United States District Court, N.D. California, San Jose Division
ORDER GRANTING PLAINTIFFS' UNOPPOSED MOTION FOR
APPROVAL OF FLSA COLLECTIVE SETTLEMENT, NAMED PLAINTIFF
SERVICE PAYMENTS, AND ATTORNEYS' FEES AND COSTS;
DISMISSING RULE 23 CLASS CLAIMS [RE: ECF 69]
LAB SON FREEMAN UNITED STATES DISTRICT JUDGE.
the Court is Plaintiffs' Unopposed Motion for Approval of
FLSA Collective Settlement, Named Plaintiff Service Payments,
and Attorneys' Fees and Cost. Mot., ECF 69. In this
putative class and collective action, Plaintiffs Hugo Madrid,
Leigha Salyers, and Jenifer Marchon (collectively,
“Named Plaintiffs”) allege that Defendants
teleNetwork Partners, LTD., d/b/a teleNetwork, and
teleNetwork California, Inc. (collectively,
“Defendants” or “teleNetwork”)
violated the Fair Labor Standards Act (“FLSA”),
29 U.S.C. § 201, et seq., and various
California labor laws. See Compl. ¶ 1, ECF 1.
Pending before the Court is Plaintiffs' motion seeking
settlement approval. Mot. at 1-2. The settlement resolves the
claims of the Named Plaintiffs and the 65 individuals who
opted in to the FLSA collective action (collectively,
“Opt-In Plaintiffs”) (together with Named
Plaintiffs, “Plaintiffs”). In their motion,
Plaintiffs request that the Court approve the payments to the
Opt-In Plaintiffs, the service awards to the Named
Plaintiffs, and the attorney's fees and litigation costs,
as well as dismiss without prejudice the claims of the
putative Rule 23 class members who did not opt in to the FLSA
claims. See Id. at 2.
considered the papers filed by the parties, the relevant
legal authority, and the oral arguments at the June 20, 2019
hearing, the Court GRANTS Plaintiffs' motion for
Factual and Procedural Background
August 8, 2017, Named Plaintiffs filed this putative
collective and class action case under the Fair Labor
Standards Act (“FLSA”), 29 U.S.C. § 201,
et seq., and various California labor laws. Compl.
¶ 1. TeleNetwork provides call-center services from
their physical call centers in Texas and California.
Id. ¶¶ 2, 27. TeleNetwork employed Named
Plaintiffs as customer service representatives
(“CSRs”) in these call centers. Id.
¶¶ 2-3, 24-26. Named Plaintiffs allege that
Defendants did not accurately compensate them for all the
work they performed from the beginning of their work shifts
through the end of their shifts. Id. ¶¶
5-9. Specifically, Named Plaintiffs allege that they did not
receive compensation for the time it took for them to execute
required tasks at the beginning of their shifts, such as
turning on the computer, logging into the appropriate
software, and entering in their time. Id.
¶¶ 7-9, 29-33. In addition, Named Plaintiffs allege
that Defendants failed to provide them with a bona fide meal
period because Defendants required Named Plaintiffs to return
to their stations and log back into their computers before
the end of their meal breaks. Id. ¶¶
34-38. Finally, Named Plaintiffs allege that they were not
compensated for post-shift work because Defendants did not
compensate them for the time spent logging out of the systems
and shutting down their workstations. Id.
on these alleged actions, Named Plaintiffs assert the
following causes of action against Defendants: (1) a
violation of the FLSA, 29 U.S.C. § 201, et seq,
for failure to pay overtime wages, id. ¶¶
77-87; (2) a violation of California Labor Code §§
223, 510, 1194, 1197.1, 1198, and IWC Wage Order 4, for
failure to pay overtime, id. ¶¶ 88-96; (3)
a violation of California Labor Code §§ 223, 1194,
1197, 1197.1, and IWC Wage Order 4, for failure to pay
minimum wage and regular wages for all hours worked,
id. ¶¶ 97-103; (4) a violation of
California Labor Code §§ 221 and 223, for unlawful
deductions of wages, id. ¶¶ 104-10; (5) a
violation of California Labor Code §§ 226.7, 512,
and IWC Wage Order 4, for failure to provide meal breaks,
id. ¶¶ 111-19; (6) a violation of
California Labor Code § 226, for the failure to provide
accurate wage statements, id. ¶¶ 120-24;
(7) a violation of California Labor Code §§ 201,
202, and 203, for the failure to timely pay wages upon
discharge, id. ¶¶ 125-29; (8) a violation
of California Business and Professions Code § 17200,
et seq., id. ¶¶ 130-37; and (9)
violations under the Private Attorneys General Act
(“PAGA”), California Labor Code § 2698,
et seq., id. ¶¶ 138- 44.
Plaintiffs bring these claims on behalf a putative collective
for the alleged FLSA violation and a putative class for the
alleged California labor law violations. The collective is
defined as “[a]ll similarly situated current and former
hourly brick-and-mortar Customer Service Representatives who
work or have worked for Defendants at any time from August 8,
2014 through judgment.” Id. ¶ 54. The
class is defined as “[a]ll similarly situated current
and former hourly brick-and-mortar Customer Service
Representatives who work or have worked for Defendants in
California at any time from August 8, 2013 through
judgment.” Id. ¶ 68.
September 20, 2017, the Court granted the Parties'
stipulation to conditionally certify the FLSA collective
action and to provide notice to the putative collective
members. ECF 23. On September 22, 2017, Defendants answered
the Complaint. ECF 24. By the end of the 45-day opt-in
period, the 65 Opt-In Plaintiffs had filed consents to join
the litigation. ECF 30-45. After the close of the opt-in
period, the Parties began settlement discussions. Mot., Ex. B
(“Stoops Decl.”) ¶ 22, ECF 69-2. The
Parties' settlement discussions took place over
approximately 12 months, and they reached a settlement in
December 2018. Id.
