Selk v. Pioneers Mem'l Healthcare Dist.

• Decision Date: 29 January 2016
• Docket Number: Case No. 13-cv-244-BAS-BGS
• Citation: 159 F.Supp.3d 1164
• Court: U.S. District Court — Southern District of California
• Parties: Elena Selk, Plaintiff, v. Pioneers Memorial Healthcare District, Defendant.

159 F.Supp.3d 1164

Elena Selk, Plaintiff,

v.Pioneers Memorial Healthcare District, Defendant.

Case No. 13-cv-244-BAS-BGS

United States District Court, S.D. California.

Signed January 29, 2016

Lara Ann Prodanovich, Clint S. Engleson, Eric K. Yaeckel, Sullivan Law Group LLP, San Diego, CA, for Plaintiff.

Margarita Haugaard, Horton Knox Carter and Foote, Peter Michael Perez, Adam Ryan Rosenthal, John S. Adler, Littler Mendelson, San Diego, CA, Orlando Bailey Foote, III, Horton Knox Carter and Foote LLP, El Centro, CA, for Defendant.

ORDER GRANTING PLAINTIFF'S MOTION FOR APPROVAL OF FLSA SETTLEMENT

Cynthia Bashant, United States District Judge

Plaintiff Elena Selk brings this collective action under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 –219, on behalf of nonexempt employees of Defendant Pioneers Memorial Healthcare District (“Pioneers”). (ECF Nos. 1, 48.) Selk represents a class of current and former hourly employees of Pioneers who worked overtime during the relevant period, and a class of current and formerly hourly employees of Pioneers who used an employee cafeteria discount while working overtime. (ECF Nos. 48, 96, 102.) The parties are presently before the Court on Plaintiff Selk's unopposed Motion for Approval of Settlement. (ECF No. 125.) The motion came on for hearing on January 13, 2016. (ECF No. 129.) Having considered the papers and the representations of counsel at oral argument, the Court GRANTS the motion.

I. BACKGROUND

Plaintiff Selk originally filed this action on January 31, 2013, alleging that her former employer, Defendant Pioneers, failed to pay her and other similarly situated workers proper wages and overtime in violation of the FLSA and California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code. § 17200 et seq. (ECF No. 1.) On April 22, 2014, after Selk had filed a Second Amended Complaint that retained both the FLSA and UCL claims, the Court granted Pioneers' motion for partial summary judgment on Selk's UCL claim, leaving only claims under the FLSA. (ECF No. 96.)

Plaintiff's core allegations are as follows: (1) that Pioneers' policy of rounding employees' “clock in” and “clock out” times to the nearest 15 minutes systematically undercompensated its employees, denying them properly calculated regular and overtime pay; (2) that Pioneers' policy of excluding the 10% cafeteria meal discount it offers to employees from the value of total remuneration used to calculate employees' regular rate of pay denied employees proper wages and overtime; and (3) that Pioneers' practice of not accounting for the time employees worked while logged into computer systems other than Pioneers' primary time record system denied employees compensation for all hours actually worked. (SAC 7–11.) On January 8, 2014, Selk sought certification of three classes under Federal Rule of Civil Procedure 23, centered on the aforementioned claims, or in the alternative, certification of three collective action classes under the FLSA. (ECF No. 59.) The Court ultimately certified two classes under the FLSA: an “Overtime Class” based on Pioneers' time clock rounding policy and practices, and a “Cafeteria Discount Class” based on Selk's claim that the law requires Pioneers to include the 10% cafeteria discount when determining the total remuneration used to calculate employees' regular rate of pay. (ECF Nos. 96, 102.) After certification, Selk disseminated notice to 1,065 putative class members, 65 of whom opted-in to one or both of the “rounding” and “cafeteria discount” claims.¹ (ECF No. 113.) The FLSA consent forms signed by the opt-in plaintiffs were lodged with the Court on December 1, 2014. Id.

On March 23, 2015, while in the midst of one of their several discovery disputes, the parties filed a notice of settlement. (ECF No. 121.) Plaintiff's Motion for Approval of Settlement followed on July 14, 2015. (ECF No. 125.) The motion seeks approval of: (1) a settlement of all FLSA claims, (2) an award of attorney's fees and costs, (3) an enhancement award to Plaintiff Selk as the named plaintiff, and (4) a separate settlement between Selk and Pioneers, including a general release of claims for which Selk is to be independently compensated. (Mot.1:2–7.)

The settlement (“Settlement” or “Settlement Agreement”) provides that Pioneers will pay an amount not to exceed $50,000 to settle the claims of the 65 opt-in plaintiffs and Plaintiff Selk (collectively, the “Parties Plaintiff”). (ECF No. 127, Exh. A (“Settlement Agreement”) ¶ C.) The $50,000 settlement fund is to be apportioned as follows: the Parties Plaintiff will receive individual settlement payments totaling $17,500; Plaintiff Selk will receive a $5,000 service payment; counsel for Parties Plaintiff will receive $22,000 in attorney's fees and costs; and Plaintiff Selk will receive a separate payment of $5,500 in consideration for signing a “full and complete” settlement agreement with Pioneers that includes a general release of claims. (Mot.4:12–6:15.) The amount of each opt-in plaintiff's individual payment varies based upon an agreed upon-formula and the amount of weeks worked during the covered time period, but in no case will an opt-in plaintiff receive less than $150.² (Sullivan Decl., Exh. 3.)

