Kelly v. Aspire Physical Recovery at Hoover LLC

Filing 24

MEMORANDUM OPINION. Signed by Magistrate Judge John H England, III on 6/28/18. (MRR, )

FILED
2018 Jun-28 PM 03:31
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
CARLYDA KELLY,
Plaintiff,
v.
ASPIRE PHYSICAL RECOVERY AT
HOOVER, LLC,
Defendant.

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Case No.: 2:17-cv-00961-JHE

MEMORANDUM OPINION1
Plaintiff Carlyda Kelly (“Kelly” or “Plaintiff”) and Defendant Aspire Physical Recovery
Center at Hoover, LLC (“Aspire” or “Defendant”) have jointly requested approval of their
settlement agreement, which represents the resolution of a disputed matter under the Fair Labor
Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”). (Docs. 19 & 23). For the reasons set forth
below, the court approves the parties’ settlement.
Background Facts
On June 7, 2017, Kelly filed this action, asserting two FLSA counts. (Doc. 1). In Count
I, Kelly alleges Aspire wrongfully classified her as an exempt managerial employee despite the
fact she was not subject to the exemption and improperly denied her overtime compensation. (Id.).
In Count II, Kelly alleges Aspire terminated her on a pretextual basis in retaliation for participating

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In accordance with the provisions of 28 U.S.C. § 636(c) and Federal Rule of Civil
Procedure 73, the parties have voluntarily consented to have a United States Magistrate Judge
conduct any and all proceedings, including trial and the entry of final judgment. (Doc. 12).

in a Department of Labor investigation of Aspire’s practices. (Id.). On June 30, 2017, Aspire
answered the complaint. (Doc. 7).
On May 16, 2018, Aspire and Kelly jointly submitted a motion for settlement approval and
an attached settlement agreement. (Docs. 19 & 19-1). After initial review of the agreement, the
undersigned held a telephone conference with the parties to discuss a pervasive release and a
confidentiality provision contained in the agreement. Based on the discussion at the telephone
conference, the undersigned ordered the parties to resubmit their agreement with specific
modifications. (Doc. 21). On June 27, 2018, the parties did so, (doc. 23), and the undersigned has
reviewed that agreement. Aspire has agreed to pay a total of $32,000.00 to Kelly. (Id. at ¶ 1). Of
that amount, $1,562.00 is allocated to Kelly’s Count I claim, (id. at ¶ 1.1.1); $1,562.00 is allocated
as liquidated damages for Kelly’s Count I claim, (id. at ¶ 1.1.2); and $12,626.00 is allocated to
Kelly’s Count II claim for emotional distress damages, (id.). The remaining $16,250.00 is
allocated to Kelly’s counsel for attorneys’ fees and costs. (Id. at ¶ 1.1.3).
Analysis
If an employee proves his employer violated the FLSA, the employer must remit to the
employee all unpaid wages or compensation, liquidated damages in an amount equal to the unpaid
wages, a reasonable attorney’s fee, and costs. 29 U.S.C. § 216(b). “FLSA provisions are
mandatory; the ‘provisions are not subject to negotiation or bargaining between employer and
employee.’” Silva v. Miller, 307 Fed. Appx. 349, 351 (11th Cir. 2009) (quoting Lynn’s Food
Stores, Inc. v. U.S. Dep’t of Labor, 679 F.2d 1350, 1352 (11th Cir. 1982)). “Any amount due that
is not in dispute must be paid unequivocally; employers may not extract valuable concessions in
return for payment that is indisputably owed under the FLSA.” Hogan v. Allstate Beverage Co.,
Inc., 821 F. Supp. 2d 1274, 1282 (M.D. Ala. 2011). Consequently, parties may settle an FLSA
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claim for unpaid wages only if there is a bona fide dispute relating to a material issue concerning
the claim.
In Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982), the
Eleventh Circuit stated there is only one context in which compromises of FLSA back wage claims
may be allowed: a stipulated judgment entered by a court which has determined that a settlement
proposed by an employer and employees, in a suit brought by the employees under the FLSA, is a
fair and reasonable resolution of a bona fide dispute over FLSA provisions. The primary focus of
a court’s inquiry in determining whether to approve an FLSA settlement is to ensure that an
employer does not take advantage of its employees in settling their claim for wages and other
damages due under the statute. Collins v. Sanderson Farms, Inc., 568 F. Supp. 714, 719 (E.D. La.
2008).
This case presents the somewhat unusual scenario of an FLSA settlement that includes both
a wage claim and a retaliatory termination claim. As stated above, there is no question that a
district court is required to scrutinize for fairness the settlement of a claim for back wages brought
pursuant to 29 U.S.C. § 216(b). Lynn's Food, 679 F.2d at 1353. However, Lynn’s Food does not
discuss judicial oversight of retaliatory termination claims. Accordingly, courts in this Circuit
have generally concluded that an FSLA retaliatory discharge claim is not subject to the same
review unless its terms contaminate any associated wage claim. See, e.g., Hernandez v. Iron
Container, LLC, No. 13-22170-CIV, 2014 WL 633848, at *2 (S.D. Fla. Feb. 18, 2014); Dunbar v.
Wolf Bay Lodge, Inc., No. CV 15-00265-CG-M, 2015 WL 6394515, at *1 n.1 (S.D. Ala. Oct. 22,
2015); Thompson v. Dealer Mgmt. Servs., Inc., No. 616CV1468ORL40KRS, 2016 WL 7644856,
at

