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Enegren v. KC Lodge Ventures LLC

United States District Court, D. Kansas

October 11, 2019

ALYSSA ENEGREN, et al., Plaintiffs,
v.
KC LODGE VENTURES LLC, et al., Defendants.

          MEMORANDUM AND ORDER

          Daniel D. Crabtree United States District Judge.

         Plaintiffs, on behalf of themselves and others similarly situated, filed this lawsuit under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201- 219, alleging unlawful pay practices against defendants KC Lodge Ventures LLC, et al. Doc. 29. This matter comes before the court on plaintiffs' Unopposed Motion to Grant Final Certification and Approve Collective Action Settlement (Doc. 73) and plaintiffs' Unopposed Motion for Approval of Award of Attorneys' Fees in Conjunction with Settlement (Doc. 74).

         I. Background

         Defendants own and operate Twin Peaks franchise restaurants in Kansas and Missouri. Plaintiff Alyssa Nida[1] is a former Twin Peaks employee. She represents a collective class of current and former employees (“Twin Peaks plaintiffs”) who have filed a putative collective action claim for alleged FLSA violations. They assert that defendants (1) failed to pay Twin Peaks plaintiffs for all hours worked; (2) failed to compensate Twin Peaks plaintiffs for the cost of their uniforms and other image and costume standards; and (3) failed to ensure servers made minimum wage after mandatory tip sharing.

         Plaintiff, individually and on behalf of others similarly situated, filed a Complaint against defendants on May 17, 2017. The parties participated in an unsuccessful mediation session on January 22, 2018. Plaintiff then filed an amended complaint, and defendants filed an answer and asserted various affirmative defenses. The parties proceeded with discovery from March to July 2018. On August 31, 2018, the parties filed a joint motion stipulating to conditional collective action certification and asked the court to approve the parties' eventual stipulation for conditional certification.

         On September 10, 2018, the court conditionally certified plaintiffs' claims as a collective action under 29 U.S.C. § 216(b), and authorized notice to all current and former servers, bartenders, and hostesses employed by any defendant at any time since June 6, 2015. Plaintiffs mailed the court-approved notice to putative class members. The notice advised them of their right to join the case and advised those who elected to join of the terms and conditions of class membership:

If you choose to join this lawsuit, . . . you will be bound by any ruling, settlement, or judgment, whether favorable or unfavorable, on the claims asserted. By joining this lawsuit, you designate the Named Plaintiff as your representative, and to the fullest extent possible, to make decisions on your behalf concerning the case, the method and manner of conducting the case, the entering of an agreement with Plaintiff's counsel regarding payment of attorneys' fees and court costs, the approval of settlements, and all other matters pertaining to this lawsuit.

Doc. 54-1 at 3 (¶ 9). The Notice also advised:

If you choose not to join this lawsuit, you will not be affected by any ruling, judgment, or settlement rendered on the claims asserted in this case, whether favorable or unfavorable.

Id. (¶ 10).

         And, plaintiffs' counsel required putative opt-in plaintiffs to file a consent form. The court-approved consent form provides:

I hereby consent to be a party plaintiff seeking unpaid wages against [Defendants] . . . . I designate the Named Plaintiff to make all decisions on my behalf concerning the method and manner of conducting the case including settlement, the entering of an agreement with Plaintiffs' counsel regarding payment of attorneys' fees and court costs, and all other matters pertaining to this lawsuit. For purposes of this lawsuit, I choose to be represented by Foulston Siefkin LLP and other attorneys with whom they may associate.

Id. at 5.

         Following conditional certification, 102 Twin Peaks plaintiffs filed consent forms and joined the case as opt-in plaintiffs. Through discovery and a separate agreement on the conditional certification process, the parties exchanged documents and electronically stored information about defendants' uniform requirements and payroll, timekeeping, and personnel records for every plaintiff.

         On February 21, 2019, the parties participated in a mediation session with mediator Dennis Gillen. After a full day of mediation, the parties reached a settlement agreement. The parties later executed a Settlement Agreement and Release of Claims (“the Settlement Agreement”) memorializing the terms of their settlement. Doc. 73-1. All opt-in plaintiffs have received notice of the terms of the settlement, and none have objected. The parties have submitted the Settlement Agreement to the court with plaintiffs' unopposed motion seeking approval of the settlement. Id.

