A federal court has ruled that a settlement of a collective action lawsuit filed under the Fair Labor Standards Act (FLSA) may include a release of any plaintiffs’ rights to overtime pay under state law.
Wells Fargo was the defendant in five different overtime pay lawsuits filed by former mortgage consultants, loan consultants and loan originators. The lawsuits were consolidated in multidistrict litigation in the District Court for the Southern District of Texas. Two of the lawsuits claimed nationwide collective status under the FLSA, while another brought claims under Washington state law only. The national claims were successfully mediated, and more than 4,000 employees opted in to the settlement. The settlement released all future claims to unpaid overtime (including state law claims).
The named plaintiffs in the claim under Washington state law, however, did not opt in and filed objections. The court denied their objections, along with a motion for reconsideration, holding that the plaintiffs lacked standing because they were not opt-in members of the collectives. The court also held that even if the plaintiffs had standing, they had not shown that the settlement was substantively unreasonable or unfair.
The court noted that potentially valuable legal rights were given up in the settlement, and that plaintiffs were entitled to accept a certain sum in exchange for the sacrifice of uncertain potential future recovery. The court, therefore, granted the settlement final approval.