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Beck v. Honey Locust Farms, LLC

United States District Court, M.D. Pennsylvania

October 20, 2017

HOPE BECK, Plaintiff
v.
HONEY LOCUST FARMS, LLC and THOMAS BROSS IV, Defendants

          MEMORANDUM

          Christopher C. Conner, Chief Judge

         Before the court is the motion (Doc. 16) by plaintiff Hope Beck ("Beck") for approval of the settlement agreement between Beck and defendants Honey Locust Farms, LLC ("Honey Locust Farms") and Thomas Bross IV ("Bross"). The parties seek to resolve Beck's claims against defendants under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., the Pennsylvania Minimum Wage Act ("PMWA"), 43 Pa. Stat. § 333.101 et seq., and the Pennsylvania Wage Payment and Collection Act ("PWPCA"), 43 Pa. Stat. Ann. § 260.1 et seq. For the reasons that follow, the court will grant the motion in part and deny it in part.

         I. Factual Background & Procedural History

         Honey Locust Farms employed Beck from approximately May 2013 through July 2016. (See Doc. 1 ¶¶ 1, 16). At all times relevant, Bross was a manager or chief executive officer for Honey Locust Farms, a limited liability company located in Berlin, PA. (Doc. 1 ¶¶ 2-3; Doc. 5 ¶¶ 2-3). Beck avers that she received an hourly wage of $31.88 per hour from May 2013 to May 2014, $36.63 per hour from May 2014 to December 2014, and $39.38 per hour from December 2014 until her termination in July 2016. (Doc. 1 ¶¶ 6, 16). During her employment, Beck claims she routinely worked 50-hour work weeks but only received compensation for 40 hours per week. (Id. ¶¶ 7-8). Beck estimates her unpaid overtime between May 2013 and July 2016 was approximately 1, 245 hours. (Id. ¶ 16). She calculates the total overtime pay owed to her at $44, 780.60. (Id.) Defendants deny Beck's allegations. (Doc. 5 ¶¶ 6-8, 16).

         Beck commenced this action by filing a three-count complaint on September 28, 2016, asserting claims for violation of the FLSA, the PMWA, and the PWPCA. (Doc. 1). Defendants filed an answer (Doc. 5) denying each of Beck's claims. On September 19, 2017, Beck filed the instant motion (Doc. 16) for judicial approval of the parties' settlement.

         II. Legal Standard

         Congress enacted the FLSA for the purpose of "protect[ing] all covered workers from substandard wages and oppressive working hours." Barrentine v. Ark.-Best Freight Sys., 450 U.S. 728, 739 (1981); see also 29 U.S.C. § 202(a). The statute was designed to ensure that each employee covered by the Act would receive "[a] fair day's pay for a fair day's work and would be protected from the evil of overwork as well as underpay." Barrentine, 450 U.S. at 739 (internal citations and quotations omitted). To safeguard employee rights made mandatory by statute, 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.[1]

         The Third Circuit has not addressed whether FLSA actions claiming unpaid wages may be settled privately prior to obtaining judicial approval. Absent such guidance, district courts within the Third Circuit have routinely adopted the majority position and have required judicial approval as a precondition to amicable resolution of claims.[2] Courts typically employ the considerations set forth by the Eleventh Circuit in Lynn's Food Stores, 679 F.2d 1350, when evaluating proposed FLSA settlement agreements. See, e.g., McGee, 2014 WL 2514582; Brown, 2013 WL 5408575; Deitz, 2013 WL 2338496; Altenbach, 2013 WL 74251; Cuttic, 868 F.Supp.2d 464; Brumley, 2012 WL 1019337; Morales, 2012 WL 870752.

         Under Lynn's Food Stores, a proposed compromise may satisfy judicial review if it is a "fair and reasonable resolution of a bona fide dispute over FLSA provisions." 679 F.2d at 1355. When a reviewing court is satisfied that the agreement in fact resolves a bona fide dispute, it proceeds in two phases: first, the court assesses whether the parties' agreement is fair and reasonable to the plaintiff employee; second, it determines whether the settlement furthers or "impermissibly frustrates" implementation of the FLSA in the workplace. Altenbach, 2013 WL 74251, at *1; see McGee, 2014 WL 2514582, at *2; Brown, 2013 WL 5408575, at *1; Dees, 706 F.Supp.2d at 1241.

         III. Discussion

         The court will consider seriatim the terms of the proposed settlement agreement, the nature of the parties' dispute, and the fairness and reasonableness of the compromise as to Beck and as measured against the intent of the FLSA. See Lynn's Food Stores, 679 F.2d at 1355.

         A. Terms of Proposed Agreement

         Under the terms of the proposed settlement agreement, defendants agree to pay $30, 000.00 to resolve Beck's claims. (See Doc. 16-1 ¶ 1). Of the total settlement amount, Beck will receive $22, 619.10 and her counsel will receive $7, 380.90 for attorney's fees and costs. (Id.) In exchange for payment thereunder, the agreement contains the following release provisions:

3. Except as set forth in Paragraph 1 of this Agreement, Employee is not entitled to any other payments, compensation, wages, benefits, reimbursements or distributions from any Defendant or any Releasee under this Agreement, under any prior agreement, express or implied, written or unwritten, or otherwise. References in this Agreement to the release of claims by Employee against Defendants and the other Releasees shall be deemed to also include, without limitation, the release of claims against Defendants and the Releasees regarding all contractual payments, compensation, commissions, wages, benefits, back pay, interest, statutory payments and penalties, bonuses, damages, paid time off, overtime, sick pay, severance pay, travel expenses, ...

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