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Burns v. EGS Financial Care, Inc.

United States District Court, W.D. Missouri, St. Joseph Division

September 19, 2016

LANCE BURNS, et al Plaintiffs,
v.
EGS FINANCIAL CARE, INC., Defendant.

          ORDER APPROVING FLSA SETTLEMENT

          GREG KAYS, UNITED STATES DISTRICT COURT CHIEF JUDGE.

         This case arises out of plaintiffs' employment as telephone-dedicated customer service representatives for Defendant EGS Financial Care, Inc. (“EGS”). Plaintiffs allege that EGS violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219, by failing to compensate them for overtime hours worked.

         Now before the Court is the parties' joint motion for approval of settlement (Doc. 51) and supplemental briefing to the joint motion to approve the FLSA settlement (Docs. 53, 55). For the following reasons, the motion is GRANTED. Plaintiffs' motion to certify class (Doc. 12) is DENIED AS MOOT.

         Background

         On December 15, 2015, Lance Burns, Cynthia Coons Annigan, Michael Rudesal, and Susan Keller (“Named Plaintiffs”) filed this FLSA collective action against EGS on behalf of themselves and all others similarly situated. The remaining 110 plaintiffs (“Unnamed Plaintiffs”) later joined this action by filing opt-in consent forms (Docs. 3-11, 25, 28, 29, 30, 34).[1] Before plaintiffs' motion for conditional certification of the class was ripe for review, the parties reached proposed settlements of the Named Plaintiffs' and Unnamed Plaintiffs' claims. There are two separate settlement agreements: one regarding the four Named Plaintiffs' claims (the “Named Plaintiff Settlement”) (Doc. 55), and another regarding the Unnamed Plaintiffs' claims (the “Unnamed Plaintiff Settlement”) (Doc. 55-1).

         Under the settlements, EGS will pay Named Plaintiffs and Unnamed Plaintiffs using the following formula: (12 minutes per day x 5 days x the average hourly rate per minute x the number of weeks worked between December 2012 and December 2015) - (paid time off (“PTO”) x 1.25). Additionally, each of the Named Plaintiffs will receive a $250 enhancement award in consideration for their role in the litigation. 30% of each individual's compensation will be set aside for attorneys' fees.[2] In return, the Named Plaintiffs and Unnamed Plaintiffs agree to dismiss their FLSA claims against EGS with prejudice, release EGS from future liability relating to employee compensation, and set aside 30% of each award for attorneys' fees. Both settlements also contain confidentiality clauses. Named Plaintiffs shall keep all non-public terms and conditions of the settlement, non-public facts regarding EGS's business operations, and the negotiations concerning the settlement confidential (Doc. 55 ¶ 10). Unnamed Plaintiffs shall keep all non-public terms and conditions of the settlement, the settlement amount, and non-public facts regarding EGS's business operations confidential (Doc. 55-1 ¶ 8).

         Standard

         An employee may compromise or waive an FLSA claim “if [the] employee brings suit directly against a private employer pursuant to § 216(b) of the statute, and the district court enters a stipulated judgment” on the settlement after scrutinizing the settlement for fairness. Copeland v. ABB, Inc., 521 F.3d 1010, 1014 (8th Cir. 2008) (noting that FLSA rights can only be compromised in a court action where the employee initiates the lawsuit against the employer); Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982). To approve an FLSA settlement under 29 U.S.C. § 216(b), 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 an award of reasonable attorneys' fees.” Grove v. ZW Tech, Inc., No. 11-2445-KHV, 2012 WL 4867226, at *3 (D. Kan. Oct. 15, 2012).

         Public policy favors settlements of FLSA claims. Lynn's Food Stores, 679 F.2d at 1354. In reviewing a proposed settlement, a court must not substitute “its own judgment as to optimal settlement terms for the judgments of the litigants and their counsel.” Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1148-49 (8th Cir. 1999) (affirming an order approving a proposed settlement in a class action case).

         Discussion

         The Court finds each Settlement satisfies all of the prerequisites for approval.

         A. The parties have shown a bona fide wage and hour dispute exists.

         To demonstrate a bona fide wage and hour dispute exists, the parties must provide the reviewing court with the following information:

(1) a description of the nature of the dispute (for example, a disagreement over coverage, exemption or computation of hours worked or rate of pay); (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 ...

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