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 Court ordered
the parties to supplement their motion to address certain
concerns raised by the Court, (Doc. 55), and the parties have
done so. (Doc. 56).
Court first pointed out that, although the parties’
settlement extends beyond the named plaintiffs, they have not
moved for certification of a collective action. (Doc. 55 at
3). While the parties still have not done so, it is clear
from their briefing that they desire conditional
certification. (Doc. 56 at 7). The Court therefore construes
their supplemental memorandum as including a motion for
conditional certification of the settlement class pursuant to
Hipp v. Liberty National Life Insurance Co., 252
F.3d 1208, 1217-19 (11th Cir. 2001).
Court next doubted that the parties had met the standard for
conditional certification, particularly in that the named
plaintiffs, who are tipped employees complaining of tip
violations, purport to represent both tipped and non-tipped
employees. (Doc. 55 at 3-4). The parties have now clarified
that the defendants took a tip credit uniformly as to all
employees included within the complaint and the proposed
collective action, including those the plaintiffs say are not
tipped employees, and that the tip credit is improper due to
the defendants’ uniform practice of sharing tips with
the same group of non-tipped employees. With this
understanding, the Court finds that all members of the
proposed collective action are similarly situated to the
named plaintiffs and that the requirements for conditional
certification under governing law are satisfied. Accordingly,
the parties’ deemed motion for conditional
certification of a collective action is
granted. The following class is
All current and former non-exempt employees of Defendants who
worked as bartenders, servers, food expediters, food runners,
and/or bussers between June 30, 2016 and June 30, 2018 at any
of the following Half Shell Oyster House locations: Flowood,
Hard Rock, Destin, Mobile, Hattiesburg, Biloxi, Gulfport,
Spanish Fort and Lafayette.
(Doc. 53-1 at 3; Doc. 56 at 12).
Final Approval of Settlement.
Court next questioned whether settlement could be approved
prior to: (1) the sending of notice to potential opt-in
plaintiffs; (2) the expiration of the post-notice deadline
for opting into the collective action; and (3) an opportunity
for the opt-in plaintiffs to object to the terms of the
proposed settlement. (Doc. 55 at 4-5). While the parties
presently seek final approval of their settlement, the cases
on which they rely stand only for the proposition that
preliminary approval is appropriate at the pre-notice stage.
The Court considers this an appropriate procedural sequence.
number of sister courts have rejected efforts to obtain final
settlement approval prior to the sending of
notice. Their primary objections are that final
approval would moot the lawsuit (precluding the sending of
notice) and that a plaintiff cannot settle claims
of a non-party.
Court perceives an additional impediment to final approval of
the settlement at this stage. The Court’s
responsibility is to “determin[e] that a settlement
proposed by an employer and employees” is “a fair
and reasonable resolution” of a bona fide FLSA dispute.
Lynn’s Food Stores, Inc. v. United States, 679
F.2d 1350, 1355 (11th Cir. 1982). There are two
named plaintiffs in this action, but there are clearly many
hundreds of potential opt-in plaintiffs,  and their
perception of what is fair and reasonable may well differ
from that of the named plaintiffs. It would be premature for
the Court to definitively decide the fairness and
reasonableness of the proposed settlement when well over 99%
of the potential claimants have had no opportunity to
identify unfair or unreasonable aspects of the settlement
parties insist that only they should have any say in the
settlement. Unlike in the Rule 23 context, where class
members can be bound to a settlement against their will,
those within the scope of a collective action can remain
outside the litigation with no adverse consequences; thus,
they say, employees that believe the settlement is not fair
and reasonable can simply elect not to participate. (Doc. 56
question, however, is not whether the class of potential
opt-in plaintiffs will be harmed by the settlement but
whether they will be benefited, and benefited in a way that
is fair and reasonable under the circumstances. Their voice,
if they have one, should be heard before that determination
is definitively made. Were settlement reached and approval
sought only after expiration of the opt-in period, counsel
might be in a position to represent, in compliance with Rule
11, that his clients deem the settlement fair and reasonable;
because settlement of this case was reached prior to notice,
no such representation is possible, and the input of opt-in
plaintiffs must be obtained by different means.
the foregoing reasons, the Court declines to consider final
approval of the proposed settlement at this time.
Preliminary Approval of Settlement.
some courts have refused to consider even preliminary
approval of an FLSA settlement agreement prior to notice,
others (including this Court) have permitted preliminary
approval, with only final approval delayed until notice and
an opportunity to opt in and object to the settlement
terms. The Court considers preliminary approval
responsive to the concerns regarding mootness and authority
without unnecessarily discouraging the very settlements that
federal courts are expected to promote.
approval is only preliminary, the case is not settled, and
the named plaintiffs’ claims remain live. Because the
case will settle, if at all, only after final approval, and
because by that time the opt-in process will be complete, the
named plaintiffs will not exceed their authority by settling
on behalf of non-parties.
allow the district court to approve the settlement in order
to promote the policy of encouraging settlement of
litigation.” Lynn’s, 679 F.2d at 1354.
In many cases, delaying preliminary approval of a proposed
settlement would discourage settlement, in derogation of this
policy; unable to obtain any early indication of favorable
judicial disposition towards a settlement proposal, many
defendants would divert to litigation issues – such as
contests over conditional certification, discovery and the
merits – resources that could have funded a settlement,
thereby shrinking the pot if not scotching settlement
entirely. The availability of preliminary approval encourages
parties to vigorously explore settlement while retaining for
future opt-in plaintiffs a genuine opportunity to challenge
the fairness and reasonableness of a settlement they had no
hand in crafting.
Court therefore considers whether to preliminarily approve
the parties’ proposed settlement. The Court previously
identified a number of questions regarding the proposed
settlement and has received generally satisfactory responses.
complaint asserts several FLSA claims, all relating to
minimum wage (not overtime), with the most sweeping being
that the defendants improperly took a tip credit every
workweek as to every class member. The settlement formula
focuses on this claim, providing a flat $2.50 to each opt-in
plaintiff for each work hour recorded or paid by the
defendants. The other four claims asserted in the complaint
are narrower in scope, extending only to particular
workweeks. Because the FLSA protects only payment of the
applicable minimum wage, which cannot be recovered twice
under different theories, these four claims are largely
redundant with the tip credit claim. All five asserted claims
appear to be problematic for the plaintiffs, factually and
legally. The $2.50 per hour recovery represents about 25% of
what most ...