Black et al v. DMNO, LLC et al, No. 2:2016cv02708 - Document 133 (E.D. La. 2018)
Court Description: AMENDED ORDER AND REASONS - IT IS ORDERED that the 131 Joint Motion to Approve Settlement is GRANTED and the Parties' settlement agreement is APPROVED. IT IS FURTHER ORDERED that Plaintiffs Mark Gandy; Ashley Newton; David Pierce-Feith; Austi n Lane; Patrice Jones; Erin Lawrence; Zachary Adams; Asaria Crittenden; Elizabeth Kuzmovich; Larry Hunt, Jr.; James Black; Barbara Stamatelatos; and Carlos Ayestas' claims against Defendants DMNO, LLC; Doron Moshe Rebi-Chia; Itai Ben Eli; and It amar Levy be and hereby are DISMISSED WITH PREJUDICE in accordance with the terms of the settlement agreement. Attorneys' fees and costs are paid in accordance with the contingency fee contract between Plaintiffs and attorneys. Signed by Judge Susie Morgan.(bwn)
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Black et al v. DMNO, LLC et al Doc. 133 U N ITED S TATES D ISTRICT COU RT EASTERN D ISTRICT OF LOU ISIAN A J AMES BLACK, ET AL., Plain tiffs CIVIL ACTION VERSU S N O. 16 -2 70 8 D MN O, LLC, ET AL., D e fe n d an ts SECTION : “E” AMEN D ED ORD ER AN D REASON S Before the Court is the Parties’ J oint Motion to Approve the Settlem ent and to Dism iss Plaintiffs Mark Gandy; Ashley Newton; David Pierce-Feith; Austin Lane; Patrice J ones; Erin Lawrence; Zachary Adams; Asaria Crittenden; Elizabeth Kuzmovich; Larry Hunt, J r.; J ames Black; Barbara Stam atelatos; and Carlos Ayestas’ claim s with prejudice. 1 For the reasons that follow, the m otion is GRAN TED . 2 BACKGROU N D Plaintiffs filed this collective action, individually and on behalf of all others sim ilarly situated, on March 31, 2016. 3 Plaintiffs allege Defendants DMNO, LLC; Doron Moshe RebiChia; Itai Ben Eli; and Itam ar Levy (collectively “Doris Metropolitan”) violated the Fair Labor Standards Act, 29 U.S.C. § 201 by, inter alia: (1) paying its servers $2.15 per hour instead of the national minimum wage of $ 7.25 per hour, claiming a tip credit, but requiring the servers to participate in a tip pool that included managers; 4 (2) failing to pay Plaintiffs one and one half times their hourly rate for the hours they work in excess of forty hours per 1 R. Doc. 191. The Court originally approved the parties’ proposed settlem ent on J uly 30 , 20 18. R. Doc. 132. In that order, the Court inadvertently om itted J am es Black and Barbara Stam atelatos. This am ended order addresses that om ission; no other chan ges have been m ade. 3 R. Doc. 1. The nam ed parties in the com plaint also included Shannon McSwain, whose claim s were settled on May 21, 20 18, R. Doc. 98, and J effery Blair, whose claim s were dism issed on May 3, 20 18 , R. Doc. 87. 4 R. Doc. 1 at I, IV. 2 1 Dockets.Justia.com week; 5 and (3) requiring Plaintiffs to attend m andatory Monday meetings, without paying Plaintiffs an hourly wage. 6 The Court certified the collective class on J une 1, 2018. 7 The class includes those “employed as a server or assistant server at Doris Metropolitan, paid less than $ 7.25 per hour in direct cash wages (e.g., you were paid $ 2.13/ hour), and you were required to tip out a portion of your tips to managers and/ or owners/ m anagers.”8 On J une 4– 5, 2018, the Court held a two-day bench trial. 9 During the trial, the parties reached a stipulation with respect to: (1) Defendants’ liability regarding paym ent for mandatory Monday meetings and to dam ages in the amount of $1,124.44; (2) Defendants’ liability regarding the overtime claim s and to dam ages in the amount of $ 443.45; and (3) with respect to the damage calculation only, the parties stipulated that, in the event the Court find Defendants liable, Defendants would be liable for “dam age amounts regarding the unpaid minimum wage claim s in the amount of $ 87,765.98 for a 2 year look back period and $85,451.31 for a 3 years look back period.”10 On J uly 20, 2018, following the trial, but before the Court’s ruling, the Parties jointly moved to approve the proposed settlem ent agreement and dismiss Plaintiffs’ remaining claims with prejudice. 11 STAN D ARD OF LAW The Court “m ust approve any settlem ent reached by the parties which resolves the 5 Id. Id. 7 R. Doc. 115. 