United States District Court, D. Colorado
MATTHEW PRIM, individually and on behalf of all others similarly situated, Plaintiff,
v.
ENSIGN UNITED STATES DRILLING, INC., Defendant.
ORDER
PHILIP
A. BRIMMER UNITED STATES DISTRICT JUDGE.
This
matter comes before the Court on Plaintiff's First
Amended Unopposed Motion for Approval of FLSA Settlement and
Stipulation of Dismissal of Lawsuit With Prejudice [Docket
No. 42]. Plaintiff renews his request that the Court approve
the parties' settlement of plaintiff's claims under
the Fair Labor Standards Act (“FLSA”), 29 U.S.C.
§ 201 et seq. The Court has jurisdiction
pursuant to 28 U.S.C. § 1331.
I.
BACKGROUND
On
September 30, 2015, plaintiff filed his complaint,
individually and on behalf of all others similarly situated,
alleging that defendant violated the FLSA. Docket No. 1.
Plaintiff was employed by defendant and worked in an oilfield
as an hourly employee. Id. at 2, ¶ 7. Plaintiff
and other employees received bonuses as a component of their
compensation including “Safety Bonuses and/or
Performance Bonuses.” Id., ¶ 8. Plaintiff
alleges that defendant excluded these bonuses from
calculations of plaintiff's and other employees'
regular rate of pay, and therefore failed to pay plaintiff
and the putative class members overtime at the rate required
by the FLSA. Id. at 2-3, ¶
9.[1]
On
February 15, 2017, plaintiff filed an unopposed motion for
court approval of the parties' settlement agreement and
dismissal of the lawsuit with prejudice. Docket No. 33. This
Court denied the motion without prejudice on August 24, 2017,
noting several deficiencies in plaintiff's motion and the
proposed settlement agreement. Docket No. 39. Plaintiff filed
an amended motion and revised proposed settlement agreement
on January 26, 2018. Docket Nos. 42, 42-1.
II.
LEGAL STANDARD
The
FLSA allows an employee or employees to bring a collective
action “[on] behalf of himself or themselves and other
employees similarly situated.” 29 U.S.C. § 216(b).
To determine whether plaintiffs are “similarly
situated” for purposes of FLSA collective action
certification, courts apply a two-stage approach.
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. 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)).
Collective
actions differ from Fed.R.Civ.P. 23 class actions in several
important respects. See generally Oldershaw v. DaVita
Healthcare Partners, Inc., 255 F.Supp.3d 1110, 1112-16
(D. Colo. 2017) (discussing differences between FLSA
collective actions and class actions). Significantly,
“an FLSA lawsuit does not become a collective action
unless other plaintiffs affirmatively opt into the
class” by filing a written notice of consent.
Shepheard v. Aramark Uniform & Career Apparel,
LLC, 2016 WL 5817074, at *1 (D. Kan. Oct. 5, 2016)
(quoting Cameron-Grant v. Maxim Healthcare Serv.,
Inc., 347 F.3d 1240, 1249 (11th Cir. 2003)); compare
Oldershaw, 255 F.Supp.3d at 1115 (noting that “all
potential plaintiffs who fall within the description of a
Rule 23 class are presumed to be members of the
‘plaintiff class' unless they
‘opt-out'”). However, even after additional
plaintiffs have opted in to an FLSA action, the
“plaintiff class” does not constitute a distinct
legal entity “whose interests . . . are represented by
‘class counsel' and the named plaintiff(s).”
Id. at 1115 (describing effect of Rule 23 class
certification). Instead, “every plaintiff, original or
‘opt-in', is free to pursue his or her individual
claim.” Id.
III.
