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Rios v. Midwest Partitions Inc.

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,
v.
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.

          ORDER

          PHILIP A. BRIMMER United States District Judge.

         This 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.

         I. BACKGROUND

         There are two groups of plaintiffs in this case.[1] 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.

         The 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. Id.

         None of 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 agreement.

         The 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. 56-3.

         Under 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.

         Because 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.[2] Therefore, the proposed settlement is a compromise as to Group 2.

         II. ANALYSIS

         In a 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).

         A. Final Class Certification

         The 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, 2011)).

         In 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 ...


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