SHADRACH ENNIS, et al., v. ALDER PROTECTION HOLDINGS, LLC, et al.,
Case No. 2:19-cv-512-CW
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
October 7, 2025
Hon. Clark Waddoups
PageID.10986
Plaintiffs Shadrach Ennis, Nicolaas Vanleeuwen, and Terrance Jesclard1 (collectively, the “Named Plaintiffs” or “NPs“), commenced this action on July 22, 2019. This matter is now before the Court for consideration of the parties’ Joint Motion for Approval of Collective Action Settlement (the “Joint Motion“) [ECF No. 353] seeking preliminarily approval of the Collective Action Settlement Agreement (the “Settlement Agreement“) attached to the Joint Motion. Following its initial review of the Joint Motion, the Court raised concerns regarding the issue of consent and ordered the Plaintiffs to file a supplemental brief on that issue. [See ECF No.
Following review of these filings, the applicable law, and for reasons discussed in more detail below, the Court hereby denies without prejudice the Joint Motion. The parties are advised that they are welcome to submit a revised motion and revised settlement materials that address the issues and concerns raised by the Court in this Memorandum Decision.
FACTUAL BACKGROUND
A. The Parties
The Named Plaintiffs all worked for Defendant Alder Protection Holdings, LLC in different but similar positions and for various periods between 2016 and 2019. Defendants Alder Protection Holdings, LLC and Alder Holdings, LLC (together “Alder“) are companies engaged in the business of selling, installing, and servicing electronic security equipment. It is alleged that Alder conducts its business in all 50 states in the United States. [See ECF No. 157 at ¶¶5–8.]
As for the individuals named as Defendants, Adam Schanz is the founder, owner, manager, and CEO of Alder, Adam Christian is the General Counsel of Alder, Kyle DeMordaunt is the CFO of Alder, and Dane McCartney is the President of Sales for Alder. Defendant Cove Smart, LLC (“Cove“), is a Delaware limited liability company, under which, on information and belief, the majority of its membership interests are held by Mr. Schanz. [See id. at ¶¶8–13.]
Defendant Alder operates as a door-to-door sales company. It uses individual sales representatives to sell alarm services and products to residential customers.
B. Relevant Procedural History
Although the Named Plaintiffs filed their original complaint in July 2019, the operative pleading is the Third Amended Collective/Class Action Complaint (“Third Amended Complaint“) filed September 9, 2021. [See ECF No. 157.] In the Third Amended Complaint, the Named Plaintiffs assert the following ten claims: (1) violation of the Fair Labor Standards Act,
Although multiple motions to dismiss have been filed, they have been denied. To date none of the claims in the Third Amended Complaint have been dismissed. However, Defendants’ have filed a motion for partial summary judgment regarding the collective claims, the putative class claims, and certain of the Named Plaintiffs’ individual claims—a motion that remains pending. [See ECF No. 265.]
On March 3, 2021, the Court conditionally certified a FLSA collective action and authorized the sending of a stipulated notice (the “Notice” [see ECF No. 90-1]) and consent (the “Consent” [see ECF No. 90-2]) to potential Opt-In Plaintiffs. [See ECF No. 93]. On August 31, 2023, Named Plaintiffs moved to certify a class under
On February 7, 2025, the parties jointly informed the Court that they had reached a settlement on the pending claims and defenses. [See ECF No. 350.] The Joint Motion for approval of that settlement was filed twenty days later. [See ECF No. 353.]2 Included as Exhibit 1 to the Joint Motion was a copy of the Settlement Agreement. [See ECF No. 353-1.]
- What authority does the court have to approve settlement of an FLSA collective action claim on behalf of the Opt-In Plaintiffs without obtaining the Opt-In Plaintiffs’ affirmative consent?
- If consent from the Opt-In Plaintiffs must be obtained before the proposed settlement can be approved, how do the parties propose obtaining such consent?
- Does a conflict of interest under Rule 1.8(g) of the Utah Rules of Professional Conduct arise as a result of Plaintiffs’ counsel seeking approval of an aggregate settlement seeking to resolve claims on behalf of both the Named Plaintiffs and the Opt-In Plaintiffs?
