Kutz v. Cargill Cocoa & Chocolate, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

CHRISTINE KUTZ,

Plaintiff, :

V. : 3:19-CV-0176

: (JUDGE MARIANI)

CARGILL COCOA & CHOCOLATE, INC., :

Defendant. .

MEMORANDUM OPINION

Presently before the Court is the Joint Motion of Plaintiff Christine Kutz ("Kutz") and

Defendant Cargill Cocoa & Chocolate, Inc. (“Cargill”) (Doc. 20) for judicial approval of the

parties’ settlement agreement. The parties seek to resolve Kutz’s claims against Cargill

under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., the Pennsylvania

Minimum Wage Act (“PMWA’), 43 Pa. C.S. § 333.101 et seq., and the Pennsylvania Wage

Payment and Collection Law (“PWPCL’), 43 Pa. C.S. § 260.1 ef seq.

|. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Plaintiff Christine Kutz was employed as a Food Safety Quality & Regulatory

Technologist with Cargill from on or about April 20, 2015 to in or about April, 2018 (Doc. 13,

q 1). According to the Amended Complaint, Kutz “was not paid overtime wages during the

limitations period.” (/d. at J 12). Kutz asserts that she was classified as a “non-exempt”

employee for FLSA purposes when she was hired on or around April 20, 2015, but that □□□□□

or around August 2015, Defendant re-classified Ms. Kutz's position as ‘exempt’, though

neither the position nor its requirements had changed.” (/d. at Ff 13, 14).

Kutz commenced this action by filing a five-count Complaint on January 31, 2019,

asserting violations of the FLSA, the PMWA, the PWPCL (Counts I-III), as well as additional

counts for breach of oral contract (Count IV) and unjust enrichment (Count V). (Doc. 1).

On April 12, 2019, Cargill filed a “Partial Answer and Affirmative Defenses to Count |

and Il of the Complaint.” (Doc. 9). While Cargill admitted that it employed Plaintiff as a Food

Safety Quality & Regulatory Technologist, it denied her claims for overtime on the basis that

she was exempt under the FLSA and Pennsylvania law. (/d. at 4-6 (Def.’s Answer to {J 12,

13, 14, 15, 16 of Pl.’s Compl.)). Cargill also asserted that Plaintiff “was appropriately

classified as exempt under the FLSA and Pennsylvania law and, therefore, was not entitled

to overtime compensation for working more than 40 hours per week.” (/d. at 8 (Def.’s

Answer to § 24 of Pl.’s Compl.)). Cargill denied that it failed to pay Plaintiff overtime at one

and one-half times Plaintiffs regular rate of pay for all hours worked over 40 in a work week

and denied that its actions were “willful, intentional and malicious”. (/d. at 8 (Def.’s Answer

to 25, 26, 27 of Pl.’s Compl.)). Cargill likewise denied the allegations of Count II of

Plaintiffs Complaint with respect to the PMWA.

With respect to Counts Ill, lV and V of Plaintiffs Complaint, Cargill filed a Motion to

Dismiss (Doc. 10) on April 12, 2018 and a brief in support thereof (Doc. 10-1) on that same

date.

in response, Kutz filed an Amended Complaint (Doc. 13) on May 3, 2019. That

Complaint again asserted violations by Cargill of the FLSA (Count I), violations of the

PMWA (Count II) and violations of the PWPCL (Count Ill). Kutz did not include in her

Amended Complaint the prior causes of action for breach of oral contract and unjust

enrichment which had been asserted in her original Complaint.

Thereafter, Cargill on May 17, 2019 filed its Answer and Affirmative Defenses to

Plaintiff's First Amended Complaint. (Doc. 18). Cargill again admitted that Kutz was

Cargill's employee from on or about April 2015 until August, 2018 as a Food Safety Quality

& Regulatory Technologist but otherwise denied that Plaintiff was entitled to overtime

because she was exempt under the FLSA and Pennsylvania law. (See generally id.; Def.’s

Answer to ff] 12, 13, 14, 15, 16, 20, 24, 25, 26, 27, 28, 29, 32, 33, 34, 35, 36, 39, 40, 41,

42, 43, 44, 45 and 46 of Pl.’s Am. Compl.)

Cargill also set forth various affirmative defenses including the affirmative defense

that “Plaintiff's claims are barred in whole or in part because Plaintiff was exempt from the

maximum hours/overtime pay requirement pursuant to Section 13(a)(1) of the Fair Labor

Standards Act, 29 U.S.C. § 213 (a)(1) and the Pennsylvania Minimum Wage Act.” (Doc. 18

at 14).

