United States District Court, W.D. Kentucky, Louisville Division
MEMORANDUM OPINION AND ORDER
J. Hale, Judge United States District Court
parties have filed a Joint Motion for Approval of Proposed
Settlement, Incentive Award, and an Award of Attorneys'
Fees and Costs, and seek dismissal of this action with
prejudice. (Docket Nos. 131, 133) For the reasons discussed
below, the Court finds that the settlement agreement,
incentive award, and attorneys' fees and costs are fair
and reasonable. Therefore, the parties' motion will be
a collective action brought pursuant to the Fair Labor
Standards Act (FLSA), 29 U.S.C. § 216(b). The FLSA
guarantees employees certain rights, like fair compensation,
overtime pay, and minimum-wage. Crawford v.
Lexington-Fayette Urban Cty. Gov't, No. 06-299-JBC,
2008 WL 4724499, *2 (E.D. Ky. Oct. 23, 2008); Keller v.
Miri Microsystems LLC, 781 F.3d 799, 806 (6th Cir.
2015). Only employees are afforded these protections;
independent contractors are not protected under the FLSA.
Keller, 781 F.3d at 806. “The central purpose
of the FLSA is to protect covered employees against labor
conditions ‘detrimental to the maintenance of the
minimum standard of living necessary for health, efficiency,
and general well-being of workers.'” Id.
(quoting 29 U.S.C. § 202).
either currently employ or formerly employed Plaintiffs as
roadside assistance technicians. (D.N. 88, PageID # 874-75)
Plaintiffs allege that Defendants violated the FLSA by:
(1) misclassifying roadside assistance technicians as
independent contractors; (2) failing to pay roadside
assistance technicians the minimum wage in violation of FLSA
and state wage and hour laws; (3) knowingly suffering and
permitting Plaintiff and the putative Class members to work
in excess of 40 hours during a workweek without paying
overtime compensation at a rate of one-and-one half times
their regular rate; (4) improperly reducing pay to Plaintiffs
and the putative Class members through unlawful deductions;
and (5) adopting and implementing employment policies which
violate the FLSA and state wage and hour laws.
(Id., PageID # 875) The basis of these allegations
is that Defendants required Plaintiffs to sign an
“Independent Contractor Agreement” that did not
provide for the minimum wage, proper overtime compensation,
and subjected them to pay reductions through
“damage” deductions. (D.N. 88, PageID # 881)
Plaintiffs assert that this alleged misclassification as
independent contractors was a means for the Defendants
“to coerce workers in the Class to waive their
statutory rights” under the FLSA. (Id., PageID
# 883) For their recovery, Plaintiffs sought damages, back
pay, restitution, liquidated damages, declaratory relief,
civil penalties, prejudgment interest, and reasonable
attorneys' fees and costs. (Id., PageID #
nearly three years litigating this case, the parties
successfully negotiated a settlement and have attached a copy
of the resulting settlement agreement to their motion.
(See D.N. 131-4) The settlement agreement disposes
of all claims and describes the various payments Defendants
will make to Plaintiffs and Plaintiffs' counsel.
(Id., PageID # 1376-79) The settlement agreement
provides that the named plaintiffs are to receive an
incentive award in the amount of $15, 000. (Id.,
PageID # 1376) Plaintiffs will receive as damages an amount
equal to $25.00 per week worked, or $50.00 per week worked
for Plaintiffs in California, but these payments shall not
exceed $65, 000. (Id.) Plaintiffs' counsel will
receive $42, 000 for expenses and costs, as well as
attorneys' fees in an amount no less than $58, 000.
settlement agreement pursuant to Fed.R.Civ.P. 23(e)(1)(C),
courts in the Sixth Circuit require a settlement agreement
under the FLSA to be approved by the court. See Steele v.
Staffmark Invs., LLC, 172 F.Supp.3d 1024, 1026 (W.D.
Tenn. 2016); Arrington v. Mich. Bell. Tel. Co., No.
10-10975, 2012 U.S. Dist. LEXIS 157362, at *2 (E.D. Mich.
Nov. 2, 2012); Crawford, 2008 WL 4724499 at *3. The
Sixth Circuit has identified seven factors that aid courts in
determining whether a class-action settlement is fair: (1)
the risk of fraud or collusion; (2) the complexity, expense,
and likely duration of the litigation; (3) the amount of
discovery engaged in by the parties; (4) the likelihood of
success on the merits; (5) the opinions of class counsel and
class representatives; (6) the reaction of absent class
members; and (7) the public interest. Int'l Union,
United Auto., Aerospace, and Agric. Implement Workers of
America v. Gen. Motors Corp., 497 F.3d 615, 631 (6th
Cir. 2007) (citing Granada Invs., Inc. v. DWG Corp.,
962 F.2d 1203, 1205 (6th Cir. 1992)). “The Court may
choose to consider only those factors that are relevant to
the settlement at hand and may weigh particular factors
according to the demands of the case.”
Crawford, 2008 WL 4724499 at *3 (quoting
Redington v. Goodyear Tire & Rubber Co., No.
5:07CV1999, 2008 WL 3981461, at *11 (N.D. Ohio Aug. 22,
2008)). These factors apply to settlement agreements made in
FLSA actions, see id., and must be considered along
with the federal policy favoring settlement of class actions.
See Int'l Union, 497 F.3d at 632.
Settlement Agreement Terms
preliminary matter, the Court must determine whether a bona
fide dispute exists. The FLSA creates a statutory entitlement
that employers and employees generally may not agree to pay
or receive less than what the statute provides for.
Crawford, 2008 WL 4724499, *3 (citing Martin v.
Indiana Michigan Power Co., 292 F.Supp.2d 947 (W.D.
Mich. 2002). However, a federal district court may approve
the settlement of a suit brought pursuant to § 216(b) of
the FLSA. Id. (citing Lynn's Food Stores v.
U.S., 679 F.2d 1350 (11th Cir. 1982)). A federal
district court approving any settlement of claims must
determine whether a bona fide dispute exists to ensure that
plaintiff employees have not relinquished their rights to
compensation guaranteed by the statute. Id.
“Without a bona fide dispute, no settlement could be
fair and reasonable. Thus, some doubt must exist that
Plaintiffs would succeed on the merits through litigation of
their claims.” Collins v. Sanderson Farms,
Inc., 586 F.Supp.2d 714, 719- 20 (E.D. La. 2008).
the parties' assertion that there is a bona fide dispute
over whether Defendants violated the FLSA (D.N. 131-1, PageID
# 1361), the Court must make its own assessment. See
Collins 586 F.Supp.2d at 719. At the heart of
Plaintiffs' claims is the assertion that they were really
employees under the FLSA, rather than independent
contractors. (D.N. 88, PageID # 882- 84) The ...