- If such a conflict does arise, how does Plaintiffs’ counsel plan to obtain written consent from the Opt-In Plaintiffs to proceed with the settlement, as required by Rule 1.8(g).
[See ECF No. 354 at 5.] The Supplemental Brief was filed on May 12, 2025. [See ECF No. 359.]
ANALYSIS
1. The Consent Issue
After review of the Supplemental Brief, the Notice and Consent, and the relevant law on this issue, the Court has determined that a form of written express consent from each of Opt-In Plaintiff is required. Notably, counsel appears to acknowledge that it has not received written express authority from any of the Opt-In Plaintiffs to settle their claims. Instead, and relying on case law outside the Tenth Circuit, counsel argues that because the Notice informed potential Opt-In Plaintiffs “that the Named Plaintiffs may obtain a settlement,” and the Consent
First, there is nothing in the Notice to support any grant of express authority to the Named Plaintiffs or their counsel to settle the collective FLSA claims. Indeed, counsel does not argue for such a finding.
Second, counsel‘s argument that the Notice and Consent should be construed to support a determination that the Opt-In Plaintiffs granted the Named Plaintiffs apparent “representative” authority to settle, is rejected. In making this argument, counsel relies on Hood v. Uber Techs., Inc., No. 1:16-CV-998, 2019 WL 93546 (M.D.N.C. Jan. 3, 2019), an out of circuit unpublished case. Hood, however, is distinguishable and unpersuasive.
Notably, the court in Hood relied in large part on the fact that the notice sent to the opt-in plaintiffs expressly informed them “in two places that if they elected to join the lawsuit, they would be ‘bound by any settlement or judgement.‘” Id. at *2 (citations omitted). It is clear that there is no such statement in the Notice or Consent sent to the Opt-In Plaintiffs in this action. At best the Notice informs them
Moreover, the Hood court recognized that the better practice was for the consent to contain an express consent to settlement authority. Id. at *4 (“In hindsight, the consent form should have contained explicit settlement authority, if the parties were not contemplating giving the opt-in class members an opportunity to accept or reject the negotiated settlement.“)
Accordingly, and without passing on the conflict-of-interest issues, the Court finds that a form of express affirmative consent to settle must be obtained from any Opt-In Plaintiffs. Therefore, in order to ensure that only Opt-In Plaintiffs who have affirmatively consented to the FLSA settlement will be bound, the Court agrees with counsel‘s recommendation that: (a) the Opt-In Plaintiffs must be informed in any draft settlement notice that their affirmative consent to settle the FLSA claims is required and that the Settlement Agreement must be revised to require that they must affirmatively consent and/or object before any FLSA settlement may be finally approved; (b) any draft settlement notices must include an expected breakdown of any settlement disbursements identifying each Opt-In‘s and each Named Plaintiffs estimated settlement payment; and (c) any settlement must include a mechanism
If such changes are made, all confirmations of affirmative consents to settlement and any objections to the settlement must be presented to the Court. In addition, counsel must file a declaration identifying those Opt-In Plaintiffs who have consented, those that have objected, and those who have not responded.
2. Is the Proposed Settlement Fair and Reasonable?
Although the Joint Motion now before the Court must be denied for the reasons discussed above, the Court briefly notes some additional issues that the parties may wish to address before submitting a revised motion and proposed settlement agreement for approval.
As discussed below, many of these issues touch on the reasonableness and fairness of the Settlement Agreement. Although the Court‘s role in reviewing settlement agreements in a FLSA action is admittedly lower than the Court‘s role in approving a class action settlement under
a. The Settlement Payments and Distribution
Pursuant to the Settlement Agreement, the Named Plaintiffs (the “NPs“) will be receiving $333,300 each on average, for a total of $1,000,000 out of a gross settlement amount of $1,250,000, which represent 80% of the total gross settlement. [See ECF No. 353 at 6; ECF No. 353-1 at ¶4(c)(i).] However, the 138 Collective Action Members (the “CAMs“)5 are receiving, at most, $1,811.59 each on average, which when reduced by attorneys’ fees, costs, and administrative expenses is just $947.98 each and likely much lower when “legally mandated employee and employer taxes, if any are deducted.” [See ECF No. 353-1 at ¶4(c)(i)-(iii) & ¶6(a)–(d).]
