Albu v. Delta Mech. Inc.

• Court: U.S. District Court — District of Colorado
• Writing for the Court: Magistrate Judge Kathleen M. Tafoya
• Decision Date: 30 June 2015
• Docket Number: Civil Action No. 13-cv-03087-PAB-KMT
• Citation: Albu v. Delta Mech. Inc., Civil Action No. 13-cv-03087-PAB-KMT (D. Colo. Jun 30, 2015)
• Parties: ROMULUS ALBU, on behalf of himself and all similarly situated persons, Plaintiff, v. DELTA MECHANICAL INC., an Arizona corporation, and COLORADO DELTA MECHANICAL INC., a Colorado corporation, Defendants.

ROMULUS ALBU, on behalf of himself and all similarly situated persons, Plaintiff, v. DELTA MECHANICAL INC., an Arizona corporation, andCOLORADO DELTA MECHANICAL INC., a Colorado corporation, Defendants.

Civil Action No. 13-cv-03087-PAB-KMT

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

June 30, 2015

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

Magistrate Judge Kathleen M. Tafoya

This matter is before the court on the parties' "Joint Motion for Approval of Settlement Agreement" [Doc. No. 47] ("Joint Mot."). Pursuant to the Order of Reference dated November 19, 2013 [Doc. No. 6] and the memorandum dated June 12, 2015 [Doc. No. 50] December 4, 2014 (Doc. # 15), this matter was referred to the Magistrate Judge. The court has reviewed the Motion, the pleadings, the entire case file, and the applicable law and is sufficiently advised in the premises.

Also before the court is "Plaintiff's Petition for Reasonable Attorneys' Fees and Costs" ("Fee Pet.") filed June 12, 2015. [Doc. No. 49.] On June 24, 2015, Defendants filed their "Response to Plaintiff's Petition for Reasonable Attorneys' Fees and Costs" ("Resp.") [Doc. No. 52].

Plaintiff has asserted claims under the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. ("FLSA") arising out of Defendants' alleged classification of him as anindependent contractor and failing to pay regular and/or premium pay for all hours worked. (Compl.¶ 1.)

Background

Defendant Delta Mechanical provides installation services for gas or electric water heaters, tankless water heaters, solar water heaters, water softeners, water treatment, sinks, faucets, toilets and core plumbing. Delta Mechanical employs technicians to install appliances, water heaters, toilets and other products purchased by consumers from Home Depot and other providers. Plaintiff worked in Colorado for Delta Mechanical as an installation technician for a period of approximately two months. Plaintiff alleges that Delta Mechanical failed to pay premium overtime pay for hours worked by Plaintiff and other employees in excess of twelve per day and/or forty per week, failed to pay minimum wages for all non-overtime hours worked by Plaintiff and other employees, and required Plaintiff and other employees to pay the cost of gas for travel to and from jobs. Plaintiff filed this action on November 13, 2013, for all unpaid overtime compensation in the total amount of five thousand dollars ($5,000.00) plus an additional five thousand dollars ($5,000.00) in liquidated damages, as well as all reasonable attorneys' fees and costs and any other equitable and ancillary relief pursuant to the FLSA, the Wage Claim Act and the Minimum Wage Act. (See Final Pretrial Order [Doc. No. 37] at 2.)

Defendants claim Plaintiff contracted with Defendants from July 30, 2013 through September 30, 2013 to perform certain plumbing installation services pursuant to a written Independent Contractor Agreement ("ICA") dated July 20, 2013, and, pursuant to the terms of the ICA, Plaintiff acted independently to perform installation services forDefendants and was responsible for complying with all applicable state and federal laws. During that two month period, Defendants assert Plaintiff, by mutual agreement, accepted various installation jobs ranging from one to a maximum of four jobs in any given day, and in exchange for his installation work, Plaintiff was compensated at the rate of $100.00 for a water heater install, $45.00 for a toilet install, $40.00 for a kitchen garbage disposal install, and he negotiated labor charges for any custom labor he performed. In addition, during the initial training period when he became familiar with Delta's work and clientele, Defendants assert Plaintiff was paid a flat rate of $800.00 for his time. Defendants assert that even if Plaintiff were able to prevail on his theory that he was misclassified and should have been deemed an employee, there is no work week in which he labored more than 40 hours, or any work day when he worked more than 12 hours. Defendants claim Plaintiff worked only sporadically for Delta over a very limited period of time, and the installation jobs he accepted required no more than one to two hours to complete. Defendants assert Plaintiff received substantial compensation for his labor on a piece-rate basis deriving an hourly rate that far exceeded the statutory minimum of $7.78 per hour. (See Final Pretrial Order [Doc. No. 37] at 2-3.)