ANALYSIS
Plaintiff
requests that the Court certify this lawsuit as a collective
action and approve the parties' proposed settlement on
behalf of plaintiff Matthew Prim and a putative class of
hourly oilfield employees of Ensign who received certain
“Contested Bonuses.” Docket No. 42 at 7; see
also Docket No. 42-1 at 3, 5. However, plaintiff never
moved for conditional certification of the collective action
and does not now cite any authority allowing parties in FLSA
collective actions to bypass the typical two-step
certification procedure. Indeed, many courts have rejected
motions for final settlement approval where putative class
members were not given notice and an opportunity to opt in to
the lawsuit before the motion was filed. See, e.g.,
Shepheard, 2016 WL 5817074, at *2-3 (denying motion
for settlement approval filed before putative collective
action members had received notice of the lawsuit and an
opportunity to opt in and directing parties to file a motion
seeking preliminary approval of their proposed settlement);
Copeland-Stewart v. New York Life Ins. Co., 2016 WL
231237, at *2, *4 (M.D. Fla. Jan. 19, 2016) (denying motion
for collective action certification and final approval of
proposed settlement where named plaintiff had “no
authority yet to settle the future opt-in plaintiffs'
claims”); Cerrato v. Alliance Material Handling,
Inc., 2014 WL 1779823, at *2 (D. Md. Apr. 30, 2014)
(directing parties to “amend and re-file their motion
requesting conditional certification of the collective class
and facilitation of notice of the proposed settlement”
where no members of the putative class had received notice or
an opportunity to opt in to the lawsuit); Perez v. Avatar
Props., Inc., 2008 WL 4853642, at *4 (M.D. Fla. Nov. 6,
2008) (finding that the parties had “put the proverbial
cart before the horse in settling all claims, before the
representative plaintiff ha[d] any indication as to exactly
what those claims [were] and how many others he [would]
actually represent”). The rationale underlying these
decisions is twofold: first, “[i]n the absence of any
other plaintiffs opting-in, a named plaintiff's suit
becomes moot when his individual claim is satisfied, ”
Cerrato, 2014 WL 1779823, at *1 (citing Genesis
Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 1529
(2013)); second, a named plaintiff is not authorized to
settle claims on behalf of putative class members who have
not yet opted in to the lawsuit, see Perez, 2008 WL
4853642, at *3. The Court finds the reasoning in these cases
persuasive. As the court explained in Perez,
[a]pproving a global settlement with just the involvement of
one plaintiff and then giving notice and an
opportunity to opt in to an already settled matter, undercuts
[the] critical distinction [between Rule 23 class actions and
FLSA collective actions] and the reasons justifying the
distinction in the first place. Simply put: because Plaintiff
has no independent right to represent others that have yet to
appear, Plaintiff has no authority to settle their as yet
unasserted claims.
2008 WL 4853642, at *3.[2]
Moreover,
plaintiff's failure to provide putative class members
with notice and an opportunity to opt in to the lawsuit
before seeking final approval of the parties' proposed
settlement undermines the Court's ability to evaluate the
appropriateness of final certification, the fairness of the
settlement agreement, and the reasonableness of the fee award
agreed upon by the parties. See, e.g.,
Copeland-Stewart, 2016 WL 231237, at *2-3 (finding
that court could not determine the reasonableness of the
proposed settlement and requested fee award where the number
of plaintiffs who would opt in to the lawsuit was unclear).
For example, without knowing the size of the settlement
class, the Court cannot assess the reasonableness of the
requested fee award. The parties' settlement agreement
provides that any unclaimed portion of the common fund will
revert back to defendant. Docket No. 42-1 at 10, ¶¶
20-21. If the unclaimed portion is large, the total actual
recovery of the plaintiff class will be significantly lower
than the projected net settlement amount, potentially
rendering a $285, 250.00 fee award unreasonable. See
Copeland-Stewart, 2016 WL 231237, at *3 (finding request
for attorney's fees premature where the size of the
collective class was unknown and the settlement agreement
allowed a portion of the settlement amount to revert back to
defendant if not every putative class member joined the
settlement); McCaffrey v. Mortg. Sources, Corp.,
2011 WL 32436, at *5 (D. Kan. Jan. 5, 2011) (finding that
court could not “determine a reasonable attorney's
fee based on a percentage of the common fund until after the
time for reversion ha[d] expired”); Peterson v.
Mortg. Sources, Corp., 2011 WL 3793963, at *13 (D. Kan.
Aug. 25, 2011) (providing that plaintiff could re-file motion
for attorney's fees “[a]fter all class members . .
. had an opportunity to opt in the settlement” and the
“amount of money actually distributed to class
members” was known). Allowing putative class members an
opportunity to opt in to the lawsuit before final collective
action certification will also facilitate the Court's
second-stage certification analysis, which “utiliz[es]
a stricter standard” involving more individualized
consideration of plaintiffs' claims. Thiessen,
267 F.3d at 1102-03.
For the
foregoing reasons, the Court will not approve the proposed
settlement agreement at this time. If the parties wish to
proceed with the settlement, plaintiff should file a motion
seeking (1) conditional certification of the proposed
settlement class, (2) preliminary approval of the proposed
settlement, and (3) approval of notice to the putative class
members. See Shepheard, 2016 WL 5817074, at *3
(outlining proper procedure for obtaining settlement
approval). After the expiration ...