United States District Court, D. Colorado
December 13, 2016
ADAN RIOS, JAMIE BANUELOS, JOSE ANGEL GUTIERREZ, MILTON RANGEL, LAZARO HERNANDEZ, HUASCAR POLANCO, WILMER POLANCO, LEOPOLDO RODRIGUEZ, and OSCAR GONZALEZ, on their own behalf and on behalf of all others similarly situated, Plaintiffs,
MIDWEST PARTITIONS, INC., D & F PARTITIONS, LLC, YOLKINS RES/COM DRYWALL, INC., ALLEN HALL, CESAR QUINTANA, MARCOS GUTIERREZ, JAVIER MARTINEZ DRYWALL LLC, and JAVIER MARTINEZ, Defendants.
A. BRIMMER United States District Judge.
matter is before the Court on a Joint Motion for Court
Approval of Settlement. Docket No. 56. Plaintiffs and
defendants Midwest Partitions, Inc. and Allan Hall
(collectively the “Midwest defendants”) request
that the Court approve their settlement of plaintiffs'
claims brought pursuant to the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201 et seq.
are two groups of plaintiffs in this case. Docket 56 at 2-3.
Group 1 was employed directly by the Midwest defendants to
work on drywall projects at two construction sites.
Id. Group 2 was employed by subcontractors to
perform work at those same sites. Id. The parties
dispute whether the Midwest defendants were a joint employer
of Group 2. Id. at 4.
complaint alleges that the Midwest defendants and the other
defendants failed to pay statutorily required premiums for
overtime work - hours worked after forty hours in a work week
- at two construction projects in Denver, Colorado.
Id. The Midwest defendants were contracted to
install drywall at two Denver construction projects.
Id. at 4-5. The Midwest defendants entered into
agreements with several subcontractor defendants, which
required those subcontractors to furnish employees with
experience installing drywall. Id. Each plaintiff in
Group 1 was an hourly employee, paid by the Midwest
defendants. Id. Each plaintiff in Group 2 was an
hourly employee, paid by a subcontractor defendant to perform
drywall installation at one of the two construction projects.
the subcontractor defendants has answered the complaint or
participated in discovery in this lawsuit. The clerk of the
court entered default against each of the subcontractor
defendants [Docket Nos. 53-55] and the subcontractor
defendants are not parties to the proposed settlement
settlement agreement is between the named plaintiffs,
individually and “for others similarly situated,
” and the Midwest defendants. Docket No. 56-1. On March
29, 2016, the magistrate judge conditionally certified a
class consisting of “Current and Former Employees of
MIDWEST PARTITIONS, INC. who worked in 2014 and/or 2015 at
the construction projects at 1350 Glenarm Place, Denver,
Colorado 80202; 360 South Monroe Street, Denver, Colorado or
both, ” and gave class members 30 days from the mailing
of the notice to opt into the class. See Docket Nos.
39, 46. Exhibits 1 and 2 to the Settlement Agreement list the
opt-in plaintiffs and named plaintiffs who are the
beneficiaries of the settlement. Exhibit 1 identifies eleven
individuals in Group 1 and their proposed settlement amounts.
Docket No. 56-2. Exhibit 2 identifies eight individuals in
Group 2 and their proposed settlement amounts. Docket No.
the settlement agreement, the Midwest defendants have agreed
to pay Group 1 premiums for overtime worked and the
statutorily described liquidated damages on such premiums.
Id. at 3. Each Group 1 plaintiff will be compensated
based on the number of hours he worked, and receive a
corresponding amount of liquidated damages. Id.
Therefore, the proposed settlement agreement is not a
compromise as to Group 1.
the Midwest defendants do not have payroll records for the
Group 2 plaintiffs, they are unable to determine the exact
amount owed to each Group 2 plaintiff. Id. at 5.
Instead, the Midwest defendants have agreed to pay the Group
2 plaintiffs premiums for overtime worked based upon the
number of hours each Group 2 plaintiff alleges he worked. The
Midwest defendants have not agreed to pay liquidated damages
to the Group 2 plaintiffs. Therefore, the proposed settlement is a
compromise as to Group 2.
suit by employees 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).
Final Class Certification
FLSA provides that an employee or employees may bring an
action “[on] behalf of himself or themselves and other
employees similarly situated.” 29 U.S.C. § 216(b).
