543 F.Supp.3d 1293
M.D. Fla.2021Background:
- Plaintiffs Jenny Poblano and Nathan Bartlett filed an FLSA collective action and the parties jointly moved to approve a settlement that included $ service/incentive awards to the named plaintiffs.
- The parties also asked the Court to stay ruling on the service-award provision pending further developments in Eleventh Circuit law.
- The Eleventh Circuit’s decision in Johnson v. NPAS Solutions (975 F.3d 1244) holds that district courts may not approve incentive awards to named plaintiffs as part of a class-action settlement; the panel’s mandate was withheld but the decision remains binding precedent.
- The proposed settlement here contains no clear severability clause for the service-award provision and the parties filed a single motion to approve the entire settlement (not separate motions for fees/awards).
- The Court also expressed concern about the settlement’s plan for any remaining funds (reversion/cy pres) given uncertainty about the lawfulness of cy pres distributions.
- The Court denied the stay request, refused to approve the settlement (denied without prejudice), and denied several pending motions without prejudice or as moot.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court may approve service/incentive awards as part of settlement | Awards are permissible as part of negotiated settlement to compensate named plaintiffs | Awards are a valid component of the parties’ compromise | Denied: Eleventh Circuit precedent (Johnson) forbids such awards in class-action settlements and applies here |
| Whether to stay ruling on service awards pending possible change in Eleventh Circuit precedent | Requested stay to await potential change/rehearing en banc | Opposed — precedent binding now; stay unnecessary | Denied: withholding of mandate does not remove binding effect of panel precedent (Martin v. Singletary) |
| Whether Court can sever unlawful service-award provision and approve remainder of settlement | Court should excise awards and approve the rest of the agreement | Service awards are integral; parties did not submit a severable agreement | Denied: no clear severability clause; parties filed a single motion suggesting awards may be intrinsic; cannot approve settlement containing an unlawful provision |
| Whether settlement’s disposition of unclaimed/remaining funds (cy pres/reversion) is acceptable | Parties propose residual disposition (but unclear) | Defendant supports settlement terms | Denied/concerned: court will not approve a settlement creating potential cy pres distributions given legal uncertainty |
Key Cases Cited
- Johnson v. NPAS Sols., Inc., 975 F.3d 1244 (11th Cir. 2020) (panel holds district courts may not approve incentive awards to named plaintiffs in class-action settlements)
- Lynn’s Food Stores, Inc. v. U.S. Dep’t of Labor, 679 F.2d 1350 (11th Cir. 1982) (standard for approving FLSA settlements as fair and reasonable)
- Bonetti v. Embarq Mgmt. Co., 715 F. Supp. 2d 1222 (M.D. Fla. 2009) (discussing FLSA settlement approval and incentive awards)
- Martin v. Singletary, 965 F.2d 944 (11th Cir. 1992) (withholding a panel’s mandate does not relieve courts of duty to follow the panel opinion as precedent)
- Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66 (2013) (distinguishes Rule 23 class actions from FLSA collective actions)
- Frank v. Gaos, 139 S. Ct. 1041 (2019) (Supreme Court expresses concern about the propriety of cy pres distributions)
- Klier v. Elf Atochem N. Am., 658 F.3d 468 (5th Cir. 2011) (analysis and commentary on cy pres appropriateness)