Vasquez v. Crane Cartage, LLC

• Court: District Court, E.D. California
• Decided: August 6, 2020
• Docket: 1:19-cv-00657
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 CHRISTOPHER VASQUEZ, individually, No. 1:19-cv-00657-DAD-SKO and on behalf of other members of the 12 general public similarly situated, 13 Plaintiff, ORDER APPROVING INDIVIDUAL FLSA SETTLEMENT, DISMISSING PLAINTIFF’S 14 v. INDIVIDUAL CLAIMS WITH PREJUDICE, AND CLOSING THIS CASE 15 CRANE CARTAGE, LLC, (Doc. No. 18) 16 Defendant. 17 18 This matter is before the court on the parties’ stipulation for court approval of their 19 agreement to settle plaintiff’s individual claims brought under the Fair Labor Standards Act 20 (“FLSA”) and to dismiss those claims with prejudice. (Doc. No. 18.) Though plaintiff initiated 21 this putative collective and class action, plaintiff does not now seek to conditionally certify a 22 collective or class action, and the parties have stipulated to dismiss any class or collective claims 23 without prejudice. (Id. at 2, 3.) Pursuant to the parties’ settlement agreement and Federal Rule of 24 Civil Procedure 41(a)(1)(A)(ii), plaintiff seeks dismissal of this action in its entirety, with the 25 court retaining jurisdiction for the sole purpose of enforcing the settlement agreement. (Id. at 2.) 26 BACKGROUND 27 Plaintiff was employed by defendant as a truck driver from approximately April 2016 to 28 July 2017 in Tracy, California. (Doc. No. 1 at ¶ 6; Doc. No. 18 at 2.) On May 14, 2019, plaintiff 1 filed this putative collective and class action alleging that defendant committed various wage and 2 hour violations under the FLSA and the California Labor Code. (Doc. No. 1.) Defendant 3 answered plaintiff’s complaint and denied plaintiff’s allegations. (Doc. No. 5.) 4 On July 21, 2020, the parties filed a stipulation for approval of their settlement agreement. 5 (Doc. No. 18.) Subject to the court’s approval, the settlement agreement provides that this action 6 will be dismissed in its entirety, with plaintiff’s individual claims being dismissed with prejudice, 7 and in consideration defendant will pay a gross settlement amount of $40,000. (Doc. No. 18-1.) 8 The gross settlement amount consists of three separate payments: (1) $2,500 to plaintiff as full 9 compensation for plaintiff’s claim of past due wages; (2) $7,500 to plaintiff as full compensation 10 for plaintiff’s claim of liquidated damages; and (3) $30,000 to plaintiff’s attorneys for attorneys’ 11 fees and costs. (Id. at 3.) 12 In support of the parties’ joint stipulation for approval of their settlement, plaintiff filed a 13 declaration from his counsel, Robert J. Drexler, Jr., in which attorney Drexler explains why he 14 believes that the parties’ settlement is fair and reasonable. (Doc. No. 18-2 at 3.) In his 15 declaration, attorney Drexler also describes his experience litigating wage and hour actions and 16 provides summaries of his billing records and expenses for litigating this action. (Id. at 6, 10.) 17 LEGAL STANDARD 18 The purpose of the FLSA is to protect workers from substandard wages and oppressive 19 working hours. See Barrentine v. Ark.-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981). “The 20 FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot 21 be modified by contract.” Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69 (2013). 22 Because an employee cannot waive claims under the FLSA, they may not be settled without 23 supervision of either the Secretary of Labor or a district court. See Barrentine, 450 U.S. at 740; 24 Yue Zhou v. Wang’s Rest., No. 05-cv-0279-PVT, 2007 WL 2298046, at *1, n.1 (N.D. Cal. Aug. 8, 25 2007). In evaluating whether to approve an agreement to settle an individual’s FLSA claims, one 26 district court explained, “[i]n reviewing a private FLSA settlement, the court’s obligation is not to 27 act as caretaker but as gatekeeper; it must ensure that private FLSA settlements are appropriate 28 given the FLSA’s purposes and that such settlements do not undermine the Act’s purposes.” 1 Goudie v. Cable Commc’ns, Inc., No. 08-cv-507-AC, 2009 WL 88336, at *1 (D. Or. Jan. 12, 2 2009). 