The Settlement requires the Parties Plaintiff to release a defined category of claims. Specifically, the Settlement requires opt-in members to release “any and all claims ... for or which relate to the alleged failure to properly pay wages or overtime as required by the Fair Labor Standards Act, any state wage laws, any local wage laws, any other applicable federal, state or local law, and any other claims alleged in the case[.]” (Settlement Agreement ¶ B(10).) Selk's separate agreement with Pioneers (the “Selk Agreement”) contains a general release of claims that covers not only the wage and hour claims alleged in the case, but also “any and all claims ... whether known or unknown to Selk ... (1) arising out of Selk's employment with Pioneers or termination of that employment ... or (2) arising out of or in any way connected with any claim ... resulting from any act or omission by or on part of” Pioneers, its officers, or affiliates. (ECF No. 127, Exh. 6 ¶ 5.) The release of claims in both agreements is to become effective upon the Court's approval of the Settlement and dismissal of this action. (Settlement Agreement ¶ K; Selk Agreement ¶ 13.)

II. LEGAL STANDARD

The FLSA was enacted to protect covered workers from substandard wages and oppressive working hours. See Barrentine v. Arkansas–Best Freight System, Inc., 450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) ; 29 U.S.C. § 202(a) (characterizing substandard wages as a labor condition that undermines “the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers”). To advance this policy objective, the Act requires employers to pay their employees no less than a specified minimum wage for work performed, 29 U.S.C. § 206, and at least one and one-half times an employee's regular rate of pay for hours worked in excess of forty hours per week, 29 U.S.C. § 207(a)(1). Under the FLSA, an employer who violates Section 206 or 207 is liable to the employees affected for the amount of unpaid minimum wages or overtime compensation, and for an additional equal amount as liquidated damages. See 29 U.S.C. § 216(b).

“The FLSA places strict limits on an employee's ability to waive claims for unpaid wages or overtime ... for fear that employers may coerce employees into settlement and waiver.” Lopez v. Nights of Cabiria, LLC, 96 F.Supp.3d 170, 175 (S.D.N.Y.2015) (internal quotation marks and citation omitted); see Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 707, 65 S.Ct. 895, 89 L.Ed. 1296 (1945) (finding that the FLSA prohibits waiver of the statutory minimum wage and right to liquidated damages as a check against the superior bargaining power employers generally enjoy vis-à-vis employees). Accordingly, claims for unpaid wages under the FLSA may only be waived or otherwise settled if settlement is supervised by the Secretary of Labor or approved by a district court. See Lynn's Food Stores, Inc. v. United States ex rel. U.S. Dept. of Labor, Emp't Standards Admin., Wage & Hour Div., 679 F.2d 1350, 1352–53 (11th Cir.1982) ; Meza v. 317 Amsterdam Corp., 14–CV–9007 (VSB), 2015 WL 9161791, *1 (S.D.N.Y. Dec. 14, 2015) (“Parties may not privately settle FLSA claims with prejudice absent the approval of the district court or the Department of Labor.”) (citation omitted).

In reviewing a FLSA settlement, a district court must determine whether the settlement represents a “fair and reasonable resolution of a bona fide dispute.” Lynn's Food Stores, 679 F.2d at 1355. A bona fide dispute exists when there are legitimate questions about “the existence and extent of Defendant's FLSA liability.” Ambrosino v. Home Depot. U.S.A., Inc., No. 11cv1319 L(MDD), 2014 WL 1671489 (S.D.Cal. Apr. 28, 2014). There must be “some doubt ... that the plaintiffs would succeed on the merits through litigation of their [FLSA] claims.” Collins v. Sanderson Farms, 568 F.Supp.2d 714, 719–20 (E.D.La.2008) ; see also Mamani v. Licetti, No. 13–CV–7002 (KMW)(JCF), 2014 WL 2971050, *2 (S.D.N.Y. July 2, 2014) (explaining that to demonstrate a bona fide dispute under the FLSA “[t]he employer should articulate the reasons for disputing the employee's right to a minimum wage or overtime, and the employee must articulate the reasons justifying his entitlement to the disputed wages”) (internal citation omitted). If there is no question that the FLSA entitles plaintiffs to the compensation they seek, then a court will not approve a settlement because to do so would allow the employer to avoid the full cost of complying with the statute. See Socias v. Vornado Realty L.P., 297 F.R.D. 38, 41 (E.D.N.Y.2014) (Without judicial oversight ... employers may be more inclined to offer, and employees, even when...