Johnson v. Pick 6 Tahoe LLC ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 KEVIN JOHNSON, No. 2:19-cv-2186 DB 12 Plaintiff, 13 v. ORDER 14 PICK 6 TAHOE LLC, 15 Defendant. 16 17 The parties have consented to Magistrate Judge jurisdiction over this action pursuant to 28 18 U.S.C. § 636(c)(1). (ECF No. 20.) Pending before the Court is the parties’ May 13, 2022 19 stipulation for approval of settlement. (ECF No. 39.) For the reasons stated below, the parties’ 20 stipulation is granted. 21 BACKGROUND 22 Plaintiff Kevin Johnson commenced this action through counsel on October 29, 2019, by 23 filing a complaint and paying the required filing fee.1 (ECF No. 1.) The complaint alleges 24 generally that while plaintiff was employed by defendant Pick 6 Tahoe LLC the defendant 25 violated provisions of the Fair Labor Standards Act, (“FLSA”), 29 U.S.C. § 201., et. seq., by 26 27 1 Although the complaint asserts that it is also brought “on behalf of similarly situated employees,” no other plaintiffs have joined in this action. 28 1 failing to pay proper wages. (Compl. (ECF No. 1) at 2-10.2) On May 13, 2022, the parties filed a 2 proposed stipulated settlement. (ECF No. 39.) The proposed settlement provides, generally, that 3 defendant will pay plaintiff 36 monthly installments for a total payment of $6,000 and provide 4 plaintiff a neutral reference. (Stip. Set. (ECF No. 39) at 5.) Moreover, if defendant defaults on 5 these payments defendant will be liable to plaintiff for enhancements resulting in a total to be 6 paid of $16,976.06. (Id.) 7 STANDARDS 8 “The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees 9 that cannot be modified by contract.” Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69 10 (2013). “FLSA rights cannot be abridged by contract or otherwise waived because this would 11 ‘nullify the purposes’ of the statute and thwart the legislative policies it was designed to 12 effectuate.” Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 740 (1981) 13 (quoiting Brooklyn Savings Bank v. O’Neil, 324 U.S. 697, 707 (1945)). Accordingly, “[a]n 14 employee’s claims under the FLSA is non-waivable, and thus may not be settled without 15 supervision of either the Secretary of Labor or a district court.” Yue Zhou v. Wang’s Restaurant, 16 No. C 05-0279 PVT, 2007 WL 2298046, at *1 (N.D. Cal. Aug. 8, 2007). 17 “[I]n this circuit, district courts have normally applied a widely-used standard adopted by 18 the Eleventh Circuit, looking to whether the settlement is a fair and reasonable resolution of a 19 bona fide dispute.” Beidleman v. City of Modesto, No. 1:16-cv-1100 DAD SKO, 2018 WL 20 1305713, at *2 (E.D. Cal. Mar. 13, 2018). Specifically, “[c]ourts often apply the Rule 23 factors 21 [applicable in class actions] in evaluating the fairness of an FLSA settlement, while recognizing 22 that some do not apply ‘because of the inherent differences between class actions and FLSA 23 actions.’” Khanna v. Inter-Con Security Systems, Inc., No. CIV S-2214 KJM GGH, 2013 WL 24 1193485, at *2 (E.D. Cal. Mar. 22, 2013) (quoting Almodova v. City and County of Honolulu, 25 Civil No. 07-00378 DAE-LEK, 2010 WL 1372298, at *4 (D. Haw. Mar. 31, 2010)). However, in 26 order to give “due weight to the policy purposes behind the FLSA . . . . many courts have adopted 27 2 Page number citations such as this one are to the page number reflected on the court’s CM/ECF 28 1 a totality of circumstances approach that emphasizes the context of the case and the unique 2 importance of the substantive labor rights involved.” Selk v. Pioneers Memorial Healthcare 3 District, 159 F.Supp.3d 1164, 1173 (S.D. Cal. 2016). Under this approach the court considers: 4 (1) the plaintiff’s range of possible recovery; (2) the stage of proceedings and amount of discovery completed; (3) the seriousness 5 of the litigation risks faced by the parties; (4) the scope of any release provision in the settlement agreement; (5) the experience and views 6 of counsel and the opinion of participating plaintiffs; and (6) the possibility of fraud or collusion. 7 8 Id. 9 ANALYSIS 10 I. Bona Fide Dispute 11 “A bona fide dispute exists when there are legitimate questions about ‘the existence and 12 extent of Defendant’s FLSA liability.’” Id. (quoting Ambrosino v. Home Depot. U.S.A., Inc., 13 No. 11cv1319 L(MDD), 2014 WL 1671489 (S.D. Cal. Apr. 28, 2014)). Here, the parties have 14 bona fide disputes regarding whether plaintiff engaged in “off-the-clock work,” as well as “the 15 number of incidents in which [plaintiff’s] paychecks bounced[.]” (Prop. Set. (ECF No. 39) at 7.) 16 While defendant admits that “at most only one paycheck bounced,” (id.), the parties nonetheless 17 have a dispute as to “the extent of defendant’s FLSA liability,” which satisfies the bona fide 18 dispute requirement. Biedleman, 2018 WL 1305713 at *3. 19 II. Fair and Reasonable 20 “After a district court is satisfied that a bona fide dispute exists, it must then determine 21 whether the settlement is fair and reasonable.” Selk, 159 F.Supp.3d at 1172. Having consider the 22 factors noted above, and as explained below, the court finds the parties’ proposed settlement is 23 fair and reasonable. 