Courts determine whether plaintiffs are “similarly
situated” for purposes of FLSA collective action
certification in two stages. Thiessen v. GE Capital
Corp., 267 F.3d 1095, 1105 (10th Cir. 2001). A
court's initial certification comes at the notice stage,
where courts use a fairly lenient standard to determine
whether plaintiffs are similarly situated for purposes of
sending notice to putative class members. Id. at
1102. In this case, an opt-in notice was approved by the
magistrate judge. Docket No. 46. After discovery, a court
makes a final class certification using a stricter standard.
See Thiessen, 267 F.3d at 1102-03. In order to
approve a settlement prior to a final collective action
ruling, “the Court must make some final class
certification finding.” Whittington v. Taco Bell of
Am., Inc., No. 10-cv-01884-KMT-MEH, 2013 WL 6022972, at
*2 (D. Colo. Nov. 13, 2013) (citing Peterson v. Mortgage
Sources, Corp., 2011 WL 3793963, at *4 (D. Kan. Aug. 25,
deciding whether to certify a collective action, courts
consider several factors, including: (1) the disparate
factual and employment settings of individual plaintiffs; (2)
various defenses available to defendant which appear to be
individual to each plaintiff; and (3) fairness and procedural
considerations. See Thiessen, 267 F.3d at 1103.
the plaintiffs have not moved for final class certification
and do not discuss the factors laid out in Thiessen.
Docket No. 56. Therefore, the Court will examine the
parties' motion to determine if the parties have provided
sufficient information for “some final class
certification finding.” Whittington, 2013 WL
6022972, at *2. As to the first Thiessen factor
regarding dissimilarity of individual plaintiffs, the Midwest
defendants contest only that they were joint employers of the
Group 2 plaintiffs. Docket No. 56 at 3. The Midwest
defendants do not contest that all plaintiffs worked at the
same two construction sites to install drywall. Id.
at 4. Further, the nature of the FLSA violation is the same
as to each individual plaintiff - that defendants failed to
pay statutorily required premiums for hours worked in excess
of forty hours per week.
the second Thiessen factor, while there are obvious
and substantial similarities across all plaintiffs, the Group
1 and Group 2 plaintiffs are differently situated with
respect to the Midwest defendants' defenses. The Midwest
defendants do not appear to raise any defenses as to the
Group 1 plaintiffs; however, the Midwest defendants state
that they were not joint employers of the Group 2 plaintiffs,
and, in the absence of the proposed settlement, would not owe
them anything. Docket No. 56 at 4.
the factors discussed in Thiessen, it is clear that
the factual and employment settings are substantially similar
for all plaintiffs. However, there is a material distinction
between the two groups of plaintiffs based on whether they
were paid by the Midwest defendants or by subcontractors. The
Midwest defendants not only raise a distinct defense as to
the Group 2 plaintiffs, but use that defense to justify a
different payment structure under the settlement. Where there
are common facts among all plaintiffs, but differences make
certification of a single class inappropriate, the court can
certify subclasses. Renfro v. Spartan Computer Servs.,
Inc., 243 F.R.D. 431, 434 (D. Kan. 2007) (noting that it
is appropriate to consider subclasses prior to final
certification of an FLSA class); Gjurovich v.
Emmanuel's Marketplace, Inc., 282 F.Supp.2d 91, 96
n.1 (S.D.N.Y. 2003) (noting that it is appropriate to
consider decertification or division into subgroups prior to
final certification). Here, the Court finds that the parties
appropriately recognize two subclasses in line with the
division discussed in the parties' proposed settlement
agreement. Docket No 56 at 2-3. Group 1 consists of the
individuals employed directly by the Midwest defendants to
work on drywall projects at the two relevant construction
sites. Group 2 consists of the individuals employed by
subcontractors to perform work at those same sites.
on the foregoing, the Court finds that the opt-in plaintiffs
who would be covered by the proposed settlement are similarly
situated and that the classes should be certified to proceed.
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 attorney's fees. Lynn's Food
Stores, 679 F.2d at 1354.
Bona Fide Dispute
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.
plaintiffs in Group 2 argue that they performed work under
the direction and supervision of the Midwest defendants and
used equipment and supplies provided by the Midwest
defendants, rendering the Midwest defendants a joint employer
under the FLSA. Docket No. 56 at 5. The Midwest defendants
argue that they were not a joint employer of the Group 2
plaintiffs because they did not pay or supervise any of the
plaintiffs in that group. Id. If the Midwest
defendants were found by a court to have been a joint
employer of the plaintiffs in Group 2, they would be
obligated to pay both the unpaid overtime premiums and
liquidated damages. See 29 C.F.R. §
light of the parties' respective positions, the Court
finds that a bona fide dispute exists.
