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Black v. DMNO, LLC

United States District Court, E.D. Louisiana

May 21, 2018

JAMES BLACK, ET AL., Plaintiffs
DMNO, LLC, ET AL., Defendants

         SECTION: “E”



         Before the Court is the Parties' Joint Motion to Approve the Settlement and to Dismiss Plaintiff Shannon McSwain's Claims with Prejudice.[1] For the reasons that follow, the motion is GRANTED.


         Plaintiff Shannon McSwain, along with named Plaintiffs Mark Gandy; Ashley Newton; David Pierce-Feith; Austin Lane; Patrice Jones; Erin Lawrence; Zachary Adams; Asaria Crittenden; Elizabeth Kuzmovich; Larry Hunt, Jr.; and Carlos Ayestas, filed this collective action, individually and on behalf of all others similarly situated, on March 31, 2016.[2] Plaintiffs allege Defendants DMNO, LLC; Doron Moshe Rebi-Chia; Itai Ben Eli; and Itamar Levy violated the Fair Labor Standards Act of 1938[3] by, inter alia, failing to pay Plaintiff McSwain overtime wages for all hours worked in excess of 40 hours per week.[4]

         The Court conditionally certified the collective class on November 29, 2016.[5]Relevant to the instant motion, the class includes those “employed as a bartender and paid as an hourly employee at Doris Metropolitan within the past three years [who were] not paid overtime.”[6] On April 2, 2018, the parties reached a settlement agreement with respect to Plaintiff McSwain's claims during a settlement conference with the assigned magistrate judge.[7] On May 14, 2018, the Parties jointly moved to approve the proposed settlement agreement and dismiss Plaintiff McSwain's claims with prejudice.[8] No. other bartenders timely opted-in to the class.


         The Court “must approve any settlement reached by the parties which resolves the claims in this action brought under [29 U.S.C. § 216(b)].”[9] “In order to approve a settlement proposed by an employer and employees of a suit brought under the FLSA and enter a stipulated judgment, a court must determine that the settlement is a fair and reasonable resolution of a bona fide dispute over FLSA provisions.”[10] The Court must scrutinize the proposed settlement agreement to verify that parties are not circumventing the “clear FLSA requirements” by entering into a settlement agreement.[11] When deciding whether to approve a proposed settlement, the Court must assess whether the proposed settlement is both (1) the product of a bona fide dispute over the FLSA's provisions and (2) fair and reasonable.[12]


         I. The Settlement is the Product of a Bona Fide Dispute

         When deciding whether a bona fide dispute exists, the Court considers whether there is a “genuine dispute as to the Defendant's liability under the FLSA, ”[13] as “[w]ithout a bona fide dispute, no settlement could be fair and reasonable.”[14] This is particularly true in an “FLSA [action because its provisions] are mandatory, and not subject to negotiation and bargaining between employers and employees.”[15]

         The Court finds that a bona fide dispute exists between Plaintiff McSwain and Defendants with regard to whether Defendants violated the FLSA. The parties contested both the hours worked and compensation due. Counsel for the Parties have exchanged relevant payroll and personnel data and time records relevant to Ms. McSwain's claims in connection with the evaluation and negotiation of settlement. A separate individualized analysis of time and payroll records was performed by the Parties' respective counsel and compared with the allegations and claims asserted by Plaintiffs. The Parties have conducted formal discovery and undergone independent investigations of the facts and law throughout this action. The Court finds this sufficient to conclude that, in this case, there was “both aggressive prosecution and strenuous defense” to prove a bona fide dispute.[16]

         II. The Settlement is Fair and Reasonable

         In determining whether a negotiation is fair and reasonable under the FLSA, courts are guided by Reed v. General Motors Corporation, in which the Fifth Circuit enumerated factors to determine whether a settlement is fair in a class action under Rule 23 of the Federal Rules of Civil Procedure.[17] Courts, however, “adopt or vary these factors in their application in light of the special role of the Court in settlement of FLSA claims.”[18] There are six factors: (1) the existence of fraud or collusion behind the settlement; (2) the complexity, expense, and likely duration of the litigation; (3) the stage of the proceedings and the amount of discovery completed; (4) the probability of the plaintiffs' success on the merits; (5) the range of possible recovery; and (6) the opinions of class counsel, class representatives, and absent class members.[19]

         A. Application of the Factors

         1. The existence of fraud or collusion behind the settlement

         With respect to the “fraud or collusion” factor, there are several presumptions that guide a court's determination of whether a settlement is fair and reasonable. “[T]here is a strong presumption in favor of finding a settlement fair, ”[20] and, absent evidence to the contrary, there is a presumption that no fraud or collusion occurred between counsel.[21] In light of these presumptions, however, “it is clear that the court should not give rubber-stamp approval.”[22] The Court has found no indication of fraud or collusion. The Parties have engaged in discovery, motions practice, and negotiations to resolve this matter. This factor indicates the settlement is fair and reasonable.

         2. The complexity, expense, and likely duration of the litigation

         The instant case has been pending for more than two years. Although the discovery period concluded on March 27, 2018 and a four-day bench trial is set to begin June 4, 2018, [23]there are still numerous unresolved issues that remain. The Court finds that the unresolved issues and the complexity of the litigation indicate the settlement is fair and reasonable.

         3. The stage of the proceedings and the amount of discovery completed

         A court will consider how much formal discovery has been completed for two reasons: (1) “extensive discovery [by the parties indicates] a good understanding of the strengths and weaknesses of their respective cases and hence that the settlement's value is based upon such adequate information, ” and (2) “full discovery demonstrates that the parties have litigated the case in an adversarial manner and . . . therefore . . . settlement is not collusive but arms-length.”[24] The lack of much formal discovery is not necessarily ...

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