Miranda v. City of Ceres

District Court, E.D. California·Decided September 11, 2020·No. 1:18-cv-00041·Unknown

Opinion

DANIEL MIRANDA, on behalf of himself and Case No. 1:18-cv-00041-DAD-BAM all similarly situated individuals, FINDINGS AND RECOMMENDATIONS Plaintiff, REGARDING JOINT MOTION FOR APPROVAL OF SETTLEMENT v. CITY OF CERES, (Doc. No. 43) Defendant.

This Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., collective action is currently before the Court on a joint motion for approval of a settlement agreement. (Doc. No. 42.) The matter was referred to the undersigned for findings and recommendations pursuant to the Standing Order in Light of Ongoing Judicial Emergency in the Eastern District of California (Doc. No. 32) and Local Rule 302. On August 28, 2020, the motion came before the Court for hearing. Caren Sencer appeared by telephone on behalf of Plaintiff Daniel Miranda. Michael Youril appeared by telephone on behalf of Defendant City of Ceres. Having considered the briefing, and having heard the arguments of counsel, the Court will recommend that the joint motion to approve the settlement agreement be granted. This action is one of four related actions against the City of Ceres under the FLSA alleging that the City paid cash in lieu of health benefits, which were illegally excluded in the City’s calculation of employees’ regular rate of pay for the purposes of calculating overtime pay. On January 9, 2018, Plaintiff Daniel Miranda commenced this action to recover unpaid overtime compensation, liquidated damages and attorneys’ fees and costs based on the City’s alleged failure to include all statutorily required forms of compensation in the calculation of the regular rate of pay.1 (See generally Doc. No. 1.) On May 8, 2018, the Court issued a Preliminary Scheduling Order, setting deadlines for conditional certification under the FLSA. (Doc. No. 21.) Prior to the deadline for conditional certification, the parties filed a stipulation for conditional certification and facilitated class notice. (Doc. No. 22.) On December 14, 2018, the Court granted the parties’ stipulation. Specifically, the Court conditionally certified this action as a collective action under 29 U.S.C. § 216(b) consisting of all current or former employees of the City who worked statutory overtime under the FLSA and received cash payments in lieu of health care benefits or savings payments that were not included in the regular rate, between January 9, 2015 and the date conditional certification was issued, except for those individuals who opted-in to, and signed individual waivers in, McManus, et al. v. City of Ceres, United States District Court Case No.: 1:17-cv- 00355-DAD-MJS; Quiroz, et al. v. City of Ceres, United States District Court Case No. 1:17-cv- 00444-DAD-BAM or Amador et al. v. City of Ceres, United States District Court Case No.: 1:17-cv-00552-DAD-MJS. (Doc. No. 23 at 3.) The size of the collective is 38 persons, including plaintiff Miranda. The court appointed Plaintiff Daniel Miranda as collective action representative and Weinberg, Roger & Rosenfeld as counsel for the collective class. The court also approved the proposed class notice and directed that notice be distributed consistent with the parties’ stipulation. (Id.) On May 20, 2020, the parties participated in a court-sponsored settlement conference. The matter settled. (Doc. No. 38.) No substantive motion practice occurred. On July 20, 2020, the parties filed the instant joint request for approval of the settlement 1 Plaintiff also asserted claims under the California Labor Code, which subsequently were dismissed. (Doc. agreement. (Doc. No. 43.) The settlement agreement proposes a total payment of $99,500 to be allocated as follows: $43,234.96 in settlement of plaintiffs’ claims for overtime compensation; and $56,265.04 for attorneys’ fees and costs (Doc. No. 43 at 7; Doc. No. 43-2 at 8-9.) Each of the plaintiffs has voluntarily and affirmatively opted-in to the lawsuit and agreed “to become [a] party plaintiff and to be bound by any settlement of this action or adjudication by the Court.” (Doc. No. 43-1 at ¶ 3; Doc. No. 43-2 at ¶ 12.) The consents were filed with the court. (Doc. Nos. 1-1, 5-1, 6, 25.) Attachment A to the Settlement Agreement provides the individual amount that each plaintiff will receive under the Settlement Agreement.2 (Doc. No. 43-2 at ¶ 13.) “The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract.” Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69 (2013). Because an employee cannot waive claims under the FLSA, they may not be settled without supervision of either the Secretary of Labor or a district court. See Barrentine v. Ark.– Best Freight Sys., Inc., 450 U.S. 728, 740 (1981); Kerzich v. Cty. of Tuolumne, No. 1:16-cv- 01116-DAD-SAB, 2019 WL 1755496, at *2 (E.D. Cal. Apr. 19, 2019). Thus, absent supervision by the Secretary of Labor, settlement of collective action claims under the FLSA requires court approval. See Jones v. Agilysys, Inc., No. C 12–03516 SBA, 2014 WL 108420, at *2 (N.D. Cal. Jan. 10, 2014); Quiroz v. City of Ceres, No. 1:17-cv-00444-DAD-BAM, 2019 WL 1005071, at *2 (E.D. Cal. Mar. 1, 2019) (“Settlement of collective action claims under the FLSA requires court approval.”). The Ninth Circuit has not established criteria for district courts to consider in determining whether a FLSA settlement should be approved. Dunn v. Teachers Ins. & Annuity Ass’n of Am., No. 13-CV-05456-HSG, 2016 WL 153266, at *3 (N.D. Cal. Jan. 13, 2016). However, district 2 The list indicates some individuals who opted to participate in the case but will not receive a monetary settlement based on their individualized circumstances. Each of these individuals has consented to the settlement of their claim without a monetary component. (Doc. No. 43-1 at ¶¶ 4, 12.) courts in this circuit have applied the widely used standard adopted by the Eleventh Circuit, which looks to whether the settlement is a fair and reasonable resolution of a bona fide dispute. Id.; see also Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982); Selk v. Pioneers Mem’l Healthcare Dist., 159 F. Supp. 3d 1164, 1172 (S.D. Cal. 2016); Nen Thio v. Genji, LLC, 14 F. Supp. 3d 1324, 1333 (N.D. Cal. 2014). “A bona fide dispute exists when there are legitimate questions about the existence and extent of Defendant’s FLSA liability.” Kerzich v. County of Tuolomne, 335 F. Supp.3d 1179, 1184 (E.D. Cal. 2018) (quoting Selk, 159 F. Supp. 3d at 1172). A court will not approve a settlement of an action in which there is certainty that the FLSA entitles plaintiffs to the compensation they seek, because to do so would shield employers from the full cost of complying with the statute. Selk, 159 F. Supp. 3d at 1172. Once it is established that there is a bona fide dispute, courts often apply the Rule 23 factors for assessing proposed class action settlements when evaluating the fairness of a FLSA settlement, while recognizing that some of those factors do not apply because of the inherent differences between class actions and FLSA actions. Khanna v. Inter-Con Sec. Sys., Inc., No. CIV S-09-2214 KJM GGH, 2013 WL 1193485, at *2 (E.D. Cal. Mar. 22, 2013). To determine whether the proposed FLSA settlement is fair, adequate, and reasonable, courts in this circuit have balanced factors such as:

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