On May 14, 2019, this Court ordered this case to mediation (Doc. 17). Gerard J.

Geiger, Esquire, was appointed as mediator. On June 12, 2019, the mediator filed a report

advising the Court that the case had been completely settled and that Court approval of the

settlement was required. (Doc. 19).

Pursuant to the terms of the settlement agreement and limited release, Cargill

agreed to pay Kutz the total gross amount of [EEE payable in accordance with the

terms of the settlement agreement.

Il. LEGAL STANDARD FOR APPROVAL OF A SETTLEMENT AGREEMENT UNDER THE FLSA

In Howard v. Philadelphia Housing Authority, the District Court set forth the legal

standard by which a settlement agreement of claims under the FLSA must be reviewed:

FLSA claims may be compromised or settled in two ways: (1) supervision by

the Department of Labor, pursuant to 29 U.S.C. § 216(c), or (2) approval by

the district court, pursuant to 29 U.S.C. § 216(b). Adams v. Bayview Asset

Mgmt., LLC, 11 F.Supp.3d 474, 476 (E.D.Pa. 2014).

The parties proceed under the second avenue — approval by the district court.

Without guidance from the Third Circuit, district courts within this Circuit have

looked to the standard set forth by Eleventh Circuit in Lynn's Food Stores,

Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982), when a party seeks

judicial approval of an FLSA settlement agreement pursuant to 29 U.S.C. §

216(b). See Mabry v. Hildebrandt, No. 14-5525, 2015 WL 5025810, at *3

(E.D.Pa. Aug. 24, 2015) (collecting cases).

Under the Lynn’s Food standard, “[w]hen parties present to the district court a

proposed settlement, the district court may enter a stipulated judgment if it

determines that the compromise reached ‘is a fair and reasonable resolution

of a bona fide dispute over FLSA provisions’ rather than ‘a mere waiver of

statutory rights brought about by an employer's overreaching.” Cuttic v.

Crozer-Chester Med. Ctr., 868 F.Supp.2d 464, 466 (E.D.Pa. 2012) (quoting

Lynn’s Food, 679 F.2d at 1354); see also Lyons v. Gerhara’s Inc., No. 14-

06693, 2015 WL 4378514, at *3 (E.D.Pa. July 16, 2015) (applying the Lynn's

Food standard).

If the Court determines that the settlement concerns a “bona fide dispute,” it

will conduct a two-part fairness inquiry to ensure that (1) the settlement is fair

and reasonable for the employee(s), and (2) the agreement furthers the

FLSA’s implementation in the workplace. See Mabry, 2015 WL 5025810, at

*3; McGee v. Ann’s Choice, Inc., No. 12-2664, 2014 WL 2514582, at *2

(E.D.Pa. June 4, 2014). The Court uses this standard to assess the propriety

of FLSA collective action settlements and private (i.e., single-plaintiff) FLSA

settlements alike. Kraus v. PA Fit Il, LLC, No. 15-4180, 155 F.Supp.3d 516,

524-25, 2016 WL 125270, at *5 (E.D.Pa. Jan. 11, 2016) (explaining the

rationale for applying the Lynn’s Food standard to private FLSA settlements);

see also Mabry, 2015 WL 5025810, at *1-2 (collecting cases in which the

courts have applied the Lynn’s Food standard to private FLSA settlement

agreements); Bettger v. Crossmark, Inc., No. 13-2030, 2015 WL 279754, at

*3-4 (M.D.Pa. Jan. 22, 2015) (same).

197 F.Supp.3d 773, 776-777 (E.D. Pa. 2016). See also Berger v. Bell-Mark Tech. Corp.,

2019 WL 1922325, at *1-2 (M.D. Pa. 2019); Yong Liv. Family Garden Il, Inc., 2019 WL

1296258, at *1-2 (E.D. Pa. 2019).

Il. ANALYSIS

With the standard of review of a settlement agreement under the FLSA having been

delineated, the Court proceeds to analyze the propriety of the proposed private FLSA

settlement agreement below.

