Duane Morris Class Action Review - 2023 - Report - Page 326
because of the strong reliance in Johnson on 19th century precedent as well as its
controversial position that could dissuade potential plaintiffs from bringing class action
lawsuits against companies.
F.
Rulings On Approval Of FLSA Settlements
For over 40 years, virtually all federal courts have followed the ruling in Lynn’s Food
Stores, Inc., et al. v. U.S., 679 F.2d 1350 (11th Cir. 1982), that claims under the Fair
Labor Standards Act (FLSA) may only be settled through approval of the U.S.
Department of Labor (DOL) or through a lawsuit filed by the individual, in which a court
of competent jurisdiction reviews the proposed settlement for fairness. Outside of the
Eleventh Circuit, however, courts are increasingly questioning whether the holding of
Lynn's Food is sound law. These cases focus on the lack of congressional intent or
statutory basis behind logic of selecting FLSA cases - out of the many of statutes
designed to protect workers or consumers - for special scrutiny of settlement
agreements, reasoning instead that such scrutiny is anachronistic in the context of bona
fide disputes litigated by experienced counsel.
An example of the continuing trend of courts to reject the analysis of Lynn’s Food is the
ruling in 2022 in Alcantara, et al. v. Duran Landscaping, Inc., 2022 U.S. Dist. LEXIS
122552 (E.D. Penn. July 12, 2022). The plaintiffs, a group of landscaping employees,
filed a class and collective action alleging that the defendant failed to pay overtime
compensation in violation of the FLSA and the Pennsylvania Minimum Wage Act. The
parties ultimately settled the matter and the plaintiffs filed a motion for preliminary
settlement approval. As a threshold matter, the court raised the question of whether it
had to approve the settlement under Rule 41. The U.S. Department of Labor (DOL) filed
an amicus brief arguing that either the Court’s review or the DOL supervision was
necessary for FLSA settlements due to unequal bargaining power and inability to waive
FLSA rights. The court determined that it was not required to review settlements of
individual wage claims brought against employers. The court explained that Congress
did not specifically require judicial review of FLSA settlements to determine fairness,
and that following the DOL’s advice to do so would contradict the rights of plaintiffs to
dismiss claims without a court’s approval under Rule 41. The court reasoned that the
rule requiring judicial approval of settlements “has no support in the FLSA's text; it is a
judge-made rule that makes litigation slower and more expensive and is at odds with
the text of Rule 41.” Id. at *2-3. The court opined that since Congress did not include
language in the FLSA requiring judicial approval, it clearly did not intend to require a
court’s approval of FLSA settlements. Accordingly, the court ordered the plaintiffs to file
a stipulation of dismissal pursuant to Rule 42, a motion for settlement approval, or a
status report.
Settlements of wage and hour class actions are also complicated if they contain hybrid
claims under the FLSA pursuant to 29 U.S.C. § 216(b). An example is the ruling in 2022
in Walsh, et al. v. Columbus, Electric, Inc., 2022 U.S. Dist. LEXIS 167320 (S.D. Ohio
Sept. 15, 2022). Plaintiffs, a group of employees, filed a class and collective action
alleging that the defendant failed to pay overtime compensation in violation of the FLSA
and Ohio state wage and hour laws. The parties ultimately settled the matter and moved
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Duane Morris Class Action Review – 2023