Parties' Settlement Agreement, Defendants agreed to a
gross settlement amount of $65, 000. Mot., Ex. A
(“Settlement Agreement”) § 2.B.1, ECF 69-1.
The gross settlement reserves $31, 894.63 for attorney's
fees and costs. Id. § 2.B.2. In addition, Named
Plaintiffs will receive $2, 000 each from the gross
settlement amount as service awards. Id. §
2.B.3. The remainder ($27, 105.37) will be distributed as
individual payments to each participating Opt-In Plaintiff.
Id. § 2.B.4. The gross settlement does not
allocate any money to the PAGA claim. Id. §
2.B.5. The terms of the settlement also state that Defendants
will donate any uncashed settlement checks or other residual
funds to the California Unclaimed Wage Fund. Id.
§ 2.B.6. Finally, the gross settlement does not include
Defendants' share of payroll taxes, so Defendants will
need to pay those taxes in addition to the settlement amount.
Id. § 2.B.1.
terms of the allocation formula for individual payments, the
payments will be determined by considering the number of
hours and weeks that each Opt-In Plaintiff worked, as well as
each employee's hourly rate. Mot., Ex. D
(“Settlement Notice”) at 2, ECF 69-4. Any work
week in which an Opt-In Plaintiff worked fewer than 39 hours
will not be counted. Id. However, additional hours
and weeks that an Opt-In Plaintiff worked will increase his
or her individual payment. See Id. Each Opt-In
Plaintiff will receive a minimum individual payout of $80.
Id. The Settlement Agreement also allocates 50% of
each individual payment to wages, which will be subject to
all required payroll taxes and deductions. Mot. at 10;
Settlement Agreement § 2.B.4.
the terms of the Settlement Agreement, Plaintiffs agreed to
release “any and all wage and hour claims” under
both state and federal law “that were made or could
have been made” against Defendants in this action.
Id. § 3.A. Plaintiffs also consented to release
their PAGA claims and their rights to any other fees or costs
related to this litigation. Id. § 3.A-C.
Finally, Plaintiffs agreed to seek Court approval to dismiss
without prejudice the putative class claims. Id.
will mail settlement notices enclosing the settlement checks
to Plaintiffs no later than 90 days after the Court approves
the settlement. Id. § 2.B.4. The Settlement
Notice will inform each Opt-In Plaintiff of the claims made,
the terms of the Settlement Agreement, their share of the
Settlement Payment, and the claims that they are releasing.
See Settlement Notice. Defendants will also notify
Plaintiffs' Counsel if any checks are undeliverable, and
Plaintiffs' Counsel will attempt to locate these Opt-In
Plaintiffs. Settlement Agreement § 2.B.6. Per the
agreement, Opt-In Plaintiffs will have 180 calendar days
after the initial issuance of their settlement check to sign
and cash the settlement check. Id. Finally,
Plaintiffs' Counsel stated that they notified the Opt-In
Plaintiffs of the terms of the Settlement Agreement before
filing the motion. See Stoops Decl. ¶ 39. At
oral argument, Plaintiffs' Counsel stated to the Court
that they notified the Opt-In Plaintiffs of the terms of the
Settlement Agreement on firm letterhead and gave the Opt-In
Plaintiffs until the date of this Order to opt-out. No.
Opt-In Plaintiffs objected or opted out.
[FLSA] seeks to prohibit ‘labor conditions detrimental
to the maintenance of the minimum standard of living
necessary for health, efficiency, and general wellbeing of
workers.'” Kasten v. Saint-Gobain Performance
Plastics Corp., 563 U.S. 1, 11 (2011) (quoting 29 U.S.C.
§ 202(a)). Employees cannot waive their rights under the
FLSA since doing so would “nullify the purposes”
of the statute. Barrentine v. Arkansas-Best Freight Sys.,
Inc., 450 U.S. 728, 740 (1981). Accordingly, either the
Secretary of Labor or a district court must approve the
settlement of an FLSA claim. See Gonzalez v. Fallanghina,
LLC, No. 16-CV-1832-MEJ, 2017 WL 1374582, at *2 (N.D.
Cal. Apr. 17, 2017); Slezak v. City of Palo Alto,
No. 16-CV-3224-LHK, 2017 WL 2688224, at *1 (N.D. Cal. June
Ninth Circuit has not specifically addressed the criteria
courts should use to determine whether to approve an FLSA
settlement. However, district courts in the Ninth Circuit
have followed the standard set forth in the Eleventh
Circuit's Lynn's Food Stores, Inc. v. United
States, 679 F.2d 1350 (11th Cir. 1982). See, e.g.,
Gonzalez, 2017 WL 1374582 at *2; Slezak, 2017
WL 2688224, at *2. Under Lynn Food Stores, before
approving an FLSA settlement, the court must scrutinize the
settlement agreement to determine if it is “a fair and
reasonable res[o]lution of a bona fide dispute over FLSA
provisions.” 679 F.2d at 1355. If the settlement
reflects a reasonable compromise over issues that are in
dispute, the Court may approve the settlement “in order
to promote the policy of encouraging settlement of
litigation.” Id. at 1354.
their motion, Plaintiffs request that the Court issue an
order (1) approving the $65, 000 FLSA claim settlement and
allocation formula according to the terms of the Settlement
Agreement; (2) approving attorney's fees and litigation
costs in the amount of $31, 894.63; (3) distributing $2, 000
in service awards to each of the Named Plaintiffs for a total
of $6, 000; and (4) dismissing without prejudice the ...