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Deholl v. Eckerd Corp.

United States District Court, M.D. North Carolina

July 25, 2019



          N. Carlton Tilley, Jr. Senior United States District Judge.

         This matter is before the Court on Plaintiff Christopher J. DeHoll's (“DeHoll”) and Defendants Eckerd Corporation and Gregory Scott Norman's[1] (collectively “Defendants”) Joint Motion for Approval of FLSA Settlement and Motion to Dismiss with Prejudice (“Joint Motion”) [Doc. #30]. This Court requested further information from the parties in two orders, the first of which was issued on April 18, 2019 (“First Order”) [Doc. #32] and the second on May 2, 2019 (“Second Order”) [Doc. #34]. The parties responded to the First Order in a Joint Supplemental Memorandum (“First Supplemental Memorandum “) [Doc. #33], and to the Second Order in a Joint Supplemental Memorandum (“Second Supplemental Memorandum”) [Doc. #35]. For the reasons explained below, the Joint Motion is GRANTED, and this action is DISMISSED WITH PREJUDICE.


         Before approving an FLSA settlement, the court must determine if the settlement is a “fair and reasonable compromise of disputed claims and issues arising from a bona fide dispute raised pursuant to the FLSA.” Kirkpatrick v. Cardinal Innovations Healthcare Sols., 352 F.Supp.3d 499, 502 (M.D. N.C. 2018) (citing Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982)). Thus, to approve a FLSA settlement, the court must make “finding[s] with regard to (1) whether there are FLSA issues actually in dispute, (2) the fairness and reasonableness of the settlement in light of the relevant factors from Rule 23, and (3) the reasonableness of the attorneys' fees, if included in the agreement.” Duprey v. Scotts Co., LLC, 30 F.Supp.3d 404, 408 (D. Md. 2014); see also Hood v. Uber Techns., Inc., No. 1:16-CV-998, 2019 WL 93546, at *4 (M.D. N.C. Jan. 3, 2019).


         The Court must first determine whether a bona fide dispute exists. “A bona fide dispute is one in which there is some doubt whether the plaintiff would succeed on the merits at trial.” Kirkpatrick, 352 F.Supp.3d at 502 (quoting Hall v. Higher One Machs., Inc., No. 5-15-CV-670-F, 2016 WL 5416582, at *6 (E.D. N.C. Sept. 26, 2016)). To determine this, the court looks to the pleadings and proposed settlement agreement. Id. (citing Duprey, 30 F.Supp.3d at 404.)

         In this case, there is a bona fide dispute. DeHoll contends he is owed overtime under the FLSA, while the Defendants argue DeHoll is exempted from the FLSA as a highly-compensated employee and/or learned professional, and therefore, he is owed no overtime. (Mem. in Supp. of Joint Mot. for Approval of FLSA Settlement & Mot. to Dismiss with Prejudice (“Mem. in Supp. of Joint Mot.”) [Doc. #31] at 3; see also Compl. [Doc. #5] at 4-7; Defendant Eckerd Corp.'s Answer [Doc. #11] at 6-7; & Defendant Gregory Scott Norman's Answer [Doc. #12] at 7-8.) “This disagreement is a genuine dispute that supports the concept of a negotiated settlement of this FLSA claim.” Hood, 2019 WL 93546 at *4 (internal quotations and brackets omitted) (quoting Rivera v. Dixson, No. TDC-14-cv-2901, 2015 WL 427031, at *3 (D. Md. Jan. 30, 2015)).


         The Court must next determine whether the settlement is fair and reasonable. “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).” Kirkpatrick, 352 F.Supp.3d at 502 (citing Hoffman v. First Student, Inc., No. WDQ-06-1882, 2010 WL 1176641, at *2 (D. Md. Mar. 23, 2010)). These factors include “(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 plaintiff; (5) the probability of plaintiff's success on the merits and (6) the amount of the settlement in relation to the potential recovery.” Id. at 502-03 (quoting Hargrove v. Ryla Teleservices, Inc., No. 2:11CV344, 2013 WL 1897027, at *2 (E.D. Va. Apr. 12, 2013); see also Hood, 2019 WL 93546, at * 4 & Duprey, 30 F.Supp.3d at 409. In considering these factors, “there is a strong presumption in favor of finding a settlement fair . . . .” Id. (internal quotation marks omitted) (quoting Lomascolo v. Parsons Brinckerhoff, Inc., No. 18CV1310, 2009 WL 3094955, at *16-*17 (E.D. Va. Sept. 28, 2009)).

         In the present case, all six factors support a finding that the settlement is fair and reasonable. First, while the parties have not engaged in extensive discovery, they agree they have exchanged sufficient information to determine that settlement is in the best interest of all parties. (First Supp. Mem. at 3-4.) At this stage, the parties do not dispute how often DeHoll was paid, nor how much he was paid, but instead only disagree on “the narrow issue of whether Plaintiff was exempt under the FLSA . . . .” (Id. at 3.) Therefore, the parties agree that further discovery will add little additional information that could influence their decision to settle. (Id. at 4.).

         Similarly, as to the second factor, the parties recognize that in ruling on Defendants' previous motion to dismiss, the Court has narrowed the issues in the case to one issue and, because both parties already have the information necessary to develop legal arguments related to this issue, “the parties would incur substantial costs by engaging in discovery on information they both possess.” (Id. at 3-4.)

         As to the third factor, both the parties and the Court recognize that there is a presumption that “no fraud or collusion occurred between counsel, in the absence of any evidence to the contrary, ” Lomascolo, 2009 WL 3094955, at *12. (See First. Supp. Mem. at 5.) Here, there is no evidence of fraud or collusion, and the parties represent that “[c]ounsel for Plaintiff aggressively pursued Plaintiff's claims and the matter was vigorously contested by Defendants.” (First Supp. Mem. at 5.)

         As to the fourth factor, counsel for both parties are experienced in FLSA litigation. “Defendants' counsel specialize[s] in employment law matters and has handled or assisted in the defense of over twenty FLSA misclassification cases the past ten years alone, is a member of his firm's wage and hour practice group and routinely advises clients on FLSA and wage and hour matters.” (Id. at 5-6.) DeHoll's counsel is also experienced, having handled “approximately ten FLSA cases, some of which were resolved through pre-suit negotiation . . .” and “recently pursued a complex claim with FLSA causes of action in 2017 through 2019 . . . [which] likewise involved allegations of uncontested work and a failure to pay at least minimum wage for qualifying work.” (Second Supp. Mem. at 1.)

         As to the fifth factor, the parties agree that the “Defendants have a significant chance of prevailing on the merits of their learned professional exemption defense.” (First Supp. Mem. at 6.) Therefore by settling DeHoll ...

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