United States District Court, D. Maryland
TYLER JOHNSON, et al., Individually and on behalf of similarly situated employees
HELION TECHNOLOGIES, INC.
Deborah K. Chasanow United States District Judge
pending 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 Tyler Johnson. (ECF No. 45). The issues
have been briefed, and the court now rules, no hearing being
deemed necessary. Local Rule 105.6. For the following
reasons, the motion will be denied without prejudice.
Tyler Johnson and James Phelan, 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, Lab. & Emp. § 3-501
et seq. (ECF No. 45-1, at 2).
August 12, 2019, Defendant's counsel sent Plaintiff
Johnson's counsel an Offer of Judgment. (ECF No. 45-1, at
2). The offer proposed “to allow judgment to be entered
against Defendant, and in favor of Plaintiff Johnson, in the
total amount of $31, 500.00, inclusive of attorneys[']
fees and costs, $5, 250.00 of which shall be wages, $5, 250
of which shall be liquidated damages, and $21, 000 of which
shall be attorneys['] fees[.]” (ECF No. 45-2, at
1). Plaintiff Johnson, through counsel, accepted the offer on
the same day. (ECF No. 45-1, at 2). Plaintiff Johnson's
acceptance “indicate[d] that it is conditioned on
[Defendant] dismissing with prejudice the action which
[Defendant] has initiated against [Plaintiff Johnson] in the
Circuit Court for Baltimore County, Helion Technologies,
Inc. v. Johnson, No. 03-C-18-012051 (the ‘State
Court Action'), and [Defendant] has agreed to that
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,
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.
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,
(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).
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 [ ] agreement.”
Duprey, 30 F.Supp.3d at 408. Here, there is a
bona fide dispute. Plaintiff Johnson
“initiated this action because he believed that
[Defendant] owed him overtime compensation for ten to thirty
hours of overtime each week.” (ECF No. 45-1, at 4).
Defendant “reviewed its internal records and determined
that. . . it did not owe [Plaintiff Johnson] any overtime