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Kutz v. Cargill Cocoa & Chocolate, Inc.

United States District Court, M.D. Pennsylvania

October 23, 2019

CHRISTINE KUTZ, Plaintiff,
v.
CARGILL COCOA & CHOCOLATE, INC., Defendant.

          MEMORANDUM OPINION

          ROBERT D. MARIANI UNITED STATES DISTRICT JUDGE

         Presently before the Court is the Joint Motion of Plaintiff Christine Kutz ("Kutz") and Defendant Cargill Cocoa & Chocolate, Inc. ("Cargill") (Doc. 20) for judicial approval of the parties' settlement agreement. The parties seek to resolve Kutz's claims against Cargill under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., the Pennsylvania Minimum Wage Act ("PMWA"), 43 Pa. C.S. § 333.101 et seq., and the Pennsylvania Wage Payment and Collection Law ("PWPCL"), 43 Pa. C.S. § 260.1 et seq.

         I. Factual background and Procedural history

         Plaintiff Christine Kutz was employed as a Food Safety Quality & Regulatory Technologist with Cargill from on or about April 20, 2015 to in or about April, 2018 (Doc. 13, ¶ 1). According to the Amended Complaint, Kutz "was not paid overtime wages during the limitations period." (Id. at ¶ 12). Kutz asserts that she was classified as a "non-exempt" employee for FLSA purposes when she was hired on or around April 20, 2015, but that "[i]n or around August 2015, Defendant re-classified Ms. Kutz's position as 'exempt', though neither the position nor its requirements had changed." (Id. at ¶¶ 13, 14).

         Kutz commenced this action by filing a five-count Complaint on January 31, 2019, asserting violations of the FLSA, the PMWA, the PWPCL (Counts I-III), as well as additional counts for breach of oral contract (Count IV) and unjust enrichment (Count V). (Doc. 1).

         On April 12, 2019, Cargill filed a "Partial Answer and Affirmative Defenses to Count I and II of the Complaint." (Doc. 9). While Cargill admitted that it employed Plaintiff as a Food Safety Quality & Regulatory Technologist, it denied her claims for overtime on the basis that she was exempt under the FLSA and Pennsylvania law. (Id. at 4-6 (Def.'s Answer to ¶¶ 12, 13, 14, 15, 16 of Pl.'s Compl.)). Cargill also asserted that Plaintiff "was appropriately classified as exempt under the FLSA and Pennsylvania law and, therefore, was not entitled to overtime compensation for working more than 40 hours per week." (Id. at 8 (Def.'s Answer to ¶ 24 of Pl.'s Compl.)). Cargill denied that it failed to pay Plaintiff overtime at one and one-half times Plaintiffs regular rate of pay for all hours worked over 40 in a work week and denied that its actions were "willful, intentional and malicious". (Id. at 8 (Def.'s Answer to ¶¶ 25, 26, 27 of Pl.'s Compl.)). Cargill likewise denied the allegations of Count II of Plaintiffs Complaint with respect to the PMWA.

         With respect to Counts III, IV and V of Plaintiffs Complaint, Cargill filed a Motion to Dismiss (Doc. 10) on April 12, 2018 and a brief in support thereof (Doc. 10-1) on that same date.

         In response, Kutz filed an Amended Complaint (Doc. 13) on May 3, 2019. That Complaint again asserted violations by Cargill of the FLSA (Count I), violations of the PMWA (Count II) and violations of the PWPCL (Count III). Kutz did not include in her Amended Complaint the prior causes of action for breach of oral contract and unjust enrichment which had been asserted in her original Complaint.

         Thereafter, Cargill on May 17, 2019 filed its Answer and Affirmative Defenses to Plaintiffs First Amended Complaint. (Doc. 18). Cargill again admitted that Kutz was Cargill's employee from on or about April 2015 until August, 2018 as a Food Safety Quality & Regulatory Technologist but otherwise denied that Plaintiff was entitled to overtime because she was exempt under the FLSA and Pennsylvania law. (See generally id.; Def.'s Answer to ¶¶ 12, 13, 14, 15, 16, 20, 24, 25, 26, 27, 28, 29, 32, 33, 34, 35, 36, 39, 40, 41, 42, 43, 44, 45 and 46 of Pl.'s Am. Compl.).

         Cargill also set forth various affirmative defenses including the affirmative defense that "Plaintiff's claims are barred in whole or in part because Plaintiff was exempt from the maximum hours/overtime pay requirement pursuant to Section 13(a)(1) of the Fair Labor Standards Act, 29 U.S.C. § 213 (a)(1) and the Pennsylvania Minimum Wage Act." (Doc. 18 at 14).

         On May 14, 2019, this Court ordered this case to mediation (Doc. 17). Gerard J. Geiger, Esquire, was appointed as mediator. On June 12, 2019, the mediator filed a report advising the Court that the case had been completely settled and that Court approval of the settlement was required. (Doc. 19).

         Pursuant to the terms of the settlement agreement and limited release, Cargill agreed to pay Kutz the total gross amount of [XXXXX] payable in accordance with the terms of the settlement agreement.

