United States District Court, W.D. Pennsylvania
CHAD KAPOLKA AND BRETT TURRENTINE, Individually and on behalf of all Others Similarly Situated, Plaintiffs,
ANCHOR DRILLING FLUIDS USA, LLC and Q'MAX AMERICA, INC. Defendants.
Nicholas Ranjan, United States District Judge.
the Court is Plaintiffs' Amended Motion to Approve
Collective Action Settlement, [ECF 50], requesting
that the Court approve the parties' agreement to settle
Plaintiffs' claims under the Fair Labor Standards Act
(“FLSA”). [ECF 50]. The parties have
revised their proposed settlement agreement to address
concerns raised by the Court in its September 3, 2019, order.
[ECF 49]. After careful consideration, the Court
will approve the amended agreement.
Discussion & Analysis
of the public interest in FLSA rights, there are only two
ways that FLSA claims can be settled or compromised by
employees[.]” Adams v. Bayview Asset Mgmt.,
LLC, 11 F.Supp.3d 474, 476 (E.D. Pa. 2014). The first is
a compromise supervised by the Department of Labor under 29
U.S.C. § 216(c). Id. The second is a
“district court-approved compromise” under 29
U.S.C. § 216(b). Id. This case falls into the
latter bucket, and Plaintiffs request the Court's
approval of the proposed settlement agreement attached to
their motion as Exhibit 1. [ECF 50-1].
parties present to the district court a proposed [FLSA]
settlement, the district court may enter a stipulated
judgment if it determines that the compromise reached is a
fair and reasonable resolution of a bona fide dispute over
FLSA provisions rather than a mere waiver of statutory rights
brought about by an employer's overreaching.”
Cuttic v. Crozer-Chester Med. Ctr., 868 F.Supp.2d
464, 466 (E.D. Pa. 2012) (internal quotation marks
omitted); see also Vargas v. Gen. Nutrition Centers,
Inc., No. 2:10-cv-867, 2015 WL 4155449, at *1 (W.D. Pa.
Mar. 20, 2015) (same). The FLSA's provisions
“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.” Deitz v. Budget
Renovations & Roofing, Inc., No. 4:12-CV-0718, 2013
WL 2338496, at *2 (M.D. Pa. May 29, 2013); see
Lynn's Food Stores, Inc. v. United States Dept. of
Labor, 679 F.2d 1350, 1352 (11th Cir. 1982)
(“Recognizing that there are often great inequalities
in bargaining power between employers and employees, Congress
made the FLSA's provisions mandatory[.]”).
“if the Court determines that the settlement concerns a
‘bona fide dispute,' it will conduct a two-part
fairness inquiry to ensure that (1) the settlement is fair
and reasonable for the employee(s), and (2) the agreement
furthers the FLSA's implementation in the
workplace.” Howard v. Philadelphia Hous.
Auth., 197 F.Supp.3d 773, 777 (E.D. Pa. 2016). When the
proposed settlement results from arm's length negotiation
between competent counsel, the Court begins with a
“strong presumption in favor of finding [the]
settlement fair[.]” Crabtree v. Volkert, Inc.,
No. CIV.A. 11-0529-WS-B, 2013 WL 593500, at *3 (S.D.
Ala. Feb. 14, 2013).
the parties have agreed to settle Plaintiffs' claims in
exchange for Defendants' payment of $1, 105, 000.00.
[ECF 50; ECF 50-1]. From this gross
settlement fund, counsel seeks to deduct $386, 750.00 in
attorneys' fees, $6, 727.70 in costs and expenses,
to $7, 000.00 in settlement administrative costs, and $5,
000.00 “service” or “enhancement”
payments to each of the two named plaintiffs. After applying
these deductions, the result is a net settlement award of
$694, 522.30. This net award will be distributed among opt-in
class members on a pro rata basis, dependent on an analysis
of the number of weeks of overtime pay at issue for each
following reasons, the Court is persuaded that this agreement
represents a fair and reasonable settlement of a bona fide
FLSA dispute, and that the proposed resolution will further
the aim of implementing the FLSA in the workplace.
Bona Fide Dispute
the Court must determine whether the proposed settlement
would resolve a “bona fide” dispute under the
FLSA. In this context, “[a] dispute is ‘bona
fide' where it involves factual issues rather than legal
issues such as the statute's coverage and
applicability.” Kraus v. PA Fit II, LLC, 155
F.Supp.3d 516, 530 (E.D. Pa. 2016) (internal quotation marks
omitted). As a result, the Court needs to “consider the
substantive allegations and determine whether factual issues,
specific to these parties, are actually in dispute.”