8 Id. at 2. 9 R. Docs. 127, 128. 10 R. Doc. 126. 11 R. Doc. 131. 6 2 claim s in this action brought under [29 U.S.C. § 216(b)].”12 “In order to approve a settlem ent proposed by an em ployer and em ployees of a suit brought under the FLSA and enter a stipulated judgm ent, a court m ust determ ine that the settlem ent is a fair and reasonable resolution of a bona fide dispute over FLSA provisions.”13 The Court m ust scrutinize the proposed settlem ent agreem en t to verify that parties are not circum venting the “clear FLSA requirem ents” by entering into a settlem ent agreem ent. 14 When deciding whether to approve a proposed settlem ent, the Court m ust assess whether the proposed settlem ent is both (1) the product of a bona fide dispute over the FLSA’s provisions and (2) fair and reasonable. 15 AN ALYSIS I. The Settlem ent is the Product of a Bona Fide Dispute When deciding whether a bona fide dispute exists, the Court considers whether there is a “genuine dispute as to the Defen dant’s liability under the FLSA,”16 as “[w]ithout a bona fide dispute, n o settlem ent could be fair and reasonable.”17 This is particularly true in an “FLSA [action because its provisions] are m andatory, and not subject to negotiation and bargaining between em ployers and em ployees.”18 The Court finds a bona fide dispute exists between Plaintiffs and Defendants with regard to whether Defendants violated the FLSA. Num erous matters are currently in dispute, including whether Plaintiffs were properly paid regular and overtim e 12 Collins v. Sanderson Farm s, Inc., 568 F. Supp. 2d 714, 717 (E.D. La. 20 0 8 ). Id. at 719. 14 See id. 15 Dom ingue v. Sun Electric & Instrum entation, Inc., No. 0 9-682, 20 10 WL 168 8793, at *1 (E.D. La Apr. 26, 20 10 ). 16 Allen v. Entergy Operations, Inc., No. 11-1571, 20 16 WL 614687, at *1 (E.D. La. Feb. 11, 20 16). 17 Collins, 568 F. Supp. 2d at 719. 18 Allen, 20 16 WL 614687, at *1. 13 3 compensation, whether Defendants properly claim ed a tip credit, and whether Defendants maintained accurate employm ent and payroll records. During the trial of this m atter, the parties offered various witnesses and substantial evidence into the record in support of their respective positions. The Court finds this sufficient to conclude that, in this case, there was “both aggressive prosecution and strenuous defense” to prove a bona fide dispute. 19 II. The Settlem ent is Fair and Reasonable In determ in ing whether a negotiation is fair and reasonable under the FLSA, courts are guided by Reed v. General Motors Corporation, in which the Fifth Circuit enum erated factors to determ ine whether a settlem ent is fair in a class action under Rule 23 of the Federal Rules of Civil Procedure. 20 Courts, however, “adopt or vary these factors in their application in light of the special role of the Court in settlem ent of FLSA claim s.”21 There are six factors: (1) the existence of fraud or collusion behind the settlem ent; (2) the com plexity, expen se, and likely duration of the litigation; (3) the stage of the proceedings and the am ount of discovery com pleted; (4) the probability of the plaintiffs’ success on the m erits; (5) the range of possible recovery; and (6) the opinions of class counsel, class representatives, and absent class m em bers. 22 A. Application of the Factors 1. The existence of fraud or collusion behind the settlem ent With respect to the “fraud or collusion” factor, there are several presum ptions that guide a court’s determ ination of whether a settlem ent is fair and reasonable. “[T]here is a 19 See Atkins v. W orley Catastrophe Response, LLC, No. 12-240 1, 20 14 WL 145638 2, at *2 (E.D. La. Apr. 14, 20 14). 20 Allen, 20 16 WL 614687, at *2; Reed v. Gen . Motors Corp., 70 3 F.2d 170 , 172 (5th Cir. 1983); see also Collins, 568 F. Supp. 2d at 722 (noting “Rule 23 does not control FLSA collective actions, [but] m any courts have adopted m any of Rule 23’s procedures” given the court’s discretion under §216(b)). 21 Collins, 568 F. Supp. 2d at 722. 22 Id. (citing Cam p v . Progressive Corp., No. 0 1-2680 , 20 0 4 WL 21490 79 (E.D. La. Sept. 23, 20 0 4)). 4 strong presum ption in favor of finding a settlem ent fair,”23 and, absent evidence to the contrary, there is a presum ption that no fraud or collusion occurred between counsel. 