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Madrid v. Telenetwork Partners, Ltd.

United States District Court, N.D. California, San Jose Division

July 23, 2019

HUGO MADRID, et al., Plaintiffs,
v.
TELENETWORK PARTNERS, LTD., et al., Defendants.

          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]

          BETH LAB SON FREEMAN UNITED STATES DISTRICT JUDGE.

         Before 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.

         Having 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 settlement approval.

         I. BACKGROUND

         A. Factual and Procedural Background

         On 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. ¶¶ 39-42.

         Based 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.

         Named 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.

         On 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.

         B. Settlement Agreement

         In the 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.

         In 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.

         Under 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. § 2.A.

         Defendants 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.

         II. 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 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 22, 2017).

         The 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.

         III. DISCUSSION

         In 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 ...


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