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Eguizabal v. Hu and Tan, Inc.

United States District Court, D. Maryland, Southern Division

February 9, 2018

CLARA GARCIA EGUIZABAL, Plaintiff,
v.
HU AND TAN, INC., ET AL., Defendants.

          MEMORANDUM OPINION & ORDER

          PAUL W. GRIMM, UNITED STATES DISTRICT JUDGE

         On March 3, 2017, Plaintiff Clara Garcia Eguizabal filed this action against her former employers, Hu and Tan, Inc., doing business as New Village, and 58Unity, LLC, also doing business as New Village, and their owner-operators (collectively “New Village”) alleging that New Village failed to pay her minimum wages and overtime compensation in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219, and the Maryland Wage and Hour Law (“MWHL”), Md. Code Ann., Lab. & Empl. §§ 3-401 to 3-430. Am. Compl. ¶¶ 1-2, ECF No. 18. In addition, the Complaint alleges that New Village's failure to pay minimum wages and overtime compensation also violated the Maryland Wage Payment and Collection Law (“MWPCL”), Md. Code Ann., Lab. & Empl. §§ 3-501 to 3-509. Id. ¶ 2. On December 19, 2017, the parties jointly moved for court approval of the settlement agreement they have executed. Jt. Mot. & Mem., ECF No. 43. I find the net amount Eguizabal is to receive to be fair and reasonable in light of the facts of this case. Additionally, I approve the attorneys' fee award under a lodestar calculation.

         I. BACKGROUND

         Eguizabal worked in the kitchen at New Village from approximately July 29, 2015 to November 16, 2016. Am. Compl. ¶ 11. Plaintiff alleges that New Village paid her hourly wages between $4.89 and $5.57 during her tenure and typically required her to work sixty-six hours per week. Id. ¶¶ 26-35. Eguizabal also alleges that she typically worked eleven hour days and occasionally worked every day in a given week. Id. ¶¶ 31, 33. Plaintiff alleges that she was owed approximately $29, 199.70 in uncompensated overtime and minimum wages.

         The Settlement Agreement: “release[s] . . . and forever discharge[s] Current and Former Defendants . . . from all and every manner of action . . . which the Plaintiff ever had, now has, or hereafter can, shall, or may have against Current and/or Former Defendants . . . . This release also includes any claim for attorney's fees.” Agreement ¶ 5(a), ECF No. 43-1. The Agreement provides for litigation costs and attorneys' fees. Jt. Mot. & Mem. 5. The parties have agreed to settle this case for $17, 400 based on the following terms: “Current Defendants” are to pay Eguizabal $7, 600.00 in wage-based and liquidated damages; “Former Defendants” are to pay Eguizabal $2, 400.00 in non-wage based damages; and “Current Defendants” are to pay Eguizabal's attorneys, DCWAGELAW, $7, 400.00 in fees and costs.[1] Agreement ¶ 4.

         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. 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 [her] 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 any violations occurred and which if any of the current and former Defendants were responsible for said violations.

         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 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 plaintiff[]; (5) the opinions of class counsel . . .; and (6) the probability of plaintiff['s] ...

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