United States District Court, E.D. Texas, Sherman Division
MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF
UNITED STATES MAGISTRATE JUDGE
L. MAZZANT UNITED STATES DISTRICT JUDGE.
matter is before the Court on the Parties' Joint Motion
for Approval of FLSA Collective Action Settlement (Dkt. #72),
which the Magistrate Judge advised the Court to grant in her
Report and Recommendation (Dkt. #79). After careful
consideration, the Court adopts the Report and Recommendation
for the reasons explained herein.
Settlement Approval 
Fair Labor Standards Act (“FLSA”) claims can be
compromised only after a court reviews and approves the
settlement. See Bodle v. TXL Mortg. Corp., 788 F.3d
159, 165 (5th Cir. 2015). In the context of individual
actions, the Fifth Circuit has “excepted, from this
general rule, unsupervised settlements that are reached due
to a bona fide FLSA dispute over hours worked or compensation
owed.” Id. (citing Martin v. Spring Break
'83 Productions, L.L.C., 688 F.3d 247, 255 (5th Cir.
2015)). The Fifth Circuit has yet to decide the extent to
which courts are to scrutinize FLSA class actions. But
district courts in this circuit, including this one, have
approved an FLSA class settlement only after determining
whether the proposed settlement (1) resolves a bona dispute
(2) in a fair and reasonable way. See, e.g., Halleen v.
Belk, No. 4:16-cv-55-ALM, 2018 WL 6701278, at *1-*4
(E.D. Tex. Dec. 20, 2018); Dyson v. Stuart Petroleum
Testers, Inc., No. 1-15-cv-282 RP, 2016 WL 815355,
at *2 (W.D. Tex. Feb. 29, 2016) (Pittman, J.) (quoting
Collins v. Sanderson Farms, Inc., 568 F.Supp.2d 714,
719 (E.D. La. 2008)); Lee v. Metrocare Srvs., No.
3:13-cv-2349, 2015 WL 13729679, at *1 (N.D. Tex. July 1,
2015) (O'Connor, J.).
first question is whether a bona fide dispute over hours
worked or compensation owed exists. Plaintiff alleges that
Defendant misclassified Store Managers (“SMs”)
under the FLSA, that SMs often worked over forty hours per
week, and that Defendant failed to pay SMs overtime wages
(Dkt. #1), allegations which Defendant denies (Dkt. #5). The
Parties actively litigated this dispute. This includes
contentious depositions and vigorously litigated motion
practice, including a motion to conditionally certify class,
which was granted in part and denied in part. See Sims v.
Housing Auth. City of El Paso, No. EP-10-CV-109-PKC,
2011 WL 3862194, at *6 (W.D. Tex. Sept. 1, 2011) (citing the
adversarial posture between the parties as a reason to
approve the settlement). A bona fide dispute exists as a
Court must thus determine whether the class action settlement
is fair and reasonable. “Although the class-action
provisions of Federal Rule of Civil Procedure 23 technically
do not apply to collective actions under the FLSA, Rule 23(e)
is similar because it requires court approval to finalize a
proposed class action settlement.” Id. As a
result, courts often utilize the Rule 23(e) standard to
determine whether a FLSA collective action settlement is fair
and reasonable. Id.; see also Jones v.
JGC Dall. LLC, No. 3:11cv2743-O, 2014 WL 7332551, at *3
(N.D. Tex. Nov. 12, 2014).
There are six focal facets [under Rule 23(e)]: (1) the
existence of fraud or collusion behind the settlement; (2)
the complexity, expense, and likely duration of the
litigation; (3) the stage of the proceedings and the amount
of discovery completed; (4) the probability of
plaintiffs' success on the merits; (5) the range of
possible recovery; and (6) the opinions of the class counsel,
class representatives, and absent class members.
