MAC R. McCOY, Magistrate Judge.
Pending before the Court is the Joint Motion for Approval of Settlement Agreement, Settlement Agreement, and Acknowledgment and General Release, filed on January 25, 2019. (Doc. 105; Doc. 105-1). Additionally, the parties filed a Joint Supplemental Memorandum on February 19, 2019. (Doc. 114). Plaintiff Ethan Holmes and Opt-In Plaintiffs Brandon Buchanon, James Gant, Giovanni Rodriguez, Jalen Edwards, Kalyn Lady, and Kevin Kilmartin, and Defendants Swissport Fueling, Inc. and Swissport SA Fuel Services, LLC request that the Court approve the parties' proposed settlement of the Fair Labor Standards Act ("FLSA") claims in this litigation.
Upon consideration of the parties' submissions, the Undersigned recommends that the Court enter an order: (1) granting the motion to approve the proposed settlement and approve the settlement; (2) dismissing this action with prejudice as to Plaintiff Ethan Holmes and Opt-In Plaintiffs Brandon Buchanon, James Gant, Giovanni Rodriguez, Kalyn Lady, Kevin Kilmartin, and Jalen Edwards; (2) dismissing this action without prejudice as to Opt-In Plaintiffs Carlos Diaz, Bradley Alderson, Richard Hagerty, and Francisco Ortiz; and (3) directing the Clerk of Court to enter final judgment, terminate all pending motions, and close the file.
To approve the settlement of a FLSA claim, the Court must determine whether the settlement is a "fair and reasonable resolution of a bona fide dispute" of the claims raised pursuant to the Fair Labor Standards Act ("FLSA"). Lynn's Food Store, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982); 29 U.S.C. § 216. There are two ways for a claim under the FLSA to be settled or compromised. Id. at 1352-53. The first is under 29 U.S.C. § 216(c), providing for the Secretary of Labor to supervise the payments of unpaid wages owed to employees. Id. at 1353. The second is under 29 U.S.C. § 216(b) when an action is brought by employees against their employer to recover back wages. Id. When the employees file suit, the proposed settlement must be presented to the district court for the district court's review and determination that the settlement is fair and reasonable. Id. at 1353-54.
The Eleventh Circuit has found settlements to be permissible when the lawsuit is brought by employees under the FLSA for back wages. Id. at 1354. The Eleventh Circuit has held that:
Id. at 1354.
A brief procedural history is instructive. On May 17, 2017, Plaintiff, on behalf of himself and those similarly situated, filed a First Amended Complaint, bringing a collective action alleging wage violations under the FLSA. (Doc. 60 at 1). The following Opt-In Plaintiffs filed Notices of Consent to Join: Bradley Alderson, (Doc. 28); Brandon Buchanon, (Doc. 29); Carlos Diaz, (Doc. 30); James Gant, (Doc. 31); Giovanni Rodriguez, (Doc. 39); and Kalyn Lady, (Doc. 48).
On September 19, 2017, the presiding District Judge entered an Opinion and Order conditionally certifying a class defined as follows:
(Doc. 73 at 2). On December 20, 2017, the presiding District Judge approved the language for a Notice of Lawsuit and Consent to Become Opt-In Plaintiff Pursuant to 29 U.S.C. § 216(b). (Doc. 80 at 2). On January 12, 2018, the Undersigned authorized, inter alia, Plaintiff to send the approved Notice to the putative class members. (Doc. 84 at 2-3). Subsequent to the Notice being sent, the following Opt-In Plaintiffs filed Notices of Consent to Join: Jalen Edwards, (Doc. 86); Richard Hagerty, (Doc. 87); Francisco Ortiz, (Doc. 88); and Kevin Kilmartin, (Doc. 89).
In addition, three Opt-In Plaintiffs withdrew their consents to join this action: Bradley Alderson, (Doc. 90; Doc. 91); Carlos Diaz, (Doc. 92); and Richard Hagerty, (Doc. 104). Each of these withdrawing Opt-In Plaintiffs signed Declarations that included the following language: "My attorneys have advised me that withdrawal of my consent will result in the dismissal of all of my claims in this lawsuit." (Doc. 92 at 3 ¶ 7; Doc. 91 at 1 ¶ 7; Doc. 104 at 3 ¶ 8).
