Barbee v. Big River Steel, LLC

          Submitted: April 19, 2019

          Appeal from United States District Court for the Eastern District of Arkansas - Jonesboro Division

          Before SHEPHERD, MELLOY, and GRASZ, Circuit Judges.

          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.

         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 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 ...