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Gonzalez v. Fallanghina, LLC

United States District Court, N.D. California

April 17, 2017

JOSE GONZALEZ, Plaintiff,
v.
FALLANGHINA, LLC, et al., Defendants.

          ORDER RE: MOTION FOR SETTLEMENT OF FLSA CLAIMS Re: Dkt. No. 43

          MARIA-ELENA JAMES, United States Magistrate Judge

         INTRODUCTION

         Plaintiff Jose Gonzalez (“Plaintiff”) and Defendants Fallanghina, LLC dba Paisan Osteria (“Paisan”); Longbranch Berkeley LLC dba Longbranch Saloon (“Longbranch”); Hal Brandel; and Walter Wright (collectively, “Defendants”) have filed a Joint Motion to Approve Settlement of Plaintiff's claims brought under the Fair Labor and Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. Mot., Dkt. No. 43; see Settlement, Dkt. No. 43-1. The Court held a hearing on the matter on April 13, 2017. Having considered the parties' submissions, the record in this case, and the relevant legal authority, the Court GRANTS the parties' Motion.

         BACKGROUND

         A. Factual Background

         Paisan Osteria and Longbranch Saloon are restaurants located in Berkeley, California. See Second Am. Compl. (“SAC”) ¶ 9, Dkt. No. 39. Brandel owns the building that houses both restaurants and is a member and controlling shareholder of Longbranch. Id. ¶ 2. Wright is a member and controlling shareholder of Paisan. Id. ¶ 3.

         Around September 2013, Paisan hired Plaintiff as a dishwasher and paid him $10.50 an hour. Id. ¶ 8. Within a week, Plaintiff was promoted to the position of a cook. Id. Longbranch opened next door to Paisan in 2014; the restaurants were separated by a wall, with a doorway entry between them. Id. ¶ 9. Starting in December 2014, Plaintiff worked at Paisan as a cook from 8:00 a.m. to 3:00 or 4:00 p.m., then immediately walked next door to work at Longbranch as a dishwasher until approximately 11:00 p.m. Id. ¶ 11. Paisan and Longbranch shared several hourly employees, including lead cook, bar manager, front desk personnel, and wait staff. Id. Plaintiff was discharged from employment at Paisan and Longbranch around December 15, 2015. Id. ¶ 39.

         B. Procedural Background

         Plaintiff initiated this litigation on May 31, 2016 individually and on behalf of a putative FLSA collective. See Compl., Dkt. No. 1. On August, 19, 2016, Plaintiff filed the operative SAC, which asserts five claims. See SAC. He asserts the first claim for violation of section 207 of the FLSA, 29 U.S.C. § 207, against all Defendants on behalf of himself and similarly situated individuals. Id. at 2 & ¶¶ 15-22. He seeks to represent a putative collective of “hourly, non-exempt employees who worked for the joint employers [Paisan] and Longbranch, and who were not paid overtime wages pursuant to 29 U.S.C. § 207[.]” Id. ¶ 6. As an individual, Plaintiff asserts the remaining four claims against only Paisan and Longbranch: (1) California Labor Code section 510; (2) California Labor Code sections 226.7 and 512; (3) California Labor Code sections 201 through 203; and (4) California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200. Id. ¶¶ 23-49.

         The parties exchanged their initial disclosures and engaged in informal discovery; Defendants produced Plaintiffs and other putative collective members' time and payroll records and Paisan's and Longbranch's employee handbooks. Cha Decl. ¶ 3, Dkt. No. 43-1. On December 15, 2016, the parties participated in private mediation, which resulted in an agreement upon terms of a proposed settlement. Mot. at 5. On December 23, 2016, Plaintiff notified the Court that the parties reached a settlement of his individual FLSA claim. Letter, Dkt. No. 41. At this point, Plaintiff had not moved for collective certification. Although Plaintiff filed the SAC on behalf of similarly situated individuals, the Settlement only resolves Plaintiffs individual claims. Mot. at 2; see Settlement, Cha Decl., Ex. A. Plaintiff no longer intends to pursue a putative class or collective action on behalf of other employees. Letter at 1; see Mot. at 2 (“[T]he Parties have settled out Plaintiffs individual claims and seek approval of the settlement for his individual claims.”).

         The parties now seek the Court's approval of the proposed settlement. The Court continued the hearing on the matter until April 13, 2017 and ordered the parties to file a supplemental brief to address three issues: (1) how they calculated Plaintiffs recovery, (2) whether dismissal would prejudice putative collective members, and (3) the scope of the release. Order, Dkt. No. 44. The parties timely submitted a joint supplemental brief. Suppl. Br., Dkt. No. 45.

         SETTLEMENT TERMS

         The Settlement requires Defendants to pay a gross amount of $30,329. Settlement ¶ 3. Of that amount, Plaintiff will receive a total of $14,660: (1) $7,233 as reimbursement for Plaintiff s alleged unpaid wages and (2) another $7,233 designated for penalties and interest for those unpaid wages. Id. ¶ 3(a)-(b). The remaining $15,863 represents Plaintiffs attorneys' fees and costs and is to be paid directly to Plaintiffs counsel. Id. ¶ 3(c).

         The Settlement also provides for the dismissal of (1) all of Plaintiff s individual claims with prejudice and (2) Plaintiffs collective claim without prejudice. Id. ¶ 2.

         DISCUSSION

         A. Dismissal of Plaintiffs Individual Claims

          1. Legal Standard

          “The [FLSA] seeks to prohibit 'labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.'” Kasten v. Saint-Gobain Performance Plastics Corp., 563 U.S. 1, 11 (2011) (quoting 29 U.S.C. § 202(a)). “It does so in part by setting forth substantive wage, hour, and overtime standards.” Id. An employee cannot waive his or her rights under the FLSA “because this would nullify the purposes of the statute and thwart the legislative policies it was designed to effectuate.” Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 740 (1981) (internal quotation marks omitted). Thus, either the Secretary of Labor or a district court must approve the settlement of any FLSA claim. Dunn v. Teachers Ins. & Annuity Ass’n of Am., 2016 WL 153266, at *3 (N.D. Cal. Jan. 13, 2016) (citing Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982)). “If a settlement in an employee FLSA suit does reflect a reasonable compromise over issues, such as FLSA coverage or computation of back wages, that are actually in dispute[,] . . . the district court [may] approve the settlement in order to promote the policy of encouraging settlement of litigation.” Lynn’s Food Stores, 679 F.2d at 1354.

         The Ninth Circuit has identified criteria courts must consider in determining whether to approve a FLSA settlement. Otey v. CrowdFlower, Inc., 2015 WL 6091741, at *4 (N.D. Cal. Oct. 16, 2015). Courts in this district typically apply the criteria the Eleventh Circuit established in Lynn’s Food Stores, which requires an FLSA settlement to constitute “'a fair and reasonable resolution of a bona fide dispute over FLSA provisions.'” Id. (quoting Lynn’s Food Stores, ...


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