Baltazar v. Martinez Enterprises LLC

Filing 14

MEMORANDUM OPINION. Signed by Judge Madeline Hughes Haikala on 12/14/2016. (AVC)

FILED
2016 Dec-14 PM 03:46
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
VALENTINA BALTAZAR,
Plaintiffs,
v.
MARTINEZ ENTERPRISES, LLC,
d/b/a CASA BLANCA,

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Case No.: 5:15-cv-02202-MHH

Defendant.
MEMORANDUM OPINION
This opinion concerns a proposed FLSA settlement.

In her complaint,

plaintiff Valentina Baltazar contends that her former employer, defendant Martinez
Enterprises, LLC, d/b/a Casa Blanca, violated the Fair Labor Standards Act
(FLSA), 29 U.S.C. §§ 201 et seq. (Doc. 1). The parties have agreed to settle Ms.
Baltazar’s FLSA claims, and they have asked the Court to approve the proposed
settlement. (Doc. 13). The Court will approve the FLSA settlement because the
settlement is a fair and reasonable compromise of a bona fide dispute.
I.

BACKGROUND
Ms. Baltazar filed this lawsuit on December 2, 2015. (Doc. 1). In her

complaint, Ms. Baltazar states that she worked for Casa Blanca as a server from
approximately September of 2013 to August of 2015. (Doc. 1, ¶ 8). Ms. Baltazar
alleges that, in addition to performing the duties of a server, she spent more than 20

per cent of her work hours performing non-serving duties such as cutting chives,
wiping down computer screens, restocking server stations, sweeping, mopping,
filling condiment dispensers, dismantling and cleaning tea urns, and arranging and
cleaning margarita glasses. (Doc. 1, ¶¶ 16, 19–20). According to Ms. Baltazar,
Casa Blanca paid her the wage of a “tipped employee” for these tasks, in violation
of the FLSA. See 29 U.S.C. §§ 203(m), 206(a); (Doc. 1, ¶ 15).1 Ms. Baltazar also
contends that Casa Blanca violated the FLSA by failing to adequately compensate
her for work she performed in excess of forty hours per week. (Doc. 1, ¶¶23–26).
According to Ms. Baltazar, Casa Blanca “deliberately sought to avoid” its
obligations under the FLSA and, therefore, willfully violated the statute. (Doc. 1, ¶
42).
Casa Blanca disputes that Ms. Baltazar spent more than 20 per cent of her
work hours performing non-serving duties. (Doc. 13, p. 7). Casa Blanca argues,
rather, that the “side work” Ms. Baltazar performed was merely incidental to her
duties as a server, and that Casa Blanca was therefore permitted to pay Ms.
Baltazar the wage of a tipped employee for these duties. (See Doc. 13, p. 7); see
1

The FLSA provides that “[e]very employer shall pay to each of his employees who in any
workweek is engaged in commerce or in the production of goods for commerce, or is employed
in an enterprise engaged in commerce or in the production of goods for commerce . . . $7.25 an
hour,” beginning in July of 2009. See 29 U.S.C. § 206(a). With respect to employees who
receive more than $30 per month in tips—so-called “tipped employees”—the FLSA permits
employers to apply a tip credit of up to $5.12 per hour when calculating the employees’ wages.
29 U.S.C. § 203(t); Stubbia v. Nopi Enterprises, Inc., 2012 WL 3687491, at *2 (S.D. Fla. Aug.
27, 2012). Thus, an employer may pay a tipped employee $2.13 per hour without violating the
FLSA.
2

also Ash v. Sambodromo, LLC, 676 F. Supp. 2d 1360, 1366 (S.D. Fla. 2009)
(explaining that, under the FLSA, an employer may pay a tipped employee $2.13
per hour for duties that produce tips, such as serving, and for duties that are
incidental to a tip producing duty, “so long as the incidental duties do not exceed
20 percent of the employee’s overall duties”) (internal citation and quotation marks
omitted). Casa Blanca acknowledges that it miscalculated Ms. Baltazar’s overtime
pay, but it contends that the miscalculation was made in good faith. (Doc. 13, p.
8).
The parties engaged in good faith, arm’s length negotiations to resolve this
dispute. (Doc. 13, p. 12). In exchange for dismissal of this action with prejudice,
Casa Blanca agreed to pay Ms. Baltazar a gross sum of $30,000. (Doc. 13, p. 15).
The $30,000 consists of $9,960.96 in overtime wages, $9,960.96 in liquidated
damages, and $10, 072.08 in attorneys’ fees and costs. (Doc. 13, pp. 10, 14). In
agreeing to this amount, Ms. Baltazar considered the risk that a factfinder could
find (1) that she did not spend more than 20 per cent of her work hours performing
non-serving duties and is thus not entitled to back pay for such duties, and (2) that
Casa Blanca acted in good faith, thus potentially defeating an award of liquidated
damages. See Davila v. Menendez, 717 F.3d 1179, 1185–86 (11th Cir. 2013)
(explaining that a district court may choose not to award liquidated damages when
a defendant has acted in good faith). Accordingly, Ms. Baltazar agreed to forgo
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potential damages related to the hours she spent performing non-serving duties and
accept overtime wages and liquidated damages as full settlement for her claims.
(Doc. 13, p. 11). In addition, Ms. Baltazar has agreed to release all FLSA claims
she might have against Casa Blanca through the date of this order, including,
specifically, all claims Ms. Baltazar has asserted against Casa Blanca in this
lawsuit. (Doc. 13, p. 13).
On this record, the Court considers the parties’ motion to approve the
proposed settlement of Ms. Baltazar’s FLSA claims. (Doc. 13).
II.

