United States District Court, M.D. Pennsylvania
LYNN MARIE POTOSKI and DENISE GAITERI, on behalf of themselves and others similarly situated, Plaintiffs,
WYOMING VALLEY HEALTH CARE SYSTEM and WILKES-BARRE GENERAL HOSPITAL, Defendants.
Richard Caputo United States District Judge.
before me is a Joint Motion and Incorporated Memorandum of
Law for Approval of the Parties' FLSA Settlement
Including Attorneys' Fees, Costs and Service Awards.
(Doc. 199). Because the parties have agreed to a fair and
reasonable settlement to end a bona fide dispute
which does not frustrate the purposes of the Fair Labor
Standards Act, the Joint Motion will be granted.
Carmen Attanasio,  Lynn Marie Potoski, and Denise Gaiteri
(collectively “Plaintiffs”) commenced this
collective action on March 28, 2011 pursuant to the Fair
Labor Standards Act (“FLSA”) on behalf of
themselves and all others similarly situated. (See
Doc. 1). The Complaint alleges that Wyoming Valley Health
Care System and Wilkes-Barre General Hospital (collectively
“Defendants”) violated FLSA by failing to pay
class member employees for work performed during meal breaks
and for proper uniform maintenance. (See id.).
initial dismissal of the action (Doc. 23), the Plaintiffs
filed an amended complaint on November 7, 2011. (Doc. 24).
Over the course of the next eight years, the parties
litigated and I resolved many issues surrounding this case
including class notice and certification requirements
(see Doc. 71, 72, 75, 111, 149) as well who could
properly be considered class members (see Docs. 164,
166, 172-74, 176, 180). The Defendants moved for Summary
Judgment on both claims on November 9, 2018. (See
Doc. 189). This Motion was granted as to the uniform
maintenance class, but denied as to the meal break class.
(See Docs. 194, 195)
parties then indicated their intent to settle the case as to
the remaining plaintiffs and claims on March 28, 2019.
(See Doc. 196). Request for an in camera
review of a settlement agreement was denied on September 4,
2019 (Doc. 198), and on October 9, 2019, the instant Joint
Motion was filed. (See Doc. 199). The Settlement
Agreement (“the Agreement”) accompanying this
Joint Motion provides for a total maximum payment of $800,
000.00, inclusive of all fees and costs, in exchange for the
release of claims as defined in the Agreement. (See
Doc. 199-1 at ¶¶ 1.9, 3.1, 4.1- 4.3). Participating
members of the class are to receive a pro-rated portion of
the settlement after payment of attorney's fees, costs,
and service awards. (See Doc. 199-1 at ¶¶
3.3, 3.4). The fees and costs for counsel are $280, 000 and
$32, 874 respectively, with $469, 126 to be distributed to
the Plaintiffs, for an average of $3, 303.70 per class
member. (Id.; see also Doc. 199 at 14). The
remaining $18, 000 is for service awards to the named
Plaintiffs in the amount of $6, 000 per named plaintiff as
well as $6, 000 for costs to administer the settlement.
(See 199-1 at ¶¶ 3.2, 3.6; see
also Doc. 199 at 7). The Agreement further sets forth,
inter alia, the duties of the settlement
administrator, RG/2 Claims Administration LLC (“the
Administrator”), the approval of the settlement, the
notice to eligible settlement class members, the terms of the
payment, the release of claims against the Defendants, and
the confidentiality of the agreement. (See id.,
generally). A hearing was held on the Joint Motion
on December 16, 2019 and it is ripe for review.
Standard of Review
was designed to “protect certain groups of the
population from substandard wages and excessive hours which
endangered the national health and well-being and the free
flow of goods in interstate commerce.” Brooklyn
Sav. Bank v. O'Neil, 324 U.S. 697, 706 (1945). Under
FLSA, a collective action “may be maintained . . . by
any one or more employees for and on behalf of themselves and
other employees similarly situated.” 29 U.S.C. §
safeguard employee rights, “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.” Bettger v. Crossmark, Inc., 2015 WL
279754, at *3 (M.D. Pa. 2015) (citing, inter alia,
Lynn's Food Stores, Inc. v. U.S. ex rel. U.S.
