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Ganci v. MBF Inspection Services, Inc.

United States District Court, S.D. Ohio, Eastern Division

September 6, 2019

THOMAS GANCI, et al., Plaintiffs,
MBF Inspection Services, Inc., Defendant.



         This matter is before the Court on the parties' Joint Motion for Preliminary Approval of Class and Collective Action Settlement (ECF No. 143). For the following reasons, the parties' Motion is GRANTED.


         On October 30, 2015, Plaintiff Thomas Ganci commenced this action, asserting a collective action under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., and a class action pursuant to Federal Rule of Procedure 23 and the Ohio Minimum Fair Wage Standards Act, Ohio Revised Code Chapter 4111, et seq. (“Fair Wage Act”). (Compl. ¶ 1, ECF No. 1.) On November 24, 2015, Defendant filed its Answer admitting that it employed Plaintiff but denying liability. (Answer ¶ 2, ECF No. 6.) Defendant asserted that Plaintiffs were properly classified as exempt from state and federal overtime requirements. (Id. ¶¶ 9, 15; 25th Affirm. Def.)

         In September 2016, the Court granted Plaintiff's motion to conditionally certify a collective action under the FLSA of all inspection personnel “who were paid a day rate and who worked for Defendant at any time since [September 20, 2013].” (Conditional Certification Order, ECF No. 26.) At the close of the FLSA notice period, a total of 52 inspectors had filed consent forms to opt in to the lawsuit and currently remain part of the case. (Consent Filings, ECF Nos. 1-1, 12-14, 18, 25, 30-35, 37-38, 40-51; Notice of Withdrawals, ECF Nos. 26, 66; Order Dismissing Opt-ins, ECF No. 88.)

         Soon after the FLSA notice period ended, Plaintiff moved to certify a Rule 23 class of Inspectors who worked in Ohio since October 2013. The district court certified the Rule 23 class on October 27, 2017. (Class Certification Order, ECF No. 95.) The case proceeded through a full discovery period, with both parties conducting written discovery, Defendant deposing 12 Plaintiffs, Plaintiffs deposing some of Defendant's management personnel, and the parties exchanging approximately 18, 000 pages of documents. (Helland Decl. ¶ 2.)

         On April 5, 2018, the Parties attended a full day mediation in Columbus, Ohio with mediator Frank Ray, Esq. That mediation did not result in a settlement. On April 23, 2018, the Parties filed cross motions for summary judgment and Defendant filed a motion to decertify the FLSA collective. (ECF Nos. 103, 105, 107.) Those motions were never resolved because on June 22, 2018, Defendant filed a Voluntary Petition for Bankruptcy in the United States Bankruptcy Court for the District of New Mexico, case number 18-11579-t11, resulting in a stay of this case. (See ECF Nos. 133-34.)

         Litigation of the case then proceeded in the United States Bankruptcy Court for the District of New Mexico, where Plaintiff filed class proofs of claim. (Helland Decl. ¶ 7.) The parties returned to mediation on May 30, 2019, this time mediating in Albuquerque, New Mexico with Paul Fish, Esq. That mediation resulted in a signed Memorandum of Understanding; the parties fully executed the Settlement Agreement in July 2019. (Settlement Agreement, ECF No. 143-3.) The parties then sought and obtained an order from the Bankruptcy Court modifying the automatic stay for the limited purpose of seeking approval of the settlement from this Court. (ECF No. 140-1). The present motion followed on August 21, 2019. (ECF No. 143.)

         Defendant has agreed to pay a total settlement amount of $2, 225, 000, which includes all payments to all accepting Plaintiffs, enhancements awards, attorneys' fees, litigation costs, and expenses of Plaintiffs' Counsel, but excludes the employer's share of payroll taxes. (Settlement Agreement § 3, ECF No. 143-3.) The settlement includes all FLSA Opt-in Plaintiffs who are included within the scope of the Settlement and who timely execute and return a “Release of Claims Form, ” as well as any Ohio Class Members who do not timely submit a written request for exclusion in response to the Notice of Settlement. (Id. §§ 2, 3.) After accounting for enhancements awards, attorneys' fees, and litigation costs and expenses, amounts remaining from the total $2, 225, 000 will be distributed pro rata among the accepting and non-excluded Plaintiffs. (See Ex. A to the Settlement Agreement, 143-3.)


         A. Approval of FLSA Settlement

         “The FLSA's provisions are mandatory and, except as otherwise provided by statute, are generally not subject to being waived, bargained, or modified by contract or by settlement.” Kritzer v. Safelite Sols., LLC, No. 2:10-CV-0729, 2012 WL 1945144, at *5 (S.D. Ohio May 30, 2012) (citation omitted). An exception to this rule allows courts to review and approve settlement agreements in private actions for back wages under 29 U.S.C. § 216(b). Id. When reviewing an FLSA settlement, “the federal district court must ‘ensure that the parties are not, via settlement of [the] claims, negotiating around the clear FLSA requirements of compensation for all hours worked, minimum wages, maximum hours, and overtime.'” Sharier v. Top of the Viaduct, LLC, No. 5:16-CV-343, 2017 WL 961029, at *2 (N.D. Ohio Mar. 13, 2017) (quoting Rotuna v. W. Customer Mgmt. Group LLC, No. 4:09CV1608, 2010 WL 2490989, at *5 (N.D. Ohio June 15, 2010) (alteration in original)). Instead of negotiating around the FLSA's requirements, there must exist a bona fide dispute between the parties. Schneider v. Goodyear Tire & Rubber Co., No. 5:13-cv-2741, 2014 WL 2579637, at *2 (N.D. Ohio June 9, 2014).

         Factors relevant to the approval analysis include: (1) the risk of fraud or collusion behind the settlement; (2) the complexity, expense and likely duration of the litigation; (3) the amount of discovery engaged in by the parties; (4) the plaintiff's likelihood of success on the merits; and (5) the public interest in settlement. Clevenger v. JMC Mech., Inc., No. 2:15-cv-2639, 2015 WL 12681645, at *1 (S.D. Ohio Sept. 25, 2015) (citation omitted). “The court may choose to consider only factors that are relevant to the settlement at hand and may weigh particular factors according to the demands of the case.” Gentrup v. Renovo Servs., LLC, No. 07-cv-430, 2011 WL 2532922, at *8 (S.D. Ohio June 24, 2011). Additionally, the Court must separately assess the reasonableness of any proposed award of attorney's fees and costs, even when they are negotiated as part of the settlement. Lakosky v. Discount Tire Co., Inc., No. 14-13362, 2015 WL 4617186, at *1 (E.D. Mich. July 31, 2015).

         After a careful review of the Parties' motion and their settlement agreement, the Court finds that the settlement is a fair, reasonable, and adequate resolution of a bona fide legal dispute between the Parties. There is no evidence the settlement agreement is the result of anything other than arm's length negotiations between experienced opposing counsel, mediated by two well-respected mediators. Prior to reaching an agreement, counsel had access to sufficient discovery to adequately assess the likelihood of success and the risks involved in continued litigation. Likewise, the proposed attorney's fees, costs, and service award to be distributed from the total settlement amount recovered by Plaintiff are fair and ...

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