A. Terms of Proposed Settlement

Under the terms of the proposed settlement, Cargill agrees to pay Kutz the total

gross amount of [EE to resolve Kutz’s claims. Kutz will receive EEE of the

GE payment and her counsel will receive EEE representing payment of Kutz’s

attorney's fees and costs. (“Settlement Agreement and Limited Release’, Doc. 20-1, | 1(a),

In exchange for payment as set forth above, the proposed settlement agreement

contains the following release and confidentiality and non-disparagement clauses:

a. Kutz hereby irrevocably and unconditionally releases, remises, and

forever discharges Cargill and any and all individuals acting on behalf of

Cargill, including but not limited to, all of Cargill’s directors, officers,

employees or former employees, insurers, representatives, attorneys,

parents, subsidiaries, affiliates, predecessors, successors, and assigns, and

all persons acting by, through, under or in concert with any of them

(collectively, “the Releasees”) of and from any and all actions, suits, debts,

claims, liabilities, obligations, promises, agreements, controversies, damages,

and expenses of any nature whatsoever, in law or equity, including claims for

attorney's fees and costs, which she has had or may have had up until the

date of this Agreement that relate to the facts alleged in the Complaint or the

Amended Complaint, the claims asserted in the Lawsuit, and any claims that

could have been asserted in the Lawsuit based upon the facts alleged in the

Complaint or the Amended Complaint. Particularly, but without limitation,

Kutz so releases any claims she has had or may have had against the

Releasees arising under the Fair Labor Standards Act, the Pennsylvania

1 The parties attached to their Joint Motion for Approval of Settlement (Doc. 20) a copy of the

Settlement Agreement and Limited Release. However, the amounts to be allocated to the Plaintiff and to

her attorney as stated above from the a settlement payment were not stated in the document. On

request of the Court, counsel for the Plaintiff provided the Court with a copy of the Settlement Agreement

and Limited Release with the [INEM settlement amount being divided as stated above between the

Plaintiff and her attorney. The complete Settlement Agreement and Limited Release have been filed of

record by this Court under seal.

Additionally, on request of the Court, Plaintiffs counsel, Weisberg Cummings, P.C., provided a

copy of the “Engagement Letter and Contingent Fee Agreement” which has also been filed of record in this

case under seal. Paragraph three of that document states in part “our fee is thirty-five (35%) of the gross

monies recovered by settlement, before a lawsuit is filed. If we file a lawsuit, writ of summons, or arbitration

on your behalf, or commence binding mediation, after obtaining your permission to do so, then our fee will

be forty percent (40%) of the gross monies recovered.” Paragraph four of the Engagement Letter and

Contingent Fee Agreement provides for the advancement of costs and expenses by Plaintiffs counsel as

defined therein and further provides “[i]f we decide to advance any costs and expenses for your case and

are successful obtaining monies for you, you agree to reimburse us from any recovery after our attorney

fees are deducted from the gross aggregate, total amount.”

Minimum Wage Act, the Pennsylvania Wage Payment and Collection Law,

any other federal, state, or local ordinance relating to Cargill's payments to

Kutz of wages or overtime, and any claim under the common law (including

but not limited to breach of contract and unjust enrichment) relating to

Cargill's payments to Kutz of wages or overtime.

b. Kutz agrees, promises and covenants that she will not file or permit to be

filed in her name or on her behalf any lawsuit in court against any of the

persons or entities released in this Agreement based upon any act or event

released by this Agreement. Kutz further agrees that should any charge,

lawsuit, complaint or other claim be filed or pursued in her name or on her

behalf with any governmental agency, or in any other forum, against any of

the persons or entities released herein, based upon any act or event released

herein, she will not seek or accept any personal relief based upon such

charge, lawsuit, complaint or other claim, including but not limited to an award

of monetary damages or reinstatement to her employment with Cargill,

provided that nothing in this Agreement is intended to release claims related

to the validity or enforcement of this Agreement. Nothing in this Agreement

limits or precludes Kutz from filing a charge with the Equal Employment

Opportunity Commission (“EEOC”) or participating in any investigation or

proceeding conducted by the EEOC, nor shall it apply to any non-waivable

charges or claims brought before any other governmental agency.

c. Kutz represents and warrants that she has not assigned or otherwise

transferred to any person, party or entity any of the claims, demands, actions,

liabilities, obligations or causes of action being released pursuant to this

Agreement. Kutz further agrees to indemnify the Releasees and to hold them

harmless from any claims, demands, actions, liabilities, obligations and/or

causes of action previously assigned or otherwise transferred by Kutz, in the

event it is discovered that such assignation or transfer did in fact occur.

(Doc. 20-1, J 7 (a)-(c)).

