Chalmers v. DSSV, Inc.

Background

Jordan Chalmers, an employee who worked as an Inside Sales Representative, brought this Fair Labor Standards Act (FLSA) collective action for himself and other current and former sales employees whom DSSV classified as exempt from overtime pay. The plaintiffs alleged that DSSV failed to pay non-exempt sales employees overtime for hours worked beyond 40 hours in a workweek.

On February 7, 2024, the court authorized notice to Development Representatives, Inside Sales Representatives, and Account Executives who had worked for DSSV since February 7, 2021, and whom DSSV had classified as exempt from overtime. Sixty-three individuals joined the case. All 63 agreed to the written settlement and signed releases of claims.

Settlement terms

DSSV agreed to pay the plaintiffs $186,654.16, distributed in proportion to the number of workweeks each plaintiff worked for DSSV. Each plaintiff was allocated 2.5 hours of overtime pay per week at one-and-a-half times the regular rate for each week worked during the three-year limitations period. The average projected payment was $3,010.38 per plaintiff.

The settlement also provided $190,345.84 in attorneys’ fees and costs, consisting of $167,386.16 in fees and $22,959.68 in costs, plus a $3,000 service award to Chalmers. The plaintiffs’ releases covered claims asserted in the complaint and claims under state, federal, or local law that could have been asserted based on the same or substantially similar facts. Chalmers separately signed a broader release of claims related to DSSV’s acts or omissions before settlement approval.

Court’s analysis

The court applied the standard used by courts in the district for approving FLSA settlements: whether the settlement resolves a genuine dispute about FLSA requirements in a fair and reasonable way, and whether the fees and costs are reasonable.

The court found a genuine dispute because DSSV contested whether the plaintiffs were exempt under several FLSA exemptions. The parties also disputed the average number of overtime hours worked, with the plaintiffs estimating 8.51 hours per week and DSSV asserting an average of about 0.5 hours per week. They further disputed whether the alleged violations were willful, which affected whether a two-year or three-year limitations period applied.

Considering the circumstances as a whole, the court found the settlement fair and reasonable. The plaintiffs estimated total damages of $443,289.29 to $591,241.05, making the settlement payment approximately 32% to 42% of that estimate. The court also considered the litigation risks, the information exchanged before mediation, the limited but sufficient investigation of the case, the release terms, counsel’s experience, the plaintiffs’ views, and the absence of fraud or collusion. The court found that the plaintiffs’ releases did not undermine approval because the collective release was tied to the claims at issue and Chalmers received separate compensation for his broader release.

For fees, the court used the lodestar method, which calculates a reasonable fee by multiplying reasonable hours by a reasonable hourly rate. Plaintiffs’ counsel reported spending 769.32 hours on the case and sought fees and costs below the amount calculated under that method and below the value of the time spent. The court found the hours, rates, fees, and costs reasonable. It also found the $3,000 service award appropriate because Chalmers attended two mediations, provided important information, and undertook reputational risk in bringing the case against his former employer.

Ruling

The court GRANTED the plaintiffs’ unopposed motion for settlement approval. It DIRECTED the parties to perform their obligations under the settlement agreement, submit a status report within 40 days of the agreement’s effective date, and simultaneously submit a stipulated judgment.