As an initial payment-related matter, the Court is concerned that the Settlement Agreement does not fairly represent how much of the payment to be made to the NPs represents a FLSA claim payment. The Court notes that the Joint Motion suggests that every Alder sales representative, including the NPs, worked a
The Court also points out that this is supposed to be a FLSA settlement—and only a FLSA settlement—and only payments that relate to the NPs’ and CAMs’ wage and hour claims should be paid out of the total settlement amount.7 Indeed, in the Joint Motion, the parties represent that “they have not reached a settlement to resolve the putative Rule 23(a) class action claims,” which appear to be identical to the NPs individual claims. [See ECF No. 353 at 5 (emphasis added).] The parties also note that they have agreed to dismiss the putative class claims without prejudice. [Id.]
Despite that representation, it seems obvious that a large portion (if not all) of the $1,000,000 payment to the NPs must be for settlement of the NPs individual claims. Yet the Settlement Agreement does not identify what portion of that payment is related to the settlement of their individual claims, settlement of the
Nor does the Settlement Agreement explain if some part of the payment to the NPs reflects an incentive or service award relating to the FLSA claims. And if there is some award component, it is not disclosed how much that award is for each NP or how the award was calculated.
Courts in the Tenth Circuit have acknowledged that such incentive awards are only reasonable when they are tied to the work the NPs did, looking at the hours they committed to the action. See, e.g., Marquez v. Midwest Div. MMC, LLC, No. 19-2362, 2022 WL 4355298 at *15 (D. Kan. Sept. 20, 2022) (assessing the reasonableness of service awards in an FLSA settlement based on “the nature of each individual‘s involvement and the number of hours which he or she has invested in the case.““) (quoting Grove v. ZW Tech, Inc., No. 11-2445, 2012 WL 1789100, at *7 (D. Kan. May 17, 2012); Cazeau, 2020 WL 3605652, at *14 (requiring, among other things, details as to the amount of time and effort the
The proposed Notice Settlement and Settlement Agreement also indicate that the CAMs will “receive a prorated portion of the Distribution Amount [i.e., the $250,000 less attorneys’ fee and costs, the costs of the settlement administrator, and any mandated employee and employer tax deductions] in proportion to the amount of time they worked for Alder.” [See ECF No. 353-1 at ¶6(d); ECF No. 353-1, Ex. A. (“Notice Settlement) at 2.] But nowhere in the Settlement Agreement or Joint Motion is there any detail on how this prorated calculation will be performed.
The Court is also concerned why only the payments to the CAMs—and not the payments to the NPs—are to be reduced by “legally mandated employee and employer tax deductions.” [See ECF No. 353-1 at ¶6(d) (emphasis added).] First, there is no disclosure of what these tax deductions may be. Second, it is not
b. Individual Claims Issues
To the extent this is not just a FLSA settlement, but also an individual claims settlement, the Court is not in a position to and will not weigh in on the fairness or reasonableness of any individual claims settlement. The parties do not cite to any authority supporting such a review. In fact, the parties affirmatively acknowledge that “only the settlement of the FLSA collective action ... requires Court approval.” [ECF No. 353 at 7–8.]
As for the settlement of any individual claims, they can and should be dealt with in a separate settlement agreement. Those claims could still be part of the overall joint stipulation to dismiss the entire action, with all the FLSA claims and the individual claims dismissed with prejudice, and the putative class action claims dismissed without prejudice, as contemplated in the Settlement Agreement. [See ECF No. 353-1 at ¶10.]
The parties should also review the release in the Settlement Agreement to ensure it is not overbroad. As one court has noted, the concern is that an employer may “use employee wages—wages that are guaranteed by statute—as a bargaining chip to extract valuable concessions from employees.” See Selk v. Pioneer Mem. Healthcare Dist., 159 F.Supp.3d 1164, 1178 (S.D. Cal. 2016) (citing Moreno v. Regions Bank, 729 F.Supp.2d 1346, 1351 (M.D. Fla. 2010)). This is one of the reasons why a FLSA settlement should relate only to claims for unpaid wages and nothing more, and why the releases should be limited to the wage claims at issue. See Cazeau, 2020 WL 3605652, at *9 (noting that “concessions unrelated to the substance of FLSA claims have no place in FLSA settlements“) (quoting Sanchez v. RM Wireless, Inc., No. 6:17-cv-1785, 2018 WL 1866050, at *3 (M.D. Fla. Mar. 28, 2018) (citing Moreno, 729 F.Supp.2d at 1351–52)).