Reed v. Gen'l Motors Corp., 703 F.2d 170, 172
(5th Cir. 1983). The Court addresses each of these factors in
“[t]he Court may presume that no fraud or collusion
occurred between counsel in the absence of any evidence to
the contrary.” Lee v. Metrocare Servs.,
3:13-CV-2349-O, 2015 WL 13729679, at *5 (N.D. Tex. July 1,
2015) (citing Collins v. Sanderson Farms, Inc., 568
F.Supp.2d 714, 725 (E.D. La. 2008)). The Court finds no
evidence of fraud or collusion between counsel and,
therefore, presumes that no fraud or collusion occurred
“[w]hen the prospect of ongoing litigation threatens to
impose high costs of time and money on the parties, the
reasonableness of approving a mutually-agreeable settlement
is strengthened.” Klein v. O'Neal, Inc.,
705 F.Supp.2d 632, 651 (N.D. Tex. 2010) (quoting Ayers v.
Thompson, 358 F.3d 356, 373 (5th Cir. 2004)). This case
has been actively litigated thus far, and there is no reason
to expect any different if the settlement is not approved.
The Parties anticipate that they would spend the effort and
absorb the cost of producing/reviewing thousands of pages of
ESI and other documents, preparing witnesses for depositions,
and further motion practice. There is also no question that,
if the case proceeded to trial, this would impose high costs
on all parties. Accordingly, the reasonableness of approving
the parties' settlement is strengthened as ongoing
litigation threatens to impose high costs of time and money.
goal of the third factor is to “evaluate[ ] whether
‘the parties and the district court possess ample
information with which to evaluate the merits of the
competing positions.'” Klein, 705
F.Supp.2d at 653 (quoting Ayers, 358 F.3d at 369).
As stated, the Parties have engaged in discovery, including
two depositions, which allowed them to fully brief a motion
for class certification in the eighteen months in which this
case has been litigated (up to the proposed settlement
anyway). Consequently, the Court finds the parties have had
the opportunity to evaluate the merits of their respective
positions, and this factor favors approval of the settlement.
fourth factor, which is the most important factor absent
fraud and collusion, considers the probability of the
plaintiffs' success on the merits. Parker v.
Anderson, 667 F.2d 1204, 1209 (5th Cir. 1982). When
analyzing this factor, courts must judge the terms of the
proposed settlement against the probability that the class
will succeed in obtaining a judgment following a trial on the
merits. Reed, 703 F.2d at 172. However, the court
“must not try the case in the settlement hearings
because the very purpose of the compromise is to avoid the
delay and expense of such a trial.” Id.
Plaintiffs acknowledge the risks inhibiting their ability to
ultimately prevail on the merits, including, defeating
decertification motions, succeeding at the liability and
damages phases of trial, and on post-trial motions and a
potential appeal. After all, the parties dispute whether the
SMs were misclassified at all. The Settlement Agreement
ensures that every class member will receive a fair and
reasonable recovery based on a formula. It specifically
provides each class member compensation for roughly three
hours of overtime for each week they worked as an SM during
the period applicable to settlement-just one hour less than
the four hours Plaintiffs contend to have worked on average.
Plaintiffs face considerable hurdles in succeeding on the
merits, and the Settlement Agreement provides a fair and
reasonable recovery. Therefore, the Court finds this factor
weighs in favor of approving the Settlement Agreement.
fifth factor examines the range of possible recovery by the
class. This factor primarily concerns the adequacy of the
proposed settlement. See Ayers, 358 F.3d at 370. The
Parties disagree over whether a three-year or two-year
statute of limitation applies, the application of the
fluctuating workweek method of calculation, as well as
whether Plaintiffs were entitled to liquidated damages. The
Settlement Agreement resolves the uncertainty inherent in
these disputes in a way that seems fair and adequate. Class
members are to receive monetary compensation representing
overtime wages, covering a three-year period, assuming they
worked overtime for 80% of the work weeks at issue. The 80%
assumes that class members did not work overtime for paid
time off and holidays, which is not an unreasonable
assumption. Although the maximum possible award at trial
could be larger than the settlement amount, there is also a
significant chance it could be lower, or non-existent.
Overall, the Settlement Agreement is adequate.
sixth factor refers to the opinions of counsel and the class
representatives. This case has the benefit of experienced
attorneys on both sides, who have negotiated settlements in
other complex employment litigation, including class and
collective action settlements. The parties and their
attorneys agree that the settlement is a fair and reasonable
resolution of a bona fide dispute. Therefore, this factor
supports a finding in favor of approving the Settlement
considering the Reed factors, the Court finds that
the Settlement Agreement should be approved because it is a