Flerlage v. US Foods, Inc.

District Court, D. Kansas·Decided October 28, 2020·No. 2:18-cv-02614·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

MARGARET FLERLAGE & MARKUS MURRAY, individually, and on behalf of all others similarly situated,

Plaintiffs, Case No. 18-2614-DDC-TJJ

v.

US FOODS, INC.,

Defendant. ______________________________________

MEMORANDUM AND ORDER This matter comes before the court on defendant’s Unopposed Motion Regarding Revised Amounts for Attorneys’ Fees, Costs, and Representative Plaintiffs Service Awards, to Preliminarily Approve FLSA Settlement, and to Approve Amended Notice to Class (Doc. 58). The motion asks the court to (1) approve revised amounts of attorneys’ fees, costs, and representative plaintiffs service awards, (2) grant preliminary approval of the parties’ proposed FLSA settlement based thereon, and (3) approve an Amended Notice to Class. Doc. 58 at 1. The central issue here is whether the amounts of money that the proposed settlement allocates for attorneys’ fees, costs, and service awards are appropriate. The court declined to approve the sums the parties proposed in February 2020. The parties now return to the plate for another at-bat. As explained below, the court grants the motion. It approves preliminarily the parties’ FLSA settlement and approves conditionally the Amended Notice to the Class. I. Background On January 22, 2019, plaintiffs Margaret Flerlage and Markus Murray filed, collectively and as a class action, claims against defendant US Foods, Inc. for violating the Fair Labor Standards Act (FLSA) and the Kansas Wage Payment Act (KWPA). Doc. 14 at 4 (Am. Compl. ¶ 6). On August 29, 2019, the parties engaged in mediation. They then asked the court to approve preliminarily the resulting Settlement Agreement. See Doc. 54 at 1 (Mot. for Prelim. Settlement Approval); Doc. 55 at 3 (Mem. in Supp.). The court granted the motion to certify the collective class for notice purposes but declined to approve preliminarily the settlement for the

FLSA claims. Doc. 56 at 28–29. Specifically, the court declined to approve the requested award for fees and costs. Id. at 28. The court invited the parties to reapply for approval of fees, costs, and awards with reduced amounts that conform to the governing standards and with a fuller justification of their request for costs. Id. The parties accepted that invitation. On August 27, 2020, defendant filed an unopposed motion proposing reduced amounts for attorneys’ fees, costs, and awards. Doc. 58 at 1. The court now considers that motion and the revised sums it proposes. II. Legal Standard Governing Preliminary Approval of an FLSA Settlement When parties settle FLSA claims, they must present the settlement to the court to review

and decide whether the settlement is fair and reasonable. Barbosa v. Nat’l Beef Packing Co., LLC, No. 12-2311-KHV, 2015 WL 4920292, at *3 (D. Kan. Aug. 18, 2015) (citing Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982)). To approve an FLSA settlement, the court must decide whether: (1) the litigation involves a bona fide dispute, (2) the proposed settlement is fair and equitable to all parties, and (3) the proposed settlement contains an award of reasonable attorneys’ fees. Barbosa, 2015 WL 4920292, at *5 (citing McCaffrey v. Mortg. Sources, Corp., No. 08-2660-KHV, 2011 WL 32436, at *2 (D. Kan. Jan. 5, 2011)). III. Discussion A. Whether the Litigation Involves a Bona Fide Dispute Before approving an FLSA settlement, the parties must submit information sufficient for the court to conclude that a bona fide dispute exists. McCaffrey, 2011 WL 32436, at *4 (citing Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227, 1241 (M.D. Fla. 2010)). In its prior Memorandum

and Order, the court explained why this litigation involves a bona fide dispute. See Doc. 56 at 19. The court sticks with that conclusion. B. Whether Proposed Settlement is Fair and Equitable to All Parties The court next considers whether the proposed settlement is fair and equitable. “To be fair and reasonable, an FLSA settlement must provide adequate compensation to the employee and must not frustrate the FLSA policy rationales.” Solis v. Top Brass, Inc., No. 14-cv-00219- KMT, 2014 WL 4357486, at *3 (D. Colo. Sept. 3, 2014). To determine whether the proposed settlement is fair and equitable, courts regularly examine the factors that apply to proposed class action settlements under Rule 23(e). Tommey v. Computer Scis. Corp., No. 11-CV-02214-EFM,

2015 WL 1623025, at *2 (D. Kan. Apr. 13, 2015); Barbosa v. Nat’l Beef Packing Co. LLC, No. 12-2311-KHV, 2014 WL 5099423, at *7 (D. Kan. Oct. 10, 2014). The court concluded previously that the proposed settlement satisfies the factors found under Federal Rule of Civil Procedure 23(e). See Doc. 56 at 8–12, 20. The court also concluded that “plaintiffs’ proposed notice is sufficient” save for its fees and awards problem. See id. at 12–16, 20. And the court found that the proposed Settlement Agreement contained no confidentiality agreements that might otherwise undermine its fairness and reasonableness. Id. at 20–21. The court sees no reason to depart from those conclusions now. The court also must determine whether any service award payments are fair and reasonable. See Tommey, 2015 WL 1623025, at *2 (“The Court is required to examine any enhancement payment to the class representative to determine whether that person has used the class action claim for unfair personal aggrandizement in the settlement, with prejudice to absent putative class members.” (citation and internal quotation marks omitted)); Grove v. ZW Tech,

Inc., No. 11-2445-KHV, 2012 WL 1789100, at *7 (D. Kan. May 17, 2012) (reasoning that without information about the nature of the named-plaintiffs’ involvement and time invested in the case, the court “cannot determine whether the proposed service payments are fair and reasonable.”). Here, the court concluded that the service awards proposed initially were not fair and reasonable. See Doc. 56 at 22. The court explained that two defects inhered in the proposed amounts. First, the princely sums proposed would have rewarded plaintiffs about $106 and $78 per hour respectively for their work on this case. The court found those rates to be far outside the ballpark since “our court has found that $20 per hour is a reasonable incentive fee.” Id.

(quoting Foster v. Robert Brogden’s Olathe Buick GMC, Inc., No. 17-2095-DDC-JPO, 2019 WL 1002046, at *7 (D. Kan. Feb. 28, 2019)) (quotation marks and alteration omitted). Second, the proposed awards far exceeded the recovery any class member could make in the settlement. Id. Those defects sunk the proposal. But now, the parties propose reduced representative service awards. See Doc. 58 at 2. Defendant’s unopposed motion asks that the named-plaintiffs receive awards reflecting the court’s standard $20 per hour for the time each named-plaintiff dedicated to prosecuting this action. Id. Ms. Flerlage worked 34 hours, producing a proposed award of $680, and Mr. Murray’s 46 hours yield a proposed award of $920. Id. These proposed awards are consistent with rates of other incentive fees that our court has deemed reasonable. See Foster, 2019 WL 1002046, at *7 (citing Peterson v. Mortg. Sources, Corp., No. 08-2660-KHV, 2011 WL 3793963, at *8 & n.19 (D. Kan. Aug. 25, 2011) (“the Court finds that $20.00 per hour is a reasonable incentive fee”)). The court thus concludes that awards of $680 for Ms. Flerlage and $920 for Mr. Murray compensate them adequately and reasonably.

But before the court can conclude that the proposed settlement is fair and reasonable, the court must evaluate the proposed attorneys’ fees award. C.

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Flerlage v. US Foods, Inc., (D. Kan. 2020).

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