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Mena v. Season Teppanyaki Buffet, LLC

United States District Court, D. Maryland, Southern Division

March 22, 2017

HIRAM SANCHEZ MENA, et al. Plaintiffs,
v.
SEASON TEPPANYAKI BUFFET, LLC, d/b/a SEASON SEAFOOD BUFFET, Defendant.

          MEMORANDUM OPINION

          Charles B. Day United States Magistrate Judge

         Before this Court is the parties' “Joint Motion for Approval of Settlement & Dismissal with Prejudice” (the “Motion”) (ECF No. 14). The Court has reviewed the Motion, the related memorandum, and applicable law. No hearing is deemed necessary. See Local Rule 105.6 (D. Md.). For the reasons presented below, the Court does not approve the Motion.

         I. Factual Background

         Plaintiffs Hiram Sanchez Mena, Jorge Perez Ordonez, and Santos Pedro Oxlaj Gomez (collectively “Plaintiffs”), worked for Season Teppanyaki Buffet, LLC d/b/a Season Seafood Buffet (“Defendant”) as cooks and food preparers. Pls.' Compl. 2. On July 27, 2016, Plaintiffs filed a complaint alleging Defendant routinely failed to pay them minimum wage and overtime pay (ECF No. 1). Specifically, Plaintiffs allege that Plaintiff Hiram Sanchez Mena, during the course of his employment, was paid what amounts to an hourly rate of $3.49; Plaintiff Jorge Perez Ordonez, during the course of his employment, was paid what amounts to an hourly rate of $5.56; and Plaintiff Santos Pedro Oxalaj Gomez, during the course of his employment, was paid what amounts to an hourly rate ranging from $5.63 to $6.62.[1] Pls.' Compl. 3-5. As a result, Plaintiffs allege that Defendant violated the Maryland Wage Payment and Collection Law (“MWPCL”), the Fair Labor Standards Act (“FLSA”), and the Maryland Wage and Hour Law when it failed to pay them minimum and overtime wages throughout their employment. Pls.' Compl. 5-8. Defendant denied all claims. Def.'s Answer 1-6.

         On March 13, 2015, the parties filed the Motion seeking approval of their agreement to settle the case. Under the agreement, Plaintiffs agree to settle, discharge, and terminate all claims in exchange for a payment of $20, 000.00, representing $13, 000.00 in damages to Plaintiffs, and $7, 000.00 in attorneys' fees and costs for Plaintiffs' counsel.

         II. Analysis

         Under the FLSA, Congress sought to protect workers from the poor wages and long hours that can result from significant inequalities in bargaining power between employers and employees. See Saman v. LBDP, Inc., No. DKC-12-1083, 2013 WL 2949047, at *2 (D. Md. June 13, 2013) (citing Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 706 (1945)). FLSA provisions are mandatory and generally are not subject to bargaining, waiver, or modification by contract or settlement. Id.; Brooklyn, 324 U.S. at 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 employer's overreaching.'” Saman, 2013 WL 2949047, at *2 (quoting Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1354 (11th Cir. 1982)). The Fourth Circuit has not directly addressed the factors to be considered when deciding motions for approval of FLSA settlements. See id. at *3 (citations omitted). However, district courts in this circuit typically follow the Eleventh Circuit's analysis in Lynn's Food Stores. Id. The settlement must “reflect[] a fair and reasonable resolution of a bona fide dispute over FLSA provisions.” Id. (citations omitted). In this respect, the Court considers (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. Riveros v. WWK Construction, Inc., No. PJM 15-193, 2015 WL 5897749, at *2 (D. Md. Oct. 5, 2015) (citations omitted).

         A. 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 v. Parsons Brinckerhoff, Inc., No. 08-1310, 2009 WL 3094955, at *16-17 (E.D. Va. Sept. 28, 2009).

         After a review of the pleadings, the Court finds that a bona fide dispute exists in this case. Under the FLSA, “[e]very employer shall pay to each of his employees . . . the following rates . . . not less than: (A) 5.85 an hour, beginning on the 60th day after May 25, 2007;(B) $6.55 an hour, beginning 12 months after that 60th day; and (C) $7.25 an hour, beginning 24 months after that 60th day[.]” 29 U.S.C. § 206(a)(1). Additionally, “no employer shall employ any of his employees . . . for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(2)(C). If an employer violates Section 207, he is liable for unpaid minimum wages, unpaid overtime, and an equal amount of liquidated damages. 29 U.S.C. § 216(b). In this case, Plaintiffs allege that Defendant failed to pay them the legal minimum and overtime wages as required under the FLSA. In response, Defendant denies liability and has asserted several affirmative defenses, including failure to state a claim, estoppel, and Statute of Frauds. Def.'s Answer 6. A bona fide dispute exists as to Defendant's liability under the FLSA.

         B. Fairness and Reasonableness of the Settlement Agreement

          If a bona fide dispute exists, courts evaluate the fairness and reasonableness of the settlement using the following factors:

“(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 [] counsel . . .; and (6) the probability of plaintiffs' ...

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