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Kaiaokamalie v. Matson Terminals, Inc.

United States District Court, D. Hawaii

December 29, 2016

ALDEN KAIAOKAMALIE, ET AL., Plaintiffs,
v.
MATSON TERMINALS, INC., Defendant.

         ORDER OVERRULING OBJECTIONS IN PART, AND ADOPTING AS MODIFIED FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART DEFENDANT MATSON TERMINALS, INC.'S MOTION FOR APPROVAL OF FLSA SETTLEMENT AND DISMISSAL OF CLAIMS WITH PREJUDICE, ECF NO. 90

          J. Michael Seabright Chief United States District Judge.

         I. INTRODUCTION

         Before the court are Plaintiff Alden Kaiaokamalie's (“Kaiaokamalie”) Objections, filed pursuant to 28 U.S.C. § 636(b)(1) and Local Rule 72.4, to a June 20, 2016 Findings and Recommendation of Magistrate Judge Richard Puglisi to Grant in Part and Deny in Part Defendant Matson Terminals, Inc.'s Motion for Approval of FLSA Settlement and Dismissal of Claims with Prejudice (“Findings and Recommendation”). ECF No. 90. The twenty-three other Plaintiffs (“Non-objecting Plaintiffs”), as well as Defendant Matson Terminals, Inc. (“Matson”), do not object -- they ask the court to overrule Kaiaokamalie's Objections and adopt the Findings and Recommendation. ECF Nos. 94, 96 & 103.[1] Based on the following, the court OVERRULES the Objections in part and ADOPTS the Findings and Recommendation as modified.

         II. BACKGROUND

         A. Factual Background

         Plaintiffs Kaiaokamalie, Christian Aarona, Darren Chu, Hensley Enos, Jesse Brown, Joseph C. Ulii, Joshua Smith, Melvin Luke, Nate Jackson, Phillip Pavao, Jr., Scott Kaeo, Arthur Smith, Barrett Gueco, Derwin Gealon, George Calventas, Keahilele Meyers, Matthew Murphy, Walter Harada, Wilsam Keanaaina, Carlton Kenui, Matthew Bright, Peter Kaapuni, Ia Saipaia, and Lawrence Dalija (collectively, “Plaintiffs”) filed this action on July 30, 2013. ECF No. 1. Count One of the Fourth Amended Complaint alleges that Matson violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., by failing to pay Plaintiffs “the regular salary and overtime pay owed to them as non-salaried, non-exempt employees.” Fourth Am. Compl. ¶ 46, ECF No. 26. Among other relief, Plaintiffs sought “three years of regular and overtime pay for their uncompensated labor[.]” Id. ¶ 47. Counts Two, Three and Four concern only Kaiaokamalie; they allege that Matson retaliated against him in violation of Hawaii Revised Statutes § 378-63, and committed negligent and intentional infliction of emotional distress. Id. ¶¶ 48-67. Count Five concerns Plaintiff Luke, alleging a claim for breach of contract. Id. ¶¶ 68-72.

         Following extensive discovery, the parties participated in a two-day mediation conducted by former State of Hawaii Circuit Judge Riki May Amano on August 24 and 25, 2015. See E. Zorc Decl. (Mar. 22, 2016) ¶ 3, ECF No. 63-2 at PageID 431. At the conclusion of the mediation, the parties reached an agreement to settle all issues in the litigation, with the terms of the agreement set forth in an August 2015 “Term Sheet” that was signed by all Plaintiffs (including Kaiaokamalie) and by counsel for both sides. ECF No. 96-3; see also E. Zorc Decl. (Oct. 27, 2016) ¶ 3, ECF No. 96-1.

         As the Findings and Recommendation correctly summarizes:

The Term Sheet provides that, in exchange for releasing all claims against Defendant, Plaintiffs will receive from Defendant a payment of $625, 000, to be split among Plaintiffs by a formula provided by Plaintiffs' counsel, as well as Defendant's promise to pay Plaintiffs at an overtime premium rate for hours worked in excess of forty in a workweek. ECF No. 63-4. The Term Sheet also provides that Plaintiffs will continue to be paid a fixed salary covering forty hours of work in a workweek and provides for the calculation of overtime payments based on weekly salary. Id. The Term Sheet further provides that Plaintiffs will no longer be paid any “premium payments” they currently receive, that Plaintiffs with an annual salary of over $100, 000 per year will not receive overtime payments, that Plaintiffs will receive overtime payments for work on holidays as opposed to any premium payments they currently receive, and that overtime will begin upon “completion of the settlement agreement” and not upon court approval of the settlement. Id. Finally, among other things, the Term Sheet requires Plaintiffs to “cooperate in submitting any documentation to aid in the process of obtaining Court approval and dismissal with prejudice of the entire lawsuit.” Id. Although not all of the Plaintiffs were present at the mediation, between August 25 and August 31, 2015, all of the Plaintiffs, as well as the parties' counsel, signed the Term Sheet. See id.

