Kraus v. PA Fit II, LLC

155 F.Supp.3d 516

Michelle Kraus, Plaintiff,

v.PA Fit II, LLC, et al., Defendants.

CIVIL ACTION No. 15–4180

United States District Court, E.D. Pennsylvania.

Signed January 11, 2016

Michael Davey, Eckell Sparks Levy Auerbach Monte Rainer & Sloane, P.C., Media, PA, for Plaintiff.

Micah Craft, Larry J. Rappoport, Stevens & Lee, King of Prussia, PA, Justin M. Klein, Nicole D. Miller, Marks & Klein LLP, Red Bank, NJ, Steven E. Angstreich, Weir & Partners, Philadelphia, PA, for Defendants.

MEMORANDUM

EDUARDO C. ROBRENO, District Judge

I. INTRODUCTION

Plaintiff Michelle Kraus brought this action for unlawful retaliation, hostile work environment, and unpaid wages against her former employers, PA Fit II, LLC, Megan Sweitzer, William Maher, and Denise Maher, individually, and RetroFitness Clubs, LLC (collectively, “Defendants”), pursuant to the Pennsylvania Human Relations Act, 43 P.S. §§ 951, et seq., Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e, et seq., the Pennsylvania Minimum Wage Act, 43 P.S. §§ 333.101, et seq., the Federal Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. [hereinafter “FLSA”], and the Pennsylvania Wage Payment and Collection Law, 43 P.S. §§ 260.1, et seq. See Compl., ECF No. 1, Ex. A.

After a conference with Magistrate Judge Reuter, the parties reached a settlement agreement as to all of Plaintiff's claims for a gross payment of $18,000—a settlement agreement for which Plaintiff now seeks Court approval. Pl.'s Mot. to Approve a Settlement Agreement, ECF No. 18 [hereinafter “Pl.'s Mot.”]. For the reasons that follow, the Court will grant in part and deny in part Plaintiff's uncontested motion for judicial approval of the settlement agreement.

II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

In December 2013, Defendants hired Plaintiff as a personal trainer at the “RetroFitness” Gym located in Holmes, Pennsylvania. Pl.'s Mot. ¶ 4. Defendants paid Plaintiff as a W–2 employee on an hourly basis at the rate of $9.00 per half-hour personal training session. Id. ¶ 5.

On or about April 30, 2014, Plaintiff sent an email to Defendant Sweitzer, the gym's operational manager, to report comments allegedly made by her male co-workers that she perceived as sexually inappropriate, thereby creating a sexually hostile work environment. Id. ¶ 8. Plaintiff also reported that Nicole Gussin, a female co-worker, had received sexually inappropriate text messages from a male co-worker, Darold Williams. Id. ¶ 9. In response to Plaintiff's email, Defendant Sweitzer obtained copies of the text messages between Ms. Gussin and Mr. Williams. Id. ¶ 12. After reading the messages, Defendant Sweitzer concluded that Ms. Gussin, not Mr. Williams, had been the one to send sexually inappropriate text messages and photographs. Id. ¶ 13. Thereafter, Defendant Sweitzer decided that Plaintiff had falsely accused Mr. Williams of sexually harassing Ms. Gussin, and Defendant Sweitzer terminated Plaintiff's employment on May 7, 2014. Id. ¶ 14.

In August 2014, Plaintiff filed a timely charge of discrimination with the Pennsylvania Human Relations Commission (“PaHRC”) and the Equal Employment Opportunity Commission (“EEOC”), alleging that Defendant Sweitzer unlawfully terminated her employment as retaliation for the email complaint. Id. ¶ 15. Plaintiff received a Dismissal Letter from the PaHRC and a Right–to–Sue Letter from the EEOC. Id. ¶ 16. Plaintiff then filed a timely Complaint against Defendants in the Court of Common Pleas of Delaware County, Pennsylvania, raising the following claims: unlawful retaliation under Title VII and the PaHRA; sexually-hostile work environment under Title VII and the PaHRA; and discriminatory and unpaid wages under Title VII, the PaHRA, the FLSA, and the Pennsylvania Minimum Wage Act.

Specifically, in her wage-related claims, Plaintiff alleged that Defendants assigned personal training clients to the male personal trainers at a higher / more frequent rate than the female personal trainers, which gave male personal trainers higher wage earning potential. Compl. ¶¶ 133–140. Defendants subsequently removed the case to this Court on the basis of federal question jurisdiction. ECF No. 1.

Plaintiff also filed an unfair labor charge with the National Labor Relations Board (“NLRB”) against Defendants PA Fit II, LLC, Sweitzer, and the Mahers. Pl.'s Mot. ¶ 18. Plaintiff claimed that her sexual harassment complaints constituted concerted, protected activity under the National Labor Relations Act [hereinafter “NLRA”] and thus her termination was unlawful. Id. On or about January 29, 2015, the NLRB Regional Office issued a Complaint against Defendants, id. ¶ 19, and on May 6, 2015, an evidentiary hearing was held before Administrative Law Judge Arthur Amchan. Id. ¶ 20.

