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Quintana v. HealthPlanOne LLC

United States District Court, D. Arizona

July 24, 2019

Peggy Quintana, Plaintiff,
HealthPlanOne LLC, Defendant.



         Pending before the Court is Plaintiff's Unopposed Motion and Memorandum for Approval of the Parties' FLSA Collective Action Settlement (Doc. 55) and Plaintiff's Motion for Award of Attorneys' Fees, Reimbursement of Costs and Expenses, and Award of Collective Representative Service Payments (Doc. 56). Also before the Court is Defendant's Stipulated Request for a Telephonic Status Conference (Doc. 59). Because the Court does not find that a telephonic status conference would assist in the resolution of the pending motions, the Court will deny the request for a telephonic status conference. The remaining motions will be granted in part; the Collective Action Settlement will be approved.

         I. Background

         Plaintiff Peggy Quintana filed the operative Collective Action Complaint (Doc. 41) on January 2, 2019. Plaintiff, who was Defendant's employee, alleges on behalf of herself and a collective of 1, 117 similarly situated persons that Defendant failed to pay overtime in violation of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”). Specifically, Plaintiff alleges that she and other employees at Defendant's call centers were required to perform work before and after scheduled shift times, for which they were not paid. Specifically, Plaintiff estimates that she and other similarly situated employees performed between 10 and 15 minutes of unpaid overtime work each day. Throughout the pendency of this action, seven additional plaintiffs have consented to join the lawsuit (“Opt-in Plaintiffs”). (See Docs. 17, 19, 22, 45.) The Parties engaged in a full-day mediation but were unsuccessful at settling their claims at that time. (See Doc. 30.)

         On January 31, 2019, the Court issued a Scheduling Order setting deadlines for the first phase of FLSA discovery. (See Doc. 52.) Meanwhile, Defendant sought to compel arbitration of the dispute (Doc. 43), but on February 2, 2019, before the Motion to Compel was fully briefed, the Parties notified the Court that a settlement had been reached (Doc. 53). The instant motions followed.

         II. Collective Action Settlement

         The unopposed motion seeks (1) approval of the proposed settlement agreement on behalf of Plaintiff and a collective, (2) certification of a collective action for settlement purposes only, (3) approval of the notice of collective action settlement, and (4) appointment of (a) Plaintiff's attorneys as collective action counsel, (b) Plaintiff as collective representative, and (c) Analytics LLC as the third-party administrator. (See Doc. 55 at 5.)

         A. Standard for Judicial Approval of FLSA Settlements

          “The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract.” Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69 (2013). Court approval is required for settlement of private FLSA claims. Jones v. Agilysis, Inc., No. C 12-03516 SBA, 2014 WL 108420, *2 (N.D. Cal. Jan. 10, 2014) (citing Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 (11th Cir. 1982)). “In reviewing an FLSA settlement, the district court's obligation is not to act as caretaker but as gatekeeper; rather, it must ensure that private FLSA settlements are appropriate given the FLSA's purposes and that such settlements do not undermine the Act's purposes.” Id. (internal quotation marks and modifications omitted). Because the Ninth Circuit has not provided guidance for determining whether an FLSA collective action settlement should be approved, district courts in this Circuit look to the Eleventh Circuit's standard, requiring the settlement to be “a fair and reasonable resolution of a bona fide dispute.” Quiroz v. City of Ceres, No. 1:17-CV-00444-DAD-BAM, 2019 WL 1005071, at *2 (E.D. Cal. Mar. 1, 2019) (citing Dunn v. Teacher's Ins. & Annuity Ass'n of Am., No. 13-CV-05456-HSG, 2016 WL 153266, at *3 (N.D. Cal. Jan. 13, 2016)); see also Lynn's, 679 F.2d at 1352-53.

         To find a bona fide dispute, “[t]here must be ‘some doubt . . . that the plaintiffs would succeed on the merits through litigation of their [FLSA] claims.'” Selk v. Pioneers Mem. Healthcare Dist., 159 F.Supp.3d 1164, 1172 (S.D. Cal. 2016) (quoting Collins v. Sanderson Farms, 568 F.Supp.2d 714, 719-20 (E.D. La. 2008) (alterations by Selk)). “If there is no question that the FLSA entitles plaintiffs to the compensation they seek, then a court will not approve a settlement because to do so would allow the employer to avoid the full cost of complying with the statute.” Id.

         Having found a bona fide dispute, some district courts in this Circuit have looked by analogy to Federal Rule of Civil Procedure 23 to consider the fairness of the collective action settlement. Jones, 2014 WL 108420, at *2 (citing In re Bank of America Wage & Hour Emp. Litig., No. 10-MD-2138-JWL, 2013 WL 6670602, at *2 (D. Kan. Dec. 18, 2013)); see also Selk, 159 F.Supp.3d at 1172-73. The Supreme Court, however, has instructed that “Rule 23 actions are fundamentally different from collective actions under the FLSA, ” Genesis, 569 U.S. at 74, and the Ninth Circuit has discussed at length the differences between FLSA collective actions and class actions under Rule 23, Campbell v. City of Los Angeles, 903 F.3d 1090, 1112 (9th Cir. 2018) (“Collective actions and class actions are creatures of distinct texts-collective actions of section 216(b), and class actions of Rule 23-that impose distinct requirements.”). In order to account for the limited relevance of the Rule 23 standards, some district courts employ a “totality of circumstances approach that emphasizes the context of the case and the unique importance of the substantive labor rights involved.” Selk, 159 F.Supp.3d at 1173 (citing Wolinsky v. Scholastic, Inc., 900 F.Supp.2d 332, 335 (S.D.N.Y. 2012)); see e.g. Kerzich v. Cty. of Tuolumne, No. 1:16-cv-01116-DAD-SAB, 2019 WL 1755496, at *4 (E.D. Cal. Apr. 19, 2019) (adopting the Selk totality of the circumstances approach); Banks v. Pyramid Consulting, Inc., No. 3:18-CV-00078-H-JLB, 2019 WL 338493, at *2-3 (S.D. Cal. Jan. 28, 2019) (same). The Court finds the totality of the circumstances approach of more relevance, and will employ it here.

