Kirkpatrick v. Cardinal Innovations Healthcare Solutions

352 F.Supp.3d 499

Molly KIRKPATRICK, on Behalf of Herself and All Others Similarly Situated, Plaintiffs,

v.CARDINAL INNOVATIONS HEALTHCARE SOLUTIONS, Defendant.

1:16-CV-01088

United States District Court, M.D. North Carolina.

Signed December 18, 2018

Christopher R. Strianese, Tamara L. Huckert, Strianese Huckert, PLLC, Charlotte, NC, Tracey F. George, Davis George Mook LLC, Kansas City, MO, for Plaintiffs.

Deborah Whittle Durban, Matthew A. Abee, Nelson Mullins Riley & Scarborough LLP, Columbia, SC, for Defendant.

MEMORANDUM ORDER

THOMAS D. SCHROEDER, Chief Judge.

This action alleging violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b), for unpaid overtime wages is before the court on Plaintiff's Unopposed Motion to Approve the FLSA Settlement Agreement. (Doc. 78.) For the reasons that follow, the motion will be granted.

I. SETTLEMENT

Under § 216(b), when an action is brought by an employee against his employer to recover back wages, the proposed settlement must be presented to the district court for review and determination that the settlement is fair and reasonable. Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1353-54 (11th Cir. 1982).

To approve an FLSA settlement, the court must determine whether it is a fair and reasonable compromise of disputed claims and issues arising from a bona fide dispute raised pursuant to the FLSA. See id. at 1355 ; Taylor v. Progress Energy, Inc., 493 F.3d 454, 460 (4th Cir. 2007), superseded on other grounds as recognized by Whiting v. The Johns Hopkins Hosp., 416 F. App'x 312, 316 (4th Cir. 2011).

A. Bona Fide Dispute

When deciding whether there is a bona fide dispute as to a defendant's liability under the FLSA, courts consider the pleadings and the proposed settlement agreement. Duprey v. Scotts Co. LLC, 30 F.Supp.3d 404, 408 (D. Md. 2014) (citing Lomascolo v. Parsons Brinckerhoff, Inc., No. 1:08cv1310, 2009 WL 3094955, at *16–17 (E.D. Va. Sept. 28, 2009) ). "A bona fide dispute is one in which there is some doubt whether the plaintiff would succeed on the merits at trial." Hall v. Higher One Machs., Inc., No. 5-15-CV-670-F, 2016 WL 5416582, at *6 (E.D.N.C. Sept. 26, 2016) (citing Lynn's Food Stores, 679 F.2d at 1354 ). The FLSA claims at issue in this case constitute a bona fide dispute. The parties have engaged in extensive discovery and motion practice, and they have engaged in preliminary direct negotiations and mediation prior to reaching an agreement. (Doc. 78 at 8–9.) There were serious questions of fact and law at issue. (Id. at 10–11.) Therefore, the settlement was the product of contested litigation to resolve a bona fide dispute.

B. Fairness and Reasonableness

Although the Fourth Circuit has not addressed directly the relevant factors the court should consider when determining whether a FLSA settlement is fair and reasonable, district courts within the circuit have generally considered the fairness factors a court would consider under Federal Rule of Civil Procedure 23(e). See Hoffman v. First Student, Inc., No. WDQ-06-1882, 2010 WL 1176641, at *2 (D. Md. Mar. 23, 2010). For example, some courts have cited the following factors for consideration:

(1) the extent of discovery that has taken place; (2) the stage of the proceedings, including the complexity, expense and likely duration of the litigation; (3) the absence of fraud or collusion in the settlement; (4) the experience of counsel who have represented the plaintiffs; (5) the probability of plaintiffs' success on the merits and (6) the amount of the settlement in relation to the potential recovery.

Hargrove v. Ryla Teleservices, Inc., No. 2:11cv344, 2013 WL 1897027, at *2 (E.D. Va. 2013) (citing Lomascolo, 2009 WL 3094955, at *10 ). "There is a ‘strong presumption in favor of finding a settlement fair’ that must be kept in mind in considering the various factors to be reviewed in making the determination of whether a settlement is fair, adequate and reasonable." Lomascolo, 2009 WL 3094955, at *10 (quoting Camp v. Progressive Corp., Nos. 01-2680, 03-2507, 2004 WL 2149079, at *5 (E.D. La. Sept. 23, 2004) ).

The settlement agreement provides that Defendant will pay $748,527.08 to the Gross Settlement Fund and that the Net Settlement Fund (which is the Gross Settlement Fund minus Attorneys' Fees and Costs, Service Payment, and Administrative Costs) will be divided pro rata amongst the FLSA collective members based on a points system accounting for each member's average weekly salary and number of FLSA work weeks. (Doc. 78 at 5.) The settlement provides that FLSA collective members will receive payment for approximately 8 hours of overtime per week. (Id. at 11.)

