United States District Court, D. Maryland, Southern Division
MEMORANDUM OPINION AND
W. Grimm United States District Judge
Carmelle Baptiste filed this action against her former
employer, Maryland Treatment Centers, Inc. seeking damages
for unpaid wages and wrongful termination in violation of the
Fair Labor Standards Act ("FLSA"), 29 U.S.C. SS
201-219; the Maryland Wage Payment and Collection Law
("MWPCL",, Md. Code Ann., Lab. & EmpI., SS
3-501 to -509, and Maryland public policy. Am. Compl.
¶¶ 1 and 79, ECF NO.5. After Maryland Treatment
Centers answered the Complain,, but before formal discovery
commenced, the parties jointly moved for court approval of
the settlement agreement they have executed. Jt. Mot. &
Mem., ECF No. 22. In light of the facts of this case, I find
the net amount Baptiste will receive to be fair and
reasonable and therefore approve the settlement.
Additionally, I will approve the attorneys' fee award
under a lodestar calculation even though the award was
calculated using a contingent-fee arrangement. 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 adversaria1 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.
Bona Fide Dispute
order to determine the existence of a bona fide
dispute between parties 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 parties have
shown through their Joint Motion and supporting Memorandum
that there are several FLSA issues in bona fide
dispute. Primarily, the parties disagree on whether Baptiste
is entitled to overtime for working during her meal breaks
and the amount she could receive in unpaid overtime.
See Jt. Mot. & Mem. 9.
Fairness & Reasonableness
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] success on the
merits and the amount of the settlement in relation to the
Lomascolo, 2009 WL 3094955, at *10.
though formal discovery has not commenced the parties did
conduct "extensive informal discovery, including records
which would be produced if the parties conducted formal,
written discovery." Jt. Mot. & Mem. 9-10. Secondly,
the case is a complex one, involving both federal and state
claims. Id. at 10. With regard to the third and
fourth factors, the parties were both "represented by
[experienced] counsel throughout the course of
litigation." Id. Additionally, the attorneys
"engaged in vigorous debate" and "extensive
negotiation. ... to secure a
settlement." Id. at 14. I accept these
representation,, and find that there is no evidence of fraud
or collusion in the settlement. See Lomascolo, 2009
WL 3094955, at *12 ("There is a presumption that no
fraud or collusion occurred between counsel, in the absence
of any evidence to the contrary"). As for the fifth
factor, it is not relevant in this case, as it pertains to
class actions and the Settlement Agreement only addresses
Baptiste. See Id. at *10.
to the sixth and final factor, the total proposed settlement
is $30, 000, exclusive of attorneys' fees, which would
compensate Baptiste for approximately 200% of her FLSA
claims. See Jt. Mot. & Mem. 10. Baptiste argued
that the "maximum amount of overtime pay [she] could
have recovered . . . under the FLSA [and
MWPCL], was approximately $15, 000." Id. On the
other hand, without conceding liability, Maryland Treatment
Centers believed Baptiste could have only recovered a maximum
of $13, 166.50. Id. at 9. Accordingly, the
settlement amount takes "into account the risks
attendant with litigation, " which includes the
possibility that Baptiste could recover nothing or
significantly less than her claimed damages, "as well as
the possibility that, even if liability were found, Plaintiff
may not be entitled to additional liquidated damages."
Berrios v. Green Wireless, LLC, No. GJH-14-3655,
2016 WL 1562902, at *3 (D. Md. Apr. 18, 2016). Finally, the
parties agree that the Settlement Agreement "reflects a
fair and reasonable compromise of this dispute, "
therefore, I find that the total settlement amount is
reasonable and fair. Jt. Mot. & Mem. 8.
Settlement Agreement also contains a general release of
claims beyond those specified in the Complain.. Id.
at 4. A general release like this can render settlement
agreements unreasonable. See, e.g., Moreno ~. Regions
Bank, 729 F.Supp.2d 1346, 1352 (M.D. Fla. 2010)
(concluding that "a pervasive release in an FLSA
settlement confers an uncompensated, unevaluated, and unfair
benefit on the employer" that "fails judicial
scrutiny"); McKeen-Chaplin V. Franklin Am. Mortg.
Co., No. 10-5243, 2022 WL 6629608, at *3 (N.D. Cal. Dec.
19, 2012.. If, however, the employee is reasonably
compensated for the FLSA violations, the settlement agreement
can be accepted and I am not required to evaluate the
reasonableness of the settlement as to the non-FLSA claims.
Saman, 2013 WL 2949047, at *5 (citing Robertson
v. Ther-Rx Corp., No. 09-1010-MHT, 2011 WL 1810193, at
*2 (M.D. Ala. May 12, 2011)). Since the Settlement Agreement
reasonably compensates Baptiste for her FLSA claims, I find
that the general release provision is not unreasonable.
Settlement Agreement does not provide for attorneys'
fees, rather, Baptiste "retained her attorney under a
contingent fee retainer agreement providing counsel 40
percent of [the] settlement" and "was negotiated
separately from the damages." Jt. Mot. & Mem. 13.
Nevertheless,, the court must still assess this fee for
reasonableness.. See Saman, 2013 WL 2949047, at *6.
In general, contingent-fee arrangements are allowed, and
sometimes even preferred; however, in many common-fund cases,
see, e.g., Goldenberg v. Marriott PLP Corp., 33
F.Supp.2d 434, 437 (D.Md.1998,, a district court may abuse
its discretion by granting attorneys' fees pursuant to a
contingent-fee arrangement, Llora v. H.K. Research
Corp., No. 96- 1552, 1997 WL 693062, at *1 (4th Cir.
Oct. 29, 1997); Lyle v. Food Lion, Inc. 954 F.2d
984, 988 (4th Cir. 1992). Consequently, because a contingent
fee distributes a portion of the damages award to the
attorney, it is an impermissible infringement on the
statutory award to the employee. This Court has held,
however, that "an attorney's fee award negotiated
pursuant to a contingent-fee arrangement can be approved if
the court finds (1) that the fees were negotiated separately
from the damages, so that they do not infringe on the
employee's statutory award, and (2) that they are
reasonable under the lodestar approach." Garcia v.
Decalo Med. Grp., LLC, No. 14-CV-00301, 2015 WL 9311984,
at *4 (D. Md. Dec. 23, 2015) (citing Saman, 2013 WL
2949047, at *6).
lodestar amount is defined as "a reasonable hourly rate
multiplied by hours reasonably expended." Butler v.
Direct SAT USA, LLC, No. DKC 10-2747F, 2015 WL 5177757,
at *4 (D. Md. Sept. 3, 2015). In assessing the reasonableness