Paragraph eight of the settlement agreement entitled “Confidentiality and Non-

Disparagement” provides:

a. Confidentiality of Agreement. The Parties agree that this Agreement and

its specific terms are confidential. In consideration of the promises of Cargill

set forth herein, Kutz, and her attorneys, agents, and representatives, agree

not to reveal, disclose, or communicate (a) the existence or terms of this

Agreement, (b) the consideration paid hereunder, or (c) the nature of any

claims contemplated that are resolved by this Agreement. Kutz confirms that

she has not disclosed such information up to the date of her execution of this

Agreement. This includes, but is not limited to, any disclosure or

communication (a) to any reporter or other member of the press, including but

not limited to editors, opinion writers, or others for online publications that are

similar to traditional members of the press; (b) on any website or social media

platform (e.g., Facebook, Twitter, YouTube, Instagram, Tumblr); or (c) to

distribute this Agreement to any member of the public or to post this

Agreement on a website. Nothing herein shall prohibit disclosure of the

existence or terms of this Agreement, as set forth in this subparagraph below,

to Kutz’s spouse, attorneys, tax accountants, financial advisors, or federal,

state, or local governmental authorities. For the avoidance of doubt, Kutz is

entitled to disclose the existence and terms of this Agreement and the

allegations underlying this Agreement: (i) to the extent necessary to report

income to appropriate taxing authorities; (ii) in response to an order of a court

of competent jurisdiction; (iii) in response to a properly issued and valid

subpoena; or (iv) as otherwise required by law. Prior to making a disclosure

under subparts (ii), (iii) and (iv) of this Paragraph, Kutz agrees that she will

notify Cargill, through its counsel, of the order, subpoena or legal requirement

compelling the disclosure and of the disclosure she intends to make, and that

such notice will be provided to Michael Wilhelm/Law/MS 24, Cargill, Inc.,

15407 McGinty Road West, Wayzata, MN 55391.

(Id. at J 8(a)).

The parties have included in paragraph 10 of the settlement agreement a provision

entitled “Severability” which states:

10. Severability. If any court of competent jurisdiction shall hold invalid any

part of this Agreement, then the Parties request that the court making such

determination afford them the ability to cure the offending provision and, if the

Court does not provide the opportunity to cure, then the Court shall have the

right to modify this Agreement and in its reduced form this Agreement shall be

enforceable to the fullest extent permitted by law. If any provision or part of a

provision of this Agreement is held to be invalid or unenforceable, then the

Parties request that the court making such determination afford them the

ability to cure the offending provision and, if the Court does not provide the

opportunity to cure, then such provision shall be severed from this Agreement

and the remaining provisions shall remain in full force and effect. This

paragraph shall be interpreted to give the fullest possible effect to Kutz’s

release of claims.

(Id. at J 10).

B. — Bona Fide Dispute

Initially the Court determines whether the proposed settlement resolves a bona fide

dispute between the parties. Kutz alleges that Cargill willfully, intentionally and maliciously

violated state and federal law. (Doc. 13, 16, 25-28, 34). Kutz further asserts that Cargill

knew she worked more than 40 hours a week and yet failed to compensate her at the rate

of one and one-half times her regular pay as required by the FLSA. (/d. at Jf 16, 24-26).

Cargill denies these allegations and raises ten affirmative and other defenses in its

answer. (See Doc. 18). Specifically, Cargill denies that Kutz worked over 40 hours in any

given work week during the relevant period and further asserts that for the period of her

employment, Cargill employed Kutz as a Food Safety Quality & Regulatory Technologist

and that she was not entitled to overtime because she was exempt under the FLSA and

Pennsylvania law. (/d. at JJ 12-16, 24-26).

As noted in Howard v. Philadelphia Housing Authority, supra, “[a] dispute is ‘bona fide’

where it involves ‘factual issues’ rather than ‘legal issues such as the statute’s coverage and

applicability.” 197 F.Supp.3d at 777 (quoting Creed v. Benco Dental Supply Co., 2013 WL

9276109, at *1 (M.D.Pa. 2013)). Thus a “proposed settlement resolves a bona fide dispute

where the settlement’s terms ‘reflect a reasonable compromise over issues, such as . . . back

wages, that are actually in dispute’ and are not a ‘mere waiver of statutory rights brought

about by an employer's overreaching.” /d. (quoting Lynn’s Food Stores, Inc. v. United States,

679 F.2d 1350, 1355 (11th Cir. 1982). “In other words, ‘for a bona fide dispute to exist, the

dispute must fall within the contours of the FLSA and there must be evidence of the

defendant’s intent to reject or actual rejection of that claim when it is presented.” /d. at 778

(quoting Kraus v. PA Fit Il, LLC, 155 F.Supp.3d 516, 530 (E.D. Pa. 2016).