3 The Ninth Circuit has not established criteria for district courts to consider in determining 4 whether an FLSA settlement should be approved. See Dunn v. Teachers Ins. & Annuity Ass’n of 5 Am., No. 13-cv-05456-HSG, 2016 WL 153266, at *3 (N.D. Cal. Jan. 13, 2016). However, in this 6 circuit, district courts have normally applied a widely used standard adopted by the Eleventh 7 Circuit, looking to whether the settlement is a fair and reasonable resolution of a bona fide 8 dispute. Id.; see also Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352–53 (11th 9 Cir. 1982); Selk v. Pioneers Mem’l Healthcare Dist., 159 F. Supp. 3d 1164, 1172 (S.D. Cal. 10 2016); Yue Zhou, 2007 WL 2298046, at *1. “A bona fide dispute exists when there are legitimate 11 questions about the existence and extent of Defendant’s FLSA liability.” Selk, 159 F. Supp. 3d at 12 1172 (internal quotation marks and citation omitted). A court will not approve a settlement of an 13 action in which there is certainty that the FLSA entitles plaintiffs to the compensation they seek, 14 because it would shield employers from the full cost of complying with the statute. Id. 15 District courts in this circuit have also taken note of the “unique importance of the 16 substantive labor rights involved” in settling FLSA actions and adopted a “totality of 17 circumstances approach that emphasizes the context of the case.” Id. at 1173. With this 18 approach, a “district court must ultimately be satisfied that the settlement’s overall effect is to 19 vindicate, rather than frustrate, the purposes of the FLSA.” Id. Settlements that reflect a fair and 20 reasonable compromise of issues that are actually in dispute may be approved to promote the 21 efficiency of encouraging settlement of litigation. McKeen-Chaplin v. Franklin Am. Mortg. Co., 22 No. 4:10-cv-05243-SBA, 2012 WL 6629608, at *2 (N.D. Cal. Dec. 19, 2012). 23 ANALYSIS 24 A. Bona Fide Dispute 25 Here, the parties contend in their joint stipulation that a bona fide dispute exists “because 26 there are ‘legitimate questions about the existence and extent of Defendant’s FLSA liability.’” 27 (Doc. No. 18 at 5) (quoting Selk, 159 F. Supp. 3d at 1172). In particular, plaintiff alleges that he 28 was not compensated for the work that he performed off-the-clock when spending time 1 undergoing mandatory drug testing, working before and after his scheduled shifts, and working 2 during his lunch breaks. (Doc. No. 18 at 5.) Defendant maintains, however, that plaintiff was 3 compensated for the time spent completing drug testing while he was employed, and that any 4 “time associated with driver orientation (including time taking drug tests) is not compensable 5 under [the Ninth Circuit’s decision in] Nance v. May Trucking Co., 685 F. App’x 602, 605 (9th 6 Cir. 2017).” (Id.) As to any other “off-the-clock” work, defendant argues that plaintiff has not 7 identified any workweeks in which his compensation was less than the minimum wage, and he 8 did not record any allegedly uncompensated time as required by defendant’s policies. (Id.) 9 The court has considered the parties’ arguments and agrees that a bona fide dispute exists 10 as to defendant’s liability under the FLSA. Approval of the parties’ proposed settlement 11 agreement thus would not thwart the purposes of the FLSA. The court therefore proceeds to 12 consider the fairness and reasonableness of the proposed settlement. 13 B. The Proposed Settlement is Fair and Reasonable 14 To determine whether a FLSA settlement is fair and reasonable, the court evaluates the 15 “totality of the circumstances” within the context of the purposes of the FLSA. Slezak v. City of 16 Palo Alto, No. 16-cv-03224-LHK, 2017 WL 2688224, at *3 (N.D. Cal. June 22, 2017). Courts in 17 this circuit have considered the following factors when determining whether a settlement is fair 18 and reasonable under the FLSA: (1) the plaintiff’s range of possible recovery; (2) the stage of 19 proceedings and amount of discovery completed; (3) the seriousness of the litigation risks faced 20 by the parties; (4) the scope of any release provision in the settlement agreement; (5) the 21 experience and views of counsel and the opinion of participating plaintiffs; and (6) the possibility 22 of fraud or collusion. See Selk, 159 F. Supp. 3d at 1173; Slezak, 2017 WL 2688224, at *3. The 23 court addresses each of these factors below. 