*2

(M.D.

Fla.

Dec.

13,

2016), report

and

recommendation

616CV1468ORL40KRS, 2017 WL 37941 (M.D. Fla. Jan. 4, 2017).
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adopted, No.

The undersigned is satisfied that the settlement of the retaliatory discharge claim does not
taint the settlement of the wage claim. First, Kelly’s counsel has represented that resolution of the
wage claim was negotiated separately from the retaliation claim. Second, the far greater monetary
amount devoted to the retaliatory discharge claim reflects that it is the dominant claim in this
action, with the wage claim representing a comparatively small portion of both the factual
allegations in the complaint and Kelly’s potential recovery. Finally, as discussed below, the
undersigned finds the parties’ resolution of the wage claim is fair on its face. Therefore, only the
wage claim is analyzed below.
The parties’ dispute as to the merits of the case is legitimate. Specifically, Kelly maintains
she was misclassified as an exempt employee, while Aspire maintains that Kelly was not
misclassified. (Doc. 19 at 1-2). The settlement is appropriate for the disputed wages. Kelly
concedes she supervised other workers for part of the three-year time period prior to filing suit.
To the extent it relates to wages, the settlement sum approximates the full amount of unpaid
overtime for the time period after Kelly’s supervisory duties were removed and an equal amount
in liquidated damages. (Id. at 4). Because Kelly’s supervisory authority potentially renders her
an exempt employee for the portion of the relevant time period she held it, the undersigned finds
this is an appropriate basis for Kelly’s compromise of her wage claim and a reasonable resolution
of the issue. Additionally, the parties were represented by counsel throughout the litigation and
the negotiation of this settlement. Finally, Kelly’s attorneys’ fees for the wage portion of her claim
were separately negotiated so as not to affect her recovery. 2 “Where the attorney’s fee was agreed

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Kelly and her counsel entered into separate retainer agreements for the wage claim and
for the retaliation claim, and copies of these agreements have been provided to the court for in
camera review. Under the wage claim agreement, attorneys’ fees and costs are negotiated
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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.’”
Davis v. The Filta Group, Inc., 2010 WL 3958701, *2 (M.D. Fla. Sept. 20, 2010) (quoting Bonetti
v. Embarq Mgmt. Co., 2009 WL 2371407, *5 (M.D. Fla. Aug. 4, 2009)).

