United States District Court, D. Colorado
PHILIP A. BRIMMER United States District Judge
This matter is before the Court on a Joint Motion for Court Approval of Settlement [Docket No. 60] and a Joint Stipulated Motion to Dismiss All Claims Against Defendants [Docket No. 62]. The parties request that the Court approve their settlement of plaintiff’s claims brought pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq.
Plaintiff worked for Double J Disposal, Inc. (“Double J”) from either October 1997 or 1998 to March 5, 2014. Docket No. 37 at 3, ¶ 12; see also Docket No. 41 at 4-5, ¶ 12. While working for Double J, plaintiff was paid on a salary basis. Docket No. 37 at 4, ¶ 15. Plaintiff alleges that, during his employment with Double J, he frequently worked in excess of 40 hours per week and was not paid overtime. Id. ¶¶ 16-17. Plaintiff alleges that, at all times relevant to this case, plaintiff’s title was “Route Supervisor, ” but that, while he was nominally a supervisor, his primary work consisted of driving a garbage truck. Id. ¶ 19. Plaintiff alleges claims for relief for violation of the FLSA and the Colorado Wage Claim Act. See generally Id. at 6.
When employees file suit against their employer to recover back wages under the FLSA, the parties must present any proposed settlement to the district court for review and a determination of whether the settlement agreement is fair and reasonable. See Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982). Requiring court approval of FLSA settlements effectuates the purpose of the statute, which is to “protect certain groups of the population from substandard wages and excessive hours . . . due to the unequal bargaining power as between employer and employee.” Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706 (1945). To approve the settlement agreement, the Court must find that (1) the litigation involves a bona fide dispute, (2) the proposed settlement is fair and equitable to all parties concerned, and (3) the proposed settlement contains a reasonable award of attorneys’ fees. Lynn’s Food Stores, 679 F.2d at 1354.
I. BONA FIDE DISPUTE
Parties requesting approval of an FLSA settlement must provide the Court with sufficient information to determine whether a bona fide dispute exists. Dees v. Hydradry, Inc., 706 F.Supp.2d 1227, 1234 (M.D. Fla. 2010). To meet this obligation, the parties must present: (1) a description of the nature of the dispute; (2) a description of the employer’s business and the type of work performed by the employees; (3) the employer’s reasons for disputing the employees’ right to a minimum wage or overtime; (4) the employees’ justification for the disputed wages; and (5) if the parties dispute the computation of wages owed, each party’s estimate of the number of hours worked and the applicable wage. Collins v. Sanderson Farms, Inc., 568 F.Supp.2d 714, 718 (E.D. La. 2008). The mere existence of an adversarial lawsuit is not enough to satisfy the bona fide dispute requirement. Id. at 719-20.
Plaintiff claims that his primary work consisted of driving a garbage truck and that he held no bona fide supervisory responsibilities. Docket No. 37 at 4, ¶ 19; Docket No. 51 at 2. In defendants’ statement of claims and defenses in the scheduling order, defendants state that plaintiff was promoted to a supervisor position in October 1999, that his primary duty was the supervision of route drivers, and, accordingly, plaintiff was subject to the FLSA’s exemption for executive employees. Id. at 3. Plaintiff states, based on his estimate that he worked no less than 750 hours of overtime during the three years preceding this lawsuit, that he should have been compensated for those hours at a rate of $35.54 per hour. Id. at 4. Accordingly, plaintiff states that he is entitled to $26, 655 in unpaid overtime and $26, 655 in liquidated damages under the FLSA. Id. Because defendants maintain that plaintiff was an exempt employee, they argue that plaintiff is not entitled to recover any amount. Id. at 5. The Court finds that a bona fide dispute exists.
