United States District Court, E.D. Wisconsin
ORDER GRANTING MOTION TO INVALIDATE
WILLIAM C. GRIESBACH, CHIEF JUDGE UNITED STATES DISTRICT
Dwayne Morgan, Clint Robinson, Paul Robinson, Michael Owens,
Marques Stewart, Cornelius Buford, Shaun Saunders, Daunte
Davis, and Kendall Holmes brought this action on behalf of
themselves and all other persons similarly situated against
Defendants CSW, Inc. and Northern Concrete Construction, Inc.
(“Northern Concrete”), alleging violations of the
Fair Labor Standards Act (“FLSA”) and Wisconsin
Wage and Hour Law. The FLSA claim is brought as an
“opt-in” collective action pursuant to Section
16(b) of the FLSA, 29 U.S.C. § 216(b). The Wisconsin
wage and hour claim is brought as an “opt-out”
Rule 23 Class Action. Fed.R.Civ.P. 23. The amended complaint
alleges that the plaintiff employees were employed directly
by CSW, a Mississippi corporation that recruits and hires
construction workers to work on construction projects
throughout the country. During the relevant time period, the
plaintiff employees worked under a contract between CSW and
Northern Concrete at Northern Concrete's Wisconsin job
sites. Plaintiffs allege that they were joint employees of
both CSW and Northern Concrete, and that both defendants are
jointly and severally liable for violations of federal and
state laws governing minimum wages. CSW is currently
unrepresented and has failed to answer the amended complaint,
though plaintiffs have not moved for default. Northern
Concrete denies liability as a joint employer and claims that
CSW contractually agreed to assume full responsibility for
all human resources functions.
before the court is a motion to invalidate the alleged
settlements made without court approval between CSW and five
of the named plaintiffs-Paul Robinson, Clint Robinson, Shaun
Saunders, Michael Owens, and Cornelius Buford (collectively
the “Withdrawal Plaintiffs”)-and to issue a
court-authorized notice that the Withdrawal Plaintiffs remain
a party in the lawsuit. Also before the court is
plaintiffs' motion to approve a settlement reached
between plaintiffs' counsel and CSW and for leave to
withdraw all claims against CSW pursuant to that settlement.
Northern Concrete opposes both motions. For the reasons set
forth below, the motion to invalidate the private settlements
will be granted. The motion for approval of the settlement
reached by plaintiffs' counsel with CSW will be set on
the court's calendar for hearing.
September 29, 2016, Plaintiffs Dwayne Morgan, Clint Robinson,
Paul Robinson, Michael Owens, Marques Stewart, Cornelius
Buford, and Shaun Saunders filed this action on behalf of
themselves and all others similarly situated. Compl., ECF No.
1. At all times relevant, the plaintiffs were employees of
CSW and were referred by CSW to perform work in Wisconsin for
Northern Concrete. Plaintiffs alleged violations of the
minimum wage and overtime provisions of the FLSA, and the
minimum wage, overtime, travel pay, and full wage payment
guarantees of Wisconsin law. Each named plaintiff signed a
consent form in which they opted in to participate as a named
plaintiff in the lawsuit against CSW and Northern Concrete.
ECF No. 1-1 at 7-8. Kendell Holmes, though not originally
named as a plaintiff, opted into the action on December 19,
2016. ECF No. 18.
Robinson, Paul Robinson, and Shaun Saunders contacted
plaintiffs' counsel in November 2016 seeking to withdraw
from this lawsuit. Ho Decl., ECF No. 29, ¶ 2.
Plaintiffs' counsel sent the three named plaintiffs
withdrawal forms on November 29, 2016 and the three named
plaintiffs executed the forms the same day. ECF Nos. 53-2,
53-3, 53-4. Michael Owens separately contacted
plaintiffs' counsel requesting to withdraw and executed
his withdrawal on December 6, 2016. ECF No. 53-5. On January
18, 2017, Cornelius Buford met with plaintiffs' counsel
and requested money. Ho Decl. ¶ 5. When he was told that
the law firm could not pay him to be a plaintiff or class
representative, Buford left the meeting and sent a text
message to another attorney at the firm indicating he wished
to withdraw from the lawsuit. Id. Buford faxed a
withdrawal form to plaintiffs' counsel on January 19,
2017 despite not being provided with a withdrawal form.
Id. at ¶ 6. CSW President Brad Lott contacted
plaintiffs' counsel the same day to confirm that
Buford's withdrawal form had been received. Id.
Plaintiffs' counsel noted in a letter to Clint Robinson,
Paul Robinson, and Shaun Saunders that he had not been
provided with any explanation as to why the Withdrawal
Plaintiffs were seeking to withdraw from the lawsuit. ECF No.
53-1 at 2.
December 6, 2016, Marques Stewart received a telephone call
from “T, ” an individual he knew to be a CSW
representative. Stewart Decl., ECF No. 30, ¶¶ 3-4.
