Alvarez v. BI Inc.
| Decision Date | 06 April 2020 |
| Docket Number | CIVIL ACTION No. 16-2705 |
| Parties | KAREL ALVAREZ & JUAN TELLADO, Individually and on behalf of all persons similarly situated, Plaintiffs, v. BI INCORPORATED, Defendant. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
MEMORANDUM OPINION
In this collective action under the Fair Labor Standards Act, Plaintiffs allege that their employer failed to pay them, and other similarly situated persons, for various categories of overtime and "off-the-clock" work. One hundred and three individuals have "opted in" to this action since it was filed. The parties have now reached a settlement and move for my approval.
Defendant BI Incorporated provides products and services to government agencies that monitor parolees, probationers, pretrial defendants, and the like. In 2004, Defendant was awarded a contract by U.S. Immigration and Customs Enforcement ("ICE") to monitor aliens released from ICE detention pending immigration proceedings. This program is called the Intensive Supervision Appearance Program ("ISAP").
Under the contract for this program, Defendant is responsible for completing specified tasks to monitor the participants that ICE designates for ISAP supervision. The required tasks include installing electronic monitoring equipment on participants and visiting with them—both at the participants' homes and at Defendant's offices.
To carry out these tasks, Defendant has employed a number of "ISAP Case Specialists." During the time period at issue, Defendant employed hundreds of ISAP Case Specialists in approximately 61 offices, located in 32 states. Each of these offices was led by an ISAP Program Manager, who supervised the ISAP Case Specialists assigned to that office.
Plaintiffs Karel Alvarez and Juan Tellado ("Named Plaintiffs") each worked as ISAP Case Specialists for Defendant. Named Plaintiff Alvarez was employed in Defendant's Philadelphia office from July 2012 through November 2015 and has since been employed in Defendant's office in Newark, New Jersey. Named Plaintiff Tellado was employed in Defendant's Philadelphia Office from January 2014 through January 2015.
Named Plaintiffs initiated this action on June 2, 2016, by filing a Class and Collective Action Complaint, claiming that Defendant failed to pay them—and other ISAP Case Specialists throughout the United States—wages and overtime compensation, in violation of the Fair Labor Standards Act ("FLSA") and the Pennsylvania Minimum Wage Act.2 Defendant answered the Complaint on August 30, 2016, denying Plaintiffs' allegations and asserting numerous defenses.
Plaintiffs allege that Defendant failed to pay them for the following three categories of compensable work:
On November 4, 2016, I ordered limited discovery on the issue of conditional certification of a collective action under the FLSA. Named Plaintiffs and four of Defendant's corporate designees were deposed and payroll data was produced. After receiving and considering Plaintiffs' class-wide damages analysis, Defendant agreed to stay deadlines in the case and toll the statute of limitations for ISAP Case Specialists for three months so that the parties could engage in settlement negotiations. These negotiations were unsuccessful.
On April 3, 2017, Named Plaintiffs filed a motion seeking conditional certification of a collective action under the FLSA and the issuance of a court-approved notice to other current and former ISAP Case Specialists. Defendant filed a motion for partial summary judgment on Plaintiffs' claims regarding home visits, which Plaintiffs urged me to defer consideration of until after discovery on the merits. On May 18, 2018, I granted Plaintiffs' motion, conditionally certifying a collective action under the FLSA, and authorizing that notice be sent to the 667 ISAP Case Specialists who performed work in the United States during the relevant period. I also denied without prejudice Defendant's Motion for Partial Summary Judgment until the completion of discovery on the merits.
Prior to notice being sent out to members of the collective action, the parties again agreed to toll the statute of limitations and participated in a full-day, private mediation. Defendantprovided Plaintiffs with data to calculate potential damages in advance of the mediation, but the parties did not reach a settlement.
Notice was then sent out to potential plaintiffs ("Opt-In Plaintiffs") pursuant to my May 18, 2018 Order. After notice was sent out, 91 individuals returned Opt-In Consent Forms to do the same. Ten individuals had already filed written Opt-In Consent Forms to join this lawsuit before conditional certification was granted. There are now a total of 103 Opt-In Plaintiffs in the lawsuit, including the two Named Plaintiffs.
