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Lanza v. JMA Painters LLC

United States District Court, W.D. Louisiana, Lafayette Division

November 8, 2018

FREDY LANZA ET AL
v.
JMA PAINTERS LLC ET AL

          DICK CHIEF JUDGE

          REPORT AND RECOMMENDATION

          PATRICK J. HANNA UNITED STATES MAGISTRATE JUDGE

         The parties reached a settlement in this case, under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., and as a result, have filed a Joint Motion for Approval of Settlement Agreement [Rec. Doc. 60]. Based on a review of the motion, the attached settlement agreement, the applicable law and jurisprudence, and for the following reasons, it is recommended that the Joint Motion for Approval of Settlement Agreement [Rec. Doc. 60] be granted.

         BACKGROUND

         On September 26, 2016, plaintiffs Fredy Lanza and Lorenzo Romero filed a collective action complaint in the above-captioned lawsuit, asserting claims on behalf of themselves and all other similarly situated employees of JMA Painters, LLC (“JMA”), to recover allegedly unpaid overtime wages, pursuant to the FLSA, 29 U.S.C. § 207.[1] During the course of litigation, several current or former workers of JMA opted-in to this lawsuit.[2] In March 2017, this Court granted a joint motion to stay these proceedings, in order to allow the parties to engage in discussions in an effort to reach a resolution of all outstanding claims.[3] Plaintiffs did not seek certification of a collective action and, instead, pursued individual claims on behalf of the Plaintiffs identified herein.[4] The Defendants have denied all allegations against them and have raised numerous affirmative defenses.

         Meanwhile, in the Eastern District of Louisiana, a separate lawsuit was filed by Osman Maldonado against New Orleans Millworks, LLC and O&G Construction, LLC (the “Maldonado Lawsuit”).[5] During the course of discovery in the Maldonado Lawsuit, it was determined that many of the plaintiffs in the above-captioned lawsuit worked through O&G Construction, LLC or may also have worked for New Orleans Metalworks, Inc.[6] The parties in both lawsuits engaged in extensive discovery, which included the production of thousands of pages of both paper and electronic records. Additionally, numerous legal and financial issues were raised in both lawsuits.[7]

         After engaging in extensive litigation, the parties began settlement discussions and negotiations for an extended period of time, which ultimately produced a resolution of both the Maldonado Lawsuit and the above-captioned lawsuit. Settlement is conditioned upon Court approval, pursuant to the currently pending joint motion. At all times, the parties have been represented by experienced legal counsel with significant experience in litigating FLSA cases. The parties have executed a Settlement Agreement and Release of Claims (the “Agreement”) which effectuates resolution of both cases, a copy of which is attached to the joint motion for approval.[8] Furthermore, on November 5, 2018, United States District Judge Carl J. Barbier signed an order approving the FLSA Settlement and agreement in the Maldonado Lawsuit, and a copy of that order is likewise attached to the pending joint motion.[9]

         Specifically, the Agreement covers claims for the following Opt-In Plaintiffs, who assert that they worked for JMA: Alex Mena, Lorenzo Romero, Osman Maldonado, Yessica Quintanilla, Luis Alonso Martinez, Rene Baltodano, Yasmin Mitland, Denis Baltodano, Luis Ramos, Nery Mejia, Sandra Pena, Jose Pineda, Pablo Acosta, Bequer Trochez, Juan Ortega, Carlos Antonio Juarez, Miguel Lozano, Olvin Lozano, Hector Ramon Lazo, Johanna Nieves, Christian Huerta, Oscar Herrera, Nerlin Sosa and Luis Abdul-Mena (collectively, “Opt-In Plaintiffs”). There are two Opt-Out Plaintiffs, who assert that they work for JMA but are opting-out of the settlement: Josue Nunez and Jose Hernandez (“Opt-Out Plaintiffs”).[10] According to the Agreement, the Opt-Out Plaintiffs have thirty (30) days from the date that the Court approves the Agreement to initiate a separate legal action if they intend to pursue their claims.[11]

         LAW AND ANALYSIS

         “This Court must approve any settlement reached by the parties which resolves the claims in this action brought under Section 16(b) of the FLSA.”[12]Generally, settlement is the preferred means of resolving litigation.[13] Further, there is a “strong presumption” in favor of finding a settlement to be fair.[14] Before the court may approve a settlement in a collective action brought under the FLSA, it must first determine whether the settlement involves the resolution of a bona fide dispute over an FLSA provision and then decide whether the settlement is fair and reasonable.[15]

         Pursuant to the joint motion, the parties agree that a bona fide dispute exists as to the plantiffs' FLSA claims.[16] The defendants raised issues regarding the plaintiffs' status as independent contractors, whether or not the defendants could be held liable for any plaintiffs that were employed by another entity, as well as whether or not certain plaintiffs worked for JMA.[17] Additionally, the parties disputed the number of hours worked, with the plaintiffs claiming that they regularly worked overtime hours and the defendants contending they did not. The defendants also asserted that Jason Thibodeaux cannot be held individually liable. The parties further represent that they cooperated professionally throughout this litigation and the negotiation process, while also vigorously advocating their respective positions, over the course of more than twenty-four (24) months of discovery, the exchange of documents and data and negotiations, before finally achieving a resolution. This Court, having been involved in this case since its inception, including a discovery dispute and several status conferences, [18] and being familiar with the attorneys on both sides as well as the protracted efforts made toward joint resolution of the issues relevant to both the above-captioned matter and the Maldonado Lawsuit, finds that a bona fide dispute exists in this case.