24 In light of these presum ptions, however, “it is clear that the court should not give rubberstam p approval.”25 The Court has found no indication of fraud or collusion. The Parties have engaged in discovery, m otions practice, and negotiations to resolve this m atter. The case proceeded to trial, where both sides presented witnesses and evidence. This factor indicates the settlem ent is fair an d reasonable. 2. The com plexity , expense, and likely duration of the litigation The instant case has been pending for more than two years. Although the discovery period concluded on March 27, 2018, 26 and the Court heard evidence at a two-day bench trial on which the Court has not yet ruled, 27 there remain numerous unresolved issues. For example, the Court has not yet issued its findings of fact and conclusions of law with respect to whether Doris Metropolitan’s practice of including managers in the tip pool violates the FLSA, and, if so, whether that violation was willful. The Court finds that the unresolved issues and the complexity of the litigation indicate the settlement is fair and reasonable. 3. The stage of the proceedings and the am ount of discovery com pleted A court will consider how m uch form al discovery has been com pleted for two reasons: (1) “extensive discovery [by the parties indicates] a good understanding of the strengths and weaknesses of their respective cases and hence that the settlem ent’s value is based upon such adequate inform ation,” and (2) “full discovery dem onstrates that the parties have litigated the case in an adversarial m anner an d . . . therefore . . . settlem ent 23 Dom ingue, 20 10 WL 168 8 793, at *1 (internal quotations om itted). Akins, 20 14 WL 1456382, at *2. 25 Id. (quotin g 4 N EWBERG ON CLASS ACTIONS §11.41 (4th ed.)). 26 R. Doc. 65. 27 R. Docs. 119, 121, 127, 128. 24 5 is not collusive but arm s-length.”28 The lack of m uch form al discovery is not necessarily fatal, however, and a court m ay look to inform al avenues of gathering inform ation or m ay approve a settlem ent with no form al discovery conducted. 29 In this case, the Parties have engaged in both pre-certification discovery as well as extensive “m erits” discovery for the last two years. The parties have exchanged thousan ds of pages of docum ents and undergone two rigorous settlem ent conferences. 30 The case proceeded to trial, 31 and the parties reached a settlem ent only after eviden ce had been presented. 32 The Court, therefore, finds the Parties have litigated the case in an adversarial m anner and are sufficiently fam iliar with the facts of this case to reach a fair settlem ent. This factor weighs in favor of finding the settlem ent fair and reasonable. 4. The probability of Plaintiffs’ success on the m erits It is uncertain at this point whether and the extent to which Plaintiffs would be successful. The Parties have reviewed and analyzed the defenses asserted by Defendants. Although the Parties do not agree about all inferences that might be properly drawn from the undisputed facts, they submit they are confident that continued litigation of Plaintiffs’ claims would not produce results more economically beneficial than this stipulated compromise settlement. 33 The Parties have taken into account the uncertain outcom e and the risk of continued litigation, as well as the difficulties and delays inherent in such litigation and the likelihood of protracted appellate review. The Court finds that given the 28 N EWBERG ON CLASS ACTIONS § 13:50 (5th ed.) See id.; In re Chicken Antitrust Litig. Am . Poultry , 669 F.2d 228 , 241 (5th Cir. 1982) (explainin g that form al discovery is not “a necessary ticket to the bargain ing table” where the parties and the court are adequately inform ed to determ in e the fairness of the settlem ent) (citing In re Corrugated Container Antitrust Litigation, 643 F.2d 195, 211 (5th Cir. 1981)). 30 R. Docs. 45, 8 2. 31 R. Docs. 119, 121, 127, 128. 32 R. Doc. 131. 33 See R. Doc. 131-1 at 5– 6. 29 6 unresolved disputes between the parties and the stage at which this litigation rem ains, it is unclear whether and to what extent Plaintiffs would be meritorious. This factor indicates the settlement is fair and reasonable. 