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Johnson v. Helion Technologies, Inc.

United States District Court, D. Maryland

May 9, 2019

TYLER JOHNSON, et al., Individually and on behalf of similarly situated employees
v.
HELION TECHNOLOGIES, INC.

          MEMORANDUM OPINION

          DEBORAH K. CHASANOW UNITED STATES DISTRICT JUDGE

         Presently pending and ready for resolution in this employment collective action is the joint motion for approval of acceptance of offer of judgment and entry of judgment filed by Defendant Helion Technologies, Inc., and Plaintiff Matt Willis. (ECF No. 34). The issues have been briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. Because the proposed offer and acceptance of judgment represent a fair and reasonable resolution of a bona fide FLSA dispute, the motion will be granted.

         I. Background

         Plaintiffs, Tyler Johnson and William Toomey, filed a complaint on behalf of themselves and those that are similarly situated on October 23, 2018. (ECF No. 1). The complaint alleges that Defendant “improperly classified them as exempt employees and/or failed to pay them overtime wages in violation of the” Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq.; the Maryland Wage and Hour Law (“MWHL”), Md.Code Ann., Lab. & Empl. § 3-401, et seq., and the Maryland Wage Payment and Collection Law (“MWPCL”), Md. Code, LE § 3-501 et seq. (ECF No. 34-1, at 2; ECF No. 1). Plaintiff, Matt Willis, filed a notice of consent to become a party-plaintiff on October 24, 2018. (ECF No. 3).

         “On December 14, 2018, Helion's counsel sent to Mr. Willis' counsel an Offer of Judgment to be presented to Mr. Willis[.]” (ECF No. 34-1, at 2). The offer proposed “to allow judgment to be entered against Defendant, and in favor of Plaintiff Willis, in the total amount of $5, 700.00, exclusive of attorneys['] fees and costs[.]”[1] (ECF No. 34-2, at 4). “On December 27, 2018, Mr. Willis, through his counsel, informed Helion's counsel that he had decided to accept the Offer.” (ECF No. 34-1, at 2). “Thereafter, the Parties . . . determined that $6, 112.00 is an appropriate amount of attorneys' fees and costs to allocate to work performed for Mr. Willis[] in this matter by his counsel.” (Id.). “Based on that determination, ” (ECF No. 34-1, at 2) Plaintiff Willis accepted the Rule 68 offer on February 5, 2019, (ECF No. 34-3).

         II. Analysis

         Judge Hazel outlined the proper interplay between the FLSA and Rule 68 in Banegas v. Gen. Lawn Serv. Corp., No. 13-cv-3728-GJH, 2014 WL 12740666, at *1 (D.Md. July 17, 2014):

Federal Rule of Civil Procedure 68(a) instructs the court to enter judgment after receiving an accepted offer of judgment. However, the [FLSA] . . . does not permit settlement or compromise except with (1) supervision by the Secretary of Labor or (2) a judicial finding 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. U.S., 679 F.2d 1350, 1354 (11th Cir. 1982); see also Lopez v. NTI, LLC, 748 F.Supp.2d 471 (D.Md. 2010) (explaining that courts assess FLSA settlements for reasonableness). Accordingly, the FLSA modifies Rule 68(a) such that in claims filed under the FLSA, the court will enter judgment when presented with an offer and acceptance only after the court is satisfied that the settlement is a reasonable compromise.

Accord Umana v. JMD Restaurants, Inc., No. 18-cv-290-PX, 2018 WL 4829178, at *1 (D.Md. Oct. 4, 2018); Acevedo v. Phoenix Pres. Grp., Inc., No. 13-cv-3726-PJM, 2015 WL 6004150, at *2 (D.Md. Oct. 8, 2015); Reyes v. Clime, No. 14-cv-1908-PWG, 2015 WL 3644639, at *4 (D. Md. June 8, 2015).

         Although the United States Court of Appeals for the Fourth Circuit has not directly addressed the factors to be considered in deciding whether to approve 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. See, e.g., Duprey v. Scotts Co. LLC, 30 F.Supp.3d 404, 407-08 (D.Md. 2014); Lopez, 748 F.Supp.2d at 478. An FLSA settlement generally should be approved if it reflects “a fair and reasonable resolution of a bona fide dispute over FLSA provisions.” 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.

Hackett v. ADF Rest. Investments, 259 F.Supp.3d 360, 365 (D. Md. 2016) (quoting Saman v. LBDP, Inc., No. 12-cv-1083-DKC, 2013 WL 2949047, at *3 (D.Md. June 13, 2013)); see also Duprey, 30 F.Supp.3d at 408, 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. 10-cv-2261-DKC, 2011 WL 3880427, at *3 (Aug. 31, 2011) (citation 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 [ ] agreement.” Duprey, 30 F.Supp.3d at 408. Here, there is a bonda fide dispute. Plaintiff Willis “filed a notice of consent, alleging that Helion owed him overtime compensation.” (ECF Nos. 34-1, at 4; 3). Helion alleges that it “reviewed its internal records and determined that [it] . . . did not owe Mr. Willis overtime compensation and that, even ...


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