Findings and Recommendation at 3, ECF No. 74.[2]

         The Term Sheet also provided that “[t]his settlement will be memorialized in a formal settlement agreement to be drafted by the Parties, which will include standard language.” ECF No. 96-3. Accordingly, the parties conducted further negotiations regarding that “formal settlement agreement, ” resulting in a December 2, 2015 written settlement agreement. ECF No. 68-6. Thereafter, however, only eighteen of the twenty-four Plaintiffs (along with counsel for Matson) signed the December 2, 2015 written settlement agreement. ECF No. 68-2. Later, three additional Plaintiffs “committed to signing” the December 2, 2015 written settlement agreement, leaving three Plaintiffs (Kaiaokamalie, Luke, and Keanaaina) who refused to sign it. See E. Zorc Decl. (Mar. 22, 2016) ¶ 6, ECF No. 63-2.

         On March 22, 2016, Matson filed a Motion for Approval of FLSA Settlement and Dismissal of Claims with Prejudice, ECF No. 63, which was referred to Magistrate Judge Richard Puglisi under 28 U.S.C. § 636(b)(1). On June 20, 2016, Judge Puglisi issued his Findings and Recommendation, recommending granting Matson's Motion in part and denying it in part. ECF No. 74. The Findings and Recommendation concluded that the Term Sheet constituted an enforceable agreement between the parties, containing all the essential terms of an agreement to settle this litigation. Id. at 8. It found that the Term Sheet provides for a payment by Matson of a specific sum of money as well as for future overtime payments, in consideration for a release by Plaintiffs of all claims in the litigation, with details as to how such future overtime payments will be calculated. Id. It concluded that the Term Sheet was enforceable, having been signed by all parties within a week after the August 2015 mediation. Id.[3] The Findings and Recommendation further found, as a reasonable time implied by the record, that Matson's obligation to make overtime payments began on December 13, 2015. Id. at 11-12.[4]

         Finally, scrutinizing the settlement under Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982) (requiring a court to determine whether a settlement in an FLSA action is “a fair and reasonable resolution of a bona fide dispute over FLSA provisions”), the Findings and Recommendation concluded that the settlement is fair and reasonable, and recommended that it be approved. Id. at 17.

         B. Procedural Background

         On July 4, 2016, Kaiaokamalie, Aarona, Enos, Keanaaina and Luke filed written objections to the June 20, 2016 Findings and Recommendation. ECF No. 75. On July 20, 2016, Aarona, Enos, Keanaaina and Luke withdrew their objections, leaving only Kaiaokamalie as an objecting party. ECF No. 78. On August 2, 2016, Plaintiffs' counsel (given a conflict of interest) withdrew from representing Kaiaokamalie. ECF Nos. 83, 84.

         On October 6, 2016, Kaiaokamalie (having retained separate counsel) filed renewed Objections to the Findings and Recommendation. ECF No. 90. On October 26 and 27, 2016, the Non-objecting Plaintiffs and Matson filed Responses to Kaiaokamalie's Objections. ECF Nos. 94, 96. Kaiaokamalie filed supplemental declarations in support of his Objections on November 15, 2016, ECF No. 97, and on December 7, 2016, ECF No. 101. And on December 12, 2016, the Non-objecting Plaintiffs filed a Supplemental Reply. ECF No. 103. The court held a hearing on December 14, 2016. ECF No. 104.

         III. STANDARD OF REVIEW

         When a party objects to a magistrate judge's findings or recommendations, the district court must review de novo those portions to which the objections are made and “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1); see also United States v. Raddatz, 447 U.S. 667, 673 (1980); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (“[T]he district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise.”).

         Under a de novo standard, this court reviews “the matter anew, the same as if it had not been heard before, and as if no decision previously had been rendered.” Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006); United States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988). The district court need not hold a de novo hearing; however, it is the court's obligation to arrive at its own independent conclusion about those portions of the magistrate judge's findings or recommendation to which a party objects. United States v. Remsing, 874 F.2d 614, 618 (9th Cir. 1989).

         IV. ...


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