II. FAIR AND REASONABLE
To be fair and reasonable, an FLSA settlement must provide adequate compensation to the employees and must not frustrate the FLSA policy rationales. Courts considering both individual and collective settlements under the FLSA turn to the factors for evaluating the fairness of a class action settlement. See, e.g., Dail v. George A. Arab Inc., 391 F.Supp.2d 1142, 1146 (M.D. Fla. 2005) (evaluating individual action); Collins, 568 F.Supp.2d at 721 (evaluating collective action). The Tenth Circuit considers the following factors when deciding whether to approve a class action settlement under Fed.R.Civ.P. 23(e): (1) whether the parties fairly and honestly negotiated the settlement; (2) whether serious questions of law and fact exist which place the ultimate outcome of the litigation in doubt; (3) whether the value of an immediate recovery outweighs the mere possibility of future relief after protracted litigation; and (4) the judgment of the parties that the settlement is fair and reasonable. Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1188 (10th Cir. 2002).
Under the terms of the settlement agreement, defendants agree to pay plaintiff $20, 000, consisting of $10, 000 in back pay (from which defendants will withhold appropriate amounts for tax purposes) and $10, 000 in liquidated damages from which no taxes will be withheld. Docket No. 61 at 3, ¶ 2. Additionally, $10, 000 will be paid to plaintiff’s attorneys. Id. The parties argue that this settlement reflects the wide range of damages possible in this case, particularly considering that, if defendants are found to have acted in good faith, plaintiff would not be entitled to an award of liquidated damages even if he obtained a favorable result on the issue of whether he was improperly classified as an exempt employee. Docket No. 60 at 4.
The Court agrees that the settlement is fair and reasonable and reflects an adequate compromise that considers the risks of continuing with this litigation for each party. There are issues of law and fact in this case that, depending on their outcome, could result in a recovery for plaintiff that is substantially larger than this settlement, or in no recovery at all. Moreover, plaintiff and defendants are represented by experienced counsel who believe that the settlement is fair and reasonable. Id. at 4-6.
Next, the Court must determine whether the settlement agreement undermines the purpose of the FLSA, which is to protect employees’ rights from employers who generally wield superior bargaining power. To determine whether a settlement agreement complies with the FLSA, courts look at the following factors: (1) presence of other similarly situated employees; (2) a likelihood that plaintiff’s circumstances will recur; and (3) whether defendants had a history of non-compliance with the FLSA. Dees, 706 F.Supp.2d at 1244. The record shows that no other similarly situated employees have sought to join this action. In addition, there is no evidence that defendants’ alleged failure to comply with the FLSA represents a continuing violation or is part of widespread conduct. See Docket 60 at 6 (joint representation that no other employee was similarly situated to plaintiff). Moreover, plaintiff is no longer employed by defendant. Id. Because the settlement agreement contains no confidentiality provision, the terms of the settlement are public; thus, this case would give notice to future plaintiffs of prior allegations of defendants’ improper conduct. Dees, 706 F.Supp.2d at 1244-45 (noting the importance of public access to settlement agreements in FLSA cases).
III. ATTORNEYS’ FEES
The parties represent that plaintiff’s recovery was addressed independently of attorneys’ fees considerations and that his recovery was not influenced by the issue of attorneys’ fees. Docket No. 60 at 7. However, the Court must also examine whether the award of $10, 000 in attorneys’ fees and costs is reasonable. See Silva v. Miller, 307 F. App’x 349, 351-52 (11th Cir. 2009) (unpublished) (holding that contingency contract between counsel and plaintiff did not abrogate court’s duty to review the reasonableness of legal fees in an FLSA settlement). To determine the reasonableness of a fee request, a court must begin by calculating the “lodestar amount, ” which represents the number of hours reasonably expended multiplied by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); Balkind v. Telluride Mountain Title Co., 8 P.3d 581, 587-88 (Colo.App. 2000). The lodestar amount may be adjusted based upon several factors, including the amount in controversy, the length of time required to represent the client effectively, the complexity of the case, the value of the legal services to the client, awards in similar cases, and the degree of ...