         II. Legal Standard for Approval of a Settlement Agreement under the FLSA

         In Howard v. Philadelphia Housing Authority, the District Court set forth the legal standard by which a settlement agreement of claims under the FLSA must be reviewed:

FLSA claims may be compromised or settled in two ways: (1) supervision by the Department of Labor, pursuant to 29 U.S.C. § 216(c), or (2) approval by the district court, pursuant to 29 U.S.C. § 216(b). Adams v. Bayview Asset Mgmt, LLC, 11 F.Supp.3d 474, 476 (E.D.Pa. 2014).
The parties proceed under the second avenue - approval by the district court. Without guidance from the Third Circuit, district courts within this Circuit have looked to the standard set forth by Eleventh Circuit in Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982), when a party seeks judicial approval of an FLSA settlement agreement pursuant to 29 U.S.C. § 216(b). See Mabry v. Hildebrandt, No. 14-5525, 2015 WL 5025810, at *3 (E.D.Pa. Aug. 24, 2015) (collecting cases).
Under the Lynn's Food standard, "[w]hen parties present to the district court a proposed 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) (quoting Lynn's Food, 679 F.2d at 1354); see also Lyons v. Gerhard's Inc., No. 14-06693, 2015 WL 4378514, at *3 (E.D.Pa. July 16, 2015) (applying the Lynn's Food standard).
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. See Mabry, 2015 WL 5025810, at *3; McGee v. Ann's Choice, Inc., No. 12-2664, 2014 WL 2514582, at *2 (E.D.Pa. June 4, 2014). The Court uses this standard to assess the propriety of FLSA collective action settlements and private (i.e., single-plaintiff) FLSA settlements alike. Kraus v. PA Fit II, LLC, No. 15-4180, 155 F.Supp.3d 516, 524-25, 2016 WL 125270, at *5 (E.D.Pa. Jan. 11, 2016) (explaining the rationale for applying the Lynn's Food standard to private FLSA settlements); see also Mabry, 2015 WL 5025810, at *1-2 (collecting cases in which the courts have applied the Lynn's Food standard to private FLSA settlement agreements); Bettger v. Crossmark, Inc., No. 13-2030, 2015 WL 279754, at *3-4 (M.D.Pa. Jan. 22, 2015) (same).

197 F.Supp.3d 773, 776-777 (E.D. Pa. 2016). See also Berger v. Bell-Mark Tech. Corp., 2019 WL 1922325, at *1-2 (M.D. Pa. 2019); Yong Li v. Family Garden II, Inc., 2019 WL 1296258, at *1-2 (E.D. Pa. 2019).

         III. Analysis

         With the standard of review of a settlement agreement under the FLSA having been delineated, the Court proceeds to analyze the propriety of the proposed private FLSA settlement agreement below.

         A. Terms of Proposed Settlement

         Under the terms of the proposed settlement, Cargill agrees to pay Kutz the total gross amount of [XXXXX] to resolve Kutz's claims. Kutz will receive [XXXXX] of the [XXXXX] payment and her counsel will receive [XXXXX] representing payment of Kutz's attorney's fees and costs. ("Settlement Agreement and Limited Release", Doc. 20-1, ¶ 1(a), (b))[1].

         In exchange for payment as set forth above, the proposed settlement agreement contains the following release and confidentiality and non-disparagement clauses:

a. Kutz hereby irrevocably and unconditionally releases, remises, and forever discharges Cargill and any and all individuals acting on behalf of Cargill, including but not limited to, all of Cargill's directors, officers, employees or former employees, insurers, representatives, attorneys, parents, subsidiaries, affiliates, predecessors, successors, and assigns, and all persons acting by, through, under or in concert with any of them (collectively, "the Releasees") of and from any and all actions, suits, debts, claims, liabilities, obligations, promises, agreements, controversies, damages, and expenses of any nature whatsoever, in law or equity, including claims for attorney's fees and costs, which she has had or may have had up until the date of this Agreement that relate to the facts alleged in the Complaint or the Amended Complaint, the claims asserted in the Lawsuit, and any claims that could have been asserted in the Lawsuit based upon the facts alleged in the Complaint or the Amended Complaint. Particularly, but without limitation, Kutz so releases any claims she has had or may have had against the Releasees arising under the Fair Labor Standards Act, the Pennsylvania Minimum Wage Act, the Pennsylvania Wage Payment and Collection Law, any other federal, state, or local ordinance relating to Cargill's payments to Kutz of wages or overtime, and any claim under the common law (including but not limited to breach of contract and unjust enrichment) relating to Cargill's payments to Kutz of wages or overtime.
b. Kutz agrees, promises and covenants that she will not file or permit to be filed in her name or on her behalf any lawsuit in court against any of the persons or entities released in this Agreement based upon any act or event released by this Agreement. Kutz further agrees that should any charge, lawsuit, complaint or other claim be filed or pursued in her name or on her behalf with any governmental agency, or in any other forum, against any of the persons or entities released herein, based upon any act or event released herein, she will not seek or accept any personal relief based upon such charge, lawsuit, complaint or other claim, including but not limited to an award of monetary damages or reinstatement to her employment with Cargill, provided that nothing in this Agreement is intended to release claims related to the validity or enforcement of this Agreement. Nothing in this Agreement limits or precludes Kutz from filing a charge with the Equal Employment Opportunity Commission ("EEOC") or participating in any investigation or proceeding conducted by the EEOC, nor shall it apply to any non-waivable charges or claims brought before any other governmental agency.
c. Kutz represents and warrants that she has not assigned or otherwise transferred to any person, party or entity any of the claims, demands, actions, liabilities, obligations or causes of action being released pursuant to this Agreement. Kutz further agrees to indemnify the Releasees and to hold them harmless from any claims, demands, actions, liabilities, obligations and/or causes of action previously assigned or ...

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