Fair and Reasonable
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).
parties submit that they fairly and honestly negotiated the
settlement. Under the terms of the settlement agreement, the
Midwest defendants agree to pay approximately $50, 000, which
consists of both settlement payments for distribution to the
settlement class, as well as a negotiated award of
attorney's fees and costs. Docket No. 56-1. The parties
negotiated the settlement at arm's length, and
attorney's fees were negotiated separately from the award
to the settlement plaintiffs. As noted previously, the
settlement is not a compromise as to Group 1 because the
Midwest defendants have agreed to pay Group 1 both the
overtime premiums owed and liquidated damages pursuant to the
statute. The settlement, however, is a compromise as to Group
2 because the Midwest defendants will pay only the overtime
compromise is justified, according to plaintiffs, because
there are serious questions of law and fact remaining in this
case. Docket No. 56 at 7. The heart of the dispute between
Group 2 and the Midwest defendants is whether the Midwest
defendants were the joint employers of plaintiffs. In
regulations implementing the FLSA, the Department of Labor
expressly contemplates that “[a] single individual may
stand in the relation of an employee to two or more employers
at the same time.” 29 C.F.R. § 791.2(a). Joint
employment may exist “where the employers are not
completely disassociated with respect to the employment of a
particular employee and may be deemed to share control of the
employee directly or indirectly, by reason of the fact that
one employer controls, is controlled by, or is under common
control with the other employer.” 29 C.F.R. §
791.2(b)(3). A joint employer is considered jointly and
severally liable for compliance with the overtime provisions
of FLSA. See 29 U.S.C. § 207(a)(2)(C); 29
C.F.R. § 791.2. Whether a joint employment relationship
exists is a question of fact, and courts apply different
tests in different situations. See Zachary v. Rescare
Oklahoma, Inc., 471 F.Supp.2d 1175, 1179 (N.D. Okla.
2006) (noting both the lack of 10th Circuit authority on
joint employment and discussing four-, five-, six-, and
seven-factor tests applied inside and outside the 10th
Circuit when courts examine joint employment relationships);
see also Perez v. Pinon Mgmt., Inc., No.
12-cv-00653-MSK-MEH, 2013 WL 1149567, at *7 (D. Colo. Mar.
19, 2013) (denying a motion to dismiss because plaintiff
stated that one employer controlled another, sufficiently
alleging a joint employer relationship). In each of these
tests, courts consider the extent of control exercised by the
various employers, but the precise balance of factors depends
on the facts of each case.
clear that there is a factual question about whether the
Midwest defendants were joint employers with the
subcontractor defendants. While there are factors supporting
the Group 2 plaintiffs' position - including the Midwest
defendants' oversight of the Glenarm and Monroe
construction projects - there are also factors to support the
Midwest defendants' position - including their lack of
control over employment records and payment.
addition, plaintiffs state that, based on the advice of
counsel, they have concluded that the prospect and value of
immediate recovery of the premium amounts owed outweighs the
mere possibility of payment of the premiums and liquidated
damages. Counsel for plaintiffs has over 30 years of
experience representing employees and has assisted his
clients in determining whether the proposed settlement is
fair and reasonable. Docket No. 56-5.
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 that, depending on their outcome,
could result in a recovery for plaintiffs that is larger than
this settlement or result in no recovery at all. Moreover,
plaintiffs and the Midwest defendants are represented by
experienced counsel who believe that the settlement is fair
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 plaintiffs'
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 other similarly
situated employees were given an opportunity to opt-in to
this action, and several did. Docket No. 56-2. In addition,
there is no evidence in the record that defendants'
alleged failure to comply with the FLSA represents a
continuing violation or is part of widespread conduct.
Moreover, plaintiffs are no longer employed by the Midwest
defendants. Docket 56 at 7. 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).
parties represent that plaintiffs' recovery was addressed
independently of attorney's fees considerations and that
their recovery was not influenced by the issue of
attorney's fees. Docket No. 56. However, the Court must
also examine whether the award of just over $17, 000 in
attorney's 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). 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
success achieved. See Tallitsch v. Child Support Servs.,
Inc., 926 P.2d 143, 147 (Colo.App. 1996). A party
seeking an award of attorney's fees must establish the
reasonableness of each dollar and each hour for which the
party seeks an award. Jane L. v. Bangerter, 61 F.3d
1505, 1510 (10th Cir. 1995).
submit an affidavit from their attorney, Richard Rosenblatt,
who states that his billing rate ranges between $200 and $250
per hour, unless he takes a case on contingency, and that he
has over 35 years of experience representing employees and
unions. Docket No. 56-5. The parties agreed to an hourly rate
of $225 per hour for purposes of the attorney fee
determination. Docket No. 56 at 9.
