JASON DEITZ on behalf of himself and similarly situated employees, Plaintiff,
BUDGET RENOVATIONS AND ROOFING, INC., Defendant.
MATTHEW W. BRANN, District Judge.
Plaintiffs, who are proceeding pro se in this collective action for unpaid wages under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201, et seq., and the Pennsylvania Minimum Wage Act ("PMWA"), 43 P.S. §§ 333.101, et seq, commenced this litigation on April 17, 2012. Compl., ECF No. 1. The parties seek court approval of a proposed settlement agreement.
I. Factual and Procedural Background
Plaintiff Jason Deitz commenced this action alleging that he and other employees of defendant Budget Renovations & Roofing, Inc. ("Budget") were not paid for many of their working hours, including overtime premium compensation, in violation of 29 U.S.C. § 216(b) and 43 P.S. §§ 333.104, 231.36. Compl., ECF No. 1. Employees Eric Gallagher, Stephen Hornberger and Matthew Marchesk joined this lawsuit as party plaintiffs under Section 16(b) of the FLSA on May 7, 2012 and May 14, 2012. ECF Nos. 4-5.
Prior to an answer or any responsive pleading by defendant, plaintiffs filed an Emergency Motion for the Scheduling of an In-Person conference to Address the Propriety and Validity of Defendant's Recent Efforts to Settle this Action, followed by a Motion to Withdraw as Attorney for Originating Plaintiff. May 25, 2012, ECF No. 7; May 29, 2012, ECF No. 8. Apparently without their counsel's knowledge, plaintiffs engaged in settlement talks with defendant and then requested that their counsel withdraw from the lawsuit so they could effectuate the proposed settlement. Def. Brf. 6, 7, ECF No. 23. Following an in-person conference with the parties to address the issues raised in the motion, the Court issued a written Order directing the parties to submit briefing on the issue of whether court approval of the proposed settlement was required. See Order, June 5, 2012, ECF No. 16.
Upon consideration of the parties' positions and the appropriate law, the Court held, on December 13, 2012, that bona fide disputes of FLSA claims require judicial approval of a proposed settlement. ECF No. 21. The Court further directed the parties to submit the proposed settlement along with applicable case law, "addressing whether the compromise settles a bona fide dispute and is a fair and reasonable resolution of the claims." Order 9, Dec. 13, 2012, ECF No. 21. Briefing on this issue was completed on January 3, 2013 and the case was reassigned to the undersigned on January 17, 2013.
Under the terms of the proposed settlement, plaintiff Deitz will receive $3000.00 for the settlement and release of all claims arising from his employment with defendant. Def. Brf., Exh. A, ECF No. 23-1. He will receive an additional $2000.00 for obtaining the complete dismissal of this lawsuit in its entirety and with prejudice. Id . The remaining three opt-in plaintiffs will each receive $500.00 for the settlement and release of all of their claims arising from their employment with Budget. Def. Brf., Exhs. B-D, ECF Nos. 23-2-23-4.
The FLSA was enacted for the purpose of protecting all covered workers from substandard wages and oppressive working hours. Barrentine v. Arkansas-Best Freight System , 450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981); 29 U.S.C. § 202(a). Congress recognized that "due to 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 Savings Bank v. O'Neil , 324 U.S. 697, 706-07, 65 S.Ct. 895, 89 L.Ed. 1296 (1945). The provisions of the statute are mandatory and not subject to negotiation and bargaining between employers and employees because allowing waiver by employees or releases of employers would nullify the purposes of the act. See Lynn's Food Stores, Inc. v. United States Dept. of Labor , 679 F.2d 1350, 1352 (11th Cir. 1982), O'Neil , 324 U.S. at 707, D.A. Schulte, Inc. v. Gangi , 328 U.S. 108, 66 S.Ct. 925, 90 L.Ed. 1114 (1946).
Although the Third Circuit has not addressed the issue, its district courts have taken the position stated by the Eleventh Circuit in Lynn's Food Stores that court approval is required of proposed settlements in a FLSA lawsuit brought under 29 U.S.C. § 216(b). See, e.g., Cuttic v. Crozer-Chester Med. Ctr. , 868 F.Supp.2d 464 (E.D.Pa. 2012) (Robreno, J.), Morales v. PepsiCo, Inc., 2012 WL 870752 (D.N.J. Mar. 14, 2012) (Thompson, J.), Brumley v. Camin Cargo Control, Inc. , 2012 WL 300583 (D.N.J. Jan. 30, 2012) (Linares, J.), Bredbenner v. Liberty Travel, Inc. , 2011 WL 1344745 (D.N.J. Apr. 8, 2011) (Falk, M.J.) And in the December 13, 2012 Order, for the reasons stated therein, this Court adopted the same position. ECF No. 21. Accordingly, this Court must scrutinize the proposed settlement of the parties and determine if it is "a fair and reasonable resolution of a bona fide dispute over FLSA provisions." See Lynn's Food Stores , 679 F.2d at 1354, Altenbach v. Lube Center, Inc., 2013 WL 74251, at *1 (M.D. Pa. Jan. 4, 2013) (Kane, J.)
Thus, without direct guidance from the Third Circuit regarding the applicable standard for assessing settlement agreements under the FLSA, the Court looks to the considerations set forth in Lynn's Food Stroes. See e.g., Brumley, 2012 WL 1019337, Cuttic , 868 F.Supp.2d at 466, Lignore v. Hospital of University of Pennsylvania, 2007 WL 1300733, at *3 (E.D. Pa. May 1, 2007) (Pratter, J.) We also find the analysis conducted by the court in Collins v. Sanderson Farms, Inc. , 568 F.Supp.2d 714 (E.D. La. 2008) (Berrigan, J.), to be directly on point and will consider that analysis in the instant matter. See Order, Dec. 13, 2012, ECF No. 21 (directing the parties to submit briefing utilizing the analysis in Collins).
The guiding principle of the Court's inquiry in determining whether to approve the settlement of a FLSA collective action is ensuring that an employer does not take advantage of its employees in settling their claim for wages. See Collins , 568 F.Supp.2d at 719. Therefore, the Court believes that its role in the matter at hand is governed by substantive labor rights as much as it serves as an appropriate facilitator to affect a fair settlement between the parties. See Id . This is especially important here where plaintiffs are proceeding pro se and might be especially susceptible to overreaching behavior by their employer.
A. Bona Fide ...