Opinion
Case No. 6:11-cv-1346-Orl-22GJK
11-28-2011
WILLIAM WELCH, Plaintiff, v. MOONLITE HOSPITALITY SERVICES, LLC, and DAVID WESTHOVEN, Defendants.
REPORT AND RECOMMENDATION
TO THE UNITED STATES DISTRICT COURT:
This cause came on for consideration without oral argument on the following motion:
MOTION: JOINT MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT, AND UPON COURT APPROVAL, FOR DISMISSAL OF THE ACTION WITH PREJUDICE (Doc. No. 22)
FILED: November 23, 2011
THEREON it is RECOMMENDED that the motion be GRANTED.
Plaintiff and Defendants jointly move the Court to approve their settlement agreement (the "Agreement") of Plaintiffs' claims pursuant to the Fair Labor Standards Act ("FLSA") and to dismiss the case with prejudice (the "Motion"). Doc. Nos. 22, 22-5.
In Lynn's Food Stores, Inc. v. United States Department of Labor, 679 F.2d 1350, 1353 (11th Cir. 1982), the Eleventh Circuit addressed the means by which an FLSA settlement may become final and enforceable:
[t]here are only two ways in which back wage claims arising under the FLSA can be settled or compromised by employees. First, under section 216(c), the Secretary of Labor is authorized to supervise payment to employees of unpaid wages owed to them. . . . The only other route for compromise of FLSA claims is provided in the context of suits brought directly by employees against their employer under section 216(b) to recover back wages for FLSA violations. When employees bring a private action for back wages under the FLSA, and present to the district court a proposed settlement, the district court may enter a stipulated judgment after scrutinizing the settlement for fairness.Id. at 1352-53. Thus, unless the parties have the Secretary of Labor supervise the payment of unpaid wages owed or obtain the Court's approval of the settlement agreement, the parties' agreement is unenforceable. Id. See also Sammons v. Sonic-North Cadillac, Inc., 2007 WL 2298032 at *5 (M.D. Fla. Aug. 7, 2007) (noting that settlement of FLSA claim in arbitration proceeding is not enforceable under Lynn's Foods because it lacked Court approval or supervision by Secretary of Labor). Before approving an FLSA settlement, the court must scrutinize it to determine if it is "a fair and reasonable resolution of a bona fide dispute." Id. at 1354-55. If the settlement reflects a reasonable compromise over issues that are actually in dispute, the Court may approve the settlement. Id at 1354.
In determining whether the settlement is fair and reasonable, the Court should consider the following factors:
(1) the existence of collusion behind the settlement;See Leverso v. South Trust Bank of Ala. Nat. Assoc., 18 F. 3d 1527, 1531 n. 6 (11th Cir. 1994); Hamilton v. Frito-Lay, Inc., No. 6:05-cv-1592-Orl-22JGG, 2007 U.S. Dist. LEXIS 10287, at *2-3, (M.D. Fla. January 8, 2007). The Court should be mindful of the strong presumption in favor of finding a settlement fair. Cotton v. Hinton, 559 F. 2d 1326, 1331 (5th Cir. 1977).
(2) the complexity, expense, and likely duration of the litigation;
(3) the stage of the proceedings and the amount of discovery completed;
(4) the probability of plaintiff's success on the merits;
(5) the range of possible recovery; and
(6) the opinions of counsel.
Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (all decisions from the Fifth Circuit prior to October 1, 1981 are binding on the Eleventh Circuit).
This case involved disputed issues of FLSA coverage, which constitutes a bona fide dispute. Doc. No. 1, 22. The parties were represented by independent counsel who were obligated to vigorously represent their clients. Id. The parties agreed to settle Plaintiff's claims in exchange for a release of all claims for a total sum of $6,000.00, representing $1,750.00 payable to Plaintiff for unpaid wages, $1,750.00 payable to Plaintiff for liquidated damages, and $2,500.00 payable to Plaintiff's counsel for attorneys' fees and costs. Doc. No. 22-5 at 4. In the Motion, the parties state that Plaintiff is receiving full relief and that "the settlement compensates him in full for alleged back wages and alleged liquidated damages under the FLSA." Doc. No. 22 at 2.
In the Motion, the parties also state that the amount of attorneys' fees and costs were negotiated separately and apart from Plaintiff's recovery. Doc. No. 22 at 2-3. See Bonetti v. Embarq Mgmt. Co., Case No. 6:07-cv-1335, 2009 WL 2371407 (M.D. Fla. Aug. 4, 2009) (finding no need to further scrutinize amount allocated for attorneys' fees and costs where they were negotiated separately and apart from the compensation paid to Plaintiff).
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Lynn's Foods requires a court to determine whether a plaintiff's compromise of his or her claims is fair and reasonable. Lynn's Food Stores, 679 F.2d at 1354-55. The Motion states that Plaintiff's settlement reflects the full amount of compensation estimated by Plaintiff. No. 22 at 2. At the time of the settlement, Plaintiff had not yet filed answers to the Court's interrogatories. See Doc. Nos. 16-19. Based on Plaintiff's representations in the Motion, his claim has not been compromised and the Agreement is necessarily a "fair and reasonable resolution of a bona fide dispute over FLSA provisions." Lynn's Food, 679 F.2d at 1354. Thus, the Court "need not scrutinize the settlement further to consider whether the payment to [plaintiff's] attorney, the hourly rate claimed by [plaintiff's] attorney, or the costs claimed by [plaintiff's] attorney are reasonable." See Granger v. Water Sports Management, Inc., Case No. 6:08-cv-1283-Orl-31KRS, 2009 WL 1396286 at *2 (M.D. Fla. May 18, 2009). Accordingly, the undersigned recommends that the proposed Agreement in exchange for Plaintiff's release of all claims and dismissal of the action with prejudice to be fair and reasonable.
THEREON it is RECOMMENDED that the Court:
1. GRANT the Motion (Doc. No. 22) only to the extent that the Court finds the parties' settlement is fair and reasonable; and
2. Enter an order dismissing the case with prejudice and direct the Clerk to close the case; 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. If the parties have no objection to this report and recommendation, they may promptly file a joint notice of no objection.
Recommended in Orlando, Florida on November 28, 2011.
GREGORY J. KELLY
UNITED STATES MAGISTRATE JUDGE
Copies furnished to:
Presiding District Judge
Counsel of Record
Unrepresented Parties