The Joint Motion states, "Plaintiff filed the Lawsuit as a class and collective action but ultimately decided not to seek class certification and proceeded to resolve this matter on an individual basis." (Id., ¶ 4.) The court notes that no effort was made during the pendency of this case to certify a class, and the case proceeded as a single plaintiff case seeking damages for two months of alleged unpaid overtime.

Legal Standard

"Congress enacted the FLSA in 1938 with the goal of protect[ing] all covered workers from substandard wages and oppressive working hours." Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 2162 (2012). The "prime purpose" in enacting the FLSA "was to aid the unprotected, unorganized and lowest paid of the nation's working population; that is, those employees who lacked sufficient bargaining power to secure for themselves a minimum subsistence wage." Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 707 n.18 (1945).

To help further its goals, the FLSA provides that an employee or multiple employees may bring an action "on behalf of himself or themselves and other employees similarly situated." 29 U.S.C. § 216(b). When employees file suit against their employer to recover back wages under the FLSA, the parties must present any proposed settlement to the district court for review and a determination of whether the settlement agreement is fair and reasonable. See Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982); Baker v. Vail Resorts Management Co., Case No. 13-cv-01649-PAB-CBS, 2014 WL 700096 (D. Colo. Feb. 24, 2014). Requiring court approval of FLSA settlements effectuates the purpose of the statute. Brooklyn Sav. Bank v. O'Neil, 324 U.S. at 706 (1945). To approve the settlement agreement, the Court must find that (1) the litigation involves a bona fide dispute, (2) the proposed settlement is fair and equitable to all parties concerned, and (3) the proposed settlement contains a reasonable award of attorneys' fees. Lynn's Food Stores, 679 F.2d at 1354; Baker, 2014 WL 700096, at *1.

Analysis

A. Bona Fide Dispute

Parties requesting approval of an FLSA settlement must provide the Court with sufficient information to determine whether a bona fide dispute exists. Baker, 2014 WL 700096, at *1; Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227, 1234 (M.D. Fla. 2010). To meet this obligation, the parties must present: (1) a description of the nature of the dispute; (2) a description of the employer's business and the type of work performed by the employees; (3) the employer's reasons for disputing the employee's right to a minimum wage or overtime; (4) the employee's justification for the disputed wages; and (5) if the parties dispute the computation of wages owed, each party's estimate of the number of hours worked and the applicable wage. Id.; Collins v. Sanderson Farms, Inc., 568 F. Supp. 2d 714, 718 (E.D. La. 2008). The mere existence of an adversarial lawsuit is not enough to satisfy the bona fide dispute requirement. Id.

Since the lawsuit was filed, the parties conducted minimal discovery on issues relating to the individual claims asserted by Plaintiff and the related defenses and damages. Plaintiff's counsel issued and Defendants responded to one set of interrogatories and requests to produce documents. The parties took three depositions. The parties assert that counsel for all parties have vigorously pursued their positions and the rights of their clients through extended, focused, legal and factual analysis and exchanges of information. The parties also engaged in arm's-length negotiation to try to resolve this matter. (Joint Mot., ¶ 4.) At the time of the filing of the Joint Motion, the parties were on the eve of trial, which was scheduled for June 8, 2015.

The Supreme Court has defined sham litigation as a lawsuit that is objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus., 508 U.S. 49, 60-61 (1993). See also Total Renal Care, Inc. v. Western Nephrology and Metabolic Bone Disease, P. C., Case No. 08-cv-00513-CMA-KMT, 2009 WL 2596493, at *9 (D. Colo. Aug. 21, 2009). Sham litigation by definition does not involve a bona fide grievance. Protect Our Mountain Environment, Inc. v. District Court, 677 P.2d 1361, 1369 (Colo. 1984). The court finds that this case is not sham litigation and that it very much involves a bona fide dispute between adversarial opponents.

B. Fair and Equitable Settlement Agreement

Plaintiff claims he worked, on average, approximately six days a week, approximately fifty-five to sixty hours per week, for approximately nine to ten total weeks while employed with Defendants. The Plaintiff claimed approximately $5,000.00 in unpaid overtime compensation.

The parties to this settlement assert that the settlement was negotiated at arm's length, by experienced counsel, concerning the disputed issues between their clients with respect to liability and the amount due under the FLSA for allegedly unpaid wages, including unpaid overtime compensation, compensatory damages, liquidated damages, and prejudgment interest. (Joint Mot, ¶ 9.) As part of the Settlement Agreement the defendants have agreed to pay the plaintiff $6,000.00 in gross IRS Form 1099 damages. (Settlement Agreement [Doc. No. 47-1], ¶ 3(a).) The defendants also have agreed to pay Plaintiff the amount of his reasonable attorneys' fees and court costs as determined by theCourt and agreed for purposes...