bargaining,
waiver, or modification by contract or settlement except in two narrow circumstances. Lynn’s Food
Stores v. United States, 679 F.2d 1350, 1352-53 (11th Cir. 1982). Under the first of those
circumstances, not at issue here, an employee may waive her right to bring suit when the Secretary
of Labor supervises the employer’s repayment of unpaid wages and overtime compensation. See

29 U.S.C. § 216(c). Under the second circumstance, an employee who has filed a lawsuit asserting
FLSA claims against her employer may settle her case subject to judicial approval of the settlement
with respect to the FLSA claims.1 See D.A. Schulte, Inc., v. Gangi, 328 U.S. 108, 113 n.8 (1946)
(distinguishing out-of-court compromises from stipulated judgments because “the simple device of
filing suits” provides the additional safeguards of “pleading the issues and submitting the judgment
to judicial scrutiny”); Lynn’s Food Stores, 679 F.2d at 1354. To approve such a settlement, the court
must conclude that it fairly and reasonably resolves a bona fide dispute over FLSA provisions and
that the lawsuit has in fact provided the adversarial context to protect the employee’s interests from
employer overreaching. Lynn’s Food Stores, 679 F.2d at 1354-55.
In this case, there are bona fide disputes, including a dispute about whether Plaintiff was an
exempt employee under the FLSA and, if not, how to calculate the back pay he would be owed.2
The negotiations that resulted in a settlement were held at arms’ length with all parties being
represented by experienced and reputable counsel, ensuring that the employee’s interests were
adequately protected from employer overreaching. After the hearing and careful review of the
settlement agreement [Doc. 13-1], the Court concludes the settlement fairly and reasonably
compromises the parties’ disputes. Accordingly, it is ORDERED and ADJUDGED as follows:

1

Although this case was stayed pending arbitration, the Court retains the authority to review the
settlement for fairness. Guzman v. Goldman and Assocs., LLC, 2011 WL 2516936, *2 (N.D. Cal.
2011); Walker v. U.S. Title Loans, Inc., 2011 WL 1789976 (M.D. Ala. 2011). See also Powell v.
Carey Intern., Inc., 558 F. Supp. 2d 1265, 1268 (S.D. Fla. 2008) (retaining jurisdiction over any
settlement reached prior to arbitral panel’s decision); Slawienski v. Nephron Pharm. Corp., 2010
WL 5186622 (N.D. Ga. 2010) (staying a case pending arbitration rather than dismissing it because
the court would need to scrutinize any settlement for fairness.).
2

The settlement agreement also contains a release of any age discrimination claims, but because
Plaintiff alleged no such claims, the Court will not address them here.

2

1.

The settlement agreement with respect to Plaintiff’s FLSA
claims is APPROVED as a fair and reasonable compromise
of bona fide issues of law and fact;

2.

The joint motion for approval of settlement [Doc. 13] is
GRANTED; and

3.

It is ORDERED that the parties shall submit a stipulation of
dismissal with prejudice within 21 days of the entry of this
order.

SO ORDERED.
ENTER:
s/Susan K. Lee
SUSAN K. LEE
UNITED STATES MAGISTRATE JUDGE

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