On January 25, 2019, the parties filed the instant Joint Motion for Approval of Settlement Agreement. (Doc. 105). After careful review of the parties submission, the Court entered a February 8, 2019 Order, requiring the parties to supplement their Joint Motion as to three (3) aspects of the proposed Settlement Agreement. The Court required clarification and further explanation on the three (3) Opt-In Plaintiffs who withdrew their consent, on the lack of consideration for the proposed No Re-Employment provision, and on the lack of direction for the settlement amounts as to the Opt-In Plaintiffs who are included in the Settlement Agreement but failed to execute the Settlement Agreement. (Doc. 106 at 2). In addition, on February 8, 2019, the Court entered Orders to Show Cause as to why Opt-In Plaintiffs Kalyn Lady, Francisco Ortiz, and James Gant should not be dismissed for failure to prosecute. (Doc. 107 at 1-3; Doc. 108 at 103; and Doc. 109 at 103).
Plaintiff responded by filing an executed Settlement Agreement and an executed Acknowledge and General Release for Opt-In Plaintiffs James Gant and Kalyn Lady. (Doc. 112; Doc. 113). In addition, Plaintiff filed a Joint Supplemental Memorandum on February 19, 2019, addressing the issues raised in the February 8, 2019 Order. (Doc. 114).
Before addressing the substantive issues relating to the Settlement Agreement and Acknowledgment and General Release (see generally Doc. 105-1), the Court addresses preliminary matters that relate to the conditional certification and to the disposition of certain Opt-In Plaintiffs.
As stated above, on September 19, 2017, the presiding District Judge entered an Opinion and Order conditionally certifying a class. (Doc. 73). Thus, the class was only conditionally certified as a collective action and the Court has not reached a final determination as to whether this case would proceed as a certified collective action or whether the class would be decertified. In the Joint Motion, the parties address the issue of the status of the conditionally certified class. (Doc. 105 at 3). The parties assert that several Opt-In Plaintiffs filed notices of consent to join prior to Plaintiff filing the Motion for Conditional Certification. (Id. at 3). After conditional certification of the collective action, Plaintiff sent Notices and the remaining Opt-In Plaintiffs joined the action. (Id.).
In FLSA collective actions, the Eleventh Circuit has adopted a two-tiered approach to determine whether a collective action should be certified under § 216(b). Hipp v. Liberty Nat. Life Ins. Co., 252 F.3d 1208, 1218 (11th Cir. 2001). The first stage is the notice stage where in cases — such as the instant case — a court conditionally certifies the class and the class members are given notice and the opportunity to opt-in. Id. The second stage is generally precipitated by a motion for decertification that is filed after discovery is largely completed and the matter is ready for trial. Id.
In this case, the Notice was sent to putative class members. (Doc. 85). Thus, all eligible employees received notice and the opportunity to opt-in if they chose and were qualified. Only after notice was sent and the time to respond lapsed, did the parties enter into the proposed settlement. (Id.). Additionally, all of the individuals who chose to opt-in or join this lawsuit had the opportunity to consider the terms and conditions of the settlement of this action and had the opportunity to object to it. This is demonstrated by some of the Opt-In Plaintiffs choosing to withdraw their consent, (Doc. 90; Doc. 91; Doc. 92; Doc. 104), one Opt-In Plaintiff Francisco Ortiz choosing not to sign the Settlement Agreement and not to respond to the Order to Show Cause, (Doc. 108),
Opt-In Plaintiffs Carlos Diaz, Bradley Alderson, and Richard Hagerty filed consents to join and subsequently filed notices of withdrawal of these consents. (See Doc. 28; Doc. 30; Doc. 87; Doc. 90; Doc. 92; Doc. 104). In the Joint Motion for Approval of Settlement Agreement (Doc. 105), the parties did not address the disposition of these Opt-In Plaintiffs. Thus, in its February 8, 2019 Order, the Court raised a concern as to disposition of these parties. (Doc. 106 at 2). In the Joint Supplemental Memorandum, the parties addressed this concern. (Doc. 114 at 2). The parties stated that "[f]ormer Opt-In Plaintiffs Diaz, Alderson, and Hagerty, all filed Notices of Withdrawal [of] their respective Consents to Join the purported collective action." (Id.). The parties state that within each of the Notices of Withdraw is the language, "`withdrawal of [his]consent will result in the dismissal of all of [his] claims in the lawsuit.'" (Id.). Thus, the parties submit that these former Opt-In Plaintiffs' claims should be dismissed without prejudice. (Id.).
As the parties have pointed out, the withdrawing Opt-In Plaintiffs indeed signed Declarations that included the following language: "My attorneys have advised me that withdrawal of my consent will result in the dismissal of all of my claims in this lawsuit." (Doc. 92 at 3 ¶ 7; Doc. 91 at 1 ¶ 7; Doc. 104 at 3 ¶ 8). Based upon the Opt-In Plaintiffs' withdrawal and their signed acknowledgments of the procedural consequence of withdrawal, the Undersigned recommends that the claims of Opt-In Plaintiffs Carlos Diaz, Bradley Alderson, and Richard Hagerty be dismissed without prejudice.
