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Thompson v. Qwest Corp.

United States District Court, D. Colorado

May 11, 2018

ALAN THOMPSON, on behalf of himself and all others similarly situated, Plaintiff,


          William J. Martinez, United States District Judge

         This is a lawsuit under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq. Plaintiff Alan Thompson was an employee of Defendants under the title “Video Engineer II.” Thompson claims that he and his fellow Video Engineer II employees (“VE2s”) were required to work overtime but were not paid time-and-a-half for those overtime hours. Four other VE2s have also joined this lawsuit. (See ECF Nos. 4-1, 4-2, 6-1, 12-1.) Plaintiff filed a Motion for FLSA Conditional Collective Action Certification and Notice (ECF No. 34), which Defendants oppose (ECF No. 36).

         Not long after Defendants filed their opposition, Plaintiff filed a notice of settlement. (ECF No. 37.) A few weeks later, the Plaintiff filed an Unopposed Motion for FLSA Settlement Approval (“Settlement Motion”) (ECF No. 40), which is the motion currently before the Court.

         The basic terms of the Settlement Agreement (ECF No. 40-1) are as follows:

• A total payout from Defendants of $275, 000.
• Attorneys' fees to Plaintiff's counsel of one-third of that payout, i.e., $91, 666.67.
• Expenses to Plaintiff's counsel of $510.
• A service award to Plaintiff Thompson of $5, 000.
• Distribution of the remaining money, “estimated to equal no less than $175, 323.33” (ECF No. 40 at 5), among twenty-eight VE2s, which includes Plaintiff Thompson, the four other VE2s who also joined this suit, and twenty-three others that could have opted in. Each of these individuals will receive a minimum payment of $500, plus his or her share of the net settlement amount calculated based on the individual's number of work weeks since three years before this lawsuit started and the individual's average weekly compensation during that time. On average, each individual who accepts the settlement will receive $6, 262.
• Any person who chooses to reject the settlement will retain his or her own FLSA claims and can bring them in a separate action.

         The Court will refer to these terms as the “Proposed Settlement.”

         The Court understands that certain recent decisions, including from this District, have held that FLSA settlements do not require judicial approval. See Martinez v. Bohls Bearing Equip. Co., 361 F.Supp.2d 608 (W.D. Tex. 2005); see also Ruiz et al. v. Act Fast Delivery of Colorado, Inc., et al., Case No. 14-cv-870-MSK-NYW, ECF No. 132 (D. Colo., Jan. 9, 2017). These decisions generally question the correctness of the holding in Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982), that the FLSA prohibits private compromise of wage claims. Lynn's Food is the authority on which most courts, including this one, have relied as the basis for exercising authority over FLSA settlements. See, e.g., Stransky et al. v. HealthONE of Denver, Inc., Case No. 11-cv-2888-WJM-MJW, ECF No. 326 (D. Colo., Nov. 10, 2015).

         Under Lynn's Food, courts employ procedures analogous to Rule 23 class action settlements. See Whittington v. Taco Bell of Am., Inc., 2013 WL 6022972, at *4 (D. Colo. Nov. 13, 2013). One might assume that Rule 23 procedures have been imported to the FLSA settlement context because FLSA claims may be brought as collective actions, which are somewhat similar to class actions. However, such an assumption is probably mistaken. The reasoning of Lynn's Food applies equally well to an individual settlement of an FLSA claim as it might to a collective action. Lynn's Food concludes that a settlement for less than the full value of the wages and liquidated damages available under the FLSA is essentially a waiver of FLSA rights, and Congress did not intend FLSA claims to be waivable in any sense. 679 F.2d at 1352.

         Having concluded as much, Lynn's Food might have stopped there and concluded that FLSA settlements are prohibited in all circumstances. However, Lynn's Food drew upon a distinction it saw in Supreme Court case law “between a settlement agreement and a stipulated judgment entered in the adversarial context of an employees' suit for FLSA wages.” Id. at 1353 n.8. Based on this distinction, Lynn's Food concluded that “a district court may enter a stipulated judgment after scrutinizing the settlement for fairness.” Id. at 1353; see also id. at 1355 (“there is only one context in which compromises of FLSA back wage or liquidated damage claims may be allowed: a stipulated judgment entered by a court which has determined that a settlement proposed by an employer and employees, in a suit brought by the employees under the FLSA, is a fair and reasonable resolution of a bona fide dispute over FLSA provisions”). Since then, L ...

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