United States District Court, S.D. California
ORDER DENYING JOINT MOTION FOR APPROVAL OF THE SETTLEMENT AGREEMENT [DOC. 72] WITHOUT PREJUDICE
M. JAMES LORENZ, District Judge.
Pending before the Court is the parties' renewed joint motion for approval of the settlement agreement. [Doc. 72.] For the following reasons, the Court DENIES the motion WITHOUT PREJUDICE. In addition, because the parties filed a notice of settlement [Doc. 54], this Court DENIES WITHOUT PREJUDICE Plaintiffs' pending motion for summary judgment as MOOT. [Doc. 52].
On October 22, 2012, Plaintiffs filed their Amended Complaint alleging, inter alia, violations of the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. ( Amended Complaint [Doc. 21] ¶¶ 50-59.) On March 7, 2014, the parties filed a joint motion for approval of the settlement and dismissal of the action. ( Mot. Approval [Doc. 63].) On the same day, the parties filed a joint motion to file the settlement agreement under seal. ( Mot. Seal [Doc. 64].) The parties agreed that the settlement agreement should remain confidential. ( Id. ¶¶ 3-4.)
On March 10, 2014, this Court denied the parties joint motions because they failed to meet the Ninth Circuit's "compelling reasons" standard for sealing the proposed settlement agreement. ( Order Denying Motion for Settlement and Motion to File Documents Under Seal [Doc. 69].) On March 24, 2014, the parties filed a renewed joint motion to approve their settlement agreement. ( Renewed Mot. Approval [Doc. 72].)
II. LEGAL STANDARD
The Eleventh Circuit has explained that an FLSA claim can be settled in two ways. Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir.1982). First, an employee may settle and waive claims under the FLSA if the payment of unpaid wages by the employer to the employee is supervised by the Secretary of Labor. Id. Second, an employee may settle and waive claims under the FLSA if the parties present to a district court a proposed settlement agreement, and the district court enters a judgment approving the settlement. Id. Before approving an FLSA settlement, the court must scrutinize it to determine if it is "a fair and reasonable resolution of a bona fide dispute." Id. at 1354-1355. If the settlement reflects a reasonable compromise over issues that are actually in dispute, the Court may approve the settlement "in order to promote the policy of encouraging settlement of litigation." Id. at 1354.
A. The Parties Have Established a Bona Fide Dispute
As illustrated by the parties representations in the instant motion, this collective action under the FLSA presents a bona fide dispute between Plaintiffs and Defendant regarding Plaintiffs' allegedly improper classification as exempt from overtime requirements. ( Renewed Mot. Approval 2.) There also appears to be a dispute as to how damages would be calculated in this case, if Defendant were to be found liable. ( Id. 3; Pls.' Mot. Summ. J. [Doc. 52].) Further, the parties claim that over the course of several months, they reached a settlement in this matter with the help of an experienced mediator. ( Renewed Mot. Approval 2.) In light of the foregoing, the Court is convinced that this case involves a bona fide dispute over the existence and extent of Defendant's FLSA liability.
B. The Parties Fail to Establish that the Settlement Agreement is Fair and Reasonable
A district court may approve an FLSA settlement if the proposed settlement reflects "a reasonable compromise over [disputed] issues." Lynn's Food Stores, 679 F.2d at 1354. The parties argument that the proposed settlement agreement is "fair and reasonable, " in its entirety, is the following:
The settlement here is the fair and reasonable result of a bona fide dispute. The settlement follows contested litigation conducted by experienced counsel. The parties engaged in significant discovery as well as settlement negotiations conducted at arm's length and facilitated by an experienced mediator. In reaching agreement, the parties have taken into account the uncertainty and risks in litigation and the cost that each party will incur if litigation continues, including multiple jury trials. The parties have concluded that it is in their mutual interest to resolve the litigation in the manner set forth in the agreement. In this regard, the parties have fully evaluated the likelihood of prevailing on the merits of their claims and defenses, including the proper method for calculating unpaid overtime in the event that one or more of the plaintiffs prevails on their misclassification claims.
Plaintiffs have considered the potential value of their claims and concluded that the proposed settlement provides a fair and reasonable resolution of their claims. Home Depot supports this result since it eliminates the uncertainties, risks, and cost of ...