DISCUSSION
“Congress enacted the FLSA in 1938 with the goal of ‘protect[ing] all

covered workers from substandard wages and oppressive working hours.’

In

addition to mandating a minimum wage, the FLSA obligates employers to
compensate employees for hours in excess of 40 per week at a rate of 1 ½ times the
employees’ regular wages.” Christopher v. SmithKline Beecham Corp., 132 S. Ct.
2156, 2162 (2012) (quoting Barrentine v. Arkansas-Best Freight Sys., Inc., 450
U.S. 728, 739 (1981)); see also 29 U.S.C. §§ 202, 206(a), 207(a). Congress
designed the FLSA “to ensure that each employee covered by the Act would
receive ‘[a] fair day’s pay for a fair day’s work’ and would be protected from ‘the
evil of ‘overwork’ as well as ‘underpay.’” Barrentine, 450 U.S. at 739 (emphasis
in original). In doing so, Congress sought to protect “the public’s independent
4

interest in assuring that employees’ wages are fair and thus do not endanger ‘the
national health and well-being.’” Stalnaker v. Novar Corp., 293 F. Supp. 2d 1260,
1264 (M.D. Ala. 2003) (quoting Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706
(1945)).
If an employee proves that his employer violated the FLSA, then the
employer must remit to the employee all unpaid wages or compensation, liquidated
damages in an amount equal to the unpaid wages, reasonable attorneys’ fees, 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. ex. Rel. U.S. Dep’t of Labor, 679 F.2d 1350, 1352 (11th Cir. 1982));
see also Brooklyn, 324 U.S. at 707. “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 claim for unpaid wages only if
there is a bona fide dispute relating to a material issue concerning the claim. To
compromise a claim for unpaid wages, the parties must “present to the district
court a proposed settlement, [and] the district court may enter a stipulated
judgment after scrutinizing the settlement for fairness.” Lynn’s Food, 679 F.2d at
5

1353; see also Hogan, 821 F. Supp. 2d at 1281–82.2 “[T]he parties requesting
review of an FLSA compromise must provide enough information for the court to
examine the bona fides of the dispute.” Dees v. Hydradry, Inc., 706 F. Supp. 2d
1227, 1241 (M.D. Fla. 2010). The information that the parties provide also should
enable the Court “to ensure that employees have received all uncontested wages
due and that they have received a fair deal regarding any additional amount that
remains in controversy.” Hogan, 821 F. Supp. 2d at 1282. “If a settlement in an
employee FLSA suit does reflect a reasonable compromise over issues, such as
FLSA coverage or computation of back wages, that are actually in dispute,” then a
court may approve a settlement. Lynn’s Food, 679 F.2d at 1354; see also Silva,
307 Fed. Appx. at 351 (proposed settlement must be fair and reasonable).

2

In Lynn’s Food, the Eleventh Circuit Court of Appeals explained:
[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. An employee who accepts such a payment supervised by
the Secretary thereby waives his right to bring suit for both the unpaid wages and
for liquidated damages, provided the employer pays in full the back wages. 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.

679 F.2d at 1352–53 (footnotes omitted). The Eleventh Circuit reiterated the import of Lynn’s
Food in Nall v. Mal-Motels, Inc., 723 F.3d 1304 (11th Cir. 2013).
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Based on the Court’s review of the information that the parties submitted
regarding the terms of the proposed settlement agreement, the Court finds that
there is a bona fide dispute between the parties, and the settlement terms that the
parties have negotiated are fair and reasonable. (See Doc. 13). The parties agreed
to settle Ms. Baltazar’s claims in exchange for an amount that represents a
substantial percentage of Ms. Baltazar’s maximum potential recovery and was
calculated according to a method proposed by Ms. Baltazar. (See Doc. 13, p. 12).
Ms. Baltazar appreciated the risks and costs associated with litigating her claims
and determined that the proposed settlement amount represented a just
compromise. (Doc. 13, p. 11). The Court finds that the settlement amount is fair
and reasonable under the circumstances of this case.
The Court also approves the negotiated attorneys’ fee amount of $10,072.08.
(Doc. 13, p. 14). 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 Fed. Appx. at 351 (citing Lynn’s Food, 679 F.2d
at 1352); see also Briggins v. Elwood TRI, Inc., 3 F. Supp. 3d 1277, 1291 (N.D.
Ala. 2014) (noting that even where payment of attorneys’ fees does not reduce the
compensation negotiated for and payable to an FLSA plaintiff, “the court is
required to review for fairness and approve the fee and expenses proposed to be
7

paid by the defendants in the settlement”) (citing Silva, 307 Fed. Appx. at 349).
Based upon the information that the parties submitted to the Court, the Court finds
that the fee amount included in the settlement agreement adequately compensates
counsel for the time invested in the action. In addition, the negotiated fee does not
appear to compromise Ms. Baltazar’s recovery. Rather, the fee is “separate and
distinct from the settlement agreement.” Briggins, 3 F. Supp. 3d at 1291. The
Court finds the fee to be fair and reasonable.
III.

CONCLUSION
For the reasons stated above, the Court approves the parties’ proposed

settlement of Ms. Baltazar’s claims. The Court concludes that there is a bona fide
dispute regarding Ms. Baltazar’s FLSA claims, and the terms that the parties have
negotiated constitute a fair and reasonable resolution of that dispute. The Court
will enter a separate order dismissing Ms. Baltazar’s claims with prejudice and
closing the file.
DONE and ORDERED this December 14, 2016.

_________________________________
MADELINE HUGHES HAIKALA
UNITED STATES DISTRICT JUDGE

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