Johnson v. Thomson Reuters
| Decision Date | 19 March 2019 |
| Docket Number | Case No. 18-CV-0070 (PJS/HB) |
| Parties | CHRISHAWN JOHNSON and GAVIN BRANDT, individually and on behalf of all similarly situated individuals, Plaintiffs, v. THOMSON REUTERS, doing business as FindLaw, Defendant. |
| Court | U.S. District Court — District of Minnesota |
Christopher D. Jozwiak, Scott Moriarity, and Shawn J. Wanta, BAILLON THOME JOZWIAK & WANTA LLP, for plaintiffs.
Susan E. Ellingstad, LOCKRIDGE GRINDAL NAUEN PLLP, for defendant.
Plaintiffs Chrishawn Johnson and Gavin Brandt are the named plaintiffs in this collective action under the Fair Labor Standards Act ("FLSA"). They have asked the Court to approve a settlement between plaintiffs and defendant Thomson Reuters. ECF No. 50. For the reasons that follow, the settlement is approved, and plaintiffs' claims are dismissed.
Plaintiffs are Account Managers who work or formerly worked in the FindLaw division of Thomson Reuters. ECF No. 37 at ¶ 2. FindLaw Account Managers are generally responsible for "[e]nsur[ing] client retention and satisfaction" by providing "all clients" with "first class customer care." ECF No. 1 at ¶¶ 10(a)-(b). Account Managers are also responsible for identifying and successfully pursuing various sales opportunities; in the jargon of their workplace, they "[i]dentify and provide up-sell and cross sell lead opportunities to field partners" and "[s]ecure contract renewals for [an] assigned portfolio of customers." Id. at ¶¶ 10(d)-(e).
Johnson and Brandt allege that Account Managers were improperly classified as exempt from the FLSA's overtime provisions prior to January 3, 2018, and thus were not paid overtime wages, even though they "regularly worked more than 40 hours each workweek." Id. at ¶¶ 1-2, 12, 25. Instead, Johnson and Brandt allege, Account Managers received only "a base salary, non-discretionary incentive compensation, [and] participation in an employee incentive plan" (along with other "fringe benefits"). Id. at ¶ 11.
On January 3, 2018, Thomson Reuters reclassified the Account Manager position as non-exempt and began paying overtime wages to Account Managers. Id. at ¶ 13. Thomson Reuters also offered to pay the Account Managers back pay for any overtimeworked during the two years preceding January 3, 2018. Id. at ¶ 29. Thomson Reuters calculated each Account Manager's back-pay offer by multiplying the number of overtime hours reported by the Account Manager by one-half of the Account Manager's regular rate of pay. Id.
Johnson and Brandt brought this action on behalf of themselves and similarly situated Account Managers because they believe that Thomson Reuters's offer fails to fully compensate them for the overtime compensation that they would have earned had they not been classified as exempt. Johnson and Brandt argue that Thomson Reuters's offer is insufficient for two main reasons: First, the offer does not include liquidated damages. Second, the offer does not pay for past overtime at 1.5 times the regular rate of pay. ECF No. 1 at ¶ 30.
The parties agreed to conditional certification of the collective (ECF Nos. 35, 37), and all potential plaintiffs received notice of this action by email (ECF No. 37 at ¶ 6). Seventeen other Account Managers opted in to the litigation, joining Johnson and Brandt as plaintiffs. ECF Nos. 6-8, 10, 12, 14-15, 23, 31, 33, 39-45. One of those Account Managers subsequently opted out. ECF No. 47. Now, after informal discovery and a full-day settlement conference with Magistrate Judge Hildy Bowbeer, the parties have reached a settlement.
The settlement calls for Thomson Reuters to pay a total of $120,000 in liquidated damages to the FLSA collective. ECF No. 52-1 at 7. To reach that number, the parties took the number of overtime hours that the Account Managers reported working during the period from January 1, 2016, to December 31, 2017, multiplied that number by one-half of the regular rate of pay of the Account Managers, and added an enhancement of approximately one percent. ECF No. 52 at ¶ 6; ECF No. 51 at 3. The regular rate of pay was calculated using the Account Managers' base salaries plus non-discretionary incentive payments. ECF No. 51 at 6. In exchange for this payment of liquidated damages, the opt-in plaintiffs agree to waive "any and all past claims for overtime payment [they] may or do have against Thomson Reuters that accrued before September 13, 2018." ECF No. 52-1 at p. 8, ¶ c. The settlement also calls for each named plaintiff to receive a service award of $5,000 and for Thomson Reuters to reimburse $95,000 of plaintiffs' attorney's fees and costs. Id. at p. 7, ¶¶ b-c.
