Paulette Barbee, Administrator of the Estate of Kimberly Hope Gillock v. Big River Steel, LLC

United States Court of Appeals
For the Eighth Circuit
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No. 18-2255
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Paulette Barbee, Administrator of the Estate of Kimberly Hope Gillock
lllllllllllllllllllllPlaintiff - Appellant
v.
Big River Steel, LLC
lllllllllllllllllllllDefendant - Appellee
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Appeal from United States District Court
for the Eastern District of Arkansas - Jonesboro Division
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Submitted: April 19, 2019
Filed: June 20, 2019
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Before SHEPHERD, MELLOY, and GRASZ, Circuit Judges.
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GRASZ, Circuit Judge.
Paulette Barbee, Administrator of the Estate of Kimberly Hope Gillock
(formerly known as Kim Pierce), appeals the district court’s order modifying the
attorney fees in the parties’ settlement agreement. Because the district court lacked
authority to review the settled attorney fees, we vacate that portion of its judgment.

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I. Background
Kim Pierce filed a proposed class action against Big River Steel, LLC (“Big
River Steel”) for unpaid overtime wages. She asserted claims under both the Fair
Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201–219, and the Arkansas Minimum
Wage Act, Ark. Code Ann. §§ 11-4-201 to -222.
Pierce and Big River Steel reached a settlement and filed a joint status report
notifying the court they had settled and would soon file a voluntary dismissal. The
court ordered the parties to submit the settlement for approval, including the proposed
agreement and any attorney billing records. The parties complied.
After reviewing the parties’ settlement agreement, the district court
disapproved of both the settlement of the wage claims and the settled amount of
attorney fees for independent reasons. Pierce passed away shortly thereafter, and the
court stayed the case until it could substitute her estate for her as a party.
Barbee, as the estate’s administrator, and Big River Steel submitted a new
agreement addressing only the district court’s concerns on the wage settlement. The
district court then approved of the new wage settlement, again disapproved of the
amount of attorney fees, and entered a judgment with the full wage settlement amount
and a reduced attorney fee amount. Barbee appeals, and Big River Steel does not
contest the appeal.
II. Analysis
Barbee argues on appeal that any required review of the settlement agreement
did not extend to settled attorney fees. We recently addressed the standard of review
for settled attorney fees under the assumption that district courts have authority to
review them. See Melgar v. OK Foods, 902 F.3d 775, 779 (8th Cir. 2018). Barbee
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asks a question we left open in Melgar: whether the authority to review FLSA
settlements, or at least review settled attorney fees, exists at all.
There is a circuit split on whether to extend older Supreme Court cases so as
to require judicial approval of all FLSA settlements. A pair of cases from the 1940s
require judicial approval for some releases of FLSA claims, but those cases left open
the question of whether the FLSA requires judicial approval to settle bona fide
disputes over hours worked or wages owed. See D.A. Schulte, Inc., v. Gangi, 328
U.S. 108, 114 & n.10 (1946); Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 703–04,
714 (1945). The Fifth Circuit would not extend Gangi and O’Neil to require judicial
approval of all FLSA settlements, but the Second and Eleventh Circuits disagree.
Compare Martin v. Spring Break ’83 Prods., LLC, 688 F.3d 247, 255 (5th Cir. 2012)
(enforcing a settlement of bona fide FLSA disputes over hours worked or wages owed
without judicial or Department of Labor approval), with Cheeks v. Freeport Pancake
House, Inc., 796 F.3d 199, 206 (2d Cir. 2015) (holding parties cannot settle FLSA
claims without approval from the district court or the Department of Labor), and
Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352–53 (11th Cir. 1982)
(same). See also Martinez v. Bohls Bearing Equip. Co., 361 F. Supp. 2d 608, 618–31
(W.D. Tex. 2005) (extensively reviewing the history behind this statutory
interpretation dispute).
We have never taken a side on this issue. We have noted the Eleventh Circuit’s
opinion, see Beauford v. ActionLink, LLC, 781 F.3d 396, 405–06 (8th Cir. 2015);
Copeland v. ABB, Inc., 521 F.3d 1010, 1014 (8th Cir. 2008), but we have never had
occasion to interpret whether 29 U.S.C. § 216 requires judicial approval of all FLSA
settlements.
Because we agree with Barbee that any authority for judicial approval of FLSA
settlements in 29 U.S.C. § 216 does not extend to review of settled attorney fees, we
need not decide our view on the circuit split today. This is a question of law, and we
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review the issue de novo. Melgar, 902 F.3d at 778. The statute speaks of allowing
fees “in addition to any judgment awarded,” treating the merits of an FLSA claim and
the attorney fees as distinct. See 29 U.S.C. § 216(b). As a result, any court judgment
on the settled merits would necessarily be separate from any court review of the
settled attorney fees. This reading of the statute is consistent with the rationale of the
circuits that require approval for all FLSA settlements because such approval serves
the “FLSA’s underlying purpose” of protecting workers’ rights. Cheeks, 796 F.3d at
206. When the parties negotiate the reasonable fee amount separately and without
regard to the plaintiff’s FLSA claim, the amount the employer pays to the employees’
counsel has no bearing on whether the employer has adequately paid its employees
in a settlement. See Bench v. Cheyenne Logistics, LLC, No. 4:14CV1327, 2016 WL
2997591, at *3 (E.D. Mo. May 25, 2016) (“The Court’s review of a proposed FLSA
settlement is properly limited only to those terms precisely addressing the
compromised monetary amounts to resolve pending wage and overtime claims.”
(quoting King v. Raineri Constr., LLC, No. 4:14CV1828, 2015 WL 631253, at *4
(E.D. Mo. Feb. 12, 2015))). Thus, regardless of whether we read the statute as
requiring approval for FLSA settlements, we do not read it as requiring approval of
settled attorney fees.
Since we conclude 29 U.S.C. § 216 does not require approval of settled
attorney fees, the district court erred below. “In ordinary litigation, that is, lawsuits
between private parties, courts recognize that settlement of the dispute is solely in the
hands of the parties.” Gardiner v. A.H. Robins Co., 747 F.2d 1180, 1189 (8th Cir.
1984). When all parties to a case sign a dismissal, that dismissal is effective unless
federal law provides otherwise. Fed. R. Civ. P. 41(a)(1)(A)(ii). This right to
dismissal is an “unconditional right.” Gardiner, 747 F.2d at 1190. We also value this
right in the attorney fee context because it prevents unnecessary litigation. See
Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (“Ideally, of course, litigants will
settle the amount of a fee.”). Here, the district court agreed the parties’ proposed
wage settlement satisfied Barbee’s claims. Regardless of whether that assertion of
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authority was proper, the district court’s authority did not extend beyond concluding
the merits settlement was satisfactory. The parties were entitled to settle the attorney
fee issue, and no law gave the district court authority to interfere with that
unconditional right.1
Accordingly, we vacate the portion of the district court’s judgment below that
addressed settled attorney fees. We decline Barbee’s request to remand for entry of
judgment on the full fee amount because the district court lacks authority under Fed.
R. Civ. P. 41 to take any action on the settled attorney fees.
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1We note that if FLSA settlements are subject to judicial review, the court
would retain the authority to ensure the attorney fees were in fact negotiated
separately and without regard to the plaintiff’s FLSA claim, and there was no conflict
of interest between the attorney and his or her client.
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