T offered Stewart $200 in exchange for dropping the lawsuit
against CSW and Northern Concrete. Id. at 4. T said
that other named plaintiffs had agreed to drop the lawsuit
after receiving a few hundred dollars in cash payments from
CSW. Id. T also contacted Dwayne Morgan on several
occasions and indicated that Brad Lott asked him to act as an
intermediary on behalf of CSW. Morgan Decl., ECF No. 31,
¶ 2. T offered Morgan new employment with CSW in
exchange for his agreement to drop the lawsuit and again
stated that several other plaintiffs had either accepted an
offer of employment or payment in exchange for dropping the
lawsuit. Id. at ¶ 3. After Morgan told T he
would agree to drop the lawsuit in exchange for $600, T
informed Morgan he would first need to speak with Lott.
Id. at ¶¶ 4-5. T then told Morgan that the
most he could recover through the lawsuit was $84 but that
Lott would pay him $500 to drop the lawsuit or $1000 if he
convinced Kendell Holmes to also drop the lawsuit.
Id. at ¶¶ 5-6.
the date of this order, plaintiffs' counsel has not
submitted the Withdrawal Plaintiffs' withdrawal forms to
the court. Counsel contends, on behalf of the non-withdrawal
plaintiffs, that the Withdrawal Plaintiffs only sought to
withdraw from the litigation because they first agreed to
private settlements with CSW. Plaintiffs' counsel filed
this motion to invalidate the alleged settlements as improper
attempts to release FLSA and Wisconsin law claims without
court approval. Northern Concrete asserts that the motion
should be denied because the Withdrawal Plaintiffs only used
the withdrawals drafted by plaintiffs' counsel-not
private settlement contracts or releases which waive an
employee's right to receive wages required by law.
meantime, the non-withdrawal plaintiffs have reached their
own settlement with CSW and have filed a motion to withdraw
all of their claims against CSW subject to the following
conditions: (1) CSW will make an aggregate payment of $1, 600
to plaintiffs; (2) CSW will voluntarily provide the
plaintiffs information concerning the extent of control that
Northern Concrete exercised over the men referred by CSW to
work for Northern Concrete; and (3) CSW will provide
plaintiffs current contact information for the men that CSW
sent to work for Northern Concrete. Northern Concrete opposes
the proposed settlement on the ground that counsel for
plaintiffs has not provided the information the court needs
in order to approve the settlement with CSW, that CSW has
failed to comply with the requirements for settlement of
collective FLSA and Rule 23 Class actions, and that the
settlement encourages collusion between plaintiffs and CSW
and would be prejudicial to Northern Concrete.
Motion to Invalidate Settlements
argue that the withdrawals executed by Clint and Paul
Robinson, Saunders, Owens, and Buford were filed as a
condition of private settlements between the Withdrawal
Plaintiffs and CSW. Although those plaintiffs did not provide
the underlying reasons for their withdrawals, a CSW
representative allegedly told Morgan and Stewart that other
named plaintiffs had accepted CSW's offer of either
payment or employment in exchange for dropping all claims
against CSW and Northern Concrete. Plaintiffs assert that any
settlement agreements between the Withdrawal Plaintiffs and
CSW must be invalidated for the lack of court approval.
Rule of Civil Procedure 41(a)(1)(A) permits a plaintiff to
voluntarily dismiss his or her action without a court order
subject to “an applicable federal statute.” The
issue here is whether the FLSA is an applicable federal
statute under Rule 41 that would require court approval
before a plaintiff can dismiss an action. The FLSA was
designed “to protect certain groups of the population
from substandard wages and excessive hours” and
established minimum wages and maximum hours standards in
recognition of the unequal bargaining power between employers
and employees. Brooklyn Sav. Bank v. O'Neil, 324
U.S. 697, 706-07 (1945). The underlying policy considerations
of the FLSA forbid the waiver of basic minimum and overtime
wages under the Act as well as waiver of an employee's
right to liquidated damages. Id. at 707.
Seventh Circuit has not yet determined whether the FLSA is an
applicable federal statute under Rule 41, but it has
characterized the FLSA in dicta as a federal law that
“either forclose[s] private settlements or require[s]
their supervision by a public official.” Dye v.
Wargo, 253 F.3d 296, 302 (7th Cir. 2001). The Second
Circuit has explicitly held that “in light of the
unique policy considerations underlying the FLSA, ” the
FLSA is within Rule 41's applicable federal statute and
that “Rule 41(a)(1)(A)(ii) stipulated dismissals
settling FLSA claims with prejudice require the approval of
the district court or the DOL to take effect.”
Cheeks v. Freeport Pancake House, Inc., 796 F.3d
199, 206 (2d Cir. 2015). Although the Second Circuit did not
resolve the question of whether a dismissal without prejudice
requires court approval under Rule 41, a district court in
Florida has held that a stipulated dismissal of a FLSA action
requires court approval for any settlements regardless of
whether the dismissal is with or without prejudice.
Turner v. Interline Brands, Inc., Case No.