Xu v. Ran

CourtDistrict Court, E.D. Pennsylvania
DecidedJanuary 4, 2022
Docket2:21-cv-00550
StatusUnknown

This text of Xu v. Ran (Xu v. Ran) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Xu v. Ran, (E.D. Pa. 2022).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

YIBO XU, et al. : CIVIL ACTION Plaintiffs : : NO. 21-0550 v. : : XIN GU, et al. : Defendants :

NITZA I. QUIÑONES ALEJANDRO, J. JANUARY 3, 2022

MEMORANDUM OPINION INTRODUCTION Before this Court is a joint motion for approval of settlement agreement, [ECF 16], with respect to claims brought by Plaintiff Yibo Xu (“Plaintiff Xu”) and Plaintiff Xingxiao Jiang (“Plaintiff Jiang”) (together, “Plaintiffs”) under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., the Pennsylvania Minimum Wage Act (“PMWA”), 43 Pa. Stat. § 333.101 et seq., the Pennsylvania Wage Payment and Collection Law (“WPCL”), 43 Pa. Stat. § 260.8 et seq., and Pennsylvania common law against Defendant Yumco LLC d/b/a R&G Ping Pong (“Defendant Yumco”), Defendant Ranko Inc. d/b/a Andorra Ping Pong (“Defendant Ranko”), Defendant Chaomin Ran a/k/a Albert Ran (“Defendant Ran”), and Defendant Xin Gu a/k/a Diana Gu Ran (“Defendant Gu”) (together, “Defendants”).1 For the reasons set forth, the joint motion for approval of the Settlement Agreement is granted, in part, and denied, in part. This Court is satisfied that the proposed Settlement Agreement is a “fair and reasonable resolution of a bona fide dispute over FLSA provisions” and concludes that the Settlement Agreement—specifically, the release of claims provision—impermissibly frustrates implementation of the FLSA in the workplace.

1 Although Plaintiffs initially brought this suit as a class action, the case was never certified as such, and the joint motion for approval of the Settlement Agreement pertains to the two named Plaintiffs only. BACKGROUND Defendant Yumco owned and operated the R&G Ping Pong restaurant in Wayne, Pennsylvania; Defendant Ranko owned and operated the Andorra Ping Pong restaurant in Philadelphia, Pennsylvania; and Defendants Ran and Gu are owners, officers, shareholders, and

managers of Yumco and Ranko. Plaintiffs, former employees of Defendants, filed this lawsuit, in which they contend that Defendants violated the FLSA, the PMWA, the WPCL, and Pennsylvania common law by willfully failing to compensate them for the overtime they worked during various periods between 2012 and 2020. Defendants deny these allegations and maintain that they acted in good faith and with reasonable grounds for believing they were in compliance with the FLSA and state law requirements. Following their initial conference, the parties engaged in discovery and settlement discussions. They exchanged documents and information concerning the facts underlying Plaintiffs’ claims, including Plaintiffs’ time, pay, job duties, work schedules, lodging and utilities benefits, and the operational and financial impact that the COVID-19 pandemic has had on Defendants’ business.

The exchange gave the parties a clear understanding of the nature and viability of the asserted claims and defenses. The parties engaged in rigorous, arms-length settlement negotiations, each represented by counsel experienced in wage-and-hour matters similar to the case sub judice. The parties’ negotiations resulted in a settlement of all claims, memorialized in a written proposed Settlement Agreement and Release of Claims (the “Settlement Agreement”), for which the parties now seek this Court’s approval.

DISCUSSION The FLSA provides, inter alia, that employers shall compensate their employees at a minimum of one and one-half times the employee’s regular wage for any hours worked in excess of forty hours per week. 29 U.S.C. § 207(a)(1). The PMWA provides for the same requirements, 43 Pa. Stat. § 333.104(c), and the WPCL allows for employees to bring an action against an employer for unpaid wages, 43 Pa. Stat. § 260.9a. As noted, the parties here have jointly proposed a Settlement Agreement to resolve their

disputes, including, disputes under the FLSA. Whether court approval of settlement agreements involving FLSA claims is required is an issue the United States Court of Appeals for the Third Circuit (“Third Circuit”) has yet to address. Nonetheless, other district courts in this Circuit have followed the position taken by the United States Court of Appeals for the Eleventh Circuit in Lynn’s Food Stores, Inc. v. U.S. Dep’t of Labor, 679 F.2d 1350 (11th Cir. 1982),2 which held that court approval is required for proposed settlements in a FLSA lawsuit filed pursuant to 29 U.S.C. § 216(b). This Court is persuaded and guided by this holding. Judicial review of the proposed settlement agreement requires this Court to scrutinize the parties’ proposed Settlement Agreement and determine if it is “a fair and reasonable resolution of a bona fide dispute over FLSA provisions, Lynn’s Food Stores, 679 F.2d at 1355, whether the

settlement agreement furthers or “impermissibly frustrates” implementation of the FLSA in the workplace, Lyons v. Gerhard’s Inc., 2015 WL 4378514, at *3 (E.D. Pa. July 16, 2015) (citations omitted), and whether attorney’s fees and costs are reasonable, 29 U.S.C. § 216(b). Each of these determinations will be separately discussed. Is the proposed Settlement Agreement a fair and reasonable settlement of a bona fide dispute? “A proposed settlement agreement resolves a bona fide dispute if it ‘reflect[s] a reasonable compromise over issues, such as FLSA coverage or computation of back wages, that are actually in

2 See, e.g., Brown v. U.S. Postal Service, 2021 WL 5083981 (E.D. Pa. Nov. 2, 2021); Bettger v. Crossmark, Inc., 2015 WL 279754 (M.D. Pa. Jan. 22, 2015); Cuttic v. Crozer-Chester Med. Ctr., 868 F. Supp. 2d 464 (E.D. Pa. 2012); Morales v. PepsiCo, Inc., 2012 WL 870752 (D.N.J. Mar. 14, 2012). dispute’ and is not a ‘mere waiver of statutory rights brought about by an employer’s overreaching.’” McGee v. Ann’s Choice, Inc., 2014 WL 2514582, at *2 (E.D. Pa. June 4, 2014) (quoting Lynn’s Food Stores, 679 F.2d at 1354). Thus, as a threshold issue, this Court must determine whether the parties’ dispute is a “bona fide” dispute. “A dispute is ‘bona fide’ where it involves factual issues rather than

legal issues such as the statute’s coverage and applicability.” Kraus v. PA Fit II, LLC, 155 F. Supp. 3d 516, 530 (E.D. Pa. 2016). “In essence, for a bona fide dispute to exist, the dispute must fall within the contours of the FLSA and there must be evidence of the defendant’s intent to reject or actual rejection of that claim when it is presented.” Id.; see also Berger v. Bell-Mark Techs. Corp., 2019 WL 1922325, at *3 (M.D. Pa. Apr. 30, 2019) (“A bona fide dispute is one in which there is some doubt whether the plaintiff would succeed on the merits at trial.”). Here, as evidenced by the facts alleged in the complaint and the joint motion for approval of the Settlement Agreement, this FLSA action involves disputed issues of fact as to whether Defendants correctly paid Plaintiffs for all overtime worked. Based on the factual representations and arguments offered in the joint motion for approval of the Settlement Agreement, this Court is satisfied that a bona fide dispute exists under the FLSA regarding Defendants’ liability and Plaintiffs’ damages.3

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