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Underwood v. KC Transport, Inc.

United States District Court, S.D. West Virginia

March 11, 2019

ANGELA UNDERWOOD, individually and on behalf of others similarly situated, Plaintiff,
KC TRANSPORT, INC., d/b/a KC TRANSPORT OF WEST VIRGINIA, INC., a West Virginia Corporation, and KENNY COMPTON, a West Virginia resident, Defendants.


          John T. Copenhaver, Jr. Senior United States District Judge

         Pending is the parties' joint motion, filed January 18, 2019, for approval of a settlement agreement and dismissal of this action with prejudice.

         I. Background

         Plaintiff Angela Underwood initiated this action in this court on April 26, 2017, charging defendant KC Transport, Inc. with alleged violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. The plaintiff, a former employee of KC Transport, claimed that KC Transport owed her and all other similarly situated individuals unpaid overtime wages.

         This action has never been certified, either conditionally or finally, pursuant to 29 U.S.C. 216(b).[1]

         After both parties fully briefed their cross-motions for summary judgment, the parties informed the court that they had reached a settlement through mediation. The parties later filed the pending motion, seeking approval of a settlement that would dismiss with prejudice plaintiff's claims. Attached to the motion is an unexecuted “Mediated Partial Settlement Agreement.”[2]

         The settlement between the parties here is intended to settle not only the claims raised in this case but also an age-discrimination dispute between the parties in state court. See Joint Mot., ECF No. 57, at 3. The Settlement Agreement describes a universal settlement for both claims in the amount of $10, 000. Settlement Agreement, ECF No. 57-1. The parties later informed the court, by filing a supplemental joint motion on February 26, 2019, that $5, 000 was the amount allocated to settle the FLSA matter. Supplemental Joint Mot., ECF No. 58, at 2. While the Settlement Agreement filed with the court on January 18, 2019 contained a confidentiality provision, which is inconsistent with FLSA jurisprudence, the parties filed, on March 8, 2019, a stipulation that any confidentiality provision, or reference thereto, relating to the above-styled civil action, including the filed Settlement Agreement, shall be deemed stricken. ECF No. 59. All payments have already been made to the plaintiff and her counsel. Joint Mot., ECF No. 57, at 2.

         II. Standard of Review

         “The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract.” Genesis HealthCare, 569 U.S. at 69. 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 Court of Appeals for the Fourth Circuit has not yet had 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 WL 3592455 at *2 (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).

         III. Discussion

         First, the FLSA issue here is actually in dispute. The plaintiff alleges that she is a non-exempt employee, entitled to unpaid overtime wages she earned while working ...

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