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Faubel v. Grogg's Heating & Air Conditioning, Inc.

United States District Court, S.D. West Virginia

May 22, 2018

ERIC FAUBEL, DEVEON SMITH, and TRINITY UPPOLE, individually and on behalf of all other similarly situated individuals, Plaintiffs,
v.
GROGG'S HEATING & AIR CONDITIONING, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          John T. Copenhaver, Jr. United States District Judge

         Pending is the parties' joint motion, filed March 1, 2018, for approval of a settlement agreement and for dismissal of this action with prejudice.

         I.

         The plaintiffs initiated this action in this court on April 19, 2017, charging defendant Grogg's Heating & Air Conditioning, Inc. (“GHAC”), with alleged violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. The plaintiffs, former employees of GHAC, claimed that GHAC owed them and all other similarly situated individuals back wages for unpaid meal breaks.

         On October 2, 2017, the plaintiffs filed a motion for conditional certification as a collective action pursuant to section 16(b) of the FLSA, 29 U.S.C. § 216(b). At a hearing held before the court on November 29, 2017, and as reflected in the court's subsequent order of December 4, 2017, the court expressed its hesitance to conditionally certify a collective action under the facts presented. In particular, GHAC produced evidence casting doubt on (1) the possibility that any similarly situated individuals existed and (2) the viability of the named plaintiffs' claims as a general matter. Thus, the court “direct[ed] . . . the parties . . . to identify and depose two current or former employees of [GHAC], other than named Plaintiffs, who would fall within the class definition if the class were conditionally certified.” (ECF #27 1-2.)

         Instead, on February 6, 2018, the parties filed a notice of settlement in principle, and the court continued the issue of conditional certification. The parties later filed the pending motion, seeking approval of a settlement that would dismiss with prejudice each of the named plaintiffs' individual claims. Attached to the motion is the proposed settlement agreement, signed by each party individually.

         II.

         “The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract.” Genesis HealthCare Corp. v. Symczyk, 569 U.S. 66, 69 (2013). Doing so would thwart the purpose of the Act, which is “to protect all covered workers from substandard wages and oppressive working hours, ‘labor conditions [that are] detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.'” Barrentine v. Arkansas-Best Freight Sys., 450 U.S. 728, 739 (1981) (alteration in original) (quoting 42 U.S.C. § 202(a)). Consequently, FLSA claims for back wages can be settled in only two ways, only one of which is relevant here: “When employees bring a private action for back wages under the FLSA, and present to the district court a proposed settlement, the district court may enter a stipulated judgment after scrutinizing the settlement for fairness.” Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1352-53 (11th Cir. 1982) (citing Schulte, Inc. v. Gangi, 328 U.S. 108 (1946), and Jarrard v. Southeastern Shipbuilding Corp., 163 F.2d 960, 961 (5th Cir. 1947)).

         Because the Fourth Circuit has not yet had the occasion to endorse a standard for approving FLSA settlements, “district courts in this circuit typically employ the considerations set forth by the Eleventh Circuit in Lynn's Food Stores.” Kim v. Confidential Studio Inc., No. PWG-15-410, 2017 U.S. Dist. LEXIS 133002, at *4 (D. Md. Aug. 21, 2017) (citing cases). As succinctly stated by the district court in Confidential Studio,

[t]he settlement must “reflect[] a fair and reasonable resolution of a bona fide dispute over FLSA provisions, ” which includes findings with regard to
(1) whether there are FLSA issues actually in dispute,
(2) the fairness and reasonableness of the settlement in light of the relevant factors from [Federal Rule of Civil Procedure] 23, and (3) the reasonableness of the attorneys' fees, if included in the agreement.

Id. (second alteration in original) (citing cases and quoting Lynn's Food Stores, 679 F.2d at 1355).

         Before delving into the three requirements for settlement approval, the court pauses briefly to discuss the effect that a settlement by named plaintiffs of a proposed FLSA collective action has on potential ...


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