24 1. Plaintiff’s Range of Possible Recovery 25 Under the terms of the settlement agreement, defendant will pay plaintiff a total sum of 26 $10,000.00. (Doc. No. 18-1 at 3.) According to the parties, this amount represents over three 27 times the maximum potential value of plaintiff’s FLSA claims, which plaintiff calculates as 28 follows: $180 in wages for time spent completely drug tests, $199.20 in wages for time spent 1 working during lunch breaks, and $2,400 in wages for time spent working before and after his 2 shifts. (Id. at 5–6.) Plaintiff’s damages calculations were based on plaintiff’s analysis of “more 3 than 850 pages of documents produced by Defendant, including Plaintiff’s personnel and payroll 4 records, and calculated [] based upon various legal outcomes.” (Id. at 5.) Thus, plaintiff has 5 calculated that his claims for off-the clock work are worth approximately $2,780 in total. (Id. at 6 5–6.) Because plaintiff will be compensated at more than three times his maximum potential 7 recovery under the FLSA, consideration of this factor weighs heavily in favor of approving the 8 settlement agreement. 9 2. The Stage of the Proceedings and the Amount of Discovery Completed 10 The court is also required to evaluate the stage of the proceedings and the amount of 11 discovery completed to ensure that “the parties carefully investigated the claims before reaching a 12 resolution.” Ontiveros v. Zamora, 303 F.R.D. 356, 371 (E.D. Cal. 2014). This factor will weigh 13 in favor of approval if the parties have sufficient information to make an informed decision 14 regarding settlement. Linney v. Cellular Alaska P’ship, 151 F.3d 1234, 1239 (9th Cir. 1998). 15 Here, the parties contend that they have sufficient information to make an informed 16 decision regarding settlement. Plaintiff’s counsel completed discovery and investigation of 17 plaintiff’s individual claims. (Doc. No. 18 at 5.) Specifically, as noted above, “[p]laintiff’s 18 counsel has analyzed more than 850 pages of documents produced by Defendant, including 19 Plaintiff’s personnel and payroll records, and calculated alleged damages based upon various 20 legal outcomes.” (Id.) Under these circumstances, the court finds that the parties had sufficient 21 information to reach an appropriate settlement. 22 3. The Seriousness of the Litigation Risks Faced by the Parties 23 Courts favor settlement where “there is a significant risk that litigation might result in a 24 lesser recover[y] for the class or no recovery at all.” Bellinghausen v. Tractor Supply Co., 306 25 F.R.D. 245, 255 (N.D. Cal. 2015). Here, although plaintiff believes his claims are meritorious, if 26 the case were to proceed to trial, plaintiff concedes that “he would have difficulty prevailing on 27 his claims for off-the-clock work as there are no written records available to substantiate his 28 claims.” (Doc. No. 18 at 6.) Accordingly, because there is substantial risk that plaintiff would 1 not prevail on his claims at trial, consideration of this factor weighs in favor of approval of the 2 parties’ FLSA settlement. 3 4. The Scope of Any Release Provision in the Settlement Agreement 4 “A FLSA release should not go beyond the specific FLSA claims at issue in the lawsuit 5 itself.” Slezak, 2017 WL 2688224, at *5. Expansive release of claims would allow employers to 6 unfairly extract valuable concessions from employees using wages that they are guaranteed by 7 statute. See Moreno v. Regions Bank, 729 F. Supp. 2d 1346, 1351 (M.D. Fla. 2010) (“An 8 employee who executes a broad release effectively gambles, exchanging unknown rights for a 9 few hundred or a few thousand dollars to which he is otherwise unconditionally entitled.”). 10 Courts are therefore hesitant to approve settlement agreements that release claims that are not 11 directly related to the allegations brought in the case. See Daniels v. Aeropostale W., Inc., No. C 12 12-05755 WHA, 2014 WL 2215708, at *4 (N.D. Cal. May 29, 2014) (rejecting proposed FLSA 13 settlement in which 60 percent of collective-action opt-in members did not receive any payment 14 in exchange for a release provision that extended beyond the FLSA limits of the case); McKeen– 15 Chaplin, 2012 WL 6629608, at *5 (rejecting a FLSA settlement in part because the release 16 provision exceeded the breadth of allegations in the action and released unrelated claims that 17 plaintiffs may have against defendants). 