ALJ Amchan dismissed the Regional Office's complaint on June 19, 2015. Id. ¶ 21. ALJ Amchan found that Plaintiff's email constituted protected, concerted activity under the NLRA, but he ultimately determined that Plaintiff made the accusations “with reckless disregard for the truth.” Id. ¶ 22. He stated that there was “no credible evidence” to establish the unwanted nature of the text messages sent between Ms. Gussin and Mr. Williams. Id. Thereafter, the Regional Office filed Exceptions to the ALJ's decision, which remain pending¹ before the NLRB. Id. ¶ 24.

In light of the NLRB and PaHRC proceedings, the parties agreed to participate in a settlement conference with Magistrate Judge Reuter before expiration of Defendants' deadline to respond to Plaintiff's Complaint. Id. ¶ 25. The settlement conference was held on August 31, 2015, during which the parties agreed to settle all of Plaintiff's claims. Id. ¶ 26.

In the proposed Settlement Agreement (“the Agreement”), Defendants PA Fit II, LLC, Sweitzer, and the Mahers agree to pay a sum of $18,000 to Plaintiff in consideration for a general release, dismissal of the federal court action, and voluntary withdrawal of the NLRB proceeding. Id. ¶ 27. The $18,000 is to be apportioned as follows: $10,934.27 payable to Plaintiff on a W–2 basis representing all lost wages, and $7,065.73 payable to Plaintiff's counsel on a 1099 basis representing attorneys' fees and litigation costs. Id. The parties also agree that Defendants will pay regular installments to Plaintiff and her counsel, and the total amount is payable in full within five (5) months from the effective date of the Agreement. Id. 6 n.7.

On September 1, 2015, this Court ordered that Plaintiff's case be dismissed with prejudice pursuant to Rule 41.1(b) of the Local Rules of Civil Procedure. ECF No. 16. The Order stated that the Court would retain jurisdiction for 90 days to hear motions to vacate, modify, or strike from record, for cause shown, entry of the order of dismissal. Id.

On September 24, 2014, counsel for Defendant Denise Maher notified the Court by letter that,

[b]ecause a portion of the settlement payments related to claims of unpaid wages that arise under the Fair Labor Standards Act, it is necessary for there to be a supervised release. Accordingly, I request on behalf of all of the parties that you execute the Order approving the settlement terms as to comply with the provisions of the Fair Labor Standards Act requiring a supervised release.

On October 5, 2015, the Court denied the approval sought in the letter and granted leave to the parties to file a motion seeking approval of the Agreement with a supporting memorandum of law that would assist the Court in conducting the requisite fairness inquiry. ECF No. 17. Because the initial 90–day period during which the Court retained jurisdiction was set to lapse on November 30, 2015, the Court extended this period for an additional 90 days. ECF No. 20.

Following the Court's order, Plaintiff filed an “Uncontested Motion to Approve a Settlement Agreement.” ECF No. 18. Therein, Plaintiff first argues that judicial scrutiny is not required to effectuate a private FLSA settlement agreement. Pl.'s Mot. 1, 2 n.1, 6 n.8. Alternatively, and assuming that judicial approval is required in this case, Plaintiff analyzes the Agreement under the standard consistently used by courts in this Circuit—that is, the fair and reasonableness standard adopted from Lynn's Food Stores Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir.1982).

III. TERMS OF THE SETTLEMENT

The parties' proposed Agreement contains a general release and waiver of all claims. ECF No. 18, Ex. C ¶ 4. Plaintiff agrees to release and discharge all Defendants of and from any claims, actions, causes of action, back pay, front pay, contracts, agreements, etc., in law or equity, contract or tort or otherwise, through the effective date of the Agreement. Id. at 4. The release does not apply to claims based on facts occurring after the date of the Agreement. Id. at 5.

Plaintiff agrees not to refile, revive, or reopen this case or any related suit, except as it relates to judicial approval of this Agreement, enforcement of its terms and conditions, or the entries of formal judgment against Defendants, pursuant to sub-paragraph 8(c) of the Agreement. Id. ¶ 5.

Within seven (7) days of the Agreement's effective date, Plaintiff agrees to formally request in writing that Regional Counsel for the NLRB dismiss her now-pending case with prejudice. Id. ¶ 6.

Plaintiff further agrees that if the NLRB declines to dismiss the charge with prejudice, Plaintiff will disclaim all rights to the benefits and payments described within the Agreement. Id.

Plaintiff further agrees that she will not bring any other lawsuit, legal proceeding, action, or claim of any nature with any agency or court against Defendants, based on any matter, fact, or event occurring prior to the effective date of the Agreement, whether now known or unknown. Id. ¶ 7. She avers that she understands she will not be considered a prevailing party. Id. at 7. In exchange, Defendants agree to pay a total of $18,000.00 to Plaintiff. Id. ¶ 8. The schedule and terms of payment are detailed in the...