Bernardez v. Firstsource Sols. U.S.

ALAN BERNARDEZ, et al., Individually and on Behalf of All Others Similarly Situated, Plaintiffs v. FIRSTSOURCE SOLUTIONS USA, LLC d/b/a MEDASSIST Defendant. and JANA BROWN, Individually and on Behalf of All Others Similarly Situated, Plaintiffs v. FIRSTSOURCE SOLUTIONS USA, LLC d/b/a MEDASSIST Defendant

Civil Action Nos. 3:17-cv-613-RGJ, 3:20-cv-99-RGJ

United States District Court, W.D. Kentucky, Louisville Division

April 19, 2022

MEMORANDUM OPINION AND ORDER

Rebecca Grady Jennings, United States District Court

Plaintiffs Alan Bernardez and others similarly situated move unopposed [DE 130] for an order approving the terms of their Settlement Agreement [DE 130-1] (“Settlement Agreement”) with Firstsource Solutions, USA, LLC d/b/a/ Medassist (“Defendant”) and to dismiss the action with prejudice (“Bernardez Action”). Jana Brown (together with Alan Bernardez and all others similarly situated, (“Plaintiffs”) move unopposed for an order approving the terms of her settlement agreement with Defendant in Brown v. Firstsource Solutions USA LLC, Case No. 3:20-cv-00099-RGJ (“Brown Action”), a concurrent case also before the Court. [DE 49]. Plaintiffs rely on the same memorandum of law [DE 130-2] and Declaration [DE 131-1] in support of the motions to settle and dismiss the cases. The matter is ripe. For the reasons below, the Court GRANTS Plaintiffs' Motions to Settle and Dismiss [DE 130 & DE 49] and DISMISSES WITH PREJUDICE the Bernardez Action and the Brown Action.

I. BACKGROUND

Plaintiffs are former employees who alleged Defendant violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq. [DE 1]. Plaintiffs allege that Patient Service Representatives, Floaters/Trainers, Team Leads, and other similarly situated employees received work assignments that could not be completed within their 8-hour daily or 40-hour weekly work schedule, yet were prohibited from reporting or clocking in for more than forty hours of work per week. Thus, Plaintiffs were not paid for time spent working off-the-clock pre-shift, post-shift, and during lunch breaks, which violated the FLSA's overtime requirements. [DE 130-2 at 1294].

On September 12, 2019, the Court conditionally certified a collective of “[a]ll current and former Patient Service Representatives, Floaters/Trainers, and/or Team Leads employed by Defendant Firstsource Solutions USA, LLC d/b/a MedAssist in the Durham, North Carolina and Birmingham, Alabama regions at any time from October 4, 2014 through present.” [DE 51]. As a result, on October 16, 2019, the claims administrator sent Court-approved notice and consent forms to the approximately 656 collective members. [DE 130-3 at 1318]. The notice and consent forms informed each putative opt-in plaintiff that by filing consent forms, they agreed to be bound by any settlement of the case. [Id.]. On March 1, 2021, Plaintiffs amended the Complaint to add an additional allegation of a “straight-time-for-overtime” violation, claims under California state law, and claims under Nevada state law. [DE 130-2 at 1296]. Defendant denies all of Plaintiffs' material allegations. [Id.].

On February 7, 2020, Jana Brown, a former employee of the same Defendant in Missouri, filed a Collective and Class Action Complaint in this District Court for violating the FLSA and Missouri Minimum Wage Law, MO. REV. STAT. §§ 290.500, et seq. [Id. at 1297]. The Brown Complaint alleges the same illegal policies and practices of Defendant and asserts FLSA collective claims on behalf of “[a]ll Patient Service Representatives, Floaters/Trainers, and/or Team Leads employed by Defendant in any regions in the United States other than [the] Durham, North Carolina and Birmingham, Alabama” regions certified in the Bernardez action. [Id.].

II. SUMMARY OF SETTLEMENT

A. Scope and Amount of Settlement

The parties negotiated a settlement to resolve claims asserted in the Bernardez and Brown Actions. [DE 130-3 at 1320]. The Settlement Agreement obligates Defendant to pay $470, 000.00 (excluding the employer-side payroll taxes and withholdings due on the back wages). [DE 130-1 at 1279]. Plaintiffs constructed a damage estimate based on weekly payroll information for all Plaintiffs, which Defendant provided. [DE 130-3 at 1320]. The parties reached a settlement in principle for $150, 000.00 to be paid to Plaintiffs. [DE 130-2 at 1298]. Of that amount, $12, 000.00 will be allocated to service awards, $5, 000.00 will be allocated to release payments, and the remaining $133, 000.00 will be allocated to Plaintiffs to pay the amount due to each Plaintiff under the Settlement Agreement (“Settlement Shares”). [DE 130-1 at 1279]. The parties later agreed in principle for $320, 000.00 in attorneys' fees and costs, along with the $150, 000.00 to be paid to Plaintiffs. [Id.].