Deitz, No. 4:12-CV-0718, 2013 WL 2338496, at *3.
“In essence, for a bona fide dispute to exist, the
dispute must fall within the contours of the FLSA and there
must be evidence of the defendant's intent to reject or
actual rejection of that claim when it is presented.”
Kraus, 155 F.Supp.3d at 530.
have alleged that Defendants misclassified them, along with
the other putative class members, as independent contractors,
and wrongfully denied them overtime compensation on that
basis. [ECF 1 at ¶¶ 3-8; 26-53]. These allegations
“fall within the contours of the FLSA.”
Kraus, 155 F.Supp.3d at 530; see 29 U.S.C. §
record also contains clear “evidence of the
defendant's intent to reject or actual rejection”
of Plaintiffs' claims. Id. Defendants have, in
fact, filed an answer denying many of Plaintiffs' key
factual allegations. [ECF 11 at ¶¶ 3-8; 26-53].
Additionally, Plaintiffs' counsel has submitted an
affidavit stating that Defendants “disagreed vehemently
with many of the assertions in the [c]omplaint, ” and
that Defendants “repeatedly argued that [they] did not
employ Plaintiff, ” but that “if [they] did,
Plaintiff was exempt from the FLSA's requirements because
of the executive, administrative, professional, and/or highly
compensated employee exceptions.” [ECF 50-2 at
¶¶ 15]. Counsel also states that Defendants
“argued [Plaintiffs'] damages should be sharply
limited because [Defendants] acted in conformity with near
uniform industry practice, without complaint, for
years.” [ECF 50-2 at ¶ 26].
result, the record establishes that resolution of many of the
relevant legal issues would turn on the underlying, disputed
facts surrounding, at a minimum, (i) Plaintiffs'
employment; (ii) Defendants' pay practices; (iii)
Defendants' state of mind, i.e., Defendants'
good or bad faith in establishing the challenged pay
practices, and; (iv) industry custom. The Court therefore
finds that the proposed settlement resolves a “bona
fide” dispute of “factual issues rather than
legal issues.” Kraus, 155 F.Supp.3d at 530.
Fair & Reasonable Settlement
the Court must assess whether the proposed settlement is fair
and reasonable. In most cases, this standard is not exacting.
Indeed, “[i]f the parties are represented by competent
counsel in an adversary context, the settlement they reach
will, almost by definition, be reasonable.” Bonetti
v. Embarq Mgmt. Co., 715 F.Supp.2d 1222, 1227 (M.D. Fla.
2009); see Lliguichuzhca v. Cinema 60, LLC, 948
F.Supp.2d 362, 366 (S.D.N.Y. 2013) (“[C]ourts typically
regard the adversarial nature of a litigated FLSA case to be
an adequate indicator of the fairness of the
settlement.”). Only “[r]arely will the Court be
in a position to competently declare that such a settlement
is ‘unreasonable.'” Bonetti, 715
F.Supp.2d at 1227; see also Austin v.
Pennsylvania Dep't of Corr., 876 F.Supp. 1437, 1472
(E.D. Pa. 1995) (“In determining the fairness of a
proposed settlement, the Court should attribute significant
weight to the belief of experienced counsel that settlement
is in the best interests of the class.”).
both parties are represented by experienced counsel who
frequently litigate and settle FLSA and other employment law
claims in both state and federal court. [ECF 50-2 at
¶¶ 5-9, 13-14; ECF 52 at ¶¶ 6-7].
Additionally, the parties employed an experienced mediator to
assist them in negotiating their settlement and reached their
initial agreement to settle through the mediation process.
[ECF 50-2 at ¶ 20]. The Court thus begins with a strong
presumption that the settlement counsel have forged through
extensive, adversarial negotiation is reasonable.
so, the Court has to review the details of the proposed
agreement to ensure that it is fair. In analyzing proposed
FLSA settlements, “district courts have relied on the
factors set out by the Third Circuit for approving class
action settlements pursuant to Federal Rule of Civil
Procedure 23.” Brown v. TrueBlue, Inc., No.
