United States District Court, S.D. Alabama, Southern Division
WILLIAM H. STEELE, UNITED STATES DISTRICT JUDGE.
FLSA action is before the Court on the parties' joint
motion to approve settlement. (Doc. 52). The issues raised by
the motion are substantially more complex than those in most
such motions coming before the Court.
named plaintiffs filed a collective action complaint in June
2018. (Doc. 1). The plaintiffs were employed in Mobile,
Alabama between March 2015 and May 2017, in the positions of
server and “food expo.” (Id. at
2-3). The complaint asserts that the defendants,
who own and/or operate a chain of restaurants along the Gulf
Coast, have committed the following FLSA violations: (1)
requiring servers to absorb business expenses (such as
uniform costs, tools of the trade, non-paying customers
(“walk offs”) and erroneous orders), bringing
their hourly wage below the minimum wage; (2) requiring
servers to study and pass periodic menu tests without any
compensation for the time involved; (3) claiming a tip credit
for all hours worked by servers, even though servers commonly
work over 20% of their hours doing mandatory non-tipped work;
(4) requiring servers to “tip out, ” via a tip
pool, to non-tipped employees (bartenders, food expeditors,
food runners and bussers); and (5) requiring servers to work
shifts as non- tipped food expo and claiming a tip credit for
all such hours. (Id. at 6-12). The complaint alleges
the defendants' violations were willful so as to trigger
a three-year limitations period, to June 2015. (Id.
at 13). It seeks recovery of all unpaid wages and all
improperly skimmed tips, along with liquidated damages and
attorney's fees and costs. (Id. at 12-13).
named plaintiffs seek to maintain a collective action in
which similarly situated past and present employees may
participate. The complaint identifies such persons as those
who worked as servers at any of the defendants' locations
since June 6, 2015, along with other employees within these
geographical and temporal parameters who were required to
absorb the defendants' business expenses or as to whom
the defendants claimed a tip credit. (Doc. 1 at 13-15).
November 2018, the parties reported their belief that
mediation could be beneficial and sought the first of several
postponements of their discovery and related litigation
obligations in order to explore settlement. (Docs. 32, 34,
36, 38, 40). Following two mediations and the informal
exchange of information and documents, the parties reached a
settlement. (Doc. 49). The instant motion represents their
effort to secure judicial approval of that settlement as
required by Lynn's Food Stores, Inc. v. United
States, 679 F.2d 1350, 1352-53 (11th Cir.
1982) and Nall v. Mal-Motels, Inc., 723 F.3d 1304,
1307-08 (11th Cir. 2013) (extending
Lynn's to former employees).
action to recover the liability prescribed in either of the
preceding sentences may be maintained against any employer
... in any Federal or State court of competent jurisdiction
by any one or more employees for and in behalf of himself or
themselves and other employees similarly situated.” 29
U.S.C. § 216(b) (emphasis added). The FLSA thus allows
the maintenance of a collective action, and notice to
potential class members, if the represented employees are
“similarly situated” to the named plaintiffs.
Hipp v. Liberty National Life Insurance Co., 252
F.3d 1208, 1218 (11th Cir. 2001).
parties' settlement agreement contemplates relief to a
broad spectrum of past and present employees, yet their
motion does not request establishment of a collective action.
Nor have the parties made any showing that conditional
certification is appropriate under the test established in
Hipp. They appear instead to assume that an FLSA
action can be settled collectively without satisfying the
ordinary requirements for conditional
class action context, a court cannot certify a settlement
class unless all the Rule 23 requirements for certification
(save only the absence of intractable trial management
problems - since a settlement presumes no trial) are
satisfied. Amchem Products, Inc. v. Windsor, 521
U.S. 591, 619-20 (1997). It is not immediately apparent that
collective actions are subject to a different rule, and
Hipp expressly holds that the text of the FLSA
requires named plaintiffs to “demonstrate” they
are similarly situated to other employees in order to
maintain a collective action, 252 F.3d at 1217, with no
obvious exception for settlements.
parties rely heavily on this Court's decision in
Warren v. Cook Sales, Inc., 2017 WL 325829 (S.D.
Ala. 2017). The Court therein did issue a certification
“for settlement purposes, ” id. at 2,
but it did not ignore the requirements of Hipp
simply because the parties proposed to settle the case.
Instead, the Court addressed Hipp and other cases
and identified evidence submitted by the plaintiffs relevant
to the certification determination. Warren v. Cook Sales,
Inc., 2016 WL 4498459 at *2-3 (S.D. Ala. 2016).
noted, the complaint seeks certification only as to servers
and as to other employees required to absorb the
defendants' business expenses or as to whom the
defendants claimed a tip credit. (Doc. 1 at 13-15). The
parties now seek to extend the benefits of the settlement to
all bartenders, servers, food expeditors, food runners and
bussers. (Doc. 53-1 at 3). Since the complaint alleges these
employees are not tipped, (Doc. 1 at 7), it is not clear that
the defendants would have claimed a tip credit as to
them; nor is it clear that they would have
absorbed any of the defendants' business expenses.
Evidence of the sort identified in Hipp and other
cases for showing that non-server employees are similarly
situated to the named plaintiffs has not been provided the
short, the parties: have not moved for conditional
certification; have not made a threshold showing sufficient
to obtain conditional certification; and have not
demonstrated that the mere fact they desire to settle this
action excuses them from doing so. The Court has and
expresses no opinion whether the parties can make such a
showing or demonstration, but until and unless they do so,
their proposed settlement cannot be approved.
it clear that certification is the only impediment to
approval. The parties assume their settlement can be approved
before notice is issued and potential opt-in plaintiffs are
given the opportunity both to do so and to object to the
proposed resolution of the lawsuit. They identify no
authority for this procedure, which runs counter to that
employed in Warren, 2017 WL 325829 at *2, where the
Court considered the absence of objection from potential
opt-in plaintiffs - who received notice of the terms of the
proposed settlement - significant in gauging the
settlement's fairness. Id. at *6, *8, *9.
it is premature to resolve the motion to approve settlement,
the Court questions certain provisions because they affect
the size of the universe of potential opt-in plaintiffs who
would receive notice prior to approval of the settlement.
First, the complaint alleges the violations were willful and
invokes the consequent three-year look-back period, to June
2015, (Doc. 1 at 13, 15); the proposed settlement abandons
willfulness and establishes a two-year look-back period, to
June 2016. (Doc. 53-1 at 3). Second, while the complaint sets
no ending date of the relevant period, the proposed
settlement provides no recovery for violations occurring
after June 2018. (Doc. 53-1 at 3). The parties may be able to
satisfactorily explain the discrepancy, but they have not yet
assumption the parties will resolve the issues noted above,
the Court provides the following non-exhaustive list of
potential concerns with the terms of the proposed settlement,
which the parties should be prepared to address. Again, the
Court does not suggest the ...