Here, it is the Court’s view on review of the pleadings and related documents filed of

record that there are genuine issues as to whether Kutz could prove that she worked the

overtime hours alleged and that Cargill knew of and willfully disregarded its obligation to

compensate her at a rate of one and one-half times her regular rate for all overtime hours

worked. Additionally, but central to Kutz’s claim of entitlement to overtime, there is a

significant, perhaps pivotal, issue as to whether Kutz is an exempt employee under the

FLSA such that its overtime provisions would not have application to her. For these

reasons, the Court concludes that the proposed agreement resolves a bona fide dispute

between the parties.

C. | Whether the Proposed Settlement Agreement is Fair and Reasonable

and in Furtherance of the FLSA’s Implementation

As part of its analysis, the Court must determine whether the settlement is fair and

reasonable. The Settlement Agreement provides that Cargill shall pay a total of [EE to

the Plaintiff. The parties in their Joint Motion for Approval of Settlement state:

10

Cargill has agreed to pay Ms. Kutz a significant sum in excess of Ms. Kutz’s

gross pay for the entirety of 2017, her last full year of employment with the

company. In exchange, Ms. Kutz agrees to the stipulated dismissal of her

lawsuit as well as to the terms of a limited release and a confidentiality

clause. Ms. Kutz made this agreement voluntarily and with the advice and

support of her legal counsel.

Both parties also faced the risk of establishing or disputing liability. The

parties vigorously disputed the facts of this case. If the case had proceeded,

the question of liability likely would have depended on the jury's assessment

of the credibility of conflicting witness testimony concerning the nature of Ms.

Kutz's job duties. The jury also would have to assess the credibility of

conflicting witness testimony concerning Ms. Kutz’s alleged work hours to

determine the amount of overtime pay that she was allegedly owed.

(Doc. 20, 4-5).

Further, the parties in their Joint Motion assert that the litigation “would be complex,

time-consuming, costly, and uncertain. Neither party could reliably expect success on the

merits without assuming significant risk, and neither party could accurately predict of [sic]

amount of potential recovery, if any, that might be awarded.” (/d. at 5).

The Joint Motion also addresses the “difficult-to-satisfy standard of willfulness”

explaining that because Kutz did not file suit until January 31, 2019, her claims were possibly

limited by a two-year statute of limitations. (/d.)(citing 29 U.S.C. § 255(a)). In the absence of

a finding of willfulness, the parties point out that Kutz would be precluded from seeking

damages for the 16 months of her tenure that occurred prior to January 30, 2017. (/d.).

In making a determination of whether a proposed settlement is fair and reasonable,

“district courts within the Third Circuit have considered the factors set forth in Girsh v.

11

Jepson, 521 F.2d 153, 157 (3d Cir. 1975), which established evaluative criteria for measuring

the fairness of proposed class action settlements.” Berger, 2019 WL 1922325 at *4.

The factors set forth in Girsh v. Jepson are as follows:

(1) the complexity, expense and likely duration of the litigation; (2) the

reaction of the class to the settlement; (3) the stage of the proceedings and

the amount of discovery completed; (4) the risks of establishing liability; (5)

the risks of establishing damages; (6) the risks of maintaining the class action

through the trial; (7) the ability of the defendants to withstand a greater

judgment; (8) the range of reasonableness of the settlement fund in light of

the best possible recovery; [and] (9) the range of reasonableness of the

settlement fund to a possible recovery in light of all the attendant risks of

litigation.

Girsh, 521 F.2d at 157 (quoting City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir.

1974)) (internal quotations and alterations omitted)).

The Court in Berger noted that:

Some of the Girsh factors are of “little help, if not irrelevant, in the single-

plaintiff context.” Howard v. Phila. Hous. Auth., 197 F.Supp.3d 773, 777 n.1

(E.D. Pa. 2016). Consequently, courts need not apply the factors

mechanically. /d. (quoting Kraus, 155 F.Supp.3d at 523 n.3).

Berger, 2019 WL 1922325 *at 5. See also, Kraus, 155 F.Supp.3d 516 at 523 n.3 (in using

the Girsh factors to assess whether private FLSA settlements are fair and reasonable,

district courts “are forced to ignore the factors specific to the class-action context, and the

resulting analysis is not a Girsh analysis at all’).