As discussed above, the Settlement Agreement should be singularly focused on the FLSA claims—nothing else. Yet the release given by the CAMs in the Settlement Agreement appear to cover not only all the FLSA claims but also “all other claims and causes of action asserted in the Action.” [ECF No. 353-1 at ¶3 (emphasis added).]
Such a release might presumably include all of the following asserted claims: violation of Utah‘s Payment of Wages Act [see ECF No. 157 at ¶¶172-178]; breach of contract regarding commissions or residuals [id. at ¶¶179–183); breach of good faith and fair dealing relating to commissions and residuals [id. at ¶¶184–187];
Notably, it is unclear if any consideration was provided to the CAMs for releasing these claims. The only payments to be made to them under the Settlement Agreement arise out of their FLSA claims. Nothing in the Settlement Agreement mentions that any additional consideration will be provided to the CAMs for releasing these claims. As Judge Shelby has noted in Cazeau, 2020 WL 3605652, at *7-8, the Court will not approve a release of non-FLSA claims unless supported by “adequate additional compensation.” See also Marquez, 2022 WL 4355298 at *14 (noting that courts typically will not approve broad releases but only releases of “wage-related claims“).
In addition, the release in the Settlement Agreement purports to release persons other than persons or entities that could be considered “Employers” under the FLSA. For example, it releases all the Defendants’ “shareholders, board members, partners, agents, employees, attorneys, insurers, [and] reinsurers” from
In addition, in the initial Notice sent to potential Opt-In Plaintiffs there was no mention of the specific state law, common law, or securities law claims that were also being litigated. The Notice stated that “this lawsuit is about whether Alder failed to comply with federal laws requiring the payment of overtime compensation for hours worked in excess of 40 hours in any workweek and minimum wage for all hours work[sic].” [ECF No. 90-1 at 3.] It further provided that “plaintiffs are seeking money damages for unpaid overtime compensations for the period of November 1, 2016, through the time of the trial or settlement.” [See id. at 4.] There was no mention in that Notice that other claims may also have been at issue.
The Court notes that the first and only oblique mention to the CAMs of any other claims—other than the FLSA claims—is the inclusion in the Notice Settlement of the language of the proposed release, which does not describe the state law, common law, or securities law claims that will be released. This lack of
Further, the release purports to not only bind the NPs and the CAMs, but also Plaintiffs’ counsel from “represent[ing], assist[ing], or encourage[ing] anyone else to pursue the putative class action claims.” The parties should review the propriety of such a proviso. See Utah Code of Judicial Admin. Rule 13-5.6(b) (prohibiting an attorney from participating in offering or making “an agreement in which a restriction on the lawyer‘s right to practice is part of the settlement of a client controversy“).
d. The Allocation of Costs of the Settlement Administrator
The Settlement Agreement appears to impose 100% of the costs to administer the settlement (estimated to be $10,000) solely upon the CAMs. [See ECF No. 353-1 at ¶6(c).]. Yet it appears that the NPs will enjoy the benefit of the settlement administrator‘s efforts. The settlement administrator will make all required disbursements, including those due the NPs, and also pay the NPs’ counsel the contingency fees owed by the NPs, and provide Form 1099s and prepare payroll and income tax reports as necessary for the NPs. [See ECF No. 353-1 at ¶6(a)-(b).] Because the NPs are enjoying these benefits, it may be unreasonable to impose this financial burden solely on the CAMs.
Under the Settlement Agreement it appears that the initial $750,000 of the gross settlement amount will be paid by Alder to the settlement administrator within 14 days of the signing of the Settlement Agreement and the Court‘s final approval. [See ECF 353-1 at ¶4(a)(i).]
The remaining $500,000 will be paid in equal monthly installments of $100,000, beginning 30 days after the initial payment is made. [See id. ¶4(a)(ii).] Thus, the full amount of the gross settlement amount will not be paid until 6 months and 14 days after the Settlement Agreement is approved by the Court.