18 Here, the settlement agreement includes a broad release provision that is not limited to a 19 release of plaintiff’s FLSA claims. In fact, the release provision states that “[t]he parties intend 20 for this release to be as broad as possible.” (Doc. No. 18-1 at 5.) Plaintiff’s counsel declares that 21 “the settlement consideration of $10,000 for settlement and release of all claims arising out of 22 Plaintiff’s employment is fair and reasonable in light of the maximum potential value of 23 Plaintiff’s FLSA claims.” (Id. at 6.) The court finds that the broad scope of the release weighs 24 against approval of the parties’ settlement agreement. However, in the court’s view, the inclusion 25 of such a broad release does not preclude approval of the settlement agreement when considering 26 the totality of the circumstances. Most importantly here, the release pertains solely to plaintiff, 27 not to any putative class or collective members, because the parties have agreed to settle 28 plaintiff’s individual claims only. Moreover, it appears clear that plaintiff is not unconditionally 1 entitled to the full $10,000 he would be paid under the settlement. Rather, as shown by his own 2 calculations, he would be entitled to less than a third of that amount. Thus, under the settlement 3 plaintiff is in essence being compensated for agreeing to a broad release of claims he might have 4 against his former employer. 5 5. The Experience and Views of Counsel and the Opinion of Plaintiff 6 In determining whether a settlement is fair and reasonable, “[t]he opinions of counsel 7 should be given considerable weight both because of counsel’s familiarity with th[e] litigation 8 and previous experience with cases.” Larsen v. Trader Joe’s Co., No. 11-cv-05188-WHO, 2014 9 WL 3404531, *5 (N.D. Cal. July 11, 2014). Here, plaintiff’s counsel has considerable experience 10 in litigating and settling labor and employment cases and has represented to the court that this 11 settlement is fair, adequate, and in the best interests of plaintiff. (Doc. No. 18-2 at 3.) In 12 addition, plaintiff had an opportunity to review the terms of the settlement agreement and 13 ultimately accepted its terms and signed the agreement. (Id. at 18-1 at 11–12.) Accordingly, 14 consideration of this factor weighs in favor of approval of the FLSA settlement. 15 6. The Possibility of Fraud or Collusion 16 Here, the court finds that there is a low probability of fraud or collusion because the 17 parties used payroll record data to calculate unpaid wages and liquidated damages, and provided 18 plaintiff the opportunity to review the settlement amounts, and the amount of attorneys’ fees and 19 costs. (Id.) As noted, plaintiffs’ counsel asserts that the settlement amount is greater than the 20 maximum amount that plaintiffs could recover at trial even if he prevailed. (Doc. No. 18-2 at 3.) 21 This approach, based on an objective analysis of plaintiff’s time records, “guards against the 22 arbitrariness that might suggest collusion.” Selk, 159 F. Supp. 3d at 1179. 23 In addition, there is nothing in the record to suggest plaintiff’s counsel “allowed the 24 pursuit of their own self-interests . . . to infect the negotiation.” In re Bluetooth Prods. Liab. 25 Litig., 654 F.3d 935, 947 (9th Cir. 2011). The payment for attorneys’ fees and costs does not 26 detract from plaintiff’s recovery, since plaintiff will receive more than the full amount of what he 27 is allegedly due. As such, this settlement lacks any evidence of more “subtle signs” of collusion, 28 such as, for example, when counsel receive a disproportionate distribution of the settlement, or 1 when the plaintiff class receives no monetary distribution but counsel are “amply rewarded.” Id. 2 at 947. 3 Upon considering the totality of the circumstances, as reviewed above, the court finds that 4 the proposed settlement is fair and reasonable. 