United States District Court, E.D. Tennessee
REPORT AND RECOMMENDATION OF THE SPECIAL MASTER
APPROVING THE COLLECTIVE ACTION SETTLEMENT
FLSA collective action, the Court has appointed the
undersigned Special Master pursuant to Fed.R.Civ.P. 53 and
stipulation of the Parties to issue a report and
recommendation concerning whether the proposed FLSA
collective action settlement should be approved. The Special
Master recommends the Court APPROVE the settlement in its
and Procedural History.
action was filed by Angela Bolden on July 26, 2013 (ECF Doc.
No. 1). In July of 2014, after Ms. Bolden accepted an offer
of judgment, Keith Salinas was added to the caption and
became the Named Plaintiff. (ECF Doc. No. 51). The Plaintiffs
assert that U.S. Xpress Enterprises Inc. and U.S. Xpress Inc.
(collectively "USX") failed to pay at least minimum
wage for all hours worked by their over-the-road truck
drivers while such drivers were in orientation and training.
("First Amended Complaint, " ECF Doc. No. 12).
During the orientation and training periods, USX paid drivers
a flat daily rate which did not consider the number of hours
worked by each driver. The Plaintiffs allege this amount
failed to pay them at least minimum wage for all hours worked
based on several theories of liability. At all times, USX has
denied and continues to deny that it paid drivers less than
minimum wage. USX further asserted that approximately 1, 400
of the collective action members signed arbitration
agreements requiring them to individually arbitrate their
claims. (See ECF Doc. No. 107).
Plaintiffs put forth several theories as to why USX paid them
less than minimum wage. First, the Plaintiffs contend that
the initial classroom orientation which occurred prior to
them driving constituted employment, and that they were
entitled to be paid minimum wage during such periods.
(See First Amended Complaint at ¶28). Second,
the Plaintiffs contend that following the orientation, the
daily rate provided in the Driver Finishing Program (an
over-the-road training program that lasted approximately 4-5
weeks) failed to provide them at least the federal minimum
wage for all hours worked. In support of this position,
Plaintiffs argue that (1) all "on duty" DOT time
constitutes compensable work; (2) all short rest breaks
constitute compensable work; and (3) sleeper berth time
beyond 8 hours per day constitutes compensable work.
(See First Amended Complaint at ¶48).
Parties engaged in significant litigation prior to attending
the mediation which ultimately led to the proposed
settlement. In August of 2017, the Parties filed
cross-motions for partial summary judgment. (See ECF
Doc. Nos. 163, 166). Based on the filings, the Parties appear
to agree that time a driver logged in an "on duty"
DOT status was compensable work time, but the Parties
disputed all other issues, including the amount of damages
Plaintiffs were entitled to under each of their theories.
Plaintiffs claim that as to the single claim that Defendants
do not appear to dispute on liability (that Defendants were
required to pay drivers at least minimum wage for all hours
worked in an "on duty" status), the total amount of
damages was $164, 385. (See Plaintiffs' Brief in
Support of Plaintiffs' Motion for Summary Judgment at 13,
ECF Doc. No. 164; Plaintiffs' Brief in Support of
Plaintiffs' Motion to Approve Settlement at 7; ECF Doc.
remaining claims brought by Plaintiffs are subject to
disputes both to liability and to damages. Both Parties have
filed for summary judgment with respect to the compensability
of sleeper berth periods and the time a driver spent in
orientation. (See ECF Doc. Nos. 163, 166). As the
briefing makes clear, the compensability of such time remains
heavily disputed. If Plaintiffs were to prevail on their
claims and obtain the full damages award as calculated by
their expert, Plaintiffs state that they would be entitled to
the following, not including the potential for liquidated
damages: $70, 513.37 for time spent in orientation ($21.75
per driver); $164, 385 for unpaid on-duty time ($48.47 per
driver); $1, 123, 260 for time spent in a truck's sleeper
berth beyond eight hours per day ($334 per driver), and $5,
246.60 for unpaid short rest break of 20-minutes or less
($1.60 per driver). (ECF Doc. No. 192 at 5-6).
addition to the claims brought in the collective action, 43
individuals filed arbitration following USX's motion to
compel arbitration. Those arbitrations asserts the claims
brought in the collective action, along with other individual
claims. This settlement resolves 35 of those arbitrations.
(ECF Doc. No. 192 at 13). The remaining arbitrations either
settled under separate terms or were dismissed upon
October 3, 2017, the Parties attended a full-day mediation
before the undersigned. During the mediation, both Parties
acted in good faith and made reasonable compromises to reach
an agreement. The proposed agreement creates a settlement
fund of $2, 200, 000, which will fully resolve the instant
matter and the thirty-five arbitrations. (Settlement
Agreement at 3, ECF Doc. No. 192-2). In exchange for payment
from the fund, the FLSA collective action members will
release wage and hour claims "for time spent in
orientation and the driver finishing program."