The parties have asked the Court to approve their settlement.1 The Court thus reviews the settlement to ensure that there is a bona fide dispute under the FLSA and that the settlement "is a fair and reasonable resolution of [that] bona fide dispute." Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982); see also Stainbrook v. Minn. Dep't of Pub. Safety, 239 F. Supp. 3d 1123, 1126 (D. Minn. 2017).
A "bona fide dispute" exists when there are "issues, such as FLSA coverage or computation of back wages, that are actually in dispute." Lynn's Food Stores, 679 F.2dat 1354. The Account Managers and Thomson Reuters have at least four bona fide disputes:
First, the parties disagree about whether the Account Managers were properly classified as exempt prior to January 3, 2018. Thomson Reuters does not concede that the Account Managers are now, or ever have been, covered by the FLSA's overtime provisions. ECF No. 57 at ¶ 6; ECF No. 52-1 at p. 6, ¶ a. Rather, Thomson Reuters insists that its reclassification of the Account Managers as non-exempt was voluntarily. ECF No. 19 at ¶¶ 14, 30.
Second, the parties disagree about whether "it is appropriate for this case to proceed on a collective basis." ECF No. 35 at 2; see also ECF No. 51 at 11. Thomson Reuters argues that, even if some Account Managers were misclassified, not all of the Account Managers were misclassified. See ECF No. 51 at 11. Were the litigation to proceed, then, Thomson Reuters might move to decertify the collective based on a "mixed-exemption" theory. Id.
Third, the parties disagree about whether the Account Managers are entitled to liquidated damages. ECF No. 19 at ¶ 31; ECF No. 51 at 13. An employer who violates the overtime provisions of the FLSA is liable for both (1) "unpaid overtime compensation" and (2) "an additional equal amount as liquidated damages." 29 U.S.C. § 216(b). Brock v. Superior Care, Inc., 840 F.2d 1054, 1063 n.3 (2d Cir. 1988).
"An award of liquidated damages under section 216(b) [of the FLSA] is mandatory unless the employer can show [1] good faith and [2] reasonable grounds for believing that it was not in violation of the FLSA." Braswell v. City of El Dorado, 187 F.3d 954, 957 (8th Cir. 1999) (citation omitted). The good-faith requirement is subjective; the employer must demonstrate that it had "an honest intention to ascertain and follow the dictates of the FLSA." Chao v. Barbeque Ventures, LLC, 547 F.3d 938, 942 (8th Cir. 2008) (quoting Hultgren v. Cty. of Lancaster, 913 F.2d 498, 509 (8th Cir. 1990)). "To carry [its] burden, a defendant employer must show that [it] took affirmative steps to ascertain the Act's requirements, but nonetheless, violated its provisions." Id. (quoting Martin v. Cooper Elec. Supply Co., 940 F.2d 896, 908 (3d Cir. 1991)). The reasonable-grounds requirement is objective; the employer must "prove its position was objectively reasonable." Id. (quoting Hultgren, 913 F.2d at 509).
Here, Thomson Reuters contends that it can establish both good faith and reasonable grounds. Thomson Reuters asserts that it "acted reasonably and diligently in analyzing the Account Manager position" and that it reclassified that position as non-exempt only after the position was impacted by a company reorganization and "largescale reduction in force." ECF No. 51 at 13. Thus, says Thomson Reuters, it cannot be held liable for liquidated damages.
Fourth, the parties disagree about how to calculate any overtime wages owed to plaintiffs. Specifically, the parties disagree about whether the "Fluctuating Work Week" ("FWW") method may be applied in calculating the amount of overtime compensation owed to plaintiffs (assuming that Thomson Reuters is found to have wrongly classified plaintiffs as exempt). See 29 C.F.R. § 778.114. If the FWW method applies, then the Account Managers are deemed to have already received their regular rate of compensation for all hours that they worked, including overtime hours (in other words, to have already been paid for the "time" in "time and one half"2). See 29 C.F.R. § 778.114(a) (). Thus, each plaintiff would be entitled to only one-half times his or her regular rate of pay multiplied by the number of overtime hours worked. If the FWW method does not apply, then the Account Managers are deemed not to have been paid at all for theirovertime hours (in other words, not to have been paid for either the "time" or the "one half" in "time and one half"). Thus, each plaintiff would be entitled to 1.5 times his or her regular rate of pay multiplied by the number of overtime hours worked.
For the FWW method to apply, a number of requirements must be met. See Hall v. Plastipak Holdings, Inc., 726 F. App'x 318, 320-21 (6th Cir. 2018); Flood v. New Hanover Cty., 125 F.3d 249, 252 (4th Cir. 199...
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