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Ross v. Jack Rabbit Services, LLC

United States District Court, W.D. Kentucky, Louisville Division

December 15, 2016

RICHARD ROSS, Plaintiff,
JACK RABBIT SERVICES, LLC, et al., Defendants.


          David J. Hale, Judge United States District Court

         The 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 granted.

         I. BACKGROUND

         This is 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).

         Defendants 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 # 875-76)

         After 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. (Id.)

         II. STANDARD

         Like a 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.


         A. Settlement Agreement Terms

         As a 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).

         Despite 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 ...

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