24 A. Plaintiff’s Range of Possible Recovery 25 According to the parties’ briefing plaintiff’s total recovery for all alleged violations of the 26 FLSA would amount to $6,228. (Stip. Set. (ECF No. 39) at 7.) However, if defendant’s assertion 27 that “at most only one paycheck bounced,” were found to be true plaintiff’s FLSA related 28 damages would amount to only $2,388. (Id.) Under the terms of the proposed settlement plaintiff 1 will receive $6,000—paid in 36 monthly installments—unless defendant defaults on those 2 payments in which case the total to be paid would be $16,976,06.3 (Id. at 5.) Under these 3 circumstances, the court finds this factor weighs in favor of finding the proposed settlement to be 4 fair and reasonable. See Glass v. UBS Fin. Serv., Inc., No. C-06-4068, 2007 WL 221862, at *4 5 (N.D. Cal. Jan. 26, 2007) (finding settlement in the range of 25 to 35% of claimed damages 6 appropriate). 7 B. Stage of the Proceedings 8 “A settlement that occurs in an advanced stage of the proceedings indicates the parties 9 carefully investigated the claims before reaching a resolution.” Ontiveros v. Zamora, 303 F.R.D. 10 356, 371 (E.D. Cal. 2014). Here, the time for discovery and dispositive motions have passed. All 11 that would remain in this action is trial. Accordingly, the court finds this factor weighs in favor 12 of the finding the proposed settlement to be fair and reasonable. 13 C. Seriousness of the Litigation Risk 14 “[I]t is the very uncertainty of outcome in litigation and avoidance of wasteful and 15 expensive litigation that induce consensual settlements.” Officers for Justice v. Civil Service 16 Com’n of City and Cnty. of San Francisco, 688 F.2d 615, 625 (9th Cir. 1982). There is no 17 “particular formula by which that outcome must be tested” as the “determination is ‘nothing more 18 than an amalgam of delicate balancing, gross approximations and rough justice.’” Rodriguez v. 19 West Publishing Corp., 563 F.3d 948, 965 (9th Cir. 2009) (quoting Officers for Justice, 688 F.2d 20 at 625)). 21 Here, as noted above, defendant contests many of the alleged FLSA violations. If that 22 defense were successful plaintiff would receive a significantly reduced award in comparison to 23 the proposed settlement. Even if the defense were entire unsuccessful plaintiff would be forced to 24 endure the risk and costs of trial. Instead, under the terms of the settlement plaintiff will 25 essentially be compensated for all alleged FLSA violations. Under these circumstances the Court 26 finds this factor weighs in favor of finding the proposed settlement to be fair and reasonable. 27 3 $16,976.06 represents the total damages plaintiff alleges entitlement to, including attorney’s fees 28 1 D. Scope of Release 2 Courts are “not inclined to approve a settlement of FLSA claims that includes a broad 3 release provision purporting to release claims unrelated to [the] litigation, absent a particularized 4 showing that such a broad release is . . . ‘fair and reasonable.’” Luo v. Zynga Inc., Case No. 13- 5 cv-0186 NC, 2014 WL 457742, at *3 (N.D. Cal. Jan. 31, 2014). In this regard, courts will not 6 generally approve a release provision that “does not appropriately track the extent and breadth of 7 Plaintiffs’ allegations in [the] case and releases unrelated claims of any kind or nature that class 8 members may have against defendants.” Bond. v. Ferguson Enterprises, Inc., No. 1:09-cv-1662 9 OWW MJS, 2011 WL 284962, at *7 (E.D. Cal. Jan. 25, 2011). Here, the proposed settlement 10 simply releases defendant from “liability other than to pay as agreed,” and only with respect to 11 plaintiff.4 Under these circumstances, the Court finds this factor does not weigh against finding 12 the proposed settlement to be fair and reasonable. 13 E. Experience and Views of Counsel 14 “The opinions of counsel should be given considerable weight both because of counsel’s 15 familiarity with this litigation and previous experience with cases.” Larsen v. Trader Joe’s 16 Company, Case No. 11-cv-5188 WHO, 2014 WL 3404531, at *5 (N.D. Cal. July 11, 2014). The 17 Court finds this factor weighs in favor of finding the proposed settlement to be fair and 18 reasonable. 19 F. Possibility of Fraud or Collusion 20 “When sufficient discovery has been provided and the parties have bargained at arms- 21 length, there is a presumption in favor of the settlement.” City Partnership Co. v. Atlantic 22 Acquisition Ltd. Partnership, 100 F.3d 1041, 1043 (1st Cir. 1996). Here, the Court finds no 23 evidence that plaintiff’s counsel “allowed pursuit of their own self-interests and that of certain 24 class members to infect the negotiation.” In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 25 935, 947 (9th Cir. 2011). Accordingly, the Court finds this factor also weighs in favor of the 26 finding the proposed settlement to be fair and reasonable. 27 //// 28 1 CONCLUSION 2 Upon consideration of the relative factors, the Court finds that the parties’ proposed 3 | settlement is a fair and reasonable resolution of the parties’ bona fide disputes. Accordingly, for 4 | the reasons stated above, IT IS HEREBY ORDERED that: 5 1. The parties’ May 13, 2022 proposed stipulated settlement (ECF No. 39) is granted; 6 2. The Court will retain jurisdiction over this action to enforce the terms of the settlement; 7 3. This matter is dismissed with prejudice; and 8 4. This action is closed. 9 | Dated: June 22, 2022 10 11 D ‘BORAH BARNES UNITED STATES MAGISTRATE JUDGE 13 14 15 16 17 18 19 20 21 22 23 | DLB:6 DB\orders\orders.consent\johnson2186.stip.flsa.ord 25 26 27 28