         A district court employing a totality of the circumstances approach considers the following factors to determine whether the settlement is a reasonable compromise of the dispute:

(1) the plaintiff's range of possible recovery; (2) the stage of proceedings and amount of discovery completed; (3) the seriousness of the litigation risks faced by the parties; (4) the scope of any release provision in the settlement agreement; (5) the experience and views of counsel and the opinion of participating plaintiffs; and (6) the possibility of fraud or collusion.

Selk, 159 F.Supp.3d 1173. After consideration of the factors, the Court may approve the settlement “in order to promote the policy of encouraging settlement of litigation.” Id. at 1173-74 (quoting McKeen-Chaplin v. Franklin Am. Mortg. Co., No. C 10-5243 SBA, 2012 WL 6629608, *2 (N.D. Cal. Dec. 19, 2012)) (internal quotation marks omitted).

         B. Discussion

         The Parties agreed to settle this matter for $447, 500.00, “which includes settlement payments to eligible claimants; attorneys' fees and costs directly related to the case; and individual service payments to Plaintiff and seven Opt-in Plaintiffs.” (Doc. 55 at 6.) This settlement, which the Parties characterize as an “outstanding recovery for the Collective Members, ” was reached after some discovery and a full day of mediation. (Doc. 55 at 6.) From this gross total, the parties indicate that there are $196, 819.00 in fees, incentives, and administrative costs. (Doc. 55 at 9.) Once those costs are subtracted out, each collective member is to receive a pro rata share of the award based upon their fraction of the total overtime workweeks by all collective members. (Doc. 55 at 9.) Third- party administrator Analytics LLC is to be responsible for contacting settlement plaintiffs with information regarding the settlement (see Settlement Notice, Doc. 55-3) and joining the settlement collective (see Claim Form, Doc. 55-4), and then distributing the award amongst the members. (Doc. 55 at 9, 11.)

         The Settlement Agreement provided for $134, 250.00 in attorneys' fees as well as reimbursement to Plaintiff's attorneys for costs up to $18, 000.00, requested separately in the concurrently pending Motion for an Award of Attorneys' Fees and Costs (Doc. 56).

         1. Bona Fide Dispute

         The Parties assert that this case presents a bona fide dispute over entitlement to overtime wages. (Doc. 55 at 13.) In support of this assertion, the Parties explain that there are material disputes as to whether the collective action plaintiffs would be able to obtain conditional certification, survive a decertification motion, maintain a certified collective through trial, and the amount of damages due. (Doc. 55 at 13-14.)

         Although this Court has not previously had an opportunity to address Defendant's motion to dismiss (see Doc. 50), or otherwise address the merits of Plaintiff's claims, the Court finds there is a bona fide dispute. The original complaint was opposed (see Docs. 1, 13), as was the amended complaint (see Docs. 41, 44). The Parties engaged in an unsuccessful attempt to arbitrate their claims during the pendency of this action, (see Doc. 30) and Defendant sought to compel Plaintiff to arbitrate these claims pursuant to the Federal Arbitration Act. (See Docs. 11, 43.) In addition, a review of the substance and merits of these filings reveals that there is “some doubt” as to whether Plaintiff would succeed on the merits of her claim. See Selk, 159 F.Supp.3d at 1172. Because there is a bona fide dispute, the Court will engage in the second step of the analysis.

         2. Fair and Reasonable Resolution

         Having found a bona fide dispute, the Court turns to an assessment of whether the settlement is a fair and reasonable resolution of the dispute. The Court will address the Parties' arguments regarding the fairness and reasonableness of the settlement in the context of the Selk factors, listed supra. Based upon the below evaluation, the Court finds that the settlement is fair and reasonable.

         a. Plaintiff's Range of Possible Recovery

         The approximate payout of the settlement would be for about 5 minutes of unpaid work per day, or 25 minutes of unpaid time per week. (See Doc. 55 at 16.) The Complaint, however, alleges that each collective member worked about 10 to 15 minutes of over-time per day; the recovery amounts to one-half or one-third of the total possible recovery. The Parties cite a string of cases in which district courts in this Circuit have approved settlement recoveries less than 30 to 50 percent of the Plaintiff's possible recovery. (Doc. 55 at 16-17); see e.g. Jones, 2014 WL 2090034, at *2 (approving an FLSA settlement at 30 to 60 percent of possible recoverable damages). The Court finds these cases persuasive; this factor weighs in favor of approval.

         b. Stage of Proceedings and Amount of Discovery Completed

         The Parties engaged only in a portion of the first phase of discovery, but filed for approval of the instant settlement before the Court-imposed deadline for conditional certification. (See Doc. 52.) Nevertheless the Parties indicate that they have exchanged “substantial discovery, ” sufficient to enable Plaintiff's counsel to “fully and fairly evaluate the claims and defenses and the value of the settlement.” (Doc. 55 at 17-18.) The Court finds that the parties have engaged in ample discovery to ...

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