On April 15, 2019, after continued negotiation, the parties reached an agreement in principal, which was reduced to a memorandum of understanding on May 1, 2019. The parties have now finalized the settlement and present the Settlement Agreement to me for approval under the FLSA.
The total settlement amount to be paid by Defendant to the 103 Opt-In Plaintiffs is $800,000. (Id. at ¶ II.S.) This amount includes (1) settlement awards to Opt-In Plaintiffs; (2) all applicable Federal Insurance Contributions Act and Federal Unemployment Tax Act payroll taxes; (3) service payments to Named Plaintiffs of $15,000 each for the services that they provided to the collective and as additional consideration for agreeing to a general release of all claims; and (4) $350,000 in attorneys' fees and costs to Plaintiffs' counsel. (Id.)
In exchange for these amounts, Plaintiffs agree to the dismissal of this lawsuit with prejudice and release all wage and hour claims, including but not limited to "claims under the FLSA and state law pertaining to the alleged failure to pay all hours worked, claims for unpaid wages (including overtime compensation), claims for working through meal or rest periods, and related claims for liquidated damages, interests, penalties, fees or costs. . . ." (Id. at ¶ III.F.1.a.)The Agreement also requires Named Plaintiffs to provide a broader release of claims against Defendant in exchange for their service payments. (Consent Mot., ECF No. 87-1, at 20.)
"The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract." Davis v. Abington Mem'l Hosp., 765 F.3d 236, 241 (3d Cir. 2014) (quoting Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69 (2013)). If employers violate the FLSA's minimum wage and overtime provisions, codified at 29 U.S.C. §§ 206 and 207, respectively, employers may be liable to affected employees "in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages." Id. (citing 29 U.S.C. § 216(b)). "A suit brought on behalf of other employees is known as a 'collective action.'" Genesis Healthcare Corp., 569 U.S. at 69.
A collective action under the FLSA differs from a class action under Federal Rule of Civil Procedure 23, in that "the mere presence of [collective action] allegations does not automatically give rise to the kind of aggregate litigation provided for in Rule 23." Halle v. W. Penn Allegheny Health Sys. Inc., 842 F.3d 215, 225 (3d Cir. 2016). "Rather, the existence of a collective action depends upon the affirmative participation of opt-in plaintiffs," who must, to pursue their claims, affirmatively choose to join in the collective action by filing a written opt-in notice with the court. Id.; see also 29 U.S.C. § 216(b) ().
Courts have identified two procedures for settling FLSA claims: (1) the Department of Labor can supervise the payment of unpaid minimum wages or overtime compensation pursuantto 29 U.S.C. § 216(c); or (2) the district court can approve a settlement under 29 U.S.C. § 216(b). See Brumley v. Camin Cargo Control, Inc., Nos. 08-1798, 10-2461 and 09-6128, 2012 WL 1019337, at *1 (D.N.J. Mar. 26, 2012); see also Bettger v. Crossmark, Inc., No. 13-2030, 2015 WL 279754, at *3 (M.D. Pa. Jan. 22, 2015).3
In approving a settlement under 29 U.S.C. § 216(b), a court must determine that "the compromise reached 'is a fair and reasonable resolution of a bona fide dispute over FLSA provisions.'" Brumley, 2012 WL 1019337, at *2 (quoting Lynn's Food Stores Inc. v. United States, 679 F.2d 1350, 1354 (11th Cir. 1982)); see also In re Chickie's & Pete's Wage & Hour Litig., No. 12-6820, 2014 WL 911718, at *2 (E.D. Pa. Mar. 7, 2014); Cuttic v. Crozer-Chester Med. Ctr., 868 F. Supp. 2d 464, 466 (E.D. Pa. 2012); Bredbenner v. Liberty Travel, Inc., No.s. 09-905, 09-1248, 09-4587, 2011 WL 1344745, at *18 (D.N.J. Apr. 8, 2011).
Courts generally break this analysis down into three elements: (1) whether the settlement resolves a bona fide dispute; (2...
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