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Baptiste v. Maryland Treatment Centers, Inc.

United States District Court, D. Maryland, Southern Division

November 3, 2016

CARMELEE BAPTISTE, Plaintiff,
v.
MARYLAND TREATMENT CENTER, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          Paul W. Grimm United States District Judge

         Plaintiff 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.[1] 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.

         B. Bona Fide Dispute

         In 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.

         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] success on the merits and the amount of the settlement in relation to the potential recovery.

Lomascolo, 2009 WL 3094955, at *10.

         First, 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.

         Turning 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.[3] 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.[4] Jt. Mot. & Mem. 8.

         The 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.

         D. Attorney's Fees

         The 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).

         The 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 of ...


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