Despite the delay in fully funding the settlement, the Settlement Agreement provides that upon receipt of the first $750,000 payment, the settlement administrator will immediately pay $600,000 to the NPs, and a percentage of that amount to their counsel subject to their contingency agreement. [See id. at ¶6(a).] And ten days after making that payment, the remainder of the amount due the NPs that is “associated with the Individual Claims portion of the Gross Settlement Amount” will be paid out to the NPs in the same manner. [See id. at ¶6(b).] Although not directly referenced, this amount would appear to be up to the $150,000 remaining from the initial $750,000 paid by Alder.
The Settlement Agreement does not identify when the additional $250,000 due to the NPs will be paid. Presumably, it be paid out from the five monthly $100,000 payments due from Alder. But most concerning, the Settlement Agreement does not identify how or when this additional NP payment will be paid
It is not clear to the Court why the NPs are being paid in advance of the CAMs. Many similar settlements commence making payments to all eligible recipients at the same time. Moreover, if any portions of the payments to the NPs are attributed to the FLSA claims, any temporal preference may be unreasonable. Further clarification as to the sequencing of payments may be necessary.12
f. Timing for Cashing Checks
Under the Settlement Agreement checks to the CAMs “must be cashed within sixty (60) days” after they are issued. [ECF No. 353-1 at ¶7(b).] And all checks will “become void” 60 days after they are issued. [id. at ¶7(c).] Generally, under the U.C.C. the default time to cash checks is 180 days. See
Further, under the Settlement Agreement, all amounts for checks so voided will revert to the gross settlement amount and may be redistributed pro rata (and less remailing fees) to the CAMs who already cashed their checks. [See ECF No. 353-1 at ¶7(c).] Relatedly, the settlement administrator appears to have discretion to determine if resending additional reversionary checks is not “economically feasible,” or to determine if the costs to do so will exceed the amount of the
If these or similar provisions remain in any revised agreement, the parties should be prepared to address why they are fair and reasonable.
g. Allocation of Attorneys’ Fees and Costs
Although just 20% of the gross settlement amount of $1,250,000 is attributed to the CAMs’ FLSA claims [see ECF No. 353-1 at ¶4(c)(ii)], the CAMs are paying attorneys’ fees “up to 33.33%” of the settlement amount allocated to the FLSA claims. [Id. at ¶4(c)(iii)]. The Settlement Agreement does not disclose what percentage rate the NPs will be paying in attorneys’ fees. All that is mentioned is that the NPs will pay fees “in accordance with their contingency fee agreement.” [See id. at ¶6(a).] If that rate is lower than 33.33% that may create a fairness issue.
It is also not disclosed how counsel has apportioned its work as between the FLSA claims of the CAMs, the FLSA claims of the NPs, and any of the individual or class claims. It may be that much of the heated discovery and motion practice in this case did not concern FLSA issues, but rather more time was spent on the individual or class claims issues. Counsel should closely examine the litigation
In addition, there is a lack of detail in the fees’ affidavits included with the Joint Motion. For example, and among other things, there is no breakdown by specific attorney with that attorney‘s rate and hours worked; no breakdown of costs and expenses for filing fees, service fees, mediation fees, computer research (an amount that may already be factored into the hourly billing rates for counsel), copy
h. Confidentiality, Non-Disclosure and Non-Disparagement Provisions
The Settlement Agreement has a confidentiality provision that states that the Settlement Agreement and its terms are “strictly confidential” and that all parties shall not disclose or make any statement about the Settlement Agreement, any terms of the Settlement Agreement, or “this Action.” [See ECF No.353-1 at ¶14.] The parties may only state that “the matter has been resolved to the parties mutual satisfaction.” [See id.] Breach of this provision by the NPs may be punished by a liquidated damages payment equal to any amount the breaching party received under the Settlement Agreement. [See id. at ¶16.] This damages provision, however, is not mutual.