Opt-In Plaintiff Francisco Ortiz did not execute the Settlement Agreement and did not withdraw his consent. Consequently, the Court entered an Order to Show Cause on February 8, 2019, requiring Mr. Ortiz to show good cause on or before February 22, 2019, why this action should not be dismissed against him due to his failure to prosecute. (Doc. 108 at 2).
The Court explained that pursuant to Local Rule 3.10, "[w]henever it appears that any case is not being diligently prosecuted the Court may, on motion of any party or on its own motion, enter an order to show cause why the case should not be dismissed, and if no satisfactory cause is shown, the case may be dismissed by the Court for want of prosecution." (Id. (citing M.D. Fla. R. 3.10)). The Court cautioned Mr. Ortiz that if he did not respond to the Order to Show Cause by February 22, 2019, the court would recommend that his claims in this case would be dismissed without prejudice for failure to prosecute. (Id.).
Mr. Ortiz failed to respond to the Order to Show Cause. Accordingly, the Undersigned recommends that Mr. Ortiz's claims be dismissed without prejudice for failure to prosecute.
In the Settlement Agreement, the parties allocated settlement funds to Opt-In Plaintiffs Richard Hagerty and Francisco Ortiz who did not execute the Settlement Agreement. (Doc. 105-1 at 3). The parties agree that any money allocated to any individual who did not execute the Settlement Agreement will remain with Defendant Swissport Fueling. Thus, the Undersigned finds and recommends that the money allocated in the proposed Settlement Agreement to Richard Hagerty and Francisco Ortiz remain with Swissport Fueling. Because the Undersigned also recommends that Richard Hagerty's claims and Francisco Ortiz's claims be dismissed without prejudice, these matters should not prevent the Court from approving the proposed settlement.
The Undersigned turns next to the substantive claims, defenses, and terms of the proposed settlement.
In the First Amended Complaint, Plaintiff claims that Defendants failed to compensate him and similarly situated employees for hours worked, including overtime hours. (Doc. 60 at 2). The parties agree that there are bona fide disputes as to whether Plaintiff and Opt-In Plaintiffs are entitled to overtime wages. (Doc. 105 at 4). Specifically, Defendants dispute whether Plaintiff and Opt-In Plaintiffs worked uncompensated overtime hours, the computation of uncompensated overtime hours, and if Defendants knew or should have known that Plaintiff and Opt-In Plaintiffs worked over forty (40) hours in a workweek. (Id.). Further, Defendant Swissport SA claims it did not employ Plaintiff and Opt-In Plaintiffs and Swissport Fueling claims that it paid Plaintiff and Opt-In Plaintiffs for all of the hours they worked. (Id.). Defendants further claim that if Plaintiffs worked over forty (40) hours per weeks, Defendants had a mechanism in place for Plaintiff and Opt-In Plaintiffs to report such hours. (Id.). Defendants also claim that Plaintiff and Opt-In Plaintiffs never availed themselves of this mechanism and, thus, Defendants neither knew or should have known that Plaintiff and Opt-In Plaintiffs worked these hours. (Id.).
Under the terms of the Settlement Agreement, Defendants agree to pay Plaintiff and Opt-In Plaintiffs as follows:
(Doc. 105-1 at 2-3). The parties state that the negotiated settlement is a reasonable compromise of the disputed issues. (Doc. 105 at 7). The Undersigned finds that based on the representations of the parties, these amounts are a fair and reasonable resolution of the claims in this action as to Plaintiff and these Opt-In Plaintiffs.
The Settlement Agreement contains a "No Re-Employment" provision that provides as follows:
(Doc. 105-1 at 4 ¶ 7). The Court raised concerns regarding the inclusion of this provision in its February 8, 2016 Order. (Doc. 106 at 3-4). The Lynn's Food Stores analysis necessitates a review of the proposed consideration as to each term and condition of the settlement. Shearer v. Estep Const., Inc., No. 6:14-CV-1658-ORL-41, 2015 WL 2402450, at *3 (M.D. Fla. May 20, 2015). A number of jurists in this District have expressed the view that non-cash concessions by an employee affect both the "fairness" and "full compensation" components of a settlement, and require their own fairness finding. See Jarvis v. City Elec. Supply Co., No. 6:11-cv-1590-Orl-22DAB, 2012 WL 933057, at *5 (M.D. Fla. Mar. 5, 2012), report and recommendation adopted, 2012 WL 933023 (M.D. Fla. Mar. 20, 2012).
In the Joint Supplemental Memorandum, the parties addressed this issue. (Doc. 114 at 2-3). The parties state that:
(Id. at 2).