1:10-CV-00514, 2013 WL 5408575, at *2 (M.D. Pa. Sept. 25,
2013). But “unlike its role in Rule 23 actions to serve
as caretaker and protect absent class members, the court in
FLSA class actions serves as gatekeeper to ensure that the
parties are not negotiating around the clear FLSA
requirements via settlement.” Acevedo v. Brightview
Landscapes, LLC, No. CV 3:13-2529, 2017 WL 4354809, at
*13 (M.D. Pa. Oct. 2, 2017) (internal quotation marks
omitted); see Bredbenner v. Liberty Travel,
Inc., No. CIV.A. 09-1248 MF, 2011 WL 1344745, at *18
(D.N.J. Apr. 8, 2011) (“Unlike a traditional class
action under Rule 23, potential class members in an FLSA
collective action must affirmatively opt-in to be bound by
the judgment. … Their failure to do so does not
prevent them from bringing their own suit at a later
while the factors used to evaluate Rule 23 class action
settlements provide a framework for the Court's analysis,
rigid application of those factors is neither required nor
appropriate in the FLSA context. See Deitz,
No. 4:12-CV-0718, 2013 WL 2338496, at *5 (“Although
courts have utilized Fed. R. Civ. P. 23 in
evaluating the fairness of a proposed settlement under FLSA
collective action suits, the Rule does not control such
actions and the Court may use its discretion in fashioning
appropriate standards for approving settlement of actions
brought under 29 U.S.C. § 216(b).”).
forth by the Third Circuit in Girsh v. Jepson, the
Rule 23 factors are
1) the complexity, expense, and likely duration of
2) the reaction of the class to the settlement;
3) the stage of proceedings and amount of discovery
4) the risks of establishing liability;
5) the risks of establishing damages;
6) the risk of maintaining the class through trial;
7) the ability of the defendants to withstand a greater
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 the attendant risks of litigation.
Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975).
the Court has considered and weighed each of the
Girsh factors, and determined that they favor
approving the parties' settlement agreement.
Complexity, Expense, and Likely Duration.
first Girsh factor asks the Court to evaluate the
complexity, expense, and likely duration of litigation.
Generally, “[c]ases requiring great expenditures of
time, money, and other resources on behalf of the parties and
the court” are “good candidates for
settlement.” Deitz, No. 4:12-cv-0718, 2013 WL
2338496, at *5. As a result, the greater the apparent
complexity and likely expense associated with litigating a
case to its conclusion, the more likely it is that the Court
will find a proposed settlement to be fair to employees and
the public. See In re Prudential Ins. Co. Am.
Sales Practice Litig. Agent Actions, 148 F.3d 283, 318
(3d Cir. 1998).
case is not all that complex when compared to other class or
collective actions, but neither is it uniquely
straightforward. Moreover, while the parties have already
completed some informal discovery, Plaintiffs assert, and the
Court does not doubt, that “both sides would require
substantial additional discovery including a high number of
costly depositions in order to place this case in a trial
posture.” [ECF 50 at p. 7]; c.f.
Craig v. Rite Aid Corp., No. 4:08-CV-2317, 2013 WL
84928, at *9 (M.D. Pa. Jan. 7, 2013) (“With respect to
the likely duration of this litigation, counsel for the
parties aver, and we have no reason to doubt, that even the
most procedurally advanced of these consolidated cases would
require additional and substantial discovery in order to
place the case in a trial posture.”).
because settlement of this case would conserve substantial
time, expense, and judicial resources, the Court finds that
the first Girsh factor favors approving the
Reaction of Class to Settlement.
second Girsh factor asks whether any members of the
“class” have objected or otherwise reacted to the
proposed settlement. But this factor is “not directly
applicable” in the context of an FLSA collective
action, where the settlement class will consist of voluntary
opt-in plaintiffs, “all of whom wish to settle this
matter in accordance with the terms of the proposed
settlement agreement.” Deitz, No.
4:12-CV-0718, 2013 WL 2338496, at *6.
event, Plaintiffs represent that there have been no
objections to the proposed settlement. [ECF 50 at p. 10]. As
the docket reflects, no objections been filed with the Court
either. For that reason, if the second Girsh factor
applies at all, the Court finds that it favors approval of
Stage of Proceedings & Amount of Discovery
third Girsh factor requires the Court to examine the
stage of proceedings and amount of discovery completed before
settlement, to determine whether the parties have an
“adequate appreciation of the merits of the case before
negotiating.” In re Prudential Ins. Co., 148
F.3d at 319. This requirement ensures that there is “no
risk that self-interested counsel is seeking a resolution of
the claims on terms that are most beneficial to counsel alone
without regard for the interests of the parties.”
Deitz, No. 4:12-CV-0718, 2013 WL 2338496, at *6.
represent that the parties engaged in significant, informal
discovery ahead of mediation to help them value the claim. Of
particular note, Defendants “provided substantial
compensation data, pay policies/practices, and personal
information” which, when “coupled with the class
members' general work schedules, ” allowed counsel
to “formulate a detailed assessment of the potential
damages for the entire class.” [ECF 50-2 at ¶ 17].
While the parties did not engage in formal discovery, such as