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Dotson v. P.S. Management, Inc.

United States District Court, S.D. West Virginia

March 29, 2019

KRISTOPHER DOTSON, individually and on behalf of similarly situated persons, Plaintiffs,


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

         Pending is the parties' joint motion, filed August 27, 2018, for approval of their collective action settlement agreement. Also pending is plaintiffs' separate motion for fees and costs, filed August 27, 2018.


         The plaintiff initiated this action in this court on January 25, 2017, charging defendants with alleged violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. and the West Virginia Wage and Maximum Hours Act, W.Va. Code §21-5C-1 et seq. Plaintiff Kristopher Dotson, a former employee of defendants P.S. Management, Inc. and P.S. II, Incorporated, claimed that defendants under-reimbursed their pizza delivery drivers for expenses incurred while delivering pizzas to the point that their employees' net wages fell below the minimum wage. Id. § 216(b).

         On June 30, 2017, the parties filed a stipulation of conditional collective action certification pursuant to 29 U.S.C. § 216(b) and asked the court to accept the parties' proposed notice to the class, ECF No. 15, which the court approved on July 24, 2017, ECF No. 20. The plaintiff distributed the notice of the collective action according to the conditions set by the court, and 176 individuals filed consents to join the collective action. The parties undertook continuous negotiations toward settlement. They reached an agreement on July 9, 2018 and filed a joint notice of settlement with the court the next day. The parties later filed the pending motion, seeking approval of the settlement. Attached to the motion is the Settlement and Release Agreement. Plaintiffs also filed a separate motion seeking costs and fees to which no objection has been made. On December 5, 2018, at the request of the court, the parties filed a supplemental submission in support of their joint motion. ECF No. 77.


         “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 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).

         First, the FLSA issues here are actually in dispute. The plaintiffs argue that they are owed unpaid minimum wages, liquidated damages and interest; defendants disagree. The proposed settlement agreement states that “Defendants denied and continue to deny the Named Plaintiff's allegations in the Litigation . . . and denied and continue to deny that they are liable or owe damages to anyone with respect to the alleged facts or cause of action asserted in the Litigation.” ECF No. 74-1, Recitals.

         Second, the relevant factors from Rule 23's assessment for fairness and reasonableness are as follows:

(1) The extent of discovery that has taken place; (2) the stage of the proceedings, including the complexity, expense and likely duration of the litigation; (3) the absence of fraud or collusion in the settlement; (4) the experience of counsel who have represented the plaintiffs; (5) the probability of plaintiffs' success on the merits; and (6) the amount of the settlement in relation to the potential recovery.

Patel v. Barot, 15 F.Supp.3d 648, 656 (E.D. Va. 2014); see also Flinn v. FMC Corp.,528 F.2d 1169, 1173 (4th Cir. 1975); Irvine v. Destination Wild Dunes Mgmt., Inc., 204 F.Supp.3d 846, 849 (D.S.C. 2016) (listing the ÔÇťopinions of class counsel and class members after receiving notice of the settlement whether expressed directly or ...

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