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Hohensee v. Divine Miracles, Inc.

United States District Court, E.D. Louisiana

November 14, 2018

LYDIA HOHENSEE, Plaintiff
v.
DIVINE MIRACLES, INC., ET AL., Defendants

         SECTION: “E” (2)

          ORDER AND REASONS

          SUSIE MORGAN UNITED STATES DISTRICT JUDGE.

         Before the Court is the Parties' Joint Motion to Approve Settlement.[1] For the reasons that follow, the motion is GRANTED.

         BACKGROUND

         Plaintiff Lydia Hohensee filed this collective action, individually and on behalf of others similarly situated, on February 8, 2018.[2] Plaintiff alleges Defendants Divine Miracles, Inc. and Donyette Williams violated the Fair Labor Standards Act (“FLSA”)[3] by failing to pay her and other employees one and one half times their hourly rate for the hours they work in excess of forty hours per week, failing to compensate her and other employees for all hours worked, and failing to comply with the record-keeping provisions of the FLSA.[4]

         On July 26, 2018, Plaintiff moved for conditional certification as a collective action and notice to potential class members.[5] The putative class was defined as “all individuals who: (1) Worked for Divine Miracles, Inc. at any time during the past three years; and (2) Worded as a home health care worker (“direct support worker”) on behalf of Divine Miracles, Inc. and were paid straight time for all hours worked.”[6] Defendants opposed.[7]Conditional certification as a collective action has not been granted.

         On October 31, 2018, the parties jointly filed the instant motion to approve the proposed settlement agreement between Plaintiff and Defendants.[8]

         STANDARD OF LAW

         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] This is true whether or not the action has been certified as a collective action.[10] “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.”[11] 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.[12] 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.[13]

         ANALYSIS

         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, ”[14] as “[w]ithout a bona fide dispute, no settlement could be fair and reasonable.”[15] This is particularly true in an “FLSA [action because its provisions] are mandatory, and not subject to negotiation and bargaining between employers and employees.”[16]

         The Court finds a bona fide dispute exists between Plaintiff and Defendants with regard to whether Defendants violated the FLSA. Plaintiff and Defendants dispute whether Plaintiff was properly paid regular and overtime compensation and whether Defendants maintained accurate records.[17] The Court finds this sufficient to conclude that, in this case, there was “aggressive prosecution and strenuous defense” to prove a bona fide dispute.[18]

         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.[19] Courts, however, “adopt or vary these factors in their application in light of the special role of the Court in settlement of FLSA claims.”[20] 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.[21]

         A. 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, ”[22] and, absent evidence to the contrary, there is a presumption that no fraud or collusion occurred between counsel.[23] In light of these presumptions, however, “it is clear that the court should not give rubber-stamp approval.”[24] 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.

         B. The complexity, expense, and likely duration ...


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