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approving settlement agreement with a mutual general release
Summary of this case from Wyndham Vacation Ownership, Inc. v. MiloszewskiOpinion
Case No. 6:12-cv-150-Orl-36KRS
05-31-2012
ANDRES VERGARA, Plaintiff, v. DELICIAS BAKERY & RESTAURANT, INC., TORTAS Y TORTAS BAKERY, INC., NATALIE CARDONA, Defendants.
REPORT AND RECOMMENDATION
TO THE UNITED STATES DISTRICT COURT:
This cause came on for consideration without oral argument on the following motion filed herein:
MOTION: JOINT MOTION REQUESTING APPROVAL OF SETTLEMENT AND ENTRY OF AN ORDER OF DISMISSAL (Doc. No. 20)
FILED: May 21, 2012
I. PROCEDURAL HISTORY.
Plaintiff Andres Vergara and Defendants Delicias Bakery & Restaurant, Inc., Tortas Y Tortas Bakery, Inc., and Natalie Cardona seek the Court's approval of their settlement of claims under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq. Vergara filed this case on behalf of himself and others similarly situated, but no other individuals have filed a consent to join the case. Therefore, the motion is ripe for resolution.
II. APPLICABLE LAW.
In Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1352-55 (11th Cir. 1982), the United States Court of Appeals for the Eleventh Circuit explained that claims for compensation under the FLSA may only be settled or compromised when the Department of Labor supervises the payment of back wages or when the district court enters a stipulated judgment "after scrutinizing the settlement for fairness." Id. at 1353. In Silva v. Miller, 307 F. App'x 349, 351 (11th Cir. 2009), the Eleventh Circuit observed that the FLSA "contemplates that 'the wronged employee should receive his full wages plus the penalty without incurring any expense for legal fees or costs.'" Id. at 351 (quoting Maddrix v. Dize, 153 F.2d 274, 275-76 (4th Cir. 1946)). Therefore, in any case where a plaintiff agrees to accept less than his full FLSA wages and liquidated damages, he has compromised his claim within the meaning of Lynn's Food Stores.
The Court recognizes, as it has in the past, that the Eleventh Circuit's unpublished opinions represent persuasive authority, rather than binding precedent. See 11th Cir. R. 36-2 and I.O.P. 6. --------
When a settlement agreement includes an amount to be used to pay attorney's fees and costs, the "FLSA requires judicial review of the reasonableness of counsel's legal fees to assure both that counsel is compensated adequately and that no conflict of interest taints the amount the wronged employee recovers under a settlement agreement." Silva, 307 F. App'x at 351. If the Court finds the payment to the attorney is not reasonable, the Court must consider whether a plaintiff's recovery might have been greater if the parties had reduced the attorney's fee to a reasonable amount.
III. ANALYSIS.
The parties reached a settlement in this case before Vergara filed answers to the Court's interrogatories. In the Joint Motion Requesting Approval of Settlement and Entry of an Order of Dismissal, Vergara's counsel represents that Vergara argued he was owed $2,925.00 in unpaid overtime compensation. Doc. No. 20 at 2. He does not contend that Vergara was owed an equal amount of liquidated damages. Under the settlement agreement, Vergara will receive $3,000.00. Vergara represents, through counsel, that he voluntarily agreed to this amount in light of the disputes about FLSA coverage and computation of overtime compensation due and the issue of whether the corporate defendants were separate and distinct entities. Id. Therefore, accepting the implicit representation that no liquidated damages are arguably owed, Vergara has not compromised his claim.
Because Vergara has not compromised his FLSA claim, the Court need not consider the reasonableness of the attorney's fees and costs paid under the settlement. In any event, counsel represent that the amount of fees were separately negotiated from Plaintiff's recovery. Id. at 3. When attorney's fees are agreed upon separately, without regard to the amount paid to the plaintiff, then, "unless the settlement does not appear reasonable on its face or there is reason to believe that the plaintiff's recovery was adversely affected by the amount of fees paid to his attorney, the Court will approve the settlement without separately considering the reasonableness of the fee to be paid to plaintiff's counsel." Bonetti v. Embarq Mgmt. Co., 715 F. Supp. 2d 1222, 1228 (M.D. Fla. 2009).
