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Gorham v. Regency Management Services LLC

United States District Court, D. Maryland, Southern Division

September 8, 2016



          GEORGE J. HAZEL United States District Judge.

         Plaintiff Tanginka C.L. Gorham filed this action against her former employer, Defendants Regency Management Services, LLC, Regency Furniture, Inc., and Mid-Atlantic Warehouse Services, Inc. (collectively, "Regency" or "Defendants"), seeking damages and other relief for Defendants' alleged failure to pay her overtime wages in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., the Maryland Wage and Hour Law ("MWHL"), Md. Code, Lab. & Empl. Article ("LE") § 3-401 et seq., and the Maryland Wage Payment and Collection Law ("MWPCL"), Md. Code, LE § 3-501 et seq. ECF No. 2. The parties now jointly move for approval of a settlement agreement. ECF Nos. 21 and 25. A hearing is not necessary. See hoc. R. 105.6.

         The Court has reviewed the Amended Complaint, ECF No. 3, Defendants' Answer, ECF No. 8, the Joint Motion for Approval of Settlement Agreement, ECF No. 21, the Supplemental Motion, ECF No. 25, and the Settlement Agreement and Release, ECF Nos. 21 -1. For the reasons explained below, the Court finds that bona fide disputes exist regarding liability under the FLSA, the settlement agreement is a fair and reasonable compromise of the disputes, and the attorney's fees are reasonable. See Leigh v. Bottling Group, LLC, 2012 WL 460468 at * 4 (D. Md. Feb. 10, 2012); Lopez v. NTI, LLC, 748 F.Supp.2d 471, 478 (D. Md. 2010); Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982). Therefore, the Court will GRANT the motion and instruct the clerk to close this case.

         I. BACKGROUND

         According to the Amended Complaint, Defendants are corporate entities that operate a for-profit furniture business. ECF No, 3 ¶ 9. Plaintiff was employed by Defendants from approximately May 12, 2005 until January 13, 2015, during which time she worked at Defendants' Brandy wine warehouse location, Id. ¶ 7. Beginning in October 2012, Defendants instructed Plaintiff to work a schedule of 50 hours or more per week and prior to this time she also generally worked more than 40 hours per week. Id. ¶ ¶ 22-23. Despite working in excess of 40 hours per work week, Defendants failed to pay Plaintiff any overtime premium for her overtime work. Id¶ 25. When Plaintiff asked Defendants why she was not paid overtime, she was told that "she was exempt and/or that Defendants had a policy or practice of not paying overtime." Id. ¶ 26-27.

         Defendants removed this case, which was initially filed in the District Court of Maryland for Prince George's County, Maryland, to this Court on October 15, 2015 and filed Answers to the Amended Complaint on October 22, 2015. ECF Nos. 8 and 11. The parties conducted limited discovery. On May 18, 2016, the parties filed a Joint Motion for Settlement Approval of Settlement Agreement, ECF No. 21, which was later supplemented at the Court's request, ECF No. 25.


         A. FLSA Settlements

         The FLSA does not permit settlement or compromise over alleged FLSA violations except with (1) supervision by the Secretary of Labor or (2) a judicial finding 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., 679 F.2d at 1354; see also Lopez, 748 F.Supp.2d at 478 (explaining that courts assess FLSA settlements for reasonableness). These restrictions help carry out the purpose of the FLSA, which was enacted "to protect workers from the poor wages and long hours that can result from significant inequalities in bargaining power between employers and employees." Duprey v. Scotts Co. LLC, 2014 WL 2174751 at *2 (D. Md. May 23, 2014). Before approving an FLSA settlement, courts must evaluate whether the "settlement proposed by an employer and employees ... is a fair and reasonable resolution of a bona fide dispute over FLSA provisions." Lynn's Food Stores, Inc., 679 F.2d at 1355 (italics not in original). To do so, courts examine "(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 attorneys' fees, if included in the agreement." Duprey, 30 F.Supp.3d at 408. "These factors are most likely to be satisfied where there is an 'assurance of an adversarial context' and the employee is 'represented by an attorney who can protect [his] rights under the statute."' Id. (citing Lynn's Food Stores, Inc., 679 F.2d at 1354).

         B. Bona Fide Dispute

         In determining whether a bona fide dispute over FLSA liability exists, the Court reviews the pleadings, any subsequent court filings, and the parties' recitals in the proposed settlement. Lomascolo v. Parsons Brinkernoff, Inc., 2009 WL 3094955 at *10 (E.D. Va. Sept. 28, 2009). Here, while Plaintiffs claims are outlined above, Defendants contend that Plaintiff met the requirements for an administrative or executive exemption from overtime while carrying the title of supervisor. ECF No. 25 at 3. Plaintiff disputes this characterization and contends that she was entitled to unpaid overtime. Id. Defendant also contends that the statute of limitations would bar some of Plaintiff s claims. Id. at 4. The Court finds that these issues demonstrate that there was a bona fide dispute over FLSA liability.

         C. Fairness & Reasonableness

         In determining whether a settlement of FLSA claims is fair and reasonable, the Court may consider the following:

(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 class counsel and class members after receiving notice of the settlement whether expressed directly or through failure to object; and (6) the probability of ...

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