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Kim v. Confidental Studio Inc.

United States District Court, D. Maryland, Southern Division

August 21, 2017

DONG KIM, Plaintiffs,
CONFIDENTAL STUDIO INC., et al., Defendants.


          Paul W. Grimm, United States District Judge

         On February 11, 2015, Plaintiff Dong Kim (“Mr. Kim”) filed this action against his former employer, Confidental Studio, Inc. (“Confidental”), and Raphael Choi (“Mr. Choi”), seeking recovery for “unpaid back wages, overtime pay, liquidated damages, pre and post-judgment interest, treble damages, [and] reasonable attorneys' fees and costs” under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219, the Maryland Wage and Hour Law (“MWHL”), Md. Code Ann., Lab. & Empl. §§ 3-401 to 3-430, and the Maryland Wage Payment and Collection Law (“MWPCL”), Md. Code Ann., Lab. & Empl. §§ 3-501 to 3-509. Compl. ¶ 8, ECF No. 1. On July 17, 2017, the parties moved for court approval of a jointly executed settlement agreement. Jt. Mot., ECF No. 54; Settlement Agr., ECF No. 54-1. I find the net amount Mr. Kim is to receive pursuant to the proposed Agreement to be fair and reasonable in light of the facts of this case.

         I. BACKGROUND

         Mr. Kim was employed by defendants, Confidental, a Maryland corporation operating as a dental laboratory, and Mr. Choi, Confidental's Chief Executive Officer, for approximately three-and-a-half years during the period of August 2011 to January 2015, as a dental technician.[1]Plaintiff alleges that he and others similarly situated were paid similar amounts, but never received overtime compensation when working in excess of 40 hours per week; Defendants deny these claims, asserting Plaintiff was paid on a salary basis and did not work overtime hours. Compl. ¶¶ 10-13; Jt. Mot. ¶¶ 1-5. On this basis, Mr. Kim filed a three-count Complaint, seeking unpaid overtime wages, liquidated damages, treble damages, attorneys' fees, and other various forms of recovery. Compl. ¶ 8. He initially estimated his unpaid wages at $58, 467.13, Damages Disc., ECF No. 10, but, after discovery, asserts that he is owed $18, 085.60 in unpaid wages, Jt. Mot. ¶ 4. Defendants deny both that Mr. Kim worked overtime hours and that he is entitled to overtime compensation, however have decided to discontinue litigation to avoid incurring further expense. Jt. Mot. 2.[2] The parties subsequently entered settlement negotiations in June 2017 and filed their Joint Motion for Approval of Settlement on July 17, 2017. Jt. Mot. ¶ 7.

         The Settlement Agreement provides that the Defendants will pay Plaintiff a total of $55, 000.00 as compensation for alleged overtime wages, liquidated damages, and attorneys' fees. Settlement Agr. ¶ 7; Jt. Mot. ¶ 9. This figure is further broken down such that (1) $30, 245.67[3] of the amount to be paid will cover unpaid overtime wages and liquidated damages, (2) $6, 054.33 will cover the costs of bringing this action, and (3) the remaining $18, 700.00 will go to Plaintiff's attorneys' fees. Jt. Mot. ¶ 10. A detailed payment schedule is outlined within the Settlement Agreement. Settlement Agr. 6-8. Additionally, the Agreement contains both a specific and general waiver, which are intended to release Defendants from any and all claims (that can be lawfully released) that could have been brought in this case or relate to Plaintiff's employment with Defendants in any capacity. Settlement Agr. ¶ 2-3; Jt. Mot. ¶ 21.


         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. O'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 employer's 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 (11th 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. NTI, 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 previous filings as well as the contentions in the Joint Motion, make clear that FLSA issues are in bona fide dispute. Most importantly, the parties disagree about whether Mr. Kim worked any overtime hours and, if he did, whether he is entitled to compensation for them. Jt. Mot. ¶¶ 8, 11-12. Accordingly, bona fide disputes exist as to liability and damages.

         C. Fairness & Reasonableness

         In finding this settlement fair and reasonable, I should evaluate several factors, including:

(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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