Even though the settlement agreement appears to give Vergara full compensation of all monies arguably owed to him under the FLSA, the scope of the release may render the settlement agreement unfair. Under the Settlement Agreement, Vergara and his "heirs, executors, administrators, agents, distributees, beneficiaries, successors in interest and assignees" release Defendants and "their heirs and legal representatives" from all claims and demands, known or unknown, as of the date of the execution of the Settlement Agreement. This general release specifically includes release of claims under the federal Civil Rights Act, the Florida Constitution, ERISA, ADA, ADEA, FMLA, False Claims Act, whistleblower acts, NLRA, the Genetic Information Nondiscrimination Act of 2008, COBRA, Florida Equal Pay Act, Florida Wage Discrimination Act, the Rehabilitation Act of 1973, and "all amendments to such laws, and any other state, federal or local statute, law or ordinance and any common law." Id. at 5 at ¶4. Defendants and "their heirs and legal representatives" release Plaintiffs and "his heirs, executors, administrators, agents, distributees, beneficiaries, successor in interest and assignees" from all causes of action that Defendants may have had as of the execution of the Settlement Agreement. Id. ¶ 5.
Judges in this district appear to be split on whether this form of release is permissible in an FLSA case. Compare Bright v. Mental Health Resource Center, Inc., No. 3:10-cv-427-J-37TEM, 2012 WL 868804 (M.D. Fla. March 14, 2012) (Dalton, J.), and Moreno v. Regions Bank, 729 F. Supp. 2d 1346 (M.D. Fla. 2010), with Jarvis v. City Elec. Supply Co., No. 6:11-cv-1590-Orl-22DAB, 2012 WL 933057 (M.D. Fla. March 5, 2012) (Baker, M.J.).
In the present case, the release applies not only to the FLSA claim but also to other causes of action. While there is no indication that the release was negotiated in exchange for independent consideration, Plaintiffs will receive a mutual release from Defendants. In Robertson v. Ther-Rx Corp., No. 2:09-cv-1010-MHT (WO), 2011 WL 1810193, at * 2 (M.D. Ala. May 12, 2011), the Court found that a release of all employment claims Plaintiff had as of the time of execution of the settlement agreement was not problematic because Plaintiff received compensation for the FLSA claim and separate compensation for her claims under Title VII and the FMLA. Should the Court choose to follow that rationale and find that the mutual release is adequate, independent consideration for the broad release by Vergara, then the release in this case would not undermine the fairness of the settlement.
Because there is no controlling decisional authority, the undersigned cannot make a recommendation on this issue. To the extent that the Court concludes that the release does not undermine the fairness of the settlement, I recommend that the Court find that the settlement is a fair resolution of the FLSA claim because Vergara will receive all he claims he is entitled to under the FLSA. To the extent that the Court finds that the release undermines the fairness of the settlement, then I recommend that the Court find that the settlement is not a fair resolution of the FLSA claim.
IV. RECOMMENDATION.
For the reasons set forth above, I respectfully recommend that, if the Court concludes that the release does not undermine the fairness of the settlement, that it find that the settlement is a fair resolution of a bona fide dispute under the FLSA, grant the Joint Motion Requesting Approval of Settlement and Entry of an Order of Dismissal (Doc. No. 20), and thereafter direct the Clerk of Court to close the case. If the Court finds that the release undermines the fairness of the settlement, then I respectfully recommend that the Court deny the Joint Motion Requesting Approval of Settlement and Entry of an Order of Dismissal (Doc. No. 20), and allow the case to proceed to trial.
Failure to file written objections to the proposed findings and recommendations contained in this report within fourteen (14) days from the date of its filing shall bar an aggrieved party from attacking the factual findings on appeal.
Recommended in Orlando, Florida on May 31st, 2012.
/s/_________
KARLA R. SPAULDING
UNITED STATES MAGISTRATE JUDGE Copies furnished to:
Presiding District Judge
Counsel of Record
Courtroom Deputy