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Smoot v. Wieser Brothers General Contractors, Inc.

United States District Court, W.D. Wisconsin

April 29, 2016

GREG SMOOT, on behalf of himself an all others similarly situated, Plaintiff,
v.
WIESER BROTHERS GENERAL CONTRACTORS, INC., Defendant.

OPINION & ORDER

JAMES D. PETERSON District Judge.

In this wage and hour suit, plaintiff Greg Smoot brings class action and collective action claims against defendant Wieser Brothers General Contractors, Inc., alleging violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 207, Wisconsin’s straight time and overtime pay law, Wis.Stat. § 109.03, and Wisconsin’s prevailing wage laws. The parties have reached a settlement, for which they now seek court approval. The court will certify two proposed classes, preliminarily approve the proposed settlement, approve the proposed notice to the class and settlement administration plan, and schedule a final fairness hearing.

BACKGROUND

Smoot and the other members of the proposed classes are Wisconsin residents who were employed by Wieser Brothers on or after July 8, 2012. Wieser Brothers is a Minnesota Corporation that performs general construction services throughout Minnesota and western Wisconsin.

Smoot has alleged that Wieser Brothers failed to pay proper overtime compensation to its employees, in violation of the FLSA and Wisconsin law, and that Wieser Brothers failed to pay prevailing wages, in violation of Wisconsin law. With regard to overtime pay, Wieser Brothers paid its employees at a rate of 1.5 times their regular rate of pay for each hour of overtime that they worked. But in calculating an employee’s “regular rate, ” Wieser Brothers excluded hazard pay (or “pit pay”), travel pay, and contributions to a profit-sharing plan. These exclusions resulted in a lower regular rate, which in turn resulted in a lower overtime rate. According to Smoot, this method of calculating overtime rates violated the FLSA and Wisconsin law. Smoot has also alleged that this method of calculating regular rates violated Wisconsin’s prevailing wage law.

Wieser Brothers defended its compensation calculations on the grounds that the excluded contributions were to a “bona fide plan for providing old-age, retirement, life, accident, or health insurance or similar benefits for employees.” 29 U.S.C. § 207(e)(4). Because § 207(e) and Wis. Admin. Code DWD § 290.05 permitted Wieser Brothers to exclude such contributions when calculating an employee’s regular rate, the company believed that it was not violating any state or federal laws. Wieser Brothers also affirmatively alleged that it had acted in good faith, reasonably believing that it was complying with the FLSA and state law.

After Smoot filed his complaint, counsel for both sides discussed the possibility of an early settlement. Wieser Brothers informally produced several documents, including employment policies, materials relating to the profit-sharing plan, audit results from the Wisconsin Department of Workforce Development, and payroll records. The parties exchanged several proposals for settlement and were able to narrow their points of disagreement. On January 12, 2016, both sides participated in a settlement conference with a magistrate judge. During the conference, the parties agreed to:

1. Two proposed settlement classes: a Federal Rule of Civil Procedure 23 “opt-out” class for the overtime claims under Wisconsin law, and an “opt-in” class for the claims under the FLSA and Wisconsin’s prevailing wage law;
2. A class notice to mail to all potential class members, with a 60-day period for potential class members to opt-out of the Rule 23 class and to opt-in to the FLSA and prevailing wage class;
3. A method for calculating each member’s settlement payment, depending on whether the member is part of the Rule 23 class, the FLSA and prevailing wage class, or both classes; and
4. A $30, 000 payment to class counsel for attorney fees, costs, expenses, and disbursements.

Dkt. 22-1. Because payments to individual class members will vary based on the number of hours that the employee worked and on the employee’s pay rate, the parties did not agree on a total dollar amount for the settlement fund, nor did they estimate each potential class member’s recovery. But the parties contend that the agreed-upon formula allows class members to recover close to the full measure of damages that they could receive by filing individual suits.

The court has subject matter jurisdiction over the FLSA claims pursuant to 28 U.S.C. § 1331, because they arise under federal law, and the court has supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367, because they are part of the same case or controversy.

ANALYSIS

The parties jointly move the court to: (1) preliminarily approve the settlement agreement; (2) certify Smoot as the class representative; (3) preliminarily certify classes for settling the class action claims and the collective action claims; (4) appoint the Previant Law Firm as class counsel; (5) approve and direct mailing of the proposed class notice; and (6) schedule a final approval hearing. Dkt. 20 and Dkt. 21. The court will first address certifying the classes and then address settlement.

A. Class certification

The parties move the court to certify a Rule 23 class and a settlement class for the FLSA and Wisconsin prevailing wage law claims. The court will address each class separately.

1. Rule 23 class

For the class action claims, the parties propose the following class:

All current or former hourly field employees of Wieser, including the Named Plaintiff, who worked for Wieser in Wisconsin at any time between July 8, 2013 and January 12, 2016, and who do not opt-out of the Rule 23 Settlement Class, shall be members of the “Rule 23 Settlement Class.”

Dkt. 22-1, at 3. To be certified, Rule 23(a) requires that a class satisfy the prerequisites of numerosity, commonality, typicality, and adequacy of representation. The class must also satisfy one subsection of Rule 23(b). In this case, Rule 23(b)(3) applies; it requires a showing that the common issues predominate other issues, and that the class action method provides the best way to resolve those issues. See Jefferson v. Ingersoll Int’l Inc., 195 F.3d 894, 898 (7th Cir. 1999) (“When substantial damages have been sought, the most appropriate approach is that of Rule 23(b)(3), because it allows notice and an opportunity to opt out.”). In a settlement context, the court rigorously examines whether the class meets the requirements, in an effort to mitigate the lack of an adversarial relationship between the parties, and to identify potential conflicts ...


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