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Randolph v. Powercomm Construction, Inc.

United States District Court, D. Maryland, Southern Division

April 28, 2016

GREGORY RANDOLPH, et al., Plaintiffs,


          GEORGE J. HAZEL, District Judge.

         In this Fair Labor Standards Act ("FLSA") case, Plaintiffs are former traffic controllers (commonly referred to as "flaggers") who allege that Defendant PowerComm Construction, Inc. and its owner, Defendant David Kwasnik, Sr. (collectively, "PowerComm"), failed to pay them appropriate overtime wages. The parties have now entered a settlement agreement and jointly request that the Court approve the settlement over the objection of named Plaintiffs Gregory Randolph and Dana Brown, as well as opt-in Plaintiffs Lenard Pringle, Leslie Gross, and Eunise Melton (collectively, the "Objectors"). A Fairness Hearing was conducted on February 18, 2016, during which parties presented oral arguments and the Objectors each testified. For the reasons explained below, the Court will approve the proposed settlement agreement.

         I. BACKGROUND

         PowerComm is an electrical utility construction company. See ECF No. 21 at 22.[1] David Kwasnik, Sr. is the President and CEO of PowerComm. See id. Plaintiffs are individuals who work or have worked as flaggers for PowerComm. See ECF No. 136-1-136-68. A flagger directs vehicles in traffic to ensure the safety of road workers and traffic while construction is being performed on the road. See ECF No. 130-2 at 2.

         PowerComm typically contracts with other companies to provide construction, upgrading, and maintenance services for overhead and underground distribution centers. See ECF No. 21 at 22. Specifically, PowerComm is hired to: erect utility poles and towers: replace poles, conductors, insulators, and transformers: install fiber-optic and coaxial cable: cast in place manholes; and, remediate and demolish bridges, roads, sidewalks, and buildings. See id. During the relevant time period, PowerComm had one contract to provide flaggers to the Potomac Electric Power Company ("PEPCO"). See id. at 23: see also ECF No. 130-3 at 23. The flaggers typically reported to the PowerComm yard in the morning and remained until PowerComm instructed them where to go. See ECF No. 130-3 at 55-56. PowerComm would then send the flaggers to the location requested by PEPCO. See id. at 24.

         Plaintiffs filed their Complaint on June 12, 2013, alleging violations of the FLSA and the Maryland Wage and Hour Law ("MWHL") for failure to pay overtime. See ECF No. 1. On August 14, 2013 and September 27, 2013, PowerComm filed motions for summary judgment regarding the individual claims of Plaintiffs Gregory Randolph and Dana Brown, respectively, arguing that Plaintiffs were independent contractors not covered by the FLSA. See ECF Nos. 20 & 34. Judge Paul Grimm denied PowerComm's motions for summary judgment and conditionally certified the case as a collective action under the FLSA. See ECF Nos. 50 & 51. Since then, more than fifty Plaintiffs have opted-in to the collective action.

         On July 2, 2014, PowerComm filed a third motion for partial summary judgment, arguing that if PowerComm did violate the FLSA, it had done so in good faith thus making liquidated damages unavailable. See ECF Nos. 82 & 83. The Court denied this motion as premature. See ECF No. 116. On August 5, 2014, Plaintiffs filed a Motion for Protective Order and for Sanctions, arguing that PowerComm had improperly paid some of the opt-in Plaintiffs to opt-out of the collective action. See ECF No. 89. On August 29, 2014, the Court prohibited PowerComm from further contact with Plaintiffs regarding this lawsuit and invalidated all opt-out forms. See ECF No. 104.

         PowerComm filed a fourth Motion for Summary Judgment on January 23, 2015, along with a Motion to Decertify the Conditional Collective Action. See ECF Nos. 128 & 129. Plaintiffs filed a Cross-Motion for Partial Summary Judgment and a Motion for Nonconditional Certification on February 6, 2015. See ECF Nos. 130 & 131.

         Both parties' motions for summary judgment were granted, in part, and denied, in part. ECF No. 142. In its August 21, 2015 Memorandum Opinion, the Court found that Plaintiffs are PowerComm employees covered by the FLSA and that liquidated damages would be applied if judgment for the Plaintiffs is rendered. Id. The Court denied PowerComm's motion for summary judgment based on their contention that Plaintiffs failed to timely opt-in and failed to allege a compensable claim. Id. PowerComm's motion for summary judgment on the issue of the statute of limitations was granted with respect to certain Plaintiffs whose claims were therefore dismissed but denied with regard to certain other Plaintiffs whose claims therefore remained. Id. Finally, the Court certified Plaintiffs' collective FLSA action. Id.

         After the resolution of dispositive motions, a Scheduling Order was issued setting a trial date of February 18, 2016. ECF No. 148. On December 29, 2015, the parties filed a Motion to Schedule Fairness Hearing to determine the fairness of and approve a settlement agreement reached by the parties. ECF No. 156. An Order granting the Motion for Fairness Hearing was entered and, after appropriate notice was approved and issued, a Fairness Hearing was held on February 18, 2016, the date previously set for trial. At the hearing, named Plaintiffs Gregory Randolph and Dana Brown, as well as opt-in Plaintiffs Lenard Pringle, Leslie Gross, and Eunise Melton, testified regarding their objections to the settlement agreement. The general concern of Pringle, Gross, and Melton was with their specific proposed settlement payments, with some challenging the amounts being received by other opt-in Plaintiffs. Counsel for the Plaintiffs contended that the settlement amount reflected his concerns with the case, including difficulties maintaining contact with certain Plaintiffs and concerns about the Defendants' ability to pay if a judgment for a more significant amount was reached at trial.

         II. ANALYSIS

         A. FLSA Settlements

         The FLSA does not permit settlement or compromise over alleged FLSA violations except with: (1) supervision by the Secretary of Labor; or, (2) a judicial finding that the settlement reflects "a reasonable compromise of disputed issues" rather than "a mere waiver of statutory rights brought about by an employer's overreaching." Lynn's Food Stores, Inc., 679 F.2d 1350, 1354 (11th Cir. 1982); see also Lopez v. NTI, LLC, 748 F.Supp.2d 471, 478 (D. Md. 2010) (explaining that courts assess FLSA settlements for reasonableness). These restrictions help carry out the purpose of the FLSA, which was enacted "to protect workers from the poor wages and long hours that can result from significant inequalities in bargaining power between employers and employees." Duprey v. Scotts Co. LLC, 30 F.Supp. 3d 404 (D. Md. 2014). Before approving a FLSA settlement, courts must evaluate whether the "settlement proposed by an employer and employees... is a fair and reasonable resolution of a bona fide dispute over FLSA provisions." Lynn's Food Stores, Inc., 679 F.2d at 1355 (italics not in original). To do so, courts examine "(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, 30 F.Supp. 3d at 408. "These factors are most likely to be satisfied where there is an assurance of an adversarial context' and the employee is represented by an attorney who can protect [his] rights under the statute.'" Id. (citing Lynn's Food Stores, Inc., 679 F.2d at 1354).

         "Although the Fourth Circuit has not directly addressed the factors to consider in determining whether an [FLSA class settlement]... is fair and reasonable, various federal courts have analogized to the fairness factors generally considered for court approval of class action settlements under Rule 23(e).'" Hoffman v. First Student, No. WDQ-06-1882, 2010 WL 1176641 (D. Md. Mar. 23, 2010) (alteration in original) (citing Lomascolo v. Parsons Brinkernoff, Inc., No. I:08cv1310, 2009 WL 3094955, at *10 (E.D. Va. ...

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