United States District Court, D. Maryland, Southern Division
Charles B. Day United States Magistrate Judge
this Court is the parties' Joint Motion for Approval of
Settlement (the "Motion") (ECF No. 16). The Court
has reviewed the Motion, related memoranda, and applicable
law. No hearing is deemed necessary. See Local Rule
105.6 (D. Md.). For the reasons presented below, the Court
does not approve the Settlement Agreement the parties
executed as to all claims, including Plaintiffs' claim
under the Fair Labor Standards Act ("FLSA"), 29
U.S.C. § 201.
Juan Carlos Mena Gaitan and Jorge L. Garcia Castillo
("Plaintiffs") worked for Ahmed Ahmed d/b/a POS
Construction and Ahmed Ahmed ("Defendants") as
laborers. Compl. 3. Plaintiffs allege that they worked hours
in excess of forty (40) hours per week, yet they were not
paid overtime wages. Id. Specifically, Plaintiffs
allege that they worked for approximately fifty-eight (58)
hours per week and they were not paid overtime wages.
Id. Plaintiffs claim that they are each owed $18,
153.00 in unpaid wages. Id.
February 3, 2016, Plaintiffs filed a complaint against
Defendants alleging that Defendants violated the FLSA, the
Maryland Wage Payment and Collection Law ("MWPCL"),
the Maryland Wage & Hour Law ("MWHL"). Compl. 1.
Defendants argue that they were never Plaintiffs'
"employer" or "employers" as defined
under the FLSA, MWPCL, MWHL, or any other statute. Def.'s
Answer 3. In addition, Defendants argue that they are not
proper parties to this action and that Plaintiffs were paid
all wages they were entitled to by the sub-contractors of POS
Construction, who were their employers. Id.
18, 2016, the parties participated in a settlement conference
before this Court. Mot. 6. On June 13, 2016, the parties
reached a resolution and executed the Settlement Agreement.
See ECF No. 16-2. On June 14, 2016, the parties
filed the Motion seeking approval of the Settlement
Agreement. Mot. 11. Under the Settlement Agreement,
Plaintiffs agree to settle all claims and dismiss this case
with prejudice in exchange for a payment of $20, 477.20,
which is allocated as follows: (1) $3, 250.00 to Juan Carlos
Mena Gaitan as a payment for alleged wages due; (2) $3,
250.00 to Juan Carlos Mena Gaitan as a payment for alleged
liquidated damages; (3) $3, 250.00 to Jorge L. Garcia
Castillo as a payment for alleged wages due; (4) $3, 250.00
to Jorge L. Garcia Castillo as a payment for alleged
liquidated damages; and (5) $7, 472.20 to "Stein
Sperling Bennett De Jong Driscoll PC" to account for $7,
000.00 in attorney's fees and $472.20 in costs. Mot. 7.
the FLSA, Congress seeks to protect workers from the poor
wages and long hours that can result from significant
inequalities in bargaining power between employers and
employees. See Saman v. LBDP, Inc., No. DKC-12-1083,
2013 WL 2949047, at *2 (D. Md. June 13, 2013) (citing
Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 706
(1945)). FLSA provisions are mandatory and generally are not
subject to bargaining, waiver, or modification by contract or
settlement. Id.; Brooklyn, 324 U.S. at 706.
Court-approved settlement is an exception to that rule,
"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.'" Saman,
2013 WL 2949047, at *2 (quoting Lynn's Food Stores,
Inc. v. United States, 679 F.2d 1350, 1354 (11th Cir.
1982)). The Fourth Circuit has not directly addressed the
factors to be considered when deciding motions for approval
of FLSA settlements. See id. at *3 (citations
omitted). However, district courts in this circuit typically
follow the Eleventh Circuit's analysis in Lynn's
Food Stores. Id. The settlement must
"reflect a fair and reasonable resolution of a
bona fide dispute over FLSA provisions."
Id. (citations omitted). In this respect, the Court
considers (1) whether there are FLSA issues actually in
dispute, (2) the fairness and reasonableness of the
settlement in light of the relevant factors from Rule 23, and
(3) the reasonableness of the attorney's fees, if
included in the agreement. Riveros v. WWK Construction,
Inc., No. PJM 15-193, 2015 WL 5897749, at *2 (D. Md.
Oct. 5, 2015) (citations omitted).
Bona Fide Dispute
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. See
Lomascolo v. Parsons Brinckerhoff, Inc., No. 08-1310,
2009 WL 3094955, at *16-17 (E.D. Va. Sept. 28, 2009).
Furthermore, a bona fide dispute exists when an
employee makes a claim that he or she is entitled to overtime
review of the pleadings and the terms of the Settlement
Agreement, the Court finds that a bona fide dispute
exists in this case. 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(a)(2)(C). If
an employer violates Section 207, he is liable for unpaid
overtime and an equal amount of liquidated damages. 29 U.S.C.
§ 216. In this case, Plaintiffs allege that Defendants
failed to pay them overtime wages as required under the FLSA.
Mot. 5. In response, Defendants argue that Plaintiffs were
not Defendants' employees and were not owed overtime
wages under the FLSA, MWHL, and/or MWPCL. Id.
Defendants also dispute the number of days and hours that
Plaintiffs claim to have worked and the wages they allege
they are owed. Id. Pursuant to the holding in
Lomascolo, a bona fide dispute exists as to
Defendants' liability under the FLSA. See
Lomascolo, 2009 WL 3094955, at *16.
Fairness and Reasonableness of the Settlement
bona fide dispute exists, courts evaluate the
fairness and reasonableness of the settlement using the
"(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 ...