Applying the Girsh factors quoted-above, in particular factors (1), (3), (4), (5), (8) and

(9), for the reasons set forth previously, the Court finds that the agreed upon sum of

WE is reasonable compensation for Kutz’s disputed claims for overtime pay.

12

However, the provisions of the Settlement Agreement and Limited Release entitled

“Confidentiality and Non-Disparagement” (Doc. 20-1, ] 8) requires separate and further

analysis.

The operative language of paragraph seven provides Kutz’s release and discharge

of Cargill and those individuals acting on its behalf and any related entities from all claims or

suits “of any nature whatsoever” which Kutz “has had or may have had up until the date of

this Agreement that relate to the facts alleged in the Complaint or the Amended Complaint,

the claims asserted in the Lawsuit, and any claims that could have been asserted in the

Lawsuit based upon the facts alleged in the Complaint or Amended Complaint.” (Doc. 20-1

{ 7(a)). The provisions of paragraph seven further provide that “[pJarticularly, but without

limitation, Kutz so releases any claims she has had or may have had against the Releasees

arising under the Fair Labor Standards Act, the Pennsylvania Minimum Wage Act, the

Pennsylvania Wage Payment and Collection Law, any other federal, state, or local

ordinance relating to Cargill's payments to Kutz of wages or overtime, and any claim under

the common law (including but not limited to breach of contract and unjust enrichment)

relating to Cargill’s payments to Kutz of wages or overtime.” (/d.).

As the District Court noted in Berger,

District courts reviewing proposed FLSA settlements frequently require

litigants to limit the scope of waiver and release provisions to “claims related

to the specific litigation.” Singleton v. First Student Mgmt. LLC, No. 13-1744

JEI, 2014 WL 3865853, at *8-9 (D.N.J. Aug. 6, 2014); see also Giannattasio,

2018 WL 3913109, at *2-3; Kraus, 155 F. Supp. 3d at 532-33; Bettger, 2015

WL 279754, at *8-10 (collecting cases). Courts must closely examine FLSA

13

settlements containing “pervasive” release provisions that “confer[ ] an

uncompensated, unevaluated, and unfair benefit on the employer.” Brumley,

2012 WL 1019337, at *8 (citation omitted). Provisions requiring employees to

generally release and waive all future claims against employers contravene

the FLSA objective of maintaining equal bargaining power between

employers and employees, thereby ‘impermissibly frustrat[ing] the

implementation of an otherwise fair and reasonable settlement.” Kraus, 155 F.

Supp. 3d at 533 (citing Bettger, 2015 WL 279754, at *9); see also

Giannattasio, 2018 WL 3913109, at *2 (same); Brumley, 2012 WL 1019337,

at *8.

Berger, 2019 WL1922325 at *5.

In Berger, the release under scrutiny by the Court not only purported to release and

discharge the employer from claims under the FLSA, the PMWA, and the PWPCL, but also

“claims arising under . . . the Pennsylvania Whistle Blower Law, the public

policy exception to the employment at will doctrine, the Age Discrimination in

Employment Act, the Civil Rights Act of 1866, Title VII of the Civil Rights Act

of 1964, the Civil Rights Act of 1991, the Employee Retirement Income

Security Act, the Americans with Disabilities Act, the National Labor Relations

Act, the Family and Medical Leave Act, the Worker Adjustment and

Retraining Notification Act, or any other federal, state, or local law, statute, or

ordinance... .”

Id. (quoting “Release” clause of proposed settlement agreement).

Here, unlike the release language which the Court found “inappropriately

comprehensive’ in Berger, 2019 WL1922325 at *5, the release language at issue in this

case is strictly limited to the release and discharge of claims asserted in the lawsuit or

claims that could have been asserted in this lawsuit “based upon the facts alleged in the

Complaint or the Amended Complaint.” Additionally, the release extends to claims under

the FLSA, the PMWA and the PWPCL as well as any other federal, state or local ordinance

14

‘relating to Cargill’s payments to Kutz of wages or overtime and any claim under the

common law (including but not limited to breach of contract and unjust enrichment) relating

to Cargill's payments to Kutz of wages or overtime.” Since the Plaintiffs Amended

Complaint alleges facts and claims only for overtime pay which the Plaintiff alleged she was

owed, and no other facts that would plausibly give rise to any other cause of action, the

Court finds the release to be limited only to claims for overtime pay or wages and only to

release and discharge those specific claims. Accordingly, the release in the Settlement

Agreement does not extend beyond “claims related to the specific litigation”, Berger, 2019

WL1922325 at *5. To be clear, the Court’s approval of the release provision in paragraph

seven of the parties’ Settlement Agreement and Release is based on its interpretation of the

release as releasing and discharging nothing other than claims for overtime pay during the

relevant time period as set forth in the Amended Complaint. See Howard, 197 F.Supp.3d at

779-780.