In considering the relevant factors, the court finds the following: (1) the parties have engaged in significant discovery (including interviewing employees, analyzing pay and time records, reviewing records, and serving and responding to written discovery) (id. at 8; Doc. 78-2 ¶¶ 16–19; Doc. 78-3 ¶¶ 13–16); (2) the stage of the proceedings and the complexity, expense, and likely duration of continued litigation favor approving the settlement; (3) there is an absence of any collusion or fraud in the settlement; (4) Plaintiff's counsel is experienced in such cases, having litigated prior FLSA cases on behalf of other employees (Doc. 78-2 ¶¶ 44–45; Doc. 78-3 ¶¶ 40–41); and (5) collective counsel urges the court to approve the settlement as fair and reasonable. The court has also considered the probability of Plaintiff's success on the merits and the amount of the settlement in relation to the potential recovery. The proposed settlement appears to be the product of arms-length bargaining between experienced collective counsel and experienced defense counsel, who have independently evaluated the likelihood of prevailing on their claims and defenses. Accordingly, the court grants final approval to the settlement.

II. ATTORNEYS' FEES AND COSTS

Under the FLSA, the court is authorized to award "a reasonable attorney's fee to be paid by the defendant, and costs of the action," in addition to any judgment awarded to the plaintiff. 29 U.S.C. § 216(b) ; see Poulin v. Gen. Dynamics Shared Res., Inc., No. 3:09-CV-00058, 2010 WL 1813497, at *3-4 (W.D. Va. May 5, 2010) ("[T]he language of the FLSA contemplates that ‘the wronged employee should receive his full wages plus the penalty without incurring any expense for legal fees or costs[ ]’ ...." (quoting Maddrix v. Dize, 153 F.2d 274, 275-76 (4th Cir. 1946) ) ). The Fourth Circuit generally considers twelve factors in judging the reasonableness of an award of attorneys' fees in FLSA cases:

(1) the time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorneys' fees awards in similar cases.

Barber v. Kimbrell's, Inc., 577 F.2d 216, 226 n.28 (4th Cir. 1978) (adopting the twelve factors set forth in Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (1974), abrogated on other grounds by Blanchard v. Bergeron, 489 U.S. 87, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989) ), superseded on other grounds as recognized in Knapp v. Americredit Fin. Servs., 245 F.Supp.2d 841, 848 (S.D. W. Va. 2003)and In re Robinson, 368 B.R. 492, 498 (Bankr. E.D. Va. 2007).¹

There are two primary methods for calculating attorneys' fees in the Fourth Circuit: the percentage of the fund method and the lodestar method. Phillips v. Triad Guaranty Inc., No. 1:09cv71, 2016 WL 2636289, at *2 (M.D.N.C. May 9, 2016) ; Hall, 2016 WL 5416582, at *7. "[T]he percentage of fund method provides that the court award attorneys' fees as a percentage of the common fund," while "[t]he lodestar method requires the court to determine the hours reasonably expended by counsel that created, protected, or preserved the fund[,] then to multiply that figure by a reasonable hourly rate." Phillips, 2016 WL 2636289, at *2 (alteration in original) (quotation marks omitted).

In this case, Plaintiff seeks attorneys' fees based on the percentage of the fund method. (Doc. 78 at 14–17.) To determine whether the fees sought under the percentage of the fund method are reasonable, the lodestar may be used as a cross-check, as well as the twelve factors from Barber,² 577 F.2d at 226 n.28.³

Phillips, 2016 WL 2636289, at *2–3 ; Kirven v. Central States Health & Life Co. of Omaha, No. 3:11-2149-MBS, 2015 WL 1314086, at *12 (D.S.C. Mar. 23, 2015) (collecting district court cases within the Fourth Circuit that use the lodestar method as a cross-check to ensure that the percentage of the fund method award is fair and reasonable).

The parties have agreed that Plaintiff's counsel will receive $250,000, equal to 33.39 percent of the Gross Settlement Fund, as attorneys' fees, plus reimbursement of their costs and expenses of $10,827. (Doc. 78 at 15; Doc. 78-1 at 9.) "In considering awards in similar cases, courts look to cases of similar size, rather than similar subject matter." Boyd v. Coventry Health Care Inc., 299 F.R.D. 451, 464 (D. Md. 2014). The requested 33.39 percent award is within the range of percentages that have been approved in other cases in this circuit. See id. ("Attorneys' fees awarded under the ‘percentage of recovery’ method are generally between twenty-five (25) and thirty (30) percent of the fund."); Phillips, 2016 WL 2636289, at *9 (awarding attorneys' fees of 30 percent of the settlement amount in a percentage of the fund case); c...