United States District Court, D. Maryland
CHRISTOPHER BEAM, et al.
DILLON'S BUS SERVICE, INC, et al.
DEBORAH K. CHASANOW, District Judge.
Presently pending and ready for resolution in this wage and hour law case is Plaintiffs' unopposed motion for approval of the parties' Settlement Agreements, which resolve the claims of Plaintiffs Christopher Beam, George Thomas, and Marquese Ford ("Plaintiffs"), for unpaid overtime wages under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201, et seq. (ECF No. 20). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. Because the proposed Settlement Agreements represent a fair and reasonable resolution of a bona fide FLSA dispute, they will be approved.
Plaintiff Beam alleges that he was employed as a dispatcher for Defendants Dillon's Bus Service, Inc. and Coach USA, Inc. ("Defendants") from November 2012 until October 2014; Plaintiff Thomas alleges that he was employed as a dispatcher for Defendants from October 2012 until October 2014; and Plaintiff Ford alleges that she was employed as a scheduler for Defendants from March 2008 until July 2014. Plaintiffs assert that they consistently worked over 40 hours per week for Defendants, and that this overtime was recorded when they "clocked in" and "clocked out" on Defendants' time card machine. According to Plaintiffs, Defendants knew exactly how many hours they were working each week because all hours worked were reflected in their paystubs. Despite the fact that Plaintiffs complained on multiple occasions to management about their unpaid overtime wages, Plaintiffs allege that Defendants ignored their complaints and continued denying Plaintiffs their rightfully earned time and half wages for the hours they worked in excess of 40 per week as required by the FLSA and Maryland Wage and Hour Law ("MWHL"). Defendants terminated Plaintiff Ford in July 2014 and Plaintiffs Beam and Thomas on October 31, 2014.
Plaintiffs Beam and Thomas filed the instant action on December 11, 2014. (ECF No. 1). On January 23, 2015, Defendant Dillon's Bus Service, Inc. ("Dillon's") answered the complaint (ECF No. 9), and Defendant Coach USA, Inc. ("Coach USA") moved to dismiss (ECF No. 10). Plaintiffs then filed a first amended complaint, in which Plaintiff Ford joined as a Plaintiff. (ECF No. 12). The first amended complaint alleges that Defendants violated the FLSA, MWHL, and the Maryland Wage Payment and Collection Law ("MWPCL") by failing to pay Plaintiffs overtime wages for the hours they worked per week in excess of forty. On February 23, 2015, Dillon's answered the complaint and Coach USA again moved to dismiss the complaint or in the alternative for summary judgment. (ECF Nos. 14 and 15).
On May 19, 2015, the parties participated in mediation with retired United States District Court Judge Legg, and on June 23, 2015 the parties executed Settlement Agreements. (ECF No. 20-1). On June 25, 2015, Plaintiffs filed under seal an unopposed motion to approve the parties' Settlement Agreements, along with copies of the proposed Settlement Agreements, a memorandum outlining the reasons why the court should approve the settlement, a proposed order, and Plaintiffs' counsel's billing records pertaining to this suit. (ECF Nos. 20-1, 20-2, 20-3, and 20-4). On June 26, the parties filed a joint stipulation to unseal the motion to approve the settlement. (ECF No. 26). This motion will be unsealed. In this motion, Plaintiffs request that the court: (1) approve the settlement, (2) hold Defendant Coach USA's pending motion to dismiss in abeyance pending its decision on the unopposed motion to approve the settlement, and (3) if the motion to approve the settlement is granted, deny as moot Coach USA's motion to dismiss.
The Settlement Agreement pertaining to Christopher Beam states that, upon court approval, Defendants will pay Plaintiff Beam $16, 627, on condition that they receive a completed W-9 Tax Form for Mr. Beam. (ECF No. 20-1, at 4). The agreement also states that Plaintiffs' counsel, The O'Neal Firm, LLP, will be paid $14, 500 for "attorneys' fees, costs, and other expenses incurred by and on behalf of Mr. Beam[.]" ( Id. ) The Settlement Agreement pertaining to George Thomas states that, upon court approval, Defendants will pay Plaintiff Thomas $22, 764, on condition that they receive a completed W-9 Tax Form for Mr. Thomas. (ECF No. 20-1, at 15). The agreement also states that Plaintiffs' counsel will be paid $14, 500 for "attorneys' fees, costs, and other expenses incurred by and on behalf of Mr. Thomas[.]" ( Id. ). The Settlement Agreement pertaining to Marquese Ford states that, upon court approval, Defendants will pay Plaintiff Ford $22, 764, on condition that they receive a completed W-9 Tax Form for Ms. Ford. (ECF No. 20-1, at 26). The agreement also states that Plaintiffs' counsel will be paid $14, 500 for "attorneys' fees, costs, and other expenses incurred by and on behalf of Ms. Ford[.]" ( Id. ). The Settlement Agreements also specify in paragraph 12 that Plaintiffs are responsible for any tax consequences or liabilities arising from the payments made by Defendants under the agreements.
The Settlement Agreements provide that, in exchange for their various settlement amounts, Plaintiffs agree to a general release of all claims against Defendants and upon court approval of the Settlement Agreements, dismissal of this lawsuit with prejudice. ( Id. ¶¶ 4-7, 24-25). The Settlement Agreements also contain inter alia a partial confidentiality provision in paragraph 8 and a non-disparagement clause in paragraph 10, pursuant to which each party agrees not to criticize the other party in order to protect the parties' interests in maintaining their reputations. ( Id. at 6-8, 17-19, 28-29). Moreover, paragraph 7 requires Plaintiffs to agree that:
the consideration set forth in [the agreements] is being exchanged to resolve all claims, known and unknown, by the Parties, for [Plaintiffs] confidentiality, and payment of [Plaintiffs] attorneys' fees, costs, and expenses. The Parties warrant that the consideration that [Plaintiffs are] receiving represents full satisfaction of all claims against [Defendants].
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 United States Court of Appeals for 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); Duprey v. Scotts Co. LLC, 30 F.Supp.3d 404, 409 (D.Md. 2014) (applying the same factors to a settlement that involved only individual claims). Finally, if attorneys' fees are included in the settlement agreement, the court must assess the reasonableness of the attorneys' fees. Id. at 408.
A. Bona Fide Dispute
"In deciding whether a bona fide dispute exists as to a defendant's liability under the FLSA, courts examine the pleadings in the case, along with the representations and recitals in the proposed settlement agreement." Amaya v. Young & Chang, Inc., No. PWG-14-749, 2014 WL 3671569, at *2 (D.Md. July 22, 2014). Here, the crux of the dispute is whether Plaintiffs are entitled to recover overtime wages from Defendants, or were exempt. Under the FLSA, "no employer shall employ any of his employees... for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed." 29 U.S.C. § 207. If an employer violates Section 207, he is liable for unpaid overtime and an equal amount of liquidated damages. 29 U.S.C. § 216. Plaintiffs allege that the duties they performed were non-exempt from overtime compensation, and therefore, that they are owed overtime wage payments for all hours they worked in excess of 40. Plaintiffs also have documentation of the overtime hours that they worked. Defendants deny liability, contending that Plaintiffs were not owed overtime compensation because their duties as dispatchers (Plaintiffs Beam and Thomas) and as a scheduler (Plaintiff Ford) qualify them for the Administrative Employee Exemption and/or the Motor Carrier Exemption of the FLSA. In addition, although Plaintiffs have ...