“reasonable rate” is defined as the prevailing
market rate in the relevant community for an attorney of
similar experience. Guides, Ltd. v. Yarmouth Group Prop.
Mgmt., Inc., 295 F.3d 1065, 1078 (10th Cir. 2002). The
party requesting fees bears “the burden of showing that
the requested rates are in line with those prevailing in the
community.” Ellis v. Univ. of Kan. Med. Ctr.,
163 F.3d 1186, 1203 (10th Cir. 1998). In order to satisfy his
burden, plaintiff must produce “satisfactory evidence -
in addition to the attorney's own affidavits - that the
requested rates are in line with those prevailing in the
community for similar services by lawyers of reasonably
comparable skill, experience and reputation.” Blum
v. Stenson, 465 U.S. 886, 895 n.11 (1984).
parties cite Baker v. Vail Resorts Mgmt. Co., No.
13-cv-01649-PAB-CBS, 2014 WL 700096 (D. Colo. Feb. 24, 2014),
to support plaintiffs' attorney's hourly rates. In
Baker, the Court found that $280 per hour, rather
than the $350 rate claim ed by the attorneys, was a
reasonable hourly rate in FLSA cases for attorneys with seven
and fourteen years of experience, respectively. Id.
at *3. In a more recent opinion, this Court found that $300
was a reasonable rate in FLSA cases for attorneys with 10 and
6 years of experience. Nicholas v. Double J Disposal,
Inc., No. 14-CV-01158-PAB-GPG, 2016 WL 559185, at *4 (D.
Colo. Feb. 12, 2016).
on the above-cited cases, the Court finds that the proposed
rate of $225 per hour used by the parties to determine the
attorney fees in this case is appropriate.
Rosenblatt indicates that he has spent approximately 76.7
hours on this case and submitted an itemized list of the work
he completed. Docket No. 56-5. The attorneys in Double J.
Disposal similarly spent roughly 70 hours on their case.
2016 WL 559185, at *4. The Court finds that Mr. Rosenblatt
expended a reasonable amount of time to complete this
settlement. The resulting award for plaintiffs is
substantial, and Mr. Rosenblatt expended significant time
organizing information about a number of plaintiffs, helping
other similarly situated plaintiffs to opt-in to the
settlement, and working to settle this dispute.
lodestar amount in this case is therefore $17, 257.50.
plaintiffs' counsel's hourly rate and the lodestar
amount, the Court finds that the parties' attorney's
fee request of $17, 257.00 is reasonable. Docket 56-1 at 4.
The parties also agree to reimburse Mr. Rosenblatt $600 for
the costs of this litigation, which is also reasonable.
Docket No. 56-5.
plaintiff's counsel's hourly rate and the lodestar
amount, the Court finds that the parties' attorney's
fee request is reasonable.
foregoing reasons, it is ORDERED that the Joint Motion for
Court Approval of Settlement [Docket No. 56] is GRANTED.
 Group 1 consists of Jamie Banuelos,
Delfino Cortes, Juan Garcia, Oscar Gonzales, Jose Angel
Gutierrez, Efrain Hernandez, Lazaro Hernandez, Silverio Loya,
Antonio Martinez, Gerardo Reyes, Adan Rios, Raul Castoreno,
Noe Portillo, Omar Ramos, and Gabriel Romero. Docket No.
56-2. Group 2 consists of Huascar Polanco, Wilmar Polanco,
Milton Rangel, Alejandro Rascon, Javier Rascon, Juan Rascon,
Oscar Rascon, and Leopoldo Rodriguez. Docket No.
 As for liquidated damages, plaintiffs
intend to move for default judgment and then seek to enforce
the judgment against the Subcontractor defendants if they are
able to locate them. Docket No. 56 at 5-6.
 Thiessen lists a fourth
factor, i.e. whether plaintiffs made the filings required by
the ADEA before instituting suit. See Thiessen, 267
F.3d at 1103. That factor does not apply in FLSA cases.
See Kaiser v. At The Beach, Inc., 2010 WL 5114729,
at *3, n.6 (N.D. Okla. Dec. 9, 2010).
 As the subcontractor defendants did
not participate in this lawsuit, plaintiffs were unable to
obtain a list of individuals who worked for any of these
subcontractors. Therefore they were unable to send an opt-in
notice to those employees. Docket No. 56 at 3 n.2.