Dep't of Labor, 679 F.2d 1350, 1354 (11th Cir.1982)
(“Lynn's Food Stores”)). “While the
Third Circuit Court of Appeals has not addressed whether
parties can settle FLSA actions for unpaid wages without
court approval, district courts within the Circuit have
followed the majority position and assumed that judicial
approval is necessary.” Huyett v.Murlin, 2018
WL 3155795, at *1 (M.D. Pa. 2018); see also Bettger,
2015 WL 279754, at *3 (same). A district court “may
find a proposed settlement agreement resolves a bona
fide dispute when it ‘reflect[s] a reasonable
compromise over issues, such as FLSA coverage or computation
of back wages.'” Brown v. TrueBlue, Inc.,
2013 WL 5408575, at *1 (M.D. Pa. 2013) (quoting
Lynn's Food Stores, 679 F.2d at 1354). “If
a reviewing court is satisfied that an agreement does in fact
decide a bona fide dispute, it proceeds in two
phases: first, the court assesses whether the agreement is
fair and reasonable to the plaintiff employee; second, it
determines whether the settlement furthers or
‘impermissibly frustrates' the implementation of
the FLSA in the workplace.” Bettger, 2015 WL
279754, at *4 (internal citation omitted).
parties contend that their proposed settlement
“‘is a fair and reasonable resolution of a
bona fide dispute over FLSA provisions.'”
(Doc. 199 at 1-2, 8) (quoting Altnor v. Preferred Freezer
Services, Inc., 197 F.Supp.3d 746, 763 (E.D. Pa. 2016)).
First, the parties specifically contend that their dispute is
bona fide because it involves ongoing
contentiousness within the confines of FLSA, i.e.,
an ongoing dispute over the wages due, if any, for time
worked during meal breaks. (Id. at 8-12). Second,
the parties contend that the Agreement is fair and reasonable
because it allows the Plaintiffs to be compensated in the
face of ongoing litigation costs and legal uncertainty as to
the outcome of the claims. (Id. at 12-15). The
parties further contend that the service awards to the named
Plaintiffs and the proposed attorney's fees and costs are
reasonable. (Id. at 12-21 (citing Crevatas v.
Smith Mgmt. & Consulting, LLC, 2017 WL 1078174, at
*5 (M.D Pa. 2017) (holding that attorney's fees in the
range of 20% to 45% of gross settlement can be reasonable);
McGee v. Ann's Choice, Inc., 2014 WL 2514582, at
*3 (E.D. Pa. 2014) (allowing modest “incentive
awards” to name plaintiffs for performing valuable
services to the class)). Finally, the parties contend that
despite its confidentiality clause and release provision, the
Agreement does not frustrate the purposes of FLSA because
both are narrowly tailored and not overly broad.
(Id. at 21-24 (citing Mabry v. Hildebrandt,
2015 WL 5025810, at *3 (E.D. Pa. 2015) (outlining scope of
permissible confidentiality clauses); Kraus v. PA Fit II,
LLC , 155 F.Supp.3d 516, 532-33 (E.D. Pa. 2016)
(outlining scope of permissible release provisions)).
Bona Fide Dispute.
parties contend that their settlement resolves a bona
fide dispute because they actively disagree over the
Plaintiffs' rights to the meal break wages and absent the
Agreement, the parties will continue to contest liability.
(Doc. 199 at 9-12).
proposed settlement resolves a bona fide dispute
where its terms “reflect a reasonable compromise over
issues, such as FLSA coverage or computation of back wages,
that are actually in dispute.” Lynn's Food
Stores, 679 F.2d at 1354. “A bona fide
dispute is one that involves factual issues rather than legal
issues such as the statute's coverage and
applicability.” Nwogwugwu v. Spring Meadows at
Lansdale, 2017 WL 2215264, at*2 (E.D. Pa. 2017); see
also Creed v. Benco Dental Supply Co., 2013 WL 5276109,
at *1 (M.D. Pa 2013) (same). As such, the settlement
agreement must not amount “to a mere waiver of
[Plaintiff's] statutory rights, ” rather it should
“reflect a reasonable compromise” of disputed
factual issues.” Lynn's Food ...