Hess v. Hallrich Incorporated
4:24-cv-00077
| N.D. Ohio | Jul 9, 2025Background
- Plaintiff Madelyn Hess, on behalf of herself and similarly situated delivery drivers, filed a collective action against SFR X Holdings, LLC and Greg Chaffin, alleging improper reimbursement for the use of personal vehicles, resulting in sub-minimum wage pay in violation of the Fair Labor Standards Act (FLSA).
- Plaintiffs also alleged violations of the Ohio Constitution, Prompt Pay Act, and unjust enrichment.
- Defendants moved to compel arbitration, but the motion was put on hold pending a jury trial on the arbitration agreement's validity; meanwhile, one additional opt-in plaintiff, Michael Lindenauer, remained after others settled or withdrew.
- After extensive discovery, depositions, and expert engagement, the parties reached a settlement: $28,125 total ($8,125 to plaintiffs, $13,866.93 in attorneys’ fees, $6,133.07 in costs).
- The parties jointly requested court approval for the FLSA settlement, as required by law, and the Court reviewed for fairness and reasonableness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Failure to reimburse vehicle expenses | Defendants did not properly reimburse, resulting in FLSA violation | Reimbursements were sufficient; arbitration applies | Bona fide dispute exists; settlement is fair and approved |
| FLSA minimum wage compliance | Underpayment due to expense issue led to sub-minimum wage | No minimum wage violation; compliance with law | Settlement ensures substantial recovery for plaintiffs |
| Reasonableness of attorneys’ fees | Fees reflect extensive work and are reasonable under lodestar method | Fees should be capped; minimize payout | Fee request is reasonable; substantial discount applied |
| Public interest in settlement | Settlement is fair, reduces litigation cost/uncertainty | Settlement preferable to litigation complexity | Settlement promotes certainty and public policy |
Key Cases Cited
- Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697 (1945) (FLSA rights cannot be waived except in court-approved settlements)
- Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982) (Court must approve FLSA settlements to ensure fairness)
- Reed v. Rhodes, 179 F.3d 453 (6th Cir. 1999) (Court must determine reasonableness of attorneys’ fees)
- Granada Invs., Inc. v. DWG Corp., 962 F.2d 1203 (6th Cir. 1992) (Arm’s-length settlements presumed valid absent fraud or collusion)
- Van Horn v. Nationwide Prop. & Cas. Ins. Co., 436 F. App’x 496 (6th Cir. 2011) (Describes lodestar and percentage-of-fund fee methodologies)