         Under the terms of the Settlement Agreement, defendant has agreed to pay a total of $300, 000.00 (the “Settlement Fund”), which will be allocated as follows:

1. No more than $15, 000 to representative plaintiff as a service award;
2. No more than $133, 000 in attorneys' fees; and
3. The remainder-$152, 000- to the 102 collective action members distributed on a pro rata basis.

         In exchange, the Twin Peaks plaintiffs have agreed to release any claims under state and federal wage and hour laws, and any claims under state wage payment laws from the same facts as those asserted in this case. Also, named plaintiff has signed a general release of all claims against defendants.

         The Settlement Agreement provides for a pro rata distribution of the Settlement Fund to each collective action member who consented to join this lawsuit. Plaintiffs' counsel developed a formula accounting for each plaintiff's total period of employment, number of shifts worked, and average hourly wage. Plaintiffs who had worked for a shorter period of time will receive a smaller amount for uniform reimbursement, and those who worked for a longer period will receive more. The portion of the settlement for unpaid meeting time is allocated based on the number of shifts each plaintiff had worked.

         Defendants will pay the Settlement Fund in four installments. Defendants will pay one-half of the total amount after the court approves the settlement. They will pay the remaining one-half in three subsequent equal installments. All amounts will be allocated on a pro rata basis across the overall payment timeline (meaning that the named plaintiff, opt-in plaintiffs, and plaintiffs' counsel will receive their portions of the Settlement Fund at the same time).

         II. Legal Standard

         A. FLSA Collective Action Settlement

         The parties to an FLSA action must present a settlement of those claims to the court for review and a determination that 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).

         The court may enter a stipulated judgment in an FLSA action “only after scrutinizing the settlement for fairness.” Id. (citing Peterson v. Mortg. Sources, Corp., No. 08-2660-KHV, 2011 WL 3793963, at *4 (D. Kan. Aug. 25, 2011)); see also Tommey v. Comput. Scis. Corp., No. 11-CV-02214-EFM, 2015 WL 1623025, at *1 (D. Kan. Apr. 13, 2015) (citation omitted). “If the settlement reflects a reasonable compromise over issues such as FLSA coverage or computation of back wages that are actually in dispute, the Court may approve the settlement to promote the policy of encouraging settlement of litigation.” Gambrell v. Weber Carpet, Inc., No. 10-2131-KHV, 2012 WL 5306273, at *2 (D. Kan. Oct. 29, 2012) (citing Lynn's Food Stores, 679 F.2d at 1354).

         Also, when parties settle FLSA claims before the court has made a final certification ruling, the court must make a 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)).

         B. Attorney's Fees Under the FLSA

         The FLSA requires the parties to include in the settlement agreement an award of reasonable attorney's fees and the costs of the action. 29 U.S.C. § 216(b); see also McCaffrey, 2011 WL 32436, at *2 (citing Lee v. The Timberland Co., No. C 07-2367-JF, 2008 WL 2492295, at *2 (N.D. Cal. June 19, 2008)). The court has discretion to determine the amount and reasonableness of the fee, but a FLSA fee award is mandatory. Barbosa, 2015 WL 4920292, at *3 (citations omitted).

         III. Analysis

         Plaintiffs have filed an Unopposed Motion to Grant Final Certification and Approve Collective Action Settlement. Doc. 73. Plaintiffs also have filed an Unopposed Motion for Approval of Award of Attorneys' Fees in Conjunction with Settlement. Doc. 74. In their motions, plaintiffs ask the court to certify a final collective action, approve the settlement as fair and reasonable, and award the proposed attorneys' fees and costs in an amount equal to 40 percent of the settlement. Doc. 74 at 2. The court addresses these requests, in turn, below.

         A. Final Collective Action Certification

         Because the parties have settled their FLSA claims before the court made a final certification ruling, the court must enter a final class certification finding before it can approve the settlement. See Barbosa, 2015 WL 4920292, at *3 (citing McCaffrey, 2011 WL 32436, at *2). The FLSA provides that an employee may bring a collective action on behalf of other employees who are “similarly situated.” 29 U.S.C. § 216(b). To determine whether plaintiffs are “similarly situated” for purposes of final collective action certification, the court considers several factors. They include: “(1) the disparate factual and employment settings of individual plaintiffs; (2) various defenses available to defendant[s] which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.” Gambrell, 2012 WL 5306273, at *3 (citing Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102-03 (10th Cir. 2001)).

         Plaintiffs ask the court to certify a final collective action. The parties agree that the plaintiffs are similarly situated and that final certification is warranted. But the court still must examine ...


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