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Park v. Myung GA of MD, Inc.

United States District Court, D. Maryland, Southern Division

October 13, 2016

MI JA PARK, et al.,
v.
MYUNG GA OF MD, INC. d/b/a LIGHTHOUSE TOFU, et al., Defendants.

          MEMORANDUM OPINION & ORDER

          Paul W. Grimm United States District Judge.

         On November 25, 2015, Plaintiffs Mi Ja Park and Eun Young Bang filed this action against their former employer, Myung Ga of MD, Inc., doing business as Lighthouse Tofu, and its owner-operators ("Lighthouse)) alleging that Lighthouse failed to pay them minimum wages and overtime compensation in violation of the Fair Labor Standards Act ("FLSA",, 29 U.S.C. SS 201-219, and the Maryland Wage and Hour Law ("MWHL",, Md. Code Ann., Lab. & Empl. SS 3-401 to 3-430. Compl. ¶¶ 1-2, ECF No. 1. In addition, the Complaint alleges that Lighthouse's failure to pay minimum wages and overtime compensation also violated the Maryland Wage Payment and Collection Law ("MWPCL",, Md. Code Ann., Lab. & Empl. SS 3-501 to 3-509.Id. 2. On July 29, 206,, the parties jointly moved for court approval of the settlement agreement they have executed. Jt. Mot. & Mem., ECF NO.8. I find the net amount Park and Bang are to receive to be fair and reasonable in light of the facts of this case.

         I. BACKGROUND

         Park and Bang worked as waitresses at Lighthouse Tofu for periods of about four-and-a-half and three-and-a-half years respectively before their August 2015 termination.. Compl. ¶¶ 17-20. The Plaintiffs allege that Lighthouse paid them hourly wages between $3.00 and $4.00 during their tenures and typically required them to work sixty hours a week. Id. ¶¶ 22-24. Park and Bang also allege that Lighthouse stole their tips by requiring equal distribution of tips among all Lighthouse employees but subjecting only tips collected by the waitresses and not those collected by the owner-operators to distribution. Id. ¶¶ 26-27. The Plaintiffs further allege that Lighthouse retaliated against them by terminating their employment only days after they complained of underpayment of wages and tip theft. Id. ¶¶ 36-39.

         The Settlement Agreement: "release(s] Defendants ... to and from any claims . . . arising from any omissions, acts, or facts that have occurred up until and including the Effective Date of this Settlement Agreement . ., . ." Agreement ~ 3, ECF No. 8-1. The Agreement provides for litigation costs but not attorneys' fees. Jt. Mot. & Mem. 3.

         II. DISCUSSION

         a. FLSA Settlement Generally

         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. To that end, the statute's provisions are mandatory and generally are not subject to bargaining, waiver, or modification by contract or settlement. See Brooklyn Sav. Bank v. 0'Neil, 324 U.S. 697, 706 (1945). 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 employerss overreaching.'" Saman v. LBDP, Inc., No. DKC-12-1083, 2013 WL 2949047, at *2 (D. Md. June 13, 2013) (quoting Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1354 (1tth Cir. 1982)).

         Although the Fourth Circuit has not addressed the factors to be considered in approving FLSA settlements, "district courts in this circuit typically employ the considerations set forth by the Eleventh Circuit in Lynn's Food Stores." Id. at *3 (citing Hoffman v. First Student, Inc., No. WDQ-06-1882, 2010 WL 1176641, at *2 (D. Md. Mar. 23, 2010); Lopez v. NT!, LLC, 748 F.Supp.2d 471, 478 (D. Md. 2010)). The settlement must "reflect a fair and reasonable resolution of a bona fide dispute over FLSA provisions, " which includes findings with regard to (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. Id. (citing Lynn's Food Stores, 679 F.2d at 1355; Lomascolo v. Parsons Brinckerhoff Inc., No. 08-1310, 2009 WL 3094955, at *10 (E.D. Va. Sept. 28, 2009); Lane v. Ko-Me, LLC, No. DKC-10-2261, 2011 WL 3880427, at *2-3 (D. Md. Aug. 31, 2011)). 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." Lynn's Food Stores, 679 F.2d at 1354.

         b. 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. See Lomascolo, 2009 WL 3094955, at *16-17. The Joint Motion and Memorandum makes clear that several issues are in bona fide dispute. Most importantly, the parties disagree about whether Park and Bang were permitted to keep all of the tips they received and whether they received notice of a tip credit; the number of overtime hours they worked; whether they were paid for hours they did not work; and whether their termination was retaliation for engaging protected activity under the FLSA and Maryland law.

         c. Fairness & Reasonableness

         In evaluating the fairness and reasonableness of this settlement, I must consider:

(1) the extent of discovery that has taken place; (2) the stage of the proceeding,, 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 plaintiff[]; (5) the opinions of class counsel . . . ; and (6) the probability of plaintiff['s] ...

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