United States District Court, D. Colorado
LINDA F. MORTON, ELIZABETH A. SENNETT, and LINDA MATHIAS, Plaintiffs,
TRANSCEND SERVICES, INC., Defendant.
A. BRIMMER United States District Judge.
matter is before the Court on the parties' Joint Motion
for Approval of Settlement Agreement and Release [Docket No.
32]. The parties 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.
case arises out of a wage dispute. Plaintiffs are former
employees of Transcend Services, Inc.
(“Transcend”). Docket No. 1 at 1-2, ¶¶
1-3. The plaintiffs in this action were formerly part of a
putative collective action filed in the Northern District of
Illinois, Cosentino v. Transcend Servs., Inc., No.
1:12-cv-03627, filed on May 11, 2012. See Docket No.
18 at 1; Docket No. 25 at 1. On June 30, 2015, plaintiffs
filed a complaint in this Court alleging violations of the
FLSA during their employment as medical transcriptionists for
defendant. Id. Specifically, plaintiffs allege that
defendant failed to pay them minimum wage and overtime.
Id. at 14-17. On August 2, 2016, the parties filed
their motion for approval of the settlement. Docket No. 32.
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). District
court approval of FLSA settlements effectuates the purpose of
the statute 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.
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.
the parties state that they dispute the amount of overtime
hours worked by plaintiffs Linda F. Morton and Elizabeth
Sennett. Docket No. 32 at 6. The parties also state that they
dispute whether the claims of plaintiff Linda Mathias are
time barred. Id.Defendant “Transcend maintains
that it properly paid plaintiffs based on the hours
plaintiffs reported, along with Transcend's policies,
which direct transcriptionists not to work off the clock and
contain a reporting mechanism if transcriptionists are asked
to do so.” Docket No. 32 at 5. Given the respective
positions of the parties, the Court finds that a bona fide
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 represent that each plaintiff will receive an amount
from the settlement that exceeds the amount of her damages
calculations. Docket No. 32 at 5-6. With respect to
plaintiffs Linda F. Morton and Elizabeth Sennett, the parties
represent that discovery revealed their initial claims
overestimated their hours. Id. For plaintiff Linda
Mathias, the parties represent that the amount she stands to
receive in the settlement is greater than her damages even if
her claims were proven. Id. Based on the
parties' representations, the Court finds that the first
two factors are satisfied. The Court further finds that,
given the disputed issues of law and fact, the value of
immediate recovery to plaintiffs outweighs the possibility of
future relief. Plaintiffs and defendant are represented by
experienced counsel who believe that the settlement is fair
and reasonable and the Court finds no reason to disagree with
this assessment. Id. at 5. Accordingly, the Court
finds that the settlement is fair and reasonable and reflects
an adequate compromise that considers the risks of continuing
with this litigation for each party.
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 frustrates the FLSA, courts look to factors
including: (1) presence of other similarly situated
employees; (2) a likelihood that plaintiff's
circumstances will recur; and (3) whether defendants have a
history of non-compliance with the FLSA. Dees, 706
F.Supp.2d at 1244. Here, although there appear to be
similarly-situated parties and plaintiffs have alleged that
defendant's failure to comply with the FLSA is part of
widespread conduct, the Court finds that the settlement does
not undermine the purpose of the FLSA. The settlement only
resolves plaintiffs' individual claims and does not
affect the rights of other employees of defendant.
order to approve the proposed settlement agreement, the Court
must examine whether the award of attorneys' fees and
costs is reasonable. See Silva v. Miller, 307 F.
App'x 349, 351-52 (11th Cir. 2009) (unpublished) (holding
that a contingency contract between counsel and plaintiff did
not abrogate the 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 time and labor required,
novelty and difficulty of the question presented by the case,
the skill requisite to perform the legal service properly,
preclusion of other employment by the attorneys due to
acceptance of the case, customary fee, whether the fee is
fixed or contingent, any time limitations imposed by the
client or circumstances, amount in controversy and results
obtained, experience, reputation, and ability of the
attorneys, undesirability of the case, the nature and length
of the professional relationship with the client, and awards
in similar cases. Fulton v. TLC Lawn Care, Inc.,
2012 WL 1788140, at *5 (D. Kan. May 17, 2012) (citing
Johnson v. Ga. Highway Express, Inc., 488 F.2d 714
(5th Cir. 1974); Rosenbaum v. MacAllister, 64 F.3d
1439, 1445 (10th Cir. 1995)).
parties request only $300 in attorneys' fees to
plaintiffs' counsel, stating that this low total is due
to the request being just one part of a global settlement.
Docket No. 32 at 8 n.8. The parties attach an invoice of
plaintiffs' attorneys' fees reflecting 74.20 hours of
attorney time for a total of $12, 030.00 in fees. Docket No.
32-4. Additionally, they claim that plaintiffs' counsel
incurred $1, 841.00 in costs, plaintiffs' counsel's