United States District Court, D. Colorado
ORDER ON MOTION FOR APPROVAL OF FAIR LABOR STANDARDS
Y. Wang, United States Magistrate Judge
Judge Nina Y. Wang This civil action is before the court on
Plaintiffs' Unopposed Motion for Approval of Fair Labor
Standards Act Settlement (“Motion for Approval”).
[#61, filed July 14, 2017]. Under the authority of 28 U.S.C.
§ 636(c) and the Order of Reference dated January 3,
2017 [#22], the court has considered the Motion for Approval,
the associated brief, and the applicable case law. For the
following reasons, the Motion is DENIED without prejudice.
September 29, 2016, Plaintiff Aswinraj Manohar initiated this
lawsuit for violations of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201, et seq.,
the Colorado Wage Claim Act (“CWCA”), Colo. Rev.
Stat. § 8-4-101, et seq., and the Colorado
Minimum Wage Order for unpaid and underpaid wages he earned
while employed at Defendants' Indian restaurants as a
server and cashier and for “general front of the
house” duties. [#1]; see also [#40]. On
December 16, 2016, Defendants filed an Answer that included
one counterclaim consisting of nine paragraphs. [#15 at 7-8].
February 9, 2017, Mr. Manohar amended his Complaint with
leave of court to add Plaintiff Packiaraj Veeran. [#39, #40].
The First Amended Complaint pleads one claim for FLSA
violations asserted by both Plaintiffs against all
Defendants, and one claim for violations of the CWCA asserted
by both Plaintiffs against Defendants Sugar Food LLC d/b/a
Jai Ho, Sugar Bhavan LLC d/b/a Jai Ho Boulder, and Sugar Dosa
LLC d/b/a Jai Ho Park Meadows (the “Corporate
Defendants”). See [#40 at 7, 9]. Plaintiffs
plead that Defendants were their employers at all times
relevant to this lawsuit. On February 23, 2017, Defendants
filed an Answer in which Defendant Sugar Bhavan, LLC d/b/a
Jai Ho Boulder (“Sugar Bhavan”) asserted three
Counterclaims for Conversion, Civil Theft, and Breach of
Fiduciary Duty against Plaintiff Manohar. [#41]. On March 16,
2017, Plaintiff Manohar filed a motion to dismiss arguing
that the Counterclaims constitute “improper retaliation
in violation of the FLSA and CWA's anti-retaliation
provisions, ” and “must be dismissed as they do
not arise out of a common nucleus of operative facts with
Plaintiffs' FLSA/CWA wage claims.” [#45]. Sugar
Bhavan (and “the other Defendants to the extent
impacted”) filed a Response on April 6, 2017. [#57].
Plaintiff Manohar filed a Reply on April 20, 2017. [#58].
Before the motion to dismiss could be fully adjudicated,
however, the Parties notified the court that the matter had
30, 2017, the Parties filed a Notice of Settlement stating
that they had “reached a mutually-acceptable settlement
in this action.” [#59]. On July 14, 2017, Plaintiffs
filed the Motion for Approval and accompanying brief. [#61].
The same day, the court denied the motion to dismiss
Counterclaims as moot in light of the Motion for Approval,
permitting leave for Plaintiffs to renew their motion should
the settlement fail. [#64]. The court exercises jurisdiction
pursuant to 28 U.S.C. § 1331 and supplemental
jurisdiction pursuant to 28 U.S.C. § 1367.
the context of a lawsuit brought directly by employees
against their employer under section 216(b) to recover back
wages for FLSA violations, and upon consideration of whether
the proposed settlement is fair, the district court may enter
a stipulated judgment approving the agreement and dismissing
the action. Baker v. Vail Resorts Management Co.,
No. 13-cv-01649-PAB-CBS, 2014 WL 700096 (D. Colo. Feb. 24,
2014) (citing Lynn's Food Stores, Inc. v. United
States, 679 F.2d 1350, 1353 (11th Cir. 1982)). Approval
is appropriate upon demonstration 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. Baker, 2014 WL 700096, at *1
(citing Lynn's Food Stores, 679 F.2d at 1354).
as noted by the Parties, a court in this District called into
question whether an FLSA settlement requires court approval,
absent any special circumstance. See Ruiz v. Act Fast
Delivery of Colorado, Civil No. 14-cv-00870-MSK-NYW, ECF
132, (D. Colo. Jan. 9, 2017) (unpublished). Upon
consideration of a motion to approve a settlement in an FLSA
matter, the Ruiz court found that, with few
exceptions, such settlements do not require court approval.
Id. Because the issue is not yet settled by the
Tenth Circuit, this court proceeds with applying the standard
utilized by courts in this District to consider whether it
can approve the settlement.
Bona Fide Dispute
court to discern whether a bona fide dispute exists,
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 employee; (3) the
employer's reasons for disputing the employee's right
to a minimum wage or overtime; (4) the employee's
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. Baker, 2014 WL 700096, at *1.
court finds that the Parties adequately describe their
dispute. As stated above, Plaintiffs worked at
Defendants' Indian restaurants as servers, cashiers,
cooks, and for “general front of the house”
duties. [#40 at ¶ 2]; see also [#62 at 3]. They
claim that Defendants failed to pay them minimum wage and
overtime as required under the FLSA. In the brief filed in
support of the Motion for Approval, the Parties note that
Defendants believe they are exempt from the FLSA due to the
Act's minimum monetary threshold, and that, even if the
FLSA applies, Plaintiffs were properly classified as exempt
employees. [#62 at 4]. Plaintiffs contend that the Indian
restaurants are involved in a single integrated enterprise,
Defendants' enterprise generates sufficient revenue to
satisfy the monetary threshold, they did not qualify as
exempt employees, and Defendants paid them a flat salary that
did not account for the hours they worked in excess of 40
hours per week. [Id.] The Parties assert that
through the exchange and analysis of document discovery and
review of witness accounts, they focused settlement
discussions on “the eight weeks of alleged
non-payments” for Plaintiff Manohar, and the
“seven weeks of wholly unpaid wages” for
Plaintiff Veeran because each side understood the potential
difficulties and risks in identifying the overtime hours
worked. [Id. at 4-5]. After negotiating the method
of calculating the Parties' regular rate and hours
worked, the Parties arrived at a settlement figure of $17,
500.00 to compensate Plaintiff Manohar, and a figure of $7,
500.00 for Plaintiff Veeran. [Id. at 5]. Based on
the information the Parties provide through the Amended
Complaint and the Motion for Approval and associated brief,
as well as consideration of the docket as a whole, the court
finds that a bona fide dispute led to the settlement
negotiation and resulting terms.
Fair and Equitable Settlement Agreement
be fair and reasonable, an FLSA settlement must provide
adequate compensation to the employees and must not frustrate
the FLSA policy rationales.” Baker, 2014 WL
700096, at *2. The “prime purpose” in enacting
the FLSA “was to aid the unprotected, unorganized and
lowest paid...employees who lack[ ] sufficient bargaining
power to secure for themselves a minimum subsistence
wage.” Brooklyn Sav. Bank v. O'Neil, 324
U.S. 697, 707, n.18 (1945). See also Christopher v.
SmithKline Beecham Corp.,132 S.Ct. 2156, 2162 (2012)
(“Congress enacted the FLSA in 1938 with the goal of
protect[ing] all covered workers from substandard wages and
oppressive working hours.”) (citation omitted).
“Normally, a settlement is approved where it is the
result of “contentious arm's-length negotiations,
which were undertaken in good faith by counsel…and
serious questions of law and ...