This Court has held that "[n]o reemployment clauses are different from general releases, in that the plaintiffs, as former employees of the defendants, know exactly what they are relinquishing when they agree not to seek future employment with the defendants. There is no indication that the clause undermines the fairness of the Agreement, and it does not preclude approval of the Agreement." Rivera v. CO2Meter, No. 617-CV-156-ORL28GJK, 2018 WL 3213329, at *5 (M.D. Fla. June 14, 2018), report and recommendation adopted sub nom., Rivera v. CO2Meter, Inc., No. 617-CV-156-ORL28GJK, 2018 WL 3212455 (M.D. Fla. June 29, 2018) (citing Robertson v. Ther-RX Corp., No. 2:09-cv-1010-MHT (WO), 2011 WL 1810193, at *2 (M.D. Ala. May 12, 2011)); see also, Cruz v. Winter Garden Realty, LLC, No. 6:12-CV-1098-ORL-22, 2013 WL 4774617, at *3 (M.D. Fla. Sept. 4, 2013) ("Likewise, where a plaintiff indicates that she does not desire re-employment, the inclusion of a waiver of future employment does not render the settlement unfair.").
Here, Plaintiffs represent that they no longer wish to be employed by Defendants. (Doc. 114 at 2). Plus, Defendants state that they no longer run a fueling operation at the airport. (Id.). Thus, Plaintiffs know exactly what they are relinquishing by agreeing to a no re-employment provision. Accordingly, the Undersigned finds this provision does not render the settlement unfair or unreasonable.
In addition to executing the Settlement Agreement, Plaintiff and Opt-In Plaintiffs executed Acknowledgment and General Release forms. (See e.g., Doc. 105-1 at 26-27). These documents release Defendants from all claims that could arise from Plaintiff's and Opt-In Plaintiffs' employment under a multitude of statutes. (Id. at 27). As states above, the Lynn's Food Stores analysis necessitates a review of the proposed consideration as to each term and condition of the settlement, including foregone or released claims. Shearer v. Estep Const., Inc., No. 6:14-CV-1658-ORL-41, 2015 WL 2402450, at *3 (M.D. Fla. May 20, 2015). The valuation of unknown claims is a "fundamental impediment" to a fairness determination. Id.; see also Moreno v. Regions Bank, 729 F.Supp.2d 1346, 1350-52 (M.D. Fla. 2010). The Court typically "cannot determine, within any reasonable degree of certainty, the expected value of such claims." Id. Thus, the task of determining adequate consideration for forgone claims is "difficult if not impossible." Id. (citation omitted).
Additionally, this Court has found that general releases in FLSA cases are often unfair to plaintiffs. See Moreno, 729 F. Supp. 2d at 1351. Specifically, "[a]lthough inconsequential in the typical civil case (for which settlement requires no judicial review), an employer is not entitled to use an FLSA claim (a matter arising from the employer's failing to comply with the FLSA) to leverage a release from liability unconnected to the FLSA." Id. The Court has found that "a pervasive release in an FLSA settlement confers an uncompensated, unevaluated, and unfair benefit on the employer." Id. at 1352.
However, if a plaintiff receives additional and separate consideration unrelated to the value of a plaintiff's claim to enter into a general release, then the general release can be permissible. Pariente v. CLC Resorts & Developments, Inc., No. 6:14-CV-615-ORL, 2014 WL 6389756, at *5 (M.D. Fla. Nov. 14, 2014). Here, the parties included additional and separate consideration for Plaintiff and Opt-In Plaintiffs to enter into the Acknowledgment and General Release. (Doc. 105-1 at 2-3). The Undersigned finds that based on this additional consideration, the Settlement Agreement and Acknowledgement and General Release appear fair and reasonable.
Defendants agree to pay Plaintiff's and Opt-In Plaintiffs' attorney's fees and costs in the amount of $26,500.00.
Id.
In the instant case, the parties reached a settlement and agreed upon the amount of attorney's fees and costs without compromising the amount paid to Plaintiff and Opt-In Plaintiffs. (Doc. 105 at 7). Thus, the Undersigned finds that the amount of attorney's fees is reasonable.
The Undersigned finds that the Settlement Agreement and Acknowledgment and General Release (Docs. 105-1, 112, 113) appear reasonable on their face. Accordingly, the Undersigned recommends that the Joint Motion for Approval of Settlement Agreement (Doc. 105) be granted and the Settlement Agreement and Acknowledgement and General Release (Docs. 105-1, 112, 113) be approved.
Accordingly, it is
A party has fourteen days from this date to file written objections to the Report and Recommendation's factual findings and legal conclusions. A party's failure to file written objections waives that party's right to challenge on appeal any unobjected-to factual finding or legal conclusion the district judge adopts from the Report and Recommendation. See 11th Cir. R. 3-1.