         In determining whether a settlement is fair, adequate and reasonable, the Court should consider the following 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 plaintiffs' success on the merits; (5) the range of possible recovery; and (6) the opinions of the class counsel, class representatives, and absent class members.[19] As part of the fairness determination, the Court must also assess the reasonableness of any proposed award of attorney's fees and expenses sought by plaintiff's counsel.[20]

         Here, settlement was reached “through a comprehensive negotiation process and the Agreement negotiated by the parties is very detailed and comprehensive.”[21] The parties have agreed to a settlement sum of $138, 249.55, divided as follows: (a) attorneys' fees in the amount of $51, 208.87; (b) costs in the amount of $3, 827.50; (c) named plaintiff Marvel Guerrero to receive $4, 640.25; (d) named plaintiff Fredy Lanza to receive $8, 983.80; and (e) the remaining amount, totaling $69, 589.13, shall be divided among the remaining forty-one (41) Opt-In Plaintiffs, as outlined in Exhibit A, attached to the Agreement.[22] The Agreement further delineates that, of the total settlement sum, the defendants in the Maldonado Lawsuit shall be responsible for the payment of the total gross amount of $67, 982.61, and JMA shall be responsible for the total gross amount of $70, 266.94, with each respective defendant solely responsible for funding its portion of the total gross settlement sum.[23] The Agreement contains a comprehensive release as to all named and Opt-In Plaintiffs, which includes, inter alia, “any and all claims for attorneys' fees.”[24] As stated by the parties, the settlement “will eliminate risk to all parties and will avoid extensive and protracted litigation that could have lasted for years.”[25]

         This Court has reviewed the Agreement carefully. There is no evidence of fraud or collusion behind the settlement, and there is “a presumption that no fraud or collusion occurred between counsel, in the absence of any evidence to the contrary.”[26] Since this case was commenced in 2016, counsel for all parties have vigorously represented and advanced the position of their clients, by engaging in discovery and competently addressing any and all issues presented in the litigation. As indicated through the parties early efforts at joint resolution, the joint request for a stay to effectuate those efforts, and consistent representations of same during status conferences with the undersigned, it is clear that the settlement was reached through arms-length and good faith negotiations. Thus, the first factor favors approval of the settlement as fair, adequate and reasonable.

         With regard to the inquiries set forth in the second factor, the complexity, expense, and likely duration of the litigation, this FLSA action has been ongoing since 2016 and presented several disputed legal issues which have been zealously litigated by experienced counsel. Had a settlement not been consummated, this Court is of the opinion that this case would likely have remained in litigation for a significant amount of time, in excess of at least one or two more years, including any appeal of any adverse judgment, causing the parties to have incurred significant additional expense. Accordingly, the second factor weighs in favor of finding that the settlement is fair, adequate and reasonable.

         The third factor, the stage of the proceedings and the amount of discovery completed, likewise supports a finding that the settlement is fair, adequate and reasonable, and accordingly, should be approved. This case has been pending for over two years, since September 2016. During its pendency, the parties have conducted extensive discovery, which included the production of thousands of pages of both paper and electronic records, as well as factual, legal and financial investigations.

         The fourth factor, probability of plaintiff's success on the merits, also supports a finding that the settlement is fair, adequate and reasonable. This case has been litigated by competent and experienced lawyers on each side who enjoy great respect in their field from both sides of the aisle. In light thereof, and given the nature of the disputed issues underlying the above-captioned matter and the Maldonado Lawsuit, there is uncertainty surrounding the eventual outcome of this litigation, as well as the potential for any appeal to the Fifth Circuit, such that the fourth factor weighs in favor of finding that the settlement of this action is fair, adequate and reasonable.

         The fifth factor, the range of possible recovery, weighs in favor of a finding that the settlement is fair, adequate and reasonable. The parties have carefully negotiated and outlined the recovery of the two named plaintiffs, Guerrero and Lanza, as well as the payments due to each of the remaining Opt-In Plaintiffs, such that each plaintiff will receive a fair, reasonable, and adequate sum in resolution of their FLSA claims against the defendants. Further, the Agreement explicitly notes that “Defendants have and continue to experience dire financial situations that impact their ability to fund a settlement to resolve this dispute.”[27] As such, this Court finds that the Agreement represents a settlement which curtails risk, while resolving this dispute for an amount which, both in total and on individual assessment, is adequate, fair and reasonable and within range anticipated by the Court.

         The final factor, the opinions of the class counsel, class representatives, and absent class members, also mandates a finding that the settlement is fair, adequate and reasonable. As indicated in the Joint Motion for Approval of Settlement Agreement, all Opt-In Plaintiffs “deem this settlement to be [] fair and reasonable after being fully informed of all terms and after execution of the Agreement.”[28] All parties approve the terms of the Agreement, there have been no objections to the settlement, and all agree that the proposed settlement is in the best interests of the parties involved. As recognized herein, the settlement was arrived at after extensive negotiation by experienced counsel. “The Court is entitled to rely on the judgment of experienced counsel in its evaluation of the merits of a class action settlement.”[29]Here, this Court finds no evidence that counsel has not worked in good faith to secure a good and fair settlement.

         As part of the fairness determination, the Court must also assess the reasonableness of any proposed award of attorney's fees and expenses sought by plaintiff's counsel.[30] Here, of the total settlement sum of $138, 249.55, attorneys' fees represent $51, 208.87, while costs represent $3, 827.50.[31] For the reasons that follow, Court ...


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