5. The range of possible recovery The settlem ent am ounts for Plaintiffs are based on a negotiated num ber of hours Plaintiffs allegedly worked but for which they were not paid overtim e and the com pensation due to them for allegedly being forced to participate in a tip pooling system that violated the FLSA. 34 Under the proposed settlem ent, Plaintiffs will be com pensated for half of their claim ed m inim um wage/ tip credit and/ or overtim e claim and an am ount equal to liquidated dam ages on that am ount. 35 A portion of the settlem ent am ount due to Plaintiffs is designated as wages and subject to applicable incom e and payroll taxes and withholding. 36 The rem aining portion is designated as dam ages and not subject to an y taxes or withholdings. 37 The Court finds that all of the agreed-upon am ounts are within a range of possible recovery for the Plaintiffs, indicating the settlem ent is fair and reasonable. 38 6. The opinions of class counsel, class representatives, and absent class m em bers The only parties to the settlem ent are Plaintiffs Mark Gandy; Ashley Newton; David Pierce-Feith; Austin Lane; Patrice J ones; Erin Lawrence; Zachary Adam s; Asaria Crittenden; Elizabeth Kuzmovich; Larry Hunt, J r.; and Carlos Ayestas and Defendants DMNO, LLC; Doron Moshe Rebi-Chia; Itai Ben Eli; and Itam ar Levy. There are no “absent class m em bers,” as no other servers or server assistants consented to join the collective 34 Id. at 4– 5. Id. at 5. 36 Id. 37 Id. 38 See Collins, 568 F. Supp. 2d at 726– 27. 35 7 action on or before J uly 31, 20 17, the date on which the opt-in period for the class expired. 39 Both parties are represented by counsel. 40 The Parties jointly seek judicial approval of a settlem en t agreem ent that addresses a bona fide dispute and was negotiated in good faith. The Court finds the final factor indicates the settlem ent is fair and reasonable. B. Conclusion All six of the factors indicate the proposed settlem ent is fair and reasonable. As a result, the Court finds the proposed settlem ent agreem ent is fair and reasonable. Accordingly; CON CLU SION IT IS ORD ERED that the J oint Motion to Approve Settlem ent is GRAN TED and the Parties’ settlem ent agreem ent is APPROVED . 41 IT IS FU RTH ER ORD ERED that Plaintiffs Mark Gandy; Ashley Newton; David Pierce-Feith; Austin Lane; Patrice J ones; Erin Lawrence; Zachary Adam s; Asaria Crittenden; Elizabeth Kuzmovich; Larry Hunt, J r.; J am es Black; Barbara Stamatelatos; and Carlos Ayestas’ claim s against Defendants DMNO, LLC; Doron Moshe Rebi-Chia; Itai Ben Eli; an d Itam ar Levy be and hereby are D ISMISSED W ITH PREJU D ICE in accordance with the term s of the settlem ent agreem ent. Attorneys’ fees and costs are paid 39 R. Doc. 35; see LaChapelle v. Ow ens-Illinois, Inc., 513 F.2d 286, 288 (5th Cir. 1975) (“Under [29 U.S.C. § 216(b)], . . . no person can becom e a party plaintiff and no person will be bound by or m ay ben efit from judgm ent unless he has affirm atively ‘opted into’ the class; that is, given his written, filed consent.”); Brow n v. United Furniture Industries, Inc., No. 13-246, 20 15 WL 1457265, at *5 (N.D. Miss. Mar. 30 , 20 15) (“[I]n an FLSA collective action, there are no absent class m em bers; only those who have opted in are considered parties to the suit and bound by the results of the action.”). The Court dism issed Plaintiff J effrey Blair on May 3, 20 18, R. Doc. 87; attorneys Laura Catlett and J essica Vasquez, who represent Plaintiffs, withdrew as counsel for Blair on May 24, 20 18 , R. Doc. 10 2. 40 “‘The Court is entitled to rely on the judgm ent of experienced counsel in its evaluation of the m erits of a class action settlem ent.’” Lackey v. SDT W aste & Debris Servs., LLC, No. 11-10 87, 20 14 WL 480 9535, at *2 (E.D. La. Sept. 26, 20 14) (quoting Collins, 568 F. Supp. 2d at 727). 41 R. Doc. 131. 8 in accordance with the contingency fee contract between Plaintiffs and attorneys. N e w Orle a n s , Lo u is ian a, th is 2 7th d ay o f Au gu s t, 2 0 18 . _______ _ __ _______ __ _______ SU SIE MORGAN U N ITED S TATES D ISTRICT J U D GE 9
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