Alaniz et al v. Maxum Petroleum Operating Company, Inc.

Filing 89

ORDER GRANTING 86 Joint Motion to Approve Confidential Settlement Agreement and to Dismiss with prejudice. Signed by Judge Xavier Rodriguez. (rg)

UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
§
§
§
§
§
Plaintiffs,
§
§
v.
§
§
MAXUM PETROLEUM OPERATING
COMPANY, INC. d/b/a PILOT LOGISTICS §
SERVICES and also d/b/a M PETROLEUM §
§
OPERATION COMPANY; WESTERN
PETROLEUM, LLC; and PILOT THOMAS §
§
LOGISTICS, LLC,
§
§
Defendants.
REUBEN ALANIZ and JUAN
HERNANDEZ, Individually and on Behalf
of All Others Similarly Situated,

Civil Action No. SA-15-CV-00373-XR

ORDER
On this date, the Court considered the parties Joint Motion to Approve Confidential
Settlement Agreement (Docket no. 86). After careful consideration, the motion is GRANTED.
BACKGROUND
Plaintiffs Reuben Alaniz and Juan Hernandez, proceeding on a collective basis, filed this
lawsuit against the Defendants, 1 their former employers, seeking to recover miscalculated
overtime pay under the Fair Labor Standards Act, 29 U.S.C. § 207 (“FLSA”). Docket no. 26.
Plaintiffs, who worked as frac technicians, alleged that they regularly worked in excess of 40
hours per week, and although they were paid overtime, the calculation of their pay did not
comport with FLSA provisions that factor expenses, bonuses, and overtime into the basis for
determining overtime pay. Id. Defendant answered, denying these allegations and raising
1

These defendants are Maxum Petroleum Operating Company, Inc. and Pilot Thomas Logistics, LLC.

1

numerous affirmative defenses, including some related to FLSA exemptions. Docket no. 29. This
Court granted Plaintiffs’ Unopposed Motion for Conditional Certification. Docket no. 32. On
September 27, 2016, the parties informed the Court that they had reached a settlement. Docket no.
85. They sought and were granted leave to file a confidential settlement agreement. Docket nos.
87, 88. Now before the court is the parties’ joint motion to dismiss with prejudice and to approve
the settlement. Docket no. 86.
ANALYSIS
I. FLSA Provisions
The FLSA was enacted for the purpose of protecting all covered workers from
substandard wages and oppressive working hours. Barrentine v. Arkansas-Best Freight Sys., 450
U.S. 728, 739 (1981). Congress recognized that “due to the unequal bargaining power as between
employer and employee, certain segments of the population required federal compulsory
legislation to prevent private contracts on their part which endangered national health and
efficiency and as a result the free movement of goods in interstate commerce.” Brooklyn Sav.
Bank v. O’Neil, 324 U.S. 697, 706–07 (1945). The provisions of the FLSA are mandatory. The
Eleventh Circuit has held that “[t]here are only two ways in which back wage claims arising
under the FLSA can be settled or compromised by employees:” payment supervised by the
Secretary of Labor and judicial approval of a stipulated settlement after an employee has brought
a private action. Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982). The
court reasoned that these methods ensure that the same unequal bargaining power between
employers and employees that underlies the Act does not unfairly affect a private settlement of
claims for wages. Thus, “[w]hen employees bring a private action for back wages under the
2

FLSA, and present to the district court a proposed settlement, the district court may enter a
stipulated judgment after scrutinizing the settlement for fairness.” Id. at 1353. Under Lynn’s Food
Stores, the reviewing court must determine that the settlement is a “fair and reasonable resolution
of a bona fide dispute over FLSA provisions.” Id. at 1355. Not every FLSA settlement requires
court approval, however, as “parties may reach private compromises as to FLSA claims where
there is a bona fide dispute as to the amount of hours worked or compensation due. A release of a
party’s rights under the FLSA is enforceable under such circumstances.” Martin v. Spring Break
‘83 Prods., L.L.C., 688 F.3d 247, 255 (5th Cir. 2012) (quoting and adopting Martinez v. Bohls
Bearing Equip. Co., 361 F. Supp. 2d 608, 631 (W.D. Tex. 2005)). Here, because the parties
dispute the exempt status of Plaintiffs and whether their overtime pay was calculated properly
under the FLSA, approval of the settlement is required.
II. Bona Fide Dispute
One issue in this case is whether Plaintiffs performed work properly characterized as
exempt. In addition, there is a dispute as to whether certain expenses and bonuses should have
been included in the calculation of the Plaintiffs’ overtime pay. Defendants deny all liability.
The FLSA requires employers to pay overtime compensation to employees who work
more than 40 hours in a workweek. 29 U.S.C. § 207(a)(1). The Act exempts from the overtimepay requirement any employee who works in a bona fide executive, administrative, or
professional capacity. Id. § 213(a)(1). The decision whether an employee is exempt from the
FLSA’s overtime compensation provisions is primarily a question of fact; however, the ultimate
decision is a question of law. Lott v. Howard Wilson Chrysler-Plymouth, Inc., 203 F.3d 326, 330–
31 (5th Cir. 2000).

3

In addition, the FLSA requires that covered employees be compensated at the proper
overtime rate of at least one and one-half times their regular ratesfor time worked in excess of 40
hours per week. 29 U.S.C. § 207(a)(1). The FLSA defines “regular rate” to include certain
reimbursements and bonuses which Plaintiffs allege were not included when Defendants
calculated their “regular rate.” 29 U.S.C. § 207(e)(2)–(3). As a result, Plaintiffs allege that the
overtime wages that they were paid were below what is required by the FLSA.
The Court concludes that there are bona fide disputes in this case over FLSA coverage and
the calculation of the “regular rate” of pay for determining overtime compensation.
III. Fair and Reasonable Resolution
The Court has reviewed the terms of the confidential settlement agreement and concludes
that the settlement is fair and reasonable.
CONCLUSION
The Court finds that the settlement agreement is a fair and reasonable settlement of a bona
fide dispute. Therefore, the Joint Motion to Approve Confidential Settlement Agreement (Docket
no. 86) is GRANTED, the settlement is APPROVED, and Plaintiffs’ claims are DISMISSED
WITH PREJUDICE.
It is so ORDERED.
SIGNED this 31st day of October, 2016.

_________________________________
XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

4