United States District Court, D. Colorado
COURTNEY LEE, on behalf of herself and all others similarly situated, Plaintiff,
BEST BUDZ LLC, a Colorado limited liability company, and TYSON RINGSTROM, an individual, Defendants.
Kathleen M Tafoya, United States Magistrate Judge.
matter is before the court on the parties' “Joint
Motion to Approve Settlement Agreement and Dismiss Action
with Prejudice.” ([“Motion”], Doc. No. 17.)
in an FLSA action, if settlement approval is required, the
court must “review the proposed settlement to ensure
(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.” Davis v.
Crilly, 292 F.Supp.3d 1167, 1170 (D. Colo. 2018) (citing
Lynn's Food Stores, Inc. v. United States, 679
F.2d 1350, 1354 (11th Cir. 1982)).
District, however, the law with respect to requiring court
approval of FLSA actions is somewhat in flux. Indeed, as the
parties correctly observe, several recent opinions have held
that, absent special circumstances, FLSA settlements do not
require court approval. See, e.g., Fails v. Pathway
Leasing LLC, No. 18-cv-00308, 2018 WL 6046428, at *4 (D.
Colo. Nov. 19, 2018); Ruiz v. Act Fast Delivery of Colo.,
Inc., No. 14-cv-00870-MSK-NYW, ECF No. 132 (D. Colo.
Jan. 9, 2017)). In Ruiz, Chief Judge Krieger,
reasoning that “nothing in the text of the FLSA
expressly requires court review and approval of settlements,
” joined with other courts which have held “that
an FLSA claim that is genuinely disputed by the employer may
be compromised via a private settlement between the parties,
and  such settlement will be legally effective regardless
of whether [the settlement is] submitted to or approved by
the trial court.” Ruiz, No.
14-cv-00870-MSK-NYW, ECF No. 132 at 2, 6 (citing Martin
v. Spring Break '83 Prod., LLC, 688 F.3d 247, 255
(5th Cir. 2012)); see also Oldershaw v. DaVita Healthcare
Partners, Inc., 255 F.Supp.3d 1110, 1116 (D. Colo. 2017)
(explaining that, in light of the “increased autonomy
that plaintiffs in [an FLSA] ‘collective action'
have, ” courts “have begun to question whether
settlements of ‘collective action' claims should
require court approval, or whether they should be treated as
would a settlement in any other action with multiple
plaintiffs”); Martinez v. Bohls Bearing Equip.
Co., 361 F.Supp.2d 608 (W.D. Tex. 2005) (holding that,
in some circumstances, private settlements of FLSA rights are
enforceable without judicial review).
Fails, District Judge Arguello held that if
“it does not appear that there is a defect in either
the settlement agreement itself or in the settlement process
that would require an inquiry as to whether the dispute is
bona fide, ” the parties “need only advise the
Court that all claims have been resolved and that they desire
to dismiss the case or close it.” Fails, 2018
WL 6046428, at *4. However, earlier that same year, in
Davis, Judge Arguello held that court approval of
FLSA settlements is mandatory, because it “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.'” Davis,
292 F.Supp.3d at 1170 (quoting Brooklyn Sav. Bank v.
O'Neil, 324 U.S. 697, 706 (1945)).
involved employees of Sanjel USA Inc., all of whom worked as
manual laborers at oil and gas wells across the United
States. Id. at 1171. The employees in Davis
were divided into two separate groups: (1) those who were
paid under the same fluctuating workweek scheme that included
overtime compensation; and (2) those who were paid hourly
with overtime, but who alleged that their regular rate of pay
was improperly calculated, and that they were required to
perform off-the-clock work. Id. Although at the time
of settlement, no collective had been conditionally
certified, 178 plaintiffs opted into the action and consented
to the three named Plaintiffs representing their interests in
the proceeding. Id. at 1170.
Fails, by contrast, the two plaintiffs entered into
a contract with one defendant, Cargill, to transport freight
to Cargill's customers, using motor vehicles leased from
a second defendant, Pathway. Fails, 2018 WL 6046428,
at *1. The Fails plaintiffs alleged that their
collective group was “subjected to improper deductions
by Pathway, which caused the Net Settlement Payment
ultimately remitted to them by Pathway to amount to less than
the applicable minimum wage, in violation of the
[FLSA].” Id. The proposed collective was
composed of “individuals who entered into an agreement
with Cargill to transport freight by motor vehicle with a
vehicle leased from Pathway and who executed a Payment
Authorization to Pathway, ” and the settlement
agreement was said to “affect only the claims of those
Plaintiffs who elect to file a valid Claim Form in order to
receive their share of the Settlement, not those who choose
not to participate for whatever reason.” Id.
Ruiz, a hybrid action involving seventy-three
employees, the plaintiffs litigated their FLSA claims as a
collective action, pursuant to 29 U.S.C. § 216(b), and
their Colorado Wage Claim Act claims as a putative class
action, pursuant to Federal Rule of Civil Procedure 23.
Ruiz, No. 14-cv-00870-MSK-NYW, ECF No. 132 at 1. The
plaintiffs later abandoned their claims under the Colorado
Wage Claim Act, and thereafter, proceeded to seek approval of
the settlement, as to their FLSA claims only. Id. at
1-2. Judge Krieger, in her analysis, summarized the types of
settlements that generally require court approval, as
In modern jurisprudence, only a narrow range of settlements
require court approval. Among them are settlements in Rule 23
class actions and settlements involving infants or
incompetent persons. In such circumstances, judicial review
of compromises is necessary because the parties affected -
the class members or the incompetent persons - are not
directly before the court nor have they necessarily
participated in the decision to settle.
Id. at 5. Ultimately, Judge Krieger held that court
approval of the settlement was not mandatory in that instant.
Id. at 7. In doing so, however, she left the
approval gate open for those cases exhibiting certain unusual
qualities, such as “when not all opt-in plaintiffs can
be contacted to obtain consent” to settle the case.
in Fails appears to reconcile Davis
(requiring court approval) with Ruiz (not requiring
court approval). Judge Arguello, writing in Fails,
addressed the holding in Ruiz, stating, in relevant
Where, for example, not all opt-in plaintiffs can be
contacted to obtain consent to a settlement agreement or
where a party alleges that an agreement does not actually
pertain to a bona fide dispute-which is to say that there is
evidence of malfeasance or overreaching in obtaining a
settlement agreement-this Court will scrutinize the purported
Fails, 2018 WL 6046428, at *3. Davis,
obviously, would fall into the first category, given that
direct contact with 173 manual laborers working in oil and
gas fields in diverse locations might well have been
unattainable. See Davis, 292 F.Supp.3d at 1171.
other court in this District have not come out the same way.
See, e.g., Thompson v. Qwest Corp., No.
17-CV-1745-WJM-KMT, 2018 WL 2183988, at *2 (D. Colo. May 11,
2018) (holding that an FLSA settlement required court
approval, where all putative class members had not yet been
brought before the court, and no conditional certification
had been entered); Teague v. Acxiom Corp., No.
18-cv-01743-NYW, 2018 WL 3772865, at *1 (D. Colo. Aug. 9,
2018), and Manohar v. Sugar Food LLC, No.
16-cv-02454-NYW, 2017 WL 3173451, at *2 (D. Colo. July 26,
2017) (acknowledging R ...