KATONA v. THE JUDGE GROUP, INC.
2:21-cv-03534
| E.D. Pa. | Jul 20, 2023Background
- Baez-Medina (named plaintiff) sued The Judge Group alleging recruiters were misclassified as exempt and unpaid overtime in violation of the FLSA and PMWA; prior plaintiff Katona’s individual claims were dismissed, leaving Baez as the named plaintiff.
- Court conditionally certified a collective of "Salaried Recruiters"; 55 opt-ins joined (43 employed within the two-year period relevant to many claims).
- Parties engaged in significant discovery and mediation and agreed to a global gross settlement of $175,000: $70,000 (40%) for attorneys’ fees, up to $11,979.94 costs, a $5,000 service award to Baez, and pro rata distribution of the net fund (~$88,020.06 less administration costs) because individual time records were unavailable.
- The original draft contained a broad confidentiality clause and a broader release and included conditions on Baez (no appeal, no future employment with defendant); those provisions were revised to limit confidentiality to media and to remove Baez’s additional waivers.
- Applying Lynn’s Food and the Girsh/Gunter factor analyses, the Court found a bona fide dispute, concluded the settlement (including fees and the $5,000 service award) is fair and reasonable, and approved the final revised settlement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the parties presented a bona fide FLSA dispute | Baez: recruiters were salaried and worked >40 hrs/wk without overtime; factual disputes over hours and pay exist | Judge Group: denies liability and asserts proper classification and good-faith pay practices | Court: Yes — factual disputes over hours and pay create a bona fide dispute supporting settlement approval |
| Whether the settlement is fair and reasonable under Girsh factors | Baez: experienced counsel, substantial discovery, mediation, class size and risks justify settlement | Judge Group: contested liability but did not object to settlement terms | Court: Fair and reasonable — Girsh factors (complexity, class reaction, discovery, risks) support approval |
| Whether attorneys’ fees (40% = $70,000) are reasonable | Plaintiffs: 40% is appropriate given fund size, class size, contingency risk, and counsel skill | Judge Group: no objection recorded to fee request | Court: Approved — 40% falls within the accepted 20–45% range and Gunter factors favor approval |
| Whether the $5,000 service award to Baez is appropriate and tied to an overbroad release | Baez: award compensates leadership, document/declaring participation, mediation attendance, and risk of retaliation | Judge Group: originally conditioned awards on additional waivers (no appeal, no re-employment) | Court: Approved $5,000 as ~2.85% of fund; required removal of overbroad waivers so award is permissible for services/risk incurred |
| Whether confidentiality and release terms frustrate FLSA enforcement | Baez: initially agreed to confidentiality but parties revised language to limit publicization to media; releases limited to litigation-related wage/hour claims | Judge Group: sought broad releases/limitations in earlier drafts | Court: Final revisions (media-only confidentiality; releases limited to claims related to the Action) do not impermissibly frustrate the FLSA and are acceptable |
Key Cases Cited
- Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982) (standard for judicial review of FLSA settlements)
- Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975) (nine-factor test for fairness of class settlements)
- Gunter v. Ridgewood Energy Corp., 223 F.3d 190 (3d Cir. 2000) (factors for percentage-of-recovery fee awards)
- In re Cendant Corp. Litig., 264 F.3d 201 (3d Cir. 2001) (guidance on settlement fairness and fee analysis)
- In re Warfarin Sodium Antitrust Litig., 391 F.3d 516 (3d Cir. 2004) (use of Girsh factors to evaluate class reaction and case development)
- NFL Players Concussion Injury Litig., 821 F.3d 410 (3d Cir. 2016) (discussing adequacy of discovery for settlement valuation)
- Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728 (1981) (purpose of FLSA and protection of collective rights)
- Solkoff v. Pennsylvania State Univ., 435 F. Supp. 3d 646 (E.D. Pa. 2020) (analysis of confidentiality clauses in FLSA settlements)
- Kraus v. PA Fit II, LLC, 155 F. Supp. 3d 516 (E.D. Pa. 2016) (evaluation of release scope in FLSA settlements)
- Cuttic v. Crozer-Chester Med. Ctr., 868 F. Supp. 2d 464 (E.D. Pa. 2012) (applying Lynn's Food to settlement approval)