The parties should consider the propriety of these provisions. First, the Settlement Agreement has been publicly filed on the docket [see ECF No. 353-1]. It is hard to understand how someone can be penalized for disclosing a public document. Although some courts have approved confidentiality provisions that seek to restrict the settling plaintiffs from actively contacting media or using social media to disclose the settlement terms, see Lola v. Skadden, Arps, Slate Meagher & Flom, LLP, No. 13-cv-5008, 2016 WL 922223, at *2 (S.D.N.Y. Feb. 3, 2106), many other courts have refused FLSA settlement confidentiality provisions. See Guerro-Alonso v. West 54 Dell Corp, No. 14-cv-7247, 2015 WL 3777403, at *1 (S.D.N.Y May 15, 2015)
Indeed, Judge Shelby noted the same in Cazeau when he declined to approve a FLSA settlement that had a similar confidentiality clause, noting that it was “impermissible” because it “contravenes the legislative purpose of the FLSA,” and also noting, among other things, that the settlement had been publicly filed. See Cazeau, 2020 WL 3605652, at *7 (cleaned up); see also Oates v. Kinder Morgan Energy Partners, L.P., No. CIV. 19-1171, 2022 WL 18673322 (W.D. Okla. Jan. 18, 2022) (denying approval of FLSA settlement agreement and noting that confidentiality provisions in FLSA settlements have been held to “contravene the purpose of the FLSA” and citing cases in agreement).
In addition, the Settlement Agreement has a vague “Non-Disparagement” provision. Among other concerns, it appears that this provision only binds the NPs, leaving the Defendants free to disparage the NPs (and the CAMs) as they wish. Further, the provision has no carve out that would allow the NPs to make truthful statements regarding their experiences litigating this action. See Horta v. Kings Logistics, L.L.C., No. 22 Civ. 2508, 2023 WL 11862137, at *7 (S.D.N.Y. Jul. 5, 2023) (recognizing that a mutual non-disparagement provision that contains such a carve out may be approved).
CONCLUSION
Going forward the Court needs to be presented with more sufficient and detailed information to enable it to conduct a proper review of the fairness and
In doing so the parties have a free hand in recasting their agreement. The Court is not interjecting itself into the parties’ settlement negotiations or attempting to rewrite the settlement, or imposing terms to which they may not agree. See, e.g., Fisher v SD Protection Inc., 948 F.3d 593, 606 (2d Cir. 2020) (holding that “even though a district court has a duty to review a[] FLSA settlement for reasonableness to prevent any potential abuse, this does not grant the court authority to rewrite contract provisions it finds objectionable“). Rather, the Court is merely giving the parties an opportunity to revise their settlement.
Accordingly, IT IS THEREFORE ORDERED that the Joint Motion for Approval of Collective Action Settlement [ECF No. 353] is DENIED WITHOUT PREJUDICE; and
IT IS FURTHER ORDERED that that the parties are directed to file a joint status report with the Court within 30 days.
DATED this 7th day of October 2025.
BY THE COURT:
Clark Waddoups
United States District Judge
Notes
- The filing an amended complaint following a motion to dismiss that challenged the FLSA claim but also focused on the state law, common law, and securities law claims;
- Defending against a motion to dismiss the amended complaint that mostly challenged the state law, common law, and securities claims;
- A stipulated dismissal of one of the named plaintiffs from this action;
- How any apportionment of fees considers the court‘s prior order awarding fees to Plaintiffs’ counsel [see ECF No. 106];
- Expenses and fees incurred in connection with the preparation and filing of the Second and Third Amended Complaints, each of which was filed after the FLSA collective was certified and consents were received from the CAMs;
- Expenses and fees related to Alder‘s counterclaims filed solely against the NPs [see ECF No. 164]. On this issue, the record appears to indicate that non-party Vivint may have paid the fees associated with these counterclaims. [See ECF No. 218 at 2.];
- How was Vivint‘s role in this action factored into any fee or damages apportionment? Or into the contingency fee agreement between the NPs and counsel?;
- Defending against a motion for partial summary judgment [see ECF No. 265] that was more than ½ devoted to the state law, common law, and securities claims issues;
- The preparation, filing, and briefing of a motion for sanctions that appears to relate more to issues concerning the NPs individual claims; and
- the discovery motion practice that resulted in at least 11 judicial decisions and orders [see, e.g., ECF Nos. 83, 161, 189, 195, 197, 200, 222, 223, 230, 231, 331], which may have had more to do with the NPs individual claims, or the class claims, than the FLSA claims.