In Howard, the Court declined to approve the release provision in the proposed

Settlement Agreement where Plaintiff's Complaint alleged that Defendant terminated her

employment in retaliation for her complaints about wage and overtime FLSA violations.

Because the proposed Settlement Agreement asked Plaintiff to waive “any and all Claims”

that “concern{ ] the termination of Plaintiff's employment with Defendant, including but not

limited to, claims arising under the Fair Labor Standards Act and Pennsylvania wage and

15

hour laws,” the Court concluded the terms of the release improperly exceeded the legal and

factual bases of Plaintiffs Complaint.

These broad terms, for which the parties seek judicial approval, exceed the

legal basis of Plaintiffs Complaint (i.e., wage and hour statutory protection) as

well as the factual basis of her Complaint (i.e., alleged retaliation by her

employer after she filed complaints with its HR department about wage and

overtime pay violations). Legally, the proposed release provisions would

preclude Plaintiff from bringing any future claim arising under statutes

including “but not limited to” the FLSA and Pennsylvania wage and hour laws.

Factually, the proposed release provisions would preclude Plaintiff from

bringing “any and all Claims” “concerning the termination of Plaintiffs

employment.” If the Court blindly approved the waiver of “any and all Claims”

“concerning the termination of Plaintiffs employment,” the Court risks

judicially endorsing a waiver of Plaintiffs other statutorily protected rights that

may be implicated by an allegedly unlawful termination. See, e.g., 42 U.S.C. §

1981 (unlawful retaliation under the Civil Rights Act of 1890); 42 U.S.C. §

2000e-3(a) (discriminatory retaliation under Title VII); 42 U.S.C. § 12101

(retaliation under the Americans with Disabilities Act); 43 Pa. Cons. Stat. §

951 (state law cause of action for unlawful retaliation). And such judicial

endorsement exceeds the court's judicial approval role under the FLSA.

Moreover, where a defendant has provided consideration for the release of a

plaintiffs FLSA claims arising from a particular event, which is the case here,

the Court is without knowledge as to the value of those claims. See, e.g.,

Bettger, 2015 WL 279754, at *8 (explaining that the court had no “information

regarding the value of the released claims to the parties, and the parties

fail[ed] to provide any explanation for the agreement's far-reaching waivers’).

The release of an unknown claim based on a separate statutory cause of

action frustrates the fairness of the benefit otherwise provided under the

proposed Settlement Agreement. See id. Therefore, the Court will not, under

the auspices of its FLSA settlement approval duty, approve the release

provision as drafted in the proposed Settlement Agreement.

Howard, 197 F.Supp.3d at 779-780.

16

In this case, because Kutz has not alleged any other facts or causes of action

beyond her claim for overtime pay, the concerns raising by the Court in Howard do not

prevent the approval of the language of the release in this case.

The Court further views the language of the terms of paragraph eight, entitled

“Confidentiality and Non-Disparagement’, in accordance with the statement of the

applicable law in Yong Liv. Family Garden II, Inc.:

“There is ‘broad consensus’ that FLSA settlement agreements should not be

kept confidential.” Brown, 2013 WL 5408575, at *3 (citing Brumley, 2012 WL

300583, at *3). The “public-private character” of employee rights under the

FLSA means that the public, including current, former, or potential employees

of a particular defendant, has an interest in assuring that employee wages are

fair, thus, courts find that restrictive confidentiality provisions frustrate the

implementation of the FLSA. See Mabry v. Hildebrandt, No. CV 14-5525,

2015 WL 5025810, at *3 (E.D. Pa. Aug. 24, 2015) (approving settlement

agreement with the exception of confidentiality clause).

Courts have approved limited or narrowly drawn confidentiality clauses only

where the clauses did not prevent plaintiffs from discussing the settlements

with defendants’ employees. /d. For example, in McGee v. Ann’s Choice, Inc.,

the court found a confidentiality provision reasonable where “[pllaintiffs are

free to discuss the litigation with friends, family, employees, and individuals

not affiliated with the media.” No. CIV.A. 12-2664, 2014 WL 2514582, at *3

(E.D. Pa. June 4, 2014).