B. Payments to Plaintiffs

Each Plaintiff's Settlement Share has been calculated in the Settlement Agreement, which treats 50% of each Plaintiff's Settlement Share as back wages and 50% as liquidated damages. [DE 130-2 at 1299]. Plaintiffs' Counsel calculated the Settlement Shares based on each Plaintiff's payroll information received from Defendant. [DE 130-3 at 1321]. The calculation assumed that each Plaintiff worked one hour off the clock on each of their workdays throughout the period and applied discounts for: (i) the likelihood Defendant would prevail on its “good faith” defense, (ii) the likelihood Plaintiffs' recovery would be limited to a 2-year statute of limitations, and (iii) the likelihood that Plaintiffs would have their claims dismissed due to decertification. [Id.]. Within 28 days of the Settlement Agreement's effective date, Defendant or its representative will issue each Plaintiff a check for back wages and a check for liquidated damages. [DE 130-1 at 1282].

The Settlement Agreement also allows additional payments to Plaintiffs Alan Bernardez and Tawanna Pittman of $5, 000 each, and to Plaintiffs Victoria Holland and Sierra Walker of $1, 000 each to recognize their efforts and risks in initiating and assisting in the prosecution of the Bernardez action. [Id. at 1283-84].

C. Release of Claims

The Settlement Agreement provides that in consideration for their Settlement Shares, all Plaintiffs will release and forever discharge Defendant and any of its past, present, or future owners from any unpaid wage claims, including unpaid overtime. [Id. at 1280]. This release specifically includes a release of all claims and damages arising under the FLSA and any state or local wage and hour statute or regulation. [Id.]. In exchange, Plaintiffs Alan Bernardez and Tawanna Pittman will each receive payments of $2, 500. [Id. at 1284]. Other than Plaintiffs, no collective or class member and/or previously-dismissed opt-in plaintiff will release any claims. [DE 130-2 at 1301].

III. APPROVAL OF PLAINTIFFS' FLSA SETTLEMNET

Plaintiffs move unopposed for approval of their Settlement Agreement and dismissal of the Bernardez and Brown Actions. [DE 130, 49]. Plaintiffs argue that their Settlement Agreement with Defendant results from a bona fide dispute. [130-2 at 1304]. Plaintiffs also argue that the Settlement Agreement is fair and reasonable considering their recovery and the risks associated with continued litigation. [Id. at 1306]. Finally, Plaintiffs claim that the Court need not review their attorneys' fees for reasonableness. [Id. at 1309].

A. Standard of Review

The Sixth Circuit has never resolved the question of whether court approval is required for FLSA settlement agreements. Athan v. U.S. Steel Corp., 523 F.Supp.3d 960, 965 (E.D. Mich. 2021). Yet district courts in the Sixth Circuit have repeatedly held that court approval is necessary for FLSA settlements. See, e.g., Lopez v. Silfex, No. 3:21-cv-61, 2021 WL 5795280, at *3 (S.D. Ohio Dec. 3, 2021) (citing Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1352-53 (11th Cir. 1982)); Steele v. Staffmark Invs., LLC, 172 F.Supp.3d 1024, 1026 (W.D. Tenn. 2016) (suggesting that the Sixth Circuit's holding in Runyan v. Nat'l Cash Register Corp., 787 F.2d 1039, 1042-43 (6th Cir. 1986) makes it likely that the Court would require approval of FLSA settlements).

“Before this Court can approve the settlement of Plaintiff's FLSA claim, the Court must determine that the parties were engaged in a bona fide dispute and that the settlement is a fair and reasonable compromise of the issues presented.” Lakosky v. Discount Tire Co., Inc., No. 14-13362, 2015 WL 4617186, at *1 (E.D. Mich. July 31, 2015). Next, to determine whether a proposed FLSA settlement is fair and reasonable, courts consider, as applicable:

(1) the risk of fraud or collusion; (2) the complexity, expense, and likely duration of the litigation; (3) the amount of discovery engaged in by the parties; (4) the likelihood of success on the merits; (5) the opinions of class counsel and class representatives; (6) the reaction of absent class members; and (7) the public interest.

Does 1-2 v. Deja Vu Servs., Inc., 925 F.3d 886, 894-95 (6th Cir. 2019) (quoting citing Int'l Union, UAW, et al. v. Gen. Motors Corp., 497 F.3d 615, 631 (6th Cir. 2007) (“UAW”)) (internal quotations omitted).

B. Analysis

1. Bona Fide Dispute

As noted above, “[a] federal district court approving any settlement of claims must determine whether a bona fide dispute exists to ensure that plaintiff employees have not relinquished their rights to compensation guaranteed by the statute.” Ross v. Jack Rabbit Servs., LLC, No 3:14-CV-44-DJH, 2016 WL 7320890, at *2 (W.D. Ky. Dec. 15, 2016). “A bona fide dispute exists when there are legitimate questions about the existence and extent of [the] [d]efendant's FLSA liability.” Lopez, 2021 WL 5795280, at *4 (quoting Selk v. Pioneers Mem. Healthcare Dist., 159 F.Supp.3d 1164,...