Underwood v. KC Transport, Inc., 2:17-cv-02522

Background

Angela Underwood, a former truck driver for KC Transport, sued under the FLSA alleging unpaid overtime for working over 40 hours/week; the case was never certified as a collective action under 29 U.S.C. § 216(b).
After summary judgment briefing, the parties mediated and reached a global settlement resolving both the federal FLSA claim and a related state-law age-discrimination claim for $10,000 total; $5,000 was allocated to the FLSA claim.
The originally filed settlement included a confidentiality clause, but the parties later stipulated that any confidentiality provision related to the FLSA action is stricken.
All settlement payments have been made to the plaintiff and her counsel; plaintiff’s counsel will receive $2,500 (50% of the FLSA allocation) as fees and costs.
Defendants asserted the motor-carrier exemption to the FLSA (49 U.S.C. § 31502 authority), arguing Underwood’s driving affected interstate commerce and thus the FLSA overtime requirement does not apply.
The court found the exemption defense strong, concluded the settlement was a fair and reasonable resolution of a bona fide dispute, approved the attorneys’ fee, and dismissed the action with prejudice.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the FLSA claim is subject to settlement approval by the court	Underwood contends her claim for unpaid overtime can be privately settled and should be approved	KC Transport asserts a legitimate dispute exists over the applicability of FLSA due to the motor-carrier exemption	Court: Settlement review required; court may approve stipulated judgment after scrutinizing fairness (Lynn’s Food Stores standard).
Whether the motor-carrier exemption to the FLSA applies	Underwood argues she is non-exempt and entitled to overtime	KC Transport argues Secretary of Transportation’s authority over drivers engaged in interstate commerce exempts Underwood from FLSA overtime	Court: Defendants’ interstate-commerce exemption defense is strong, creating serious doubt about plaintiff’s success.
Whether the settlement amount is fair and reasonable	Underwood agreed to the settlement allocation ($5,000 for FLSA) as a compromise	KC Transport supports the low amount given the strong exemption defense and costs of further litigation	Court: Given the disputed legal issues, discovery completed, and litigation posture, the settlement amount is fair and reasonable despite being modest.
Whether the attorneys’ fee (50% of FLSA allocation) is reasonable	Plaintiff’s counsel says the $2,500 is a reduced reimbursement for hours/costs incurred	Defendants accept that fee as part of the negotiated settlement	Court: Fee is reasonable under FLSA review principles to avoid conflicts and ensure adequate compensation to counsel.

Key Cases Cited

Genesis HealthCare Corp. v. Symczyk, 569 U.S. 66 (settlement by named plaintiffs can moot collective-action claims)
Barrentine v. Arkansas-Best Freight Sys., 450 U.S. 728 (FLSA protects workers from substandard wages; rights cannot be waived by contract)
Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350 (Eleventh Circuit standard: court must scrutinize FLSA settlements for fairness)
Schulte, Inc. v. Gangi, 328 U.S. 108 (court authority to review settlements resolving statutory labor claims)
Jarrard v. Southeastern Shipbuilding Corp., 163 F.2d 960 (judicial oversight of settlements in labor disputes)
Troutt v. Stavola Bros., Inc., 107 F.3d 1104 (Fourth Circuit on motor-carrier exemption and Secretary of Transportation control)
Flinn v. FMC Corp., 528 F.2d 1169 (factors for assessing fairness of settlements under Rule 23 considerations)
Maddrix v. Dize, 153 F.2d 274 (FLSA policy: employee should receive full wages without legal costs)
Silva v. Miller, [citation="307 F. App'x 349"] (review of attorneys’ fees in FLSA settlements to prevent conflicts of interest)