Therefore, the

undersigned finds the attorneys’ fees are reasonable.
As originally presented, the parties’ settlement agreement contained two provisions that
concerned the undersigned. First, pursuant to a general release contained in the agreement, Kelly
released Aspire from “any and all claims whatsoever of any kind or nature arising out of or in any
way connected to (i) her employment with Aspire, (ii) the termination of her employment, and (iii)
any other claim she may have arising from any event occurring prior to the date of this Agreement.”
(Doc. 19-1 at ¶ 2). The provision contains a non-exclusive list of potential causes of action Kelly
released (e.g., claims under Title VII, the Equal Pay Act, ERISA, and state law). This is
problematic because an employer may not “use an FLSA claim (a matter arising from the

separately from the settlement amount. Conversely, the retaliation claim agreement includes a
contingency fee arrangement. Although contingency fee arrangements are disfavored in the
Eleventh Circuit in FLSA wage actions, see Silva v. Miller, 307 F. App'x 349, 351 (11th Cir. 2009),
as stated above, the retaliatory discharge claim is not subject to judicial review under the
circumstances here, where there is no indication that the settlement of the retaliation claim
contaminated the wage settlement. Additionally, the logic that suggests contingency fee
arrangements are problematic in FLSA wage claims does not appear to apply to retaliation claims.
See id. (noting the “language of the statute contemplates that ‘the wronged employee should
receive his full wages plus the penalty without incurring any expense for legal fees or costs.’”)
(citation omitted and emphasis added).
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employer's failing to comply with the FLSA) to leverage a release from liability unconnected to
the FLSA.” Moreno v. Regions Bank, 729 F. Supp. 2d 1346, 1351 (M.D. Fla. 2010).
Second, the agreement contained a confidentiality provision prohibiting Kelly from
disclosing “the fact a settlement agreement has been reached and the terms of this Agreement . . .
to anyone other than her attorneys, tax advisors, or as otherwise required by law.” (Doc. 19-1 at
¶ 5). If asked, Kelly’s only permitted response is that the case has concluded; any violation of this
provision results in Kelly’s obligation to pay $2,500.00 in liquidated damages. (Id.). However,
“[a]bsent some compelling reason, the sealing from public scrutiny of FLSA agreements between
employees and employers would thwart the public's independent interest in assuring that
employees' wages are fair and thus do not endanger ‘the national health and well-being.’ ” Hogan
v. Allstate Beverage Co., 821 F. Supp. 2d 1274, 1283 (M.D. Ala. 2011) (quoting Brooklyn Savings
Bank v. O'Neil, 324 U.S. 697, 708 (1945)). While an FLSA confidentiality provision is not per se
unenforceable, a party seeking to include one must show compelling reasons why it should be
upheld. Briggins v. Elwood TRI, Inc., 3 F. Supp. 3d 1277, 1280 (N.D. Ala. 2014). Courts routinely
strike these provisions. Id. at 1289 (collecting cases).
On June 13, 2018, the undersigned held a telephone conference to discuss these issues. At
the telephone conference, the parties agreed to remove the confidentiality agreement and make the
release mutual. The parties resubmitted their settlement agreement on June 27, 2018, with those
modifications. (Doc. 23 at 4-9). The undersigned is satisfied that the agreed-upon changes resolve
the potential fairness issues identified above. Specifically, the confidentiality provision has been
removed entirely, and the mutual general release, (id. at ¶ 2), is no longer “a gratuitous . . . release
of all claims in exchange for money unconditionally owed to the employee,” Moreno, 729 F. Supp.

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2d at 1351, because it releases any claims either party may have. Therefore, the settlement is
approved.
Conclusion
The court finds Plaintiff’s FLSA wage claim represents a bona fide dispute over FLSA
provisions and the parties’ monetary settlement is a fair and reasonable resolution of that bona fide
disputes. Therefore, the parties’ motion for settlement approval, (doc. 19), as modified by the
revised settlement agreement, (doc. 23), is GRANTED, and the revised settlement agreement is
APPROVED. A separate order will be entered.
DONE this 28th day of June, 2018.

_______________________________
JOHN H. ENGLAND, III
UNITED STATES MAGISTRATE JUDGE

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