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Saman v. Lbdp, Inc.

United States District Court, Fourth Circuit

June 13, 2013

LBDP, INC., et al.


DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for review in this wage-andhour law case is the parties' joint motion for approval of a settlement agreement that resolves Plaintiff Rosa Saman's claims for unpaid overtime wages under the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. ("FLSA"). (ECF No. 28). The issues have been briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. Because the proposed settlement agreement represents a fair and reasonable resolution of a bona fide FLSA dispute, the parties' motion will be granted, and Plaintiff will be directed to file a petition for attorneys' fees and costs within fourteen (14) days.

I. Background

On April 10, 2012, Plaintiff filed a four-count complaint in this court against Defendants LBDP, Inc., d/b/a La Baguette de Paris; Unyong Lee a/k/a Un Yong Lee; and Edward S. Sokvary. (ECF No. 1). The original complaint alleged that, from August 23, 2009 through February 25, 2012, Plaintiff worked as an hourly employee at LBDP, a bakery in Montgomery County, Maryland. The complaint also asserted that Ms. Yong and Mr. Sokvary are the owners and operators of LBDP who "created, maintained and administered" the company's employment policies; had "the power to hire and fire employees"; controlled scheduling; and "handle[d] payroll responsibilities." ( Id. ¶ 3). Plaintiff alleged that, throughout her employment, she "typically work[ed] between 55-65 hours per week and sometimes was required to work in excess of 100 hours per week, " but "Defendants refused to pay [her] at the rate of one-and-one half (1½) times her regular rate of pay for hours worked per week in excess of forty (40)." ( Id. ¶¶ 12, 15). Based on these allegations, Plaintiff asserted claims for violations of three statutes: the FLSA; the Maryland Wage and Hour Law, Md. Code, Lab. & Empl. §§ 3-401, et seq. ("MWHL"); and the Maryland Wage Payment Collection Law, Md. Code, Lab. & Empl. §§ 3-501, et seq. ("MWPCL"). ( Id. ¶¶ 20-39).[1] Plaintiff also asserted a claim for wrongful termination under Maryland law based on allegations that Defendants improperly terminated her employment after she refused to abandon her efforts to secure a peace order against the spouse of another LBDP employee. ( Id. ¶¶ 16-19, 40-46).

On May 11, 2012, Defendants filed a partial motion to dismiss, arguing that the complaint failed to state a claim under the MWPCL and that the court lacked supplemental jurisdiction over Plaintiff's wrongful termination claim. (ECF No. 9). Plaintiff voluntarily dismissed her MWPCL claim (ECF No. 12), but opposed Defendants' motion to the extent it sought dismissal of her wrongful termination claim (ECF No. 13). In a Memorandum Opinion and Order filed on November 7, 2012, the court dismissed Plaintiff's wrongful termination claim for lack of subject matter jurisdiction. (ECF Nos. 16 & 17).

On November 21, 2012, Defendants filed their answer to the complaint, which asserts a number of affirmative defenses, including: (1) that "Plaintiff Fraudulently Encouraged Defendants to Falsely Record Her Overtime Records For Her Own Tax Benefit"; (2) that "Liquidated Damages Cannot Be Assessed Because Defendant Had Reasonable Grounds for Compensating Plaintiff In The Manner In Which It Did"; and (3) that the doctrine of in pari delicto bars Plaintiff's recovery, in whole or in part. (ECF No. 18, at 5-6). Concurrently with their answer, Defendants sought an order staying all discovery and referring the case to a United States Magistrate Judge for early mediation. (ECF No. 19). After Plaintiff indicated that she did not oppose mediation (ECF No. 22), the case was referred to Magistrate Judge Charles Day on December 10, 2012 (ECF No. 23). On February 4, 2012, Plaintiff's unopposed motion for leave to file an amended complaint that corrects a misnomer was granted. (ECF Nos. 25 & 26).

On April 9, 2013, the parties participated in a settlement conference before Judge Day. On or about May 3, 2013, the parties executed a settlement agreement ("the Agreement") that resolves both this lawsuit and a second lawsuit filed by Plaintiff against Defendants in the Circuit Court for Montgomery County, Maryland, which asserts a claim for abusive discharge and is captioned Rosa Saman v. LBDP, Inc., et al., No. 370562-V. (ECF No. 28-3). On May 8, 2013, the parties jointly moved for approval of that portion of the Agreement that resolves the FLSA claims asserted by Plaintiff in this action. (ECF No. 28).

With respect to Plaintiff's FLSA claims, the Agreement provides that, upon court approval, Defendants will pay Plaintiff $28, 000 to settle all claims asserted in the instant lawsuit. (ECF No. 28-3 ¶ 1). The Agreement also requires Defendants to pay Plaintiff for attorneys' fees and costs incurred in prosecuting her FLSA claims, in an amount to be determined by this court following Plaintiff's submission of a motion requesting such fees and costs. ( Id. ¶ 2.d). Separately, the Agreement requires Defendants to pay $15, 000 to Plaintiff to settle her economic and emotional distress claims asserted in the state court lawsuit. ( Id. ¶ 1). The Agreement also provides that Mr. Sokvary will sign a reference letter that Plaintiff can share with prospective employers. ( Id. ¶ 2.g).