5 C. Attorneys’ Fees and Costs 6 Because FLSA settlements require court approval, payment of attorneys’ fees from 7 settlement proceeds is also subject to review by the court. See Avila v. L.A. Police Dep’t, 758 8 F.3d 1096, 1104–05 (9th Cir. 2014) (reviewing an award of attorneys’ fees under the FLSA); 9 Dunn, 2016 WL 153266, at *9 (N.D. Cal. Jan. 13, 2016) (“The Court retains the authority to 10 determine what fees are reasonable [in an FLSA settlement].”); Selk, 159 F. Supp. 3d at 1180 11 (“Where a proposed settlement of FLSA claims includes the payment of attorney’s fees, the court 12 must also assess the reasonableness of the fee award.”) (quoting Wolinsky v. Scholastic Inc., 900 13 F. Supp. 2d 332, 336 (S.D.N.Y. 2012)). 14 Here, the court will use the lodestar method to assess the reasonableness of the amount of 15 attorneys’ fees because the settlement agreement provides for payment of fees separate and apart 16 from the amount to be paid to plaintiff, i.e., this is not a common fund case. See Roberts v. City 17 of Chula Vista, No. 16-cv-1955-MMA-DHB, 2017 WL 6541105, at *6 (S.D. Cal. Dec. 21, 2017) 18 (using lodestar method where plaintiff’s counsel’s “fees and costs are not coming out of 19 plaintiffs’ recovery”). Under the lodestar method, courts multiply “the number of hours the 20 prevailing party reasonably expended on the litigation by a reasonable hourly rate.” Camacho v. 21 Bridgepoint Fin., Inc., 523 F.3d 973, 978 (9th Cir. 2008). “Although in most cases, the lodestar 22 figure is presumptively a reasonable fee award, the district court may, if circumstances warrant, 23 adjust the lodestar to account for other factors which are not subsumed within it.” Ferland v. 24 Conrad Credit Corp., 244 F.3d 1145, 1149 n.4 (9th Cir. 2001). 25 Under the terms of the settlement agreement, plaintiff’s counsel will be paid $30,000 in attorneys’ 26 fees and costs, which the parties contend is the “product of non-collusive, adversarial negotiations 27 conducted at arm’s-length.” (Doc. No. 18 at 7.) In light of plaintiff’s counsel’s lodestar 28 ///// 1 ($49,289.50) and expenses ($564.62), the parties assert that the amount of $30,000 is fair and 2 reasonable. (Id.) 3 In calculating the lodestar, plaintiff’s counsel utilized hourly rates of $485 for associates, 4 $545 for counsel, and $745 for partners. (Doc. No. 18-2 at 6–10.) The court notes that the 5 partner rate of $745 per hour is above the rate that has been employed by judges in this district 6 when evaluating requests for attorneys’ fees. The undersigned has previously accepted as 7 reasonable for lodestar purposes hourly rates of between $370 and $495 for associates, and $545 8 and $695 for senior counsel and partners. See Emmons v. Quest Diagnostics Clinical Labs., Inc., 9 1:13-cv-00474-DAD-BAM, at *8 (E.D. Cal. Feb. 27, 2017). Nevertheless, even if the court were 10 to calculate counsel’s lodestar using the $695 partner hourly rate for the 25.2 hours spent by 11 attorney Drexler, the lodestar is $48,029.50. Thus, the negotiated amount for attorneys’ fees and 12 costs of $30,000 is still substantially less than counsel’s lodestar. Moreover, plaintiff’s counsel’s 13 lodestar shows that 86.3 hours were spent litigating this action. (Doc. No. 18 at 7.) In the court’s 14 view, 86.3 hours is not an unreasonable amount of time given counsel’s review of extensive 15 discovery and analysis of plaintiff’s employment records. 16 Accordingly, the court finds the amount for attorneys’ fees and costs provided in the 17 settlement agreement is fair and reasonable under these circumstances. 18 CONCLUSION 19 For the reasons stated above: 20 1. The parties’ joint stipulation (Doc. No. 18) is granted; 21 2. The parties’ settlement agreement including the amount to be paid for attorneys’ 22 fees and costs, (Doc. No. 18-1) is approved as fair, adequate, and reasonable, and 23 the parties shall perform the settlement agreement in accordance with its terms; 24 3. The court expressly retains jurisdiction over this action for purposes of enforcing 25 the parties’ settlement agreement; 26 ///// 27 ///// 28 ///// wOoOe 4:20 UV OEE SINE MVOC PIO OPEN OY A VE tl

1 4. Plaintiff Christopher Vasquez’s individual claims in this action are dismissed with 2 prejudice; 3 5. Plaintiffs class and collective action claims are dismissed without prejudice; 4 6. This action is hereby dismissed; and 5 7. The Clerk of the Court is directed to close this case. 6 | IT IS SO ORDERED. a 7 /}/ fP A; Dated: _ August 6, 2020 wae 8 UNITED STATES DISTRICT JUDGE 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10