Johnson v. Transport Corporation of America, Inc.

Background

Carlton Johnson brought a Fair Labor Standards Act (FLSA) collective action on behalf of himself and other individuals who worked under independent-contractor agreements with Transport Corporation of America, Inc. The opinion states that the collective included 32 individuals. The plaintiffs alleged that TCA misclassified them as independent contractors and failed to pay them the minimum wage required for the hours they worked. TCA denied the claims, arguing that the workers were properly classified as independent contractors and were paid more than the minimum wage.

The parties reached a settlement after participating in a settlement conference. They asked the court to approve it. The court noted that the Eighth Circuit had not decided whether every FLSA settlement requires judicial approval, but it assumed, without deciding, that approval was required here.

Settlement terms

The agreement provided for a total payment of $34,744.68 to the collective members, distributed proportionally according to the respective number of weeks worked during the relevant period. It also provided a $5,000 service award to Johnson, which would not reduce the amount paid to the settlement group. TCA would pay the settlement administrator’s expenses separately.

Johnson signed a general release of claims against TCA and related entities. The releases for the other collective members were limited to FLSA claims for minimum-wage compensation, liquidated damages, penalties, and interest arising from their alleged employment with TCA and accruing before the settlement’s effective date.

The agreement also provided for payment of attorneys’ fees and costs directly by TCA to Wanta Thome PLC. The agreement stated that any fees the court did not approve would revert to TCA.

Court’s analysis

The court found that the settlement resolved a genuine dispute. The plaintiffs asserted that they were employees and were on duty 24 hours a day while working, while TCA disputed that theory and relied on the drivers’ work schedules and the Federal Motor Carrier Safety Administration’s hours-of-service regulations. The court therefore concluded that the settlement reflected a reasonable compromise over disputed issues.

The court considered the stage of the case, information exchanged by the parties, counsel’s experience, the uncertainty of success on the merits, the absence of evidence that TCA overreached, and the parties’ assertion that negotiations were conducted at arm’s length. It found the settlement payment to be fair and reasonable and concluded that the agreement was an appropriate compromise because the plaintiffs were not guaranteed to win or recover all requested back pay and damages.

Because the attorneys’ fees had not been negotiated separately from the plaintiffs’ claims, the court reviewed them for reasonableness using the lodestar method. That method estimates fees by multiplying reasonable hours worked by a reasonable hourly rate. The court stated that the firm’s lodestar calculation was $73,037.00 and found the fees and costs awarded under the settlement to be substantially lower than that amount. It concluded that the fees and costs were reasonable.

Disposition

Judge Katherine Menendez ordered that the parties’ motion for approval of the settlement was GRANTED. The court also ordered that the matter was DISMISSED WITH PREJUDICE and directed that judgment be entered.