In exchange, Plaintiff agrees to the following: (1) a general release of all claims against Defendants; (2) upon court approval of the Agreement, dismissal of her state court action with prejudice; and (3) upon payment by Defendants of all amounts due under the Agreement (including any court-awarded attorneys' fees and costs), dismissal of this lawsuit with prejudice. ( Id. ¶¶ 4-5).[2] The Agreement also contains a "Mutual Non-Disparagement/Non-Publicity" provision, pursuant to which Plaintiff agrees not to proactively disseminate information about either lawsuit. ( Id. ¶ 7).

A. Analysis

Because Congress enacted the FLSA to protect workers from the poor wages and long hours that can result from significant inequalities in bargaining power between employers and employees, the statute's provisions are mandatory and, except in two narrow circumstances, are generally not subject to bargaining, waiver, or modification by contract or settlement. See Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 706 (1945). Under the first exception, the Secretary of Labor may supervise the payment of back wages to employees, who waive their rights to seek liquidated damages upon accepting the full amount of the wages owed. See 29 U.S.C. § 216(c). Under the second exception, a district court can approve a settlement between an employer and an employee who has brought a private action for unpaid wages pursuant to Section 216(b), provided that the settlement reflects a "reasonable compromise of disputed issues" rather than "a mere waiver of statutory rights brought about by an employer's overreaching." Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1354 (11th Cir. 1982).

Although the Fourth Circuit has not directly addressed the factors to be considered in deciding motions for approval of such settlements, district courts in this circuit typically employ the considerations set forth by the Eleventh Circuit in Lynn's Food Stores. See, e.g., Hoffman v. First Student, Inc., No. WDQ-06-1882, 2010 WL 1176641, at *2 (D.Md. Mar. 23, 2010); Lopez v. NTI, LLC, 748 F.Supp.2d 471, 478 (D.Md. 2010). Pursuant to Lynn's Food Stores, an FLSA settlement generally should be approved if it reflects "a fair and reasonable resolution of a bona fide dispute over FLSA provisions." Lynn's Food, 679 F.2d at 1355. Thus, as a first step, the bona fides of the parties' dispute must be examined to determine if there are FLSA issues that are "actually in dispute." Lane v. Ko-Me, LLC, No. DKC-10-2261, 2011 WL 3880427, at *2 (D.Md. Aug. 31, 2011) (citing Dees v. Hydradry, Inc., 706 F.Supp.2d 1227, 1241-42 (M.D.Fla. 2010)). Then, as a second step, the terms of the proposed settlement agreement must be assessed for fairness and reasonableness, which requires weighing a number of factors, including: "(1) the extent of discovery that has taken place; (2) the stage of the proceedings, including the complexity, expense and likely duration of the litigation; (3) the absence of fraud or collusion in the settlement; (4) the experience of counsel who have represented the plaintiffs; (5) the opinions of [] counsel...; and (6) the probability of plaintiffs' success on the merits and the amount of the settlement in relation to the potential recovery." Lomascolo v. Parsons Brinckerhoff, Inc., No. 08-cv-1310, 2009 WL 3094955, at *10 (E.D.Va. Sept. 28, 2009) (collective action); see also Poulin v. Gen. Dynamics Shared Res., Inc., No. 09-cv-00058, 2010 WL 1813497, at *1 n.1 (W.D.Va. May 5, 2010) (applying the same factors to a settlement that involved only individual FLSA claims). Finally, where a proposed settlement of FLSA claims includes a provision regarding attorneys' fees, the reasonableness of the award must also "be independently assessed, regardless of whether there is any suggestion that a conflict of interest taints the amount the wronged employee recovers under a settlement agreement." Ko-Me, LLC, 2011 WL 3880427, at *3 (internal quotation marks omitted).

B. Bona Fide Dispute

Here, the pleadings, along with the parties' representations in subsequent court filings, establish that a bona fide dispute exists as to Defendants' liability under the FLSA. See Lomascolo, 2009 WL 3094955, at *16-17 (examining the complaint, answer, and the parties' recitals in the proposed settlement to conclude that a bona fide dispute existed). In their joint motion for approval, the parties reaffirm that genuine disputes continue to exist as to: (1) the proper amount of unpaid overtime wages due - specifically, Plaintiff asserts that she is owed approximately $33, 000 in unpaid overtime damages, plus liquidated damages, whereas Defendants maintain their exposure is no greater than $16, 000; (2) whether any FLSA violation by Defendants could be deemed willful so as to support an award of liquidated damages; and (3) ...

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