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Santinac v. Worldwide Labor Support of Illinois, Inc.

United States District Court, S.D. Mississippi, Southern Division

March 23, 2017

HENRY SANTINAC, on behalf of himself and those similarly situated PLAINTIFF
v.
WORLDWIDE LABOR SUPPORT OF ILLINOIS, INC., a Mississippi Limited Liability Company, and WAYNE A. COOK, JR. DEFENDANTS

          ORDER APPROVING SETTLEMENT, AS MODIFIED BY THE COURT, AND DISMISSING CLAIMS WITH PREJUDICE

          LOUIS GUIROLA, JR. CHIEF U.S. DISTRICT JUDGE

         BEFORE THE COURT are the [80] Joint Motion for Approval of Settlement and to Dismiss Claims with Prejudice and the [83] Supplemental Joint Motion filed by the parties to this Fair Labor Standards Act (FLSA) case. The Court twice ordered Plaintiffs' counsel to submit additional information to allow the Court to evaluate the settlement, and in particular the request for approval of attorneys' fees and costs therein. Having now reviewed the Motions, the initial and supplemental briefing, including the additional information provided by Plaintiffs' counsel, the record in this matter, and the applicable law, the Court is of the opinion that the settlement should be approved, with the adjustment to attorneys' fees discussed herein, in the total amount of $262, 514.86. As a result, this action will be dismissed with prejudice.

         Background

         The FLSA requires covered employers to compensate nonexempt employees at overtime rates when they work in excess of forty hours per week. See 29 U.S.C. § 207(a). Under certain circumstances, the FLSA permits an employee to bring suit against an employer “for and on behalf of himself . . . and other employees similarly situated.” 29 U.S.C. § 216(b). Plaintiff Henry Santinac instituted this action in 2015, claiming that Defendant Worldwide Labor Support of Illinois, Inc., violated the FLSA.

         According to the allegations of the Complaint, Worldwide is “a privately held corporation [that] supplies a variety of skilled craftsmen to support ongoing projects in” various states. (Compl. 3-4 (¶11), ECF No. 1). “In particular, Worldwide subcontracts with various shipyards and other marine and industrial companies to provide the services of structural welders, shipfitters, pipe welders, pipefitters, electricians, and outside machinists.” (Id.). Defendant Wayne Cook is the president of Worldwide.

         Santinac alleged that when he was employed by Worldwide, he regularly worked over forty hours a week, but did not receive adequate overtime pay based on Worldwide's mischaracterization of a portion of his regular wages as “per diem.” He further alleged that all employees were subject to this improper per diem scheme to reduce overtime compensation.

         On June 2, 2015, the Court conditionally certified this lawsuit as a collective action. Since then, approximately 100 individuals have elected to opt-in. See Harris v. Hinds Cty., No. 3:12-cv-00542-CWR-LRA, 2014 WL 457913, at *1 (S.D.Miss. Feb. 4, 2014) (“Plaintiffs who desire to join in a ‘collective action' must ‘opt in' to the case and be bound by a judgment, unlike plaintiffs in a [Federal Rule of Civil Procedure 23] class action, who must essentially ‘opt out.'”). The parties have informed the Court that they have reached a settlement agreement and now seek approval of the settlement. See Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1354 (11th Cir. 1982).

         Discussion

         I. Request for Approval of Settlement

         The Court should approve the settlement if it “reflect[s] a reasonable compromise over issues . . . that are actually in dispute.” See Lynn's Food Stores, 679 F.3d at 1354. “The requirement of an adversarial posture between parties to a settlement agreement operates as a guarantee that employers cannot profit by coercing employees into waiving their rights, and then dressing that invalid waiver of the FLSA's protections as a valid settlement of a legal claim.” Sims v. Housing Auth. City of El Paso, No. EP-10-CV-109-PKC, 2011 WL 3862194, at *6 (W.D. Tex. Sept. 1, 2011).

         The Court is satisfied that a bona fide dispute exists between the parties. “Having found a bona fide dispute, the Court looks to whether the proposed settlement agreement is fair and reasonable.” Dyson v. Stuart Petroleum Testers, Inc., No. 1-15-CV-282 RP, 2016 WL 815355, at *2 (W.D. Tex. Feb. 29, 2016). “Although the class-action provisions of Federal Rule of Civil Procedure 23 technically do not apply to collective actions under the FLSA, Rule 23(e) is similar because it requires court approval to finalize a proposed class action settlement.” Id. As a result, courts often utilize the Rule 23(e) standard to determine whether a FLSA collective action settlement is fair and reasonable. See id.

There are six focal facets [under Rule 23(e)]: (1) the existence of fraud or collusion behind the settlement; (2) the complexity, expense, and likely duration of the litigation; (3) the stage of the proceedings and the amount of discovery completed; (4) the probability of plaintiffs' success on the merits; (5) the range of possible recovery; and (6) the opinions of the class counsel, class representatives, and absent class members.

Reed v. Gen'l Motors Corp., 703 F.2d 170, 172 (5th Cir. 1983).

         The first factor requires the Court to consider the existence of fraud or collusion behind the settlement. “In the absence of evidence to the contrary, the court may presume that no fraud or collusion occurred between counsel. There is no evidence of such here.” See Lackey v. SDT Waste & Debris Servs., LLC, No. 11-1087, 2014 WL 4809535, at *2 (E.D. La. Sept. 26, 2014). Rather, the parties participated in discovery and a lengthy settlement conference with United States Magistrate Judge Robert H. Walker before entering into the settlement agreement. See Id. This factor weighs in favor of approval of the settlement.

         As for the second factor, “[w]hen the prospect of ongoing litigation threatens to impose high costs of time and money on the parties, the reasonableness of approving a mutually-agreeable settlement is strengthened.” Klein v. O'Neal, Inc., 705 F.Supp.2d 632, 651 (N.D. Tex. 2010) (quoting Ayers v. Thompson, 358 F.3d 356, 373 (5th Cir. 2004)). Defendants have represented that they intended to file a motion seeking to decertify this action. Even if that motion failed, the trial in this case was expected to last “multiple days with the possibility that it could run longer depending upon the need for and length of expert testimony.” (Joint Mem. 7, ECF No. 81). The parties also recognize the likelihood of lengthy post-trial practice, including an appeal. (See id.). The Court agrees with the parties that further litigation of this matter would have been costly and protracted. These considerations support a finding that the settlement is fair and reasonable.

         The goal of the third factor - the stage of the proceedings and the amount of discovery - is to “evaluate[] whether ‘the parties and the district court possess ample information with which to evaluate the merits of the competing positions.'” Klein, 705 F.Supp.2d at 653 (quoting Ayers, 358 F.3d at 369). The parties have represented to the Court that they “have engaged in extensive discovery[, ]” (Joint Mem. 2, ECF No. 81), including exchanging relevant documents and conducting “multiple informal depositions of both the individual Defendant and Defendants' bookkeeper.” (Supp. ...


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