(Id. at 4). The arbitration claimants will release
all employment related claims against Defendants.
(Id. at 4-5).
January 26, 2018, Plaintiffs filed their motion to approve
the FLSA settlement. The motion is now ripe for
consideration, and for the reasons discussed below, I
recommend the Court APPROVE the Settlement in full.
proposed settlement fairly resolves a bona-fide
favors compromise and settlement of collective actions.
Carroll v. Blumaq Corp., 2010 WL 11520634 (E.D.
Term. Nov. 15, 2010); see also Lynn's Food
Stores, 679 F.2d 1350, 1354 (11th Cir. 1982);
Little Rock Sch. Dist. V. Pulaski County Special Sch.
Dist. No. 1, 921 F.2d 1371, 1388 (8th Cir.
1990) (in a class action context, providing that "[a]
strong public policy favors [settlement] agreements, and
courts should approach them with a presumption in their
favor"); Ortega v. Uponor, Inc. (In re Oponor,
Inc.), 716 F.3d 1057, 1063 (8th Cir. 2013)
(in a class action context, providing that "[a]
settlement agreement is presumptively valid."); In
re Warfarin Sodium Antitrust Litig., 391 F.3d 516 535
(3d Cir. 2004) ("there is an overriding public interest
in settling class action litigation, and it should therefore
be encouraged"); Wal-Mart Stores, Inc. v. Visa
U.S.A. Inc., 396 F.3d 96, 116 (2d Cir. 2005) (noting the
"strong judicial policy in favor of settlements,
particularly in the class action context") (internal
quotations omitted); Officers for Justice v. Civil Serv.
Comm'n, 688 F.2d 615, 625 (9th Cir. 1982)
("[V]oluntary conciliation and settlement are the
preferred means of dispute resolution. This is especially
true in complex class action litigation."); Speed
Shore Corp. v. Denda, 605 F.2d 469, 473 (9th
Cir. 1979) ("It is well recognized that settlement
agreements are judicially favored as a matter of sound public
policy. Settlement agreements conserve judicial time and
limit expensive litigation."); Newberg On Class Actions
§ 11.41 (4th ed. 2002) ("The compromise
of complex litigation is encouraged by the courts and favored
by public policy.").
reviewing a settlement of FLSA claims must conclude that it
is "fair, reasonable, and adequate." Carroll v.
Blumaq Corp., 2010 WL 11520634; see also Thompson v.
United Stone, LLC, et al, 2015 WL 867988, at *2 (E.D.
Tenn. 2016 Mar. 2, 2015) Int'l Union, United Auto.,
Aerospace, and Agr. Implement Workers of Am. V. Gen. Motors
Corp., 497 F.3d 615, 631 (6th Cir. 2007). The
court must also determine whether the settlement reflects a
reasonable compromise over issues that are actually
in dispute. Rampersad v. Certified Installation LLC,
2012 WL 5906878, at *1 (E.D. Tenn. Nov. 26, 2012) (citing
Lynn's Food Stores, Inc. v. United States, 697
F.2d 1350, 1354 (11th Cir. 1982).
may approve an FLSA settlement where such an agreement
represents the "resolution of a bona fide dispute over
FLSA provisions." Thompson v. United Stone, LLC, et
al, 2015 WL 867988, at *1 (E.D. Tenn. March 2,
2015) (quoting Lynn's Food Store, Inc. v. United
States, 679 F.2d 1350, 1355 (11th Cir. 1982).
reviewing whether a bona fide dispute exists
consider the following factors: (1) the nature of the
dispute; (2) the employer's business and type of work
performed by the employee; (3) the employer's reasons for
disputing the employee's right to the claimed wages; (4)
the employee's justification for the disputed wages; and
(5) if the parties dispute the computation of wages owed,
each party's estimate of the number of hours worked and
the applicable wage. Felix v. Thai Basil At Thornton,
Inc., 2015 U.S. Dist. LEXIS 62020, *3 (D. Colo. May 6,
dispute here is focused on whether Plaintiffs were paid at
least the federal minimum wage during the first 4-5 weeks of
their employment with Defendants. During this period,
Plaintiffs were in training and were paid a daily rate.
a. Plaintiffs assert that they were required to participate
in a classroom orientation at the start of their employment
which was not paid at the applicable minimum wage. Defendants
contend that such time is pre-employment and, thus, no
compensation was necessary. Regardless, Defendants paid
Plaintiffs for 8 hours per day of orientation, while
Plaintiffs assert the orientation lasted about 9 hours per
day (rendering a total of 3 hours non-compensated). If such
time was held to be work, the damages per driver on this
claim would be $21.75. Whether such an initial orientation
constitutes compensable work is a mixed question of law and
fact. Helde v. Knight Tranp., Inc., 982 F.Supp.2d
1189, 1199 (W.D. Wash., Oct. 9, 2013) (finding a factually
similar orientation program for truck drivers to be
compensable); but see Hurst v. First
Student, 181 F.Supp.3d 827, 838-41 (D. Ore. 2016)
(finding a factually similar orientation program for truck
drivers to be non-compensable).
