United States District Court, D. Maryland
DEBORAH K. CHASANOW UNITED STATES DISTRICT JUDGE.
pending and ready for resolution in this Fair Labor Standards
Act (“FLSA”) case is the parties' joint
motion for approval of their settlement agreement. (ECF No.
10). The issues have been briefed, and the court now rules,
no hearing being deemed necessary. Local Rule 105.6. Because
the proposed settlement agreement (the
“Agreement”) represents a fair and reasonable
resolution of a bona fide FLSA dispute, the
settlement will be approved.
Nohelia de la Cruz was employed by Defendants from
approximately 2004 to April 5, 2016. (ECF No. 10-1, at 1).
Plaintiff alleges that during the relevant time period she
worked 55 hours per week on average, at a rate of $12 per
hour that increased to $12.25 per hour. (ECF No. 1 ¶ 11;
10-1, at 1). Plaintiff alleges that Defendants either did not
pay her for overtime hours worked or paid her overtime at the
regular pay rate. (ECF No. 1 ¶¶ 15, 17, 18). Based
on these allegations, Plaintiff filed a complaint asserting
violations of the Fair Labor Standards Act (the
“FLSA”), 29 U.S.C. § 201, et seq.
(Count I); the Maryland Wage and Hour Law (the
“MWHL”), Md.Code Ann., Lab. & Empl. §
3-401, et seq. (Count II); and the Maryland Wage
Payment and Collection Law (the “MWPCL”), Md.Code
Ann., Lab. & Empl. § 3-501, et seq. (Count
III). (ECF No. 1). On May 3, the parties jointly moved for
approval of the portion of the Agreement that resolves the
FLSA claim. (ECF No. 10).
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, the statute's provisions are mandatory and are
generally not subject to bargaining, waiver, or modification
by contract or settlement. See Brooklyn Sav. Bank v.
O'Neil, 324 U.S. 697, 706-07 (1945). One exception
to the general rule is that a district court can approve a
settlement between an employer and an employee who has
brought a private action for unpaid wages pursuant to 29
U.S.C. § 216(b), 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.” Lynn's Food
Stores, Inc. v. United States, 679 F.2d 1350,
1353, 1354 (11th Cir. 1982); see also Duprey
v. Scotts Co., 30 F.Supp.3d 404, 407 (D.Md. 2014).
the United States Court of Appeals for the Fourth Circuit has
not directly addressed the factors to be considered in
deciding motions for approval of such settlements, district
courts in this circuit typically employ the considerations
set forth by the United States Court of Appeals for the
Eleventh Circuit in Lynn's Food Stores.
Duprey, 30 F.Supp.3d at 407-08 (citing cases). An
FLSA settlement generally should be approved if it reflects
“a fair and reasonable resolution of a bona
fide dispute over FLSA provisions.” See
Lynn's Food Stores, 679 F.2d at 1355. Thus, as a
first step, the bona fides of the parties'
dispute must be examined to determine if there are FLSA
issues that are “actually in dispute.”
Id. at 1354. Then, as a second step, the terms of
the proposed settlement agreement must be assessed for
fairness and reasonableness, which requires weighing a number
of 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' success on
the merits and the amount of the settlement in relation to
the potential recovery.” Duprey, 30 F.Supp.3d
at 409. Finally, where a proposed settlement of FLSA claims
includes a provision regarding attorneys' fees, the
reasonableness of the award must also “be independently
assessed, regardless of whether there is any suggestion that
a ‘conflict of interest taints the amount the wronged
employee recovers under a settlement agreement.'”
Lane v. Ko-Me, LLC, No. DKC-10-2261, 2011 WL
3880427, at *3 (Aug. 31, 2011) (citation omitted).
Bona Fide Dispute
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.”
Duprey, 30 F.Supp.3d at 408. Here, a review of the
pleadings, along with the parties' joint submission
regarding settlement, demonstrates that while Plaintiff
claims that she was not paid at the proper rate or at all for
her overtime hours worked, Defendants contend that Plaintiff
was properly paid for all hours worked. Further, Defendants
assert affirmative defenses. (ECF No. 7, at 4). Thus, a
bona fide dispute exists as to Defendants'
liability under the FLSA.
Fairness & Reasonableness
review of the parties' submissions and after considering
the relevant factors, see Duprey, 30 F.Supp.3d at
409, the Agreement appears to be a fair and reasonable
compromise of the parties' bona fide dispute.
Although the parties agreed to settle at an early stage of
the proceedings, before any formal discovery has taken place,
the parties engaged in lengthy informal discovery and
settlement discussions where counsel argued the merits of
Plaintiff's claims and addressed issues such as whether
the records kept by Defendants were accurate and whether
Plaintiff was properly paid. (ECF No. 10-1, at 1, 2).
Additionally, the Agreement is the product of negotiations
between parties represented by counsel, and there is no
evidence that the Agreement is the product of fraud or
the relationship between the amount of settlement and
Plaintiff's potential recovery, the Agreement appears to
be fair and reasonable. Plaintiff calculated that she was
owed approximately $4, 140 in overtime pay, not including
liquidated damages. (Id. at 2). Given that losing on
the issue of Defendants' FLSA liability would result in
no recovery of overtime pay, the settlement amount appears
reasonable and fair.
Attorney's Fees and Costs
the Agreement's provisions regarding attorneys' fees
and costs must also be assessed for reasonableness. “In
assessing the reasonableness of the fee, courts typically
refer to the principles of the traditional lodestar method as
a guide, ” Hackett v. ADF Restaurant Invs.,
259 F.Supp.3d 360, 367 (D.Md. 2016), which multiplies the
number of hours reasonably expended by a reasonable hourly
rate, Robinson v. Equifax Info. Servs., LLC, 560
F.3d 235, 243 (4th Cir. 2009). “An hourly
rate is reasonable if it is ‘in line with those
prevailing in the community for similar services by lawyers
of reasonably comparable skill, experience, and