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Bustos v. JCCS Services, Inc.

United States District Court, D. Maryland

August 5, 2016

MARIELLA BUSTOS, et al.,
v.
JCCS SERVICES, INC., et al.

          Mariella Bustos, Plaintiff, represented by Gregg Cohen Greenberg, Zipin, Amster and Greenberg, LLC.

          Roni Santos Reyes, Plaintiff, represented by Gregg Cohen Greenberg, Zipin, Amster and Greenberg, LLC.

          JCCS Services, Inc., Defendant, represented by Andre Tyler Hammel, Hammel Law LLC.

          Claudete Sebben, Defendant, represented by Andre Tyler Hammel, Hammel Law LLC.

          M.K. Catering, Inc., Defendant, represented by Andre Tyler Hammel, Hammel Law LLC.

          MEMORANDUM OPINION

          DEBORAH K. CHASANOW, District Judge.

         Presently pending and ready for resolution in this Fair Labor Standards Act ("FLSA") case is a joint motion for approval of a settlement agreement (the "Agreement"). (ECF No. 26). The issues have been briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. Because the Agreement represents a fair and reasonable resolution of a bona fide FLSA dispute, it will be approved.

         I. Background

         Plaintiffs Mariella Bustos and Roni Santos Reyes (collectively, the "Plaintiffs") allege that Defendants M.K. Catering, Inc. ("M.K. Catering"), JCCS Services, Inc. ("JCCS Services"), and Claudette Sebben (collectively, the "Defendants") employed them to work at a warehouse during the week and at catering events on weekends but failed to compensate them for their overtime hours. Plaintiffs aver that they received salaries for their weekday warehouse jobs and an hourly wage for their weekend catering duties. In total, Plaintiffs contend that they worked approximately fifty hours per week. Ms. Bustos avers that she was employed by Defendants from September 2010 through April 21, 2015 and received a salary of $40, 000.00 for the warehouse position and an hourly rate of $30.00 per hour for the catering position. Ms. Reyes avers that she was employed from 2008 through April 21, 2015 and received a salary of $35, 000.00 for the warehouse position and an hourly rate of $30.00 per hour for the catering position.

         Plaintiffs commenced this action by filing a complaint on April 23, 2015. (ECF No. 1). The complaint alleges that Defendants failed to pay Plaintiffs time and a half wages for hours worked in excess of forty hours per week in violation of the FLSA and the Maryland analog statutes. After the court denied Defendants' motion to dismiss (ECF No. 16), and after the close of discovery, the case was referred to Magistrate Judge Charles B. Day for mediation (ECF No. 19). Eight months later, the parties filed the pending motion for approval of the Agreement. (ECF No. 26). The Agreement provides that, upon court approval, Defendants will pay Plaintiffs and their attorney $20, 500.00. (ECF No. 26-1 ¶ 1). Ms. Bustos is to receive $7, 500.00, Ms. Reyes is to receive $6, 000.00, and Plaintiffs' attorney is to receive $7, 000.00. ( Id. ¶ 1(a)). Defendants, pursuant to the Agreement, do not admit liability, but agree to settle in order to avoid further costs of litigation. ( Id. ¶ 2). In exchange for the settlement amount, Plaintiffs agree to waive and release all claims against Defendants. ( Id. ¶ 4). The Agreement also contains a "nondisparagement" clause, pursuant to which Plaintiffs may not communicate with any current or former employee or contractor of Defendants "for the purpose of encouraging or inciting that individual to initiate any administrative action or litigation of any kind against any of the Defendants." ( Id. ¶ 3).

         Upon initial review of the pending motion, the undersigned issued a memorandum opinion and order directing the parties to supplement the record with information that would enable the court to conduct a proper assessment of the proposed settlement. ( See ECF No. 27). Plaintiffs supplemented the motion by providing a declaration from their counsel, Gregg C. Greenberg. (ECF No. 28). The declaration includes: additional information regarding the qualifications of counsel; a more detailed factual background, including Plaintiffs' salaries and hourly rate; and more specific information regarding the time expended by Plaintiffs' attorney.

         II. 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. ยง 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); see Duprey v. Scotts Co. LLC, 30 F.Supp.3d 404, 407-08 (D.Md. 2014).

         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.,Duprey, 30 F.Supp.3d at 407-08; 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 [] ...


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