b. Plaintiffs contend that a substantial amount of
time which over-the-road truck drivers spend over-the-road
constitutes working time, including all "on duty"
DOT time, short rest breaks of less than 20 minutes,
see 29 C.F.R. §785.18 ("rest periods of
short duration, running from 5 minutes to about 20 minutes
... must be counted as hours worked"); sleeper berth
time beyond 8 hours per day, see 29 C.F.R. §
785.22 (when on duty for more than 24 hours, up to 8 hours of
sleep time may be credited as non-work time. While Defendants
generally recognized that "on duty" DOT time was
compensable, the other periods of time were subject to legal
and factual disputes between the Parties. Based on the
records produced in this matter, Plaintiffs estimated the
aggregate (non-liquidated) damages for "on duty"
time was $164, 385 ($48.47 per driver), for short rest breaks
was $5, 426.60 ($1.60 per driver), and for sleeper berth time
over eight hours was $1, 123, 360 ($334 per driver).
Defendants contested the compensability of the rest breaks
and sleeper berth time, as well as the amount of on-duty time
that went unpaid. (See Defendants' Answer, ECF
Doc. No. 16).
settlement will provide approximately $250 per driver in the
collective action, after fees, costs, and administrative
expenses are paid. (ECF Doc. No. 192 at 6). This amount gives
drivers full value on their "on duty" and short
rest break claims (totaling $50.07 per driver) and more than
50% of the value for their sleeper berth and orientation
claims. Considering the inherent risks in maintaining the
collective action through trial, and the legal and factual
disputes surrounding the compensability of sleeper berth
time, this is a fair result for collective action members.
regarding the compensability of sleeper berth time for
over-the-road drivers continues to develop, but remains
subject to significant uncertainty and risk to both sides.
The most significant case to address this issue so far is
Petrone v. Werner Enterprises, a case from the
District of Nebraska which alleged that trainee drivers
failed to receive minimum wage because the defendant failed
to pay them for, inter alia, sleeper berth time in
excess of 8 hours per day. The procedural history of that
case alone emphasizes the risks and uncertainty to all
Parties should this case not resolve.
2015, the Petrone court entered summary judgment in
the plaintiffs' favor, holding that the DOL guidance, and
specifically 29 C.F.R. § 785.22, the DOL Field
Operations Handbook, and two opinion letters issued by the
DOL, were entitled to Auer deference and compel
trucking companies to pay over-the-road drivers for sleeper
berth time in excess of 8 hours per day. 121 F.Supp.3d 860
(D. Neb. 2015) (Strom, J.) ("Petrone I").
But the Petrone court then certified its holding for
interlocutory appeal to the Eighth Circuit. The Eighth
Circuit denied the petition, and the case was sent to the
trial court for a trial on damages.
to that trial, a new judge was assigned to the case, and
Werner filed a motion for reconsideration, requesting the
court reverse the summary judgment grant provided to
plaintiffs and instead hold that Werner was entitled to
judgment as a matter of law on the sleeper berth claims. The
new judge partially granted Werner's motion,
reversed the plaintiffs' summary judgment award, but held
that the issue of sleeper berth compensability was a mixed
question of law and fact, and required a jury to resolve.
2017 WL 510884 (D. Neb. Feb. 2, 2017) (Smith Camp, J.)
("Petrone II"), (vacating summary judgment
award and holding that whether sleeper berth time is
compensable must be determined by jury); see also Petrone
v. Werner Order on Motion to Clarify (Smith Camp, J.)
(further holding that whether sleeper berth time is
compensable must be determined by jury).
unresolved nature of these legal theories demonstrates that
there is a bona fide dispute of an FLS A claim.
proposed settlement is fair, reasonable, and adequate based
on the attendant risks of continued litigation.
reviewing whether a FLSA settlement is fair, reasonable and
adequate, courts consider the following factors:
(1) The existence of fraud or collusion behind the
(2) The complexity, expense, and likely duration of the
(3) The state of the proceedings and the amount of discovery
(4) The probability of Plaintiff s success on the merits;
(5) The range of possible recovery; and
(6) The Opinions of counsel.
Nutting v Unilever Mfg. (U.S.) Inc., 2014 WL
2959481, at 3 (W.D. Tenn. June 13, 2014); (citing Dees v.
Hydradry, Inc.,706 F.Supp.2d 1227, 1241 (M.D. Fla.
2010); Pessoa v. Countrywide Home Loans, Inc., No.
2007 WL 101777, at *3 (M.D. Fla. April 2, 2007)); see
also Greene v. ...