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Smith v. R.F. Fisher Electric Company, LLC

United States District Court, D. Kansas

June 4, 2018

MICHELLE C. SMITH, on behalf of herself and all others similarly situated, Plaintiff,
v.
R.F. FISHER ELECTRIC COMPANY, LLC, Defendant.

          MEMORANDUM AND ORDER

          Daniel D. Crabtree, United States District Judge.

         Plaintiff Michelle C. Smith, on behalf of herself and others similarly situated, filed this lawsuit against defendant R.F. Fisher Electric Company, LLC. She alleges that defendant violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. and the Kansas Wage Payment Act (“KWPA”), Kan. Stat. Ann. § 44-313 et seq. Doc. 1. The parties have agreed on a class-wide settlement.[1] They now ask the court to grant preliminary approval of their collective action settlement. Doc. 18. For reasons explained below, the court declines the parties' request.

         I. Background

         Plaintiff alleges that defendant required one administrative employee, each day, to work over lunch without pay to answer phones and clean the kitchen and break area-responsibilities commonly referred to as “kitchen duty.” Plaintiff alleges this “kitchen duty” required about 40 minutes of work per day and defendant followed this practice for about two years-some 510 business days.

         Plaintiff assumes an average hourly rate of pay of $20.40 for the administrative employees. Using this assumption, she calculates defendant's liability in this fashion: 510 business days x 2/3 of an hour (40 minutes per day) x $20.40 x 1.5 overtime rate = $10, 404. When liquidated, plaintiff contends, this unpaid overtime calculation amounts to a potential judgment of $20, 808.

         Conversely, defendant asserts that it paid any employee working kitchen duty for that time so long as she recorded the time on her timesheet. But, on December 20, 2016, its administrative employees received an email. Defendant reports that some of the employees misunderstood this email to direct them to stop recording time that they spent conducting kitchen duty. Thereafter, plaintiff reported to her supervisor that employees were not recording their time properly, and thus not being paid properly. Defendant then informed administrative employees to record all kitchen duty time on their timesheets to ensure that they were paid for it. Based on these events, defendant asserts, any unpaid kitchen duty occurred between December 20, 2016 and January 19, 2017-a period of 20 business days. Defendant's theory of the case results in, at most, 13 hours and 20 minutes of unpaid kitchen duty (20 days x 40 minutes).

         Defendant assumes: (a) the unpaid kitchen duty was evenly divided among the five administrative employees employed during the relevant timeframe (i.e., each worked 2.7 hours of unpaid kitchen duty); and (b) defendant should have paid all unpaid kitchen duty at the time-and-a-half overtime rate. Based on these assumptions, defendant contends that its maximum liability is $839.34. Defendant explains its theory of maximum exposure this way:

Employee

Regular Rate/ OT Rate

Amount Owed (OT Rate x 2.7 hours)

Liquidated (Amount Owed x2)

Tammy Nodurft

$24.62/$36.93

$99.71

Eva Steeples (Miller)

$23.50/$35.25

$95.18

Lisa Herzog

$18.00/$27.00

$72.90

Dena Kelley

$20.50/$30.75

$83.03

Michelle Smith

$17.00/$25.50

$68.85

Totals

$419.67

$839.34

         The parties have reached an agreement that settles their dispute over defendant's potential liability. Under the agreement, defendant will pay up to $10, 000. The Settlement Agreement defines the settlement class as all non-exempt administrative employees who performed “kitchen duty” during the two years before plaintiff filed her Complaint with the court. This settlement class includes a total of 10 individuals. The agreement proposes to distribute the settlement proceeds as follows: nothing to plaintiff's counsel-he has waived his fee; $1, 000 to plaintiff as a service payment; and the remaining $9, 000 to be apportioned among the settlement class members pro rata based upon the number of days each worked within the two-year period. The following table represents the proposed pro rata distribution.

Name

Work Started

Work Ended

Days Worked

Payment

Faith Base

04/20/15

12/21/16

611

$1, 258.35

Tammy Nodurft

04/20/15

04/20/17

731

$1, 505.49

Nancy Snowdy

04/06/17

04/20/17

14

$28.83

Eva Steeples (Miller)

04/20/15

04/20/17

731

$1, 505.49

Lisa Herzog

07/28/16

04/20/17

266

$547.83

Dena Kelley

04/20/15

04/04/17

715

$1, 472.54

Michelle Smith

12/21/15

03/03/17

438

$902.06

Beth Winkler

06/06/16

07/21/16

45

$92.68

Diane Bayer

04/20/15

06/10/16

417

$858.81

Pam Krueger

04/20/15

05/26/16

402

$827.92

Totals

4370

$9, 000.00

         Under the Settlement Agreement, each class member will receive notice of this lawsuit and the proposed settlement by mail and also will receive information disclosing the specific amount the respective class member would receive. Each class member will have 60 days from the Notice's mailing to consent to join the collective action and settlement. The Notice and Consent Form will be mailed to class members within five days of the court's preliminary approval of the parties' settlement. Class members who return the Consent Form will receive their pro rata share of the settlement proceeds, as already described. Any class members who do not return the Consent From will receive nothing, but they will remain free to bring a wage and hour claim against defendant.

         The parties seek the court's preliminary approval of their collective action settlement.

         II. Legal Standard

         The parties to an FLSA action must present a settlement of those claims to the court for review, and the court must determine whether the settlement is fair and reasonable. Barbosa v. Nat'l Beef Packing Co., LLC., No. 12-2311-KHV, 2015 WL 4920292, at *3 (D. Kan. Aug. 18, 2015) (citing Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982)). “To approve an FLSA settlement, the Court must find that the litigation involves a bona fide dispute and that the proposed settlement is fair and equitable to all parties concerned.” Id. (citing Lynn's Food Stores, Inc., 679 F.2d at 1353). Also, when parties settle FLSA claims before the court has made a final certification ruling, the court must make some final class certification finding before it can approve an FLSA collective action settlement. Barbosa, 2015 WL 4920292, at *3 (citing McCaffrey v. Mortg. Sources, Corp., No. 08-2660-KHV, 2011 WL 32436, at *2 (D. Kan. Jan. 5, 2011)).

         III. Analysis

         In the following three sections, the court discusses final collective action certification, the fairness and reasonableness of the proposed settlement agreement, and the fairness and reasonableness of the proposed service payment to plaintiff. Ultimately, the court cannot determine whether the proposed service payment is fair and reasonable so the court cannot preliminarily approve the parties' collective action settlement.

         A. Final Collective Action Certification

         Before the court can approve the parties' FLSA collective action settlement, it must make a final certification ruling. Barbosa, 2015 WL 4920292, at *3 (citing McCaffrey, 2011 WL 32436, at *3). To determine if the putative class members are similarly situated, the court considers: “(1) the disparate factual and employment settings of individual plaintiffs; (2) various defenses available to defendant which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.” Grove v. ZW Tech, Inc., No. ...


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