Yong Li, 2019 WL 1296258 at *4.

The District Court approved the confidentiality agreement in Yong Li because it

permitted disclosure ‘to the extent required by law or the District Court's procedure,” but

only “to the extent that it is interpreted to permit Plaintiff to discuss its terms with friends,

family, Defendants’ employees, and individuals not affiliated with the media.” Jd. at *5.

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The confidentiality provision must not frustrate the implementation of the FLSA in the

work place. Thus, in accordance with the reasoning in Yong Li, Plaintiff may not be

prevented from discussing the settlement with Defendant's employees, friends, families, and

individuals not affiliated with the media. Such discussion may take place orally, in writing, or

through a social media platform among the individuals identified herein who, in turn, must

keep the terms of the agreement disclosed to them confidential. The confidentiality

provisions of paragraph eight are accordingly approved subject to the right of Plaintiff to

disclose the terms of the agreement as set forth in paragraph eight and, in addition, to

Defendant's employees and Plaintiff's friends, families, and individuals not affiliated with the

media. See McGee v. Ann’s Choice, Inc., 2014 WL 2514582 at *3 (E.D. Pa. 2014).

D. Attorney’s Fees

Here, the Settlement Agreement provides that out of the GE proceeds paid to

resolve this case, the Plaintiff will receive {EEE while attorney's fees and costs in the

amount of EEE will be paid to Plaintiffs counsel, Weisberg Cummings, PC.

Because suit was filed in this case, under the terms of the Engagement Letter and

Contingent Fee Agreement, Plaintiff has agreed to attorney's fees in the amount of 40% of

the gross monies recovered, in addition to the payment of costs advanced by counsel. The

calculation of attorney's fees at 40% of [EI yields attorney's fees in the amount of

WE. Presumably the additional {EM represents costs. In Kraus v. PA Fit Il, LLC,

the Court noted that:

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Moreover, it is true that courts have approved attorneys’ fees in FLSA

settlement agreements “from roughly 20-45%” of the settlement fund. Mabry,

2015 WL 5025810, at *4 (collecting cases and the percentages that those

courts found to be reasonable). But that range of recovery has arisen in

collective and class action settlements, not private actions.

Here, the private settlement proposes $7,065.73 in attorneys’ fees and costs,

which represents approximately thirty-nine percent of the total settlement

amount of $18,000. Counsel has not provided a basis for the proposed

percentage, nor has counsel provided a lodestar calculation against which the

Court could compare the percentage of recovery to determine whether “the

total amount recovered is significantly less than the lodestar method would

permit.” /d.; In re Rite Aid Corp. Secs. Litig., 396 F.3d 294, 305-306 (3d Cir.

2005) (describing this process as “cross-checking’).

The Court is required to “articulate” the basis for a fee award. Gunter, 223

F.3d at 196, 198-99; see Brown v. TrueBlue, Inc., 2013 WL 5408575, at *3

(M.D.Pa. Sept. 25, 2013) (declining to approve the requested attorneys’ fees

without any basis on which the court could evaluate the proposed award).

Here, on this record, the Court cannot do so. Therefore, the Court will deny

the attorneys’ fees without prejudice so that counsel may file a memorandum

indicating the basis for the calculated fees.

Kraus, 155 F.Supp.3d at 534.

Here, this Court finds that the above quoted language of Kraus has complete

application to the Court's determination of the propriety of attorney's fees in this case. As in

Kraus, counsel has not provided a basis for the proposed percentage, nor has counsel

provided a lodestar calculation against which the Court could compare the percentage of

recovery so as to determine whether the total amount recovered in this case is significantly

less than the lodestar method would permit. Without additional information the Court is not

in a position to fulfill its responsibility to articulate a basis for a fee award in this case.

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Accordingly, it will, as the Court did in Kraus, deny the attorney's fees without prejudice so

that counsel may file a memorandum indicating the bases for the calculated fee.

IV. CONCLUSION

For the afore-discussed reasons, the Court will defer approval of the settlement

agreement pending receipt from Plaintiff's counsel of the required information necessary to

allow the Court to evaluate the propriety of the attorney's fees sought by Plaintiff's counsel

in this case. The other provisions of the Settlement Agreement and Limited Release are

conditionally approved to the extent that paragraph seven of the Settlement Agreement and

Limited Release is understood as limited by this Court's opinion and paragraph eight thereof

is reformed as required by the Court’s opinion herein.

A separate Order follows.

GA ae

obert D. Mariani

United States District Judge

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