Smitherman et al v. Iguana Grill Inc

Filing 61

MEMORANDUM OPINION - The court finds plaintiffs FLSA claims represent a bona fide dispute over FLSA provisions and the parties settlement is a fair and reasonable resolution of these bona fide disputes. Therefore, the parties Supplemental Joint Notice of Settlement and Request for Approval, (doc. 60), is GRANTED, and the settlement is APPROVED. A separate order will be entered. Signed by Magistrate Judge John H England, III on 9/29/2017. (KEK)

FILED
2017 Sep-29 PM 12:29
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
WESTERN DIVISION
COREY SMITHERMAN, et al.,
Plaintiffs,
v.
IGUANA GRILL, INC.,
Defendant.

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Case No.: 7:14-cv-01781-JHE

MEMORANDUM OPINION1
Plaintiffs Cory Smitherman, Jose Rico, and nineteen other persons who have filed
consents in this putative collective action (the “Plaintiffs”) and Defendant Iguana Grill, Inc. have
jointly requested approval of their settlement agreement, (doc. 60), 2 which represents the
resolution of a disputed matter under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq.
(“FLSA”). (Id.). For the reasons set forth below, the court approves the parties’ settlement.
Background Facts
On September 17, 2014, Smitherman and Rico filed this action on behalf of themselves
and all similarly situated servers employed by Defendant, alleging they were deprived of a
lawful minimum wage and overtime compensation for hours worked in violation of the FLSA.
(Doc. 1). Specifically, Plaintiffs contend (1) the tip pool in which they participated was invalid
because non-tipped employees participated in it; (2) they were not paid minimum wage for hours

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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. 58).
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The parties previously filed a request for approval of their settlement agreement, (doc.
57), which required clarification on several points. (See doc. 59). The request currently before
the Court supplements the parties’ previous request in order to provide that clarification.

in which they performed non-tip-producing work; and (3) Defendant altered its time records to
avoid paying servers minimum wage and overtime compensation.

(See id.).

Defendant

answered the complaint, (doc. 7), and Plaintiffs moved for conditional collective action
certification, (doc. 9). The undersigned entered a report and recommendation that the class be
conditionally certified, (doc. 20), and, after review, District Judge L. Scott Coogler adopted and
accepted that recommendation, (doc. 24). Nineteen additional plaintiffs have consented to join
the class.3 (Docs. 9-3, 9-4, 13, 27, 29, & 30). The parties have engaged in written discovery,
mediation, and further settlement discussions following mediation, and reached a settlement on
September 26, 2017. The terms of the settlement are contained in the parties’ Supplemental
Joint Notice of Settlement and Request for Approval (the “Agreement”). (Doc. 60 at 7-11, ¶¶ E
1-10; doc. 60-1). The undersigned has reviewed the Agreement.
Under the Agreement, Defendant has agreed to pay each plaintiff a specified amount to
settle his or her FLSA claims regarding the tip pool, unpaid minimum wage for non-tipproducing work, and altered time records resulting in unpaid minimum wage and overtime.
Three plaintiffs have agreed to compensation in the amount of $0.00. (Doc. 60-1). Six plaintiffs
are to be compensated in an amount representing 50% of Defendant’s non-liquidated liability
under a three-year liability period. (Doc. 60 at 9, ¶ E 8a; doc. 60-1). Smitherman is to be
compensated in an amount representing the average Defendant’s last settlement offer and the
three-year non-liquidated liability amount. (Doc. 60 at 10, ¶ E 8c; doc. 60-1). The remaining

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Named plaintiff Corey Smitherman filed a consent, (doc. 28), but named plaintiff Jose
Rico has not done so. According to the parties’ Supplemental Joint Notice of Settlement and
Request for Approval, the parties dispute whether Rico was required to consent given his status
as a named plaintiff and whether his recovery would be affected by his failure to consent. (Doc.
60 at 5 n.1, 6-7 ¶ C 4 & 6).
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twelve plaintiffs are to be compensated in an amount representing 80% of the average of
Defendant’s last settlement offer and the three-year non-liquidated liability amount. (Doc. 60 at
9-10, ¶ E 8b; doc. 60-1). Defendant has also agreed to pay the fees and costs charged by the
mediator and $32,116.00 to plaintiffs’ counsel in attorney’s fees and costs. (Doc. 60 at 10-11,
¶¶ E 9, 10b-c). The parties stipulate and agree the terms set forth in the Agreement constitute a
fair and reasonable resolution of a bona fide dispute. (Doc. 60 at 11-12, ¶¶ F 1-4).
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
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 or
liquidated damage 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
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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).
The parties’ dispute as to the merits of the case is legitimate. Specifically, Plaintiffs
allege Defendant violated the FLSA by claiming a tip credit while requiring employees to
contribute a portion of their tips to non-tipped employees, failing to pay them the minimum wage
for periods of time in which they were not tipped, and altering its records to avoid paying them
minimum wage and overtime; Defendant denies all of this. (Doc. 60 at 2, ¶¶ B 2-3). The parties
additionally dispute the period for which Defendant would be liable for any alleged FLSA
violations. (Id. at 6-7, ¶¶ C 1-6). The settlement, as described above, is appropriate for the
disputed unpaid wages. The formulas used to reach the settlement amounts for each plaintiff
reflect the parties’ disputes as to the applicable liability period and, in the case of named Plaintiff
Rico, the potential his claims are time-barred due to his failure to consent to class membership.
(Id. at 7-10, ¶¶ E 1-8). 4 Plaintiffs’ attorney’s fee was negotiated after the parties agreed on
formulas for each plaintiff’s settlement amount. (Doc. 60 at 10, ¶ E 9). “Where the attorney’s
fee was 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

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The undersigned notes that the three plaintiffs who will receive $0.00 will do so because
their claims are time-barred even under the liability scenario most favorable to plaintiffs. (Doc.
60 at 8 n.8). Under these circumstances, the $0.00 awards are reasonable with respect to those
plaintiffs. See, e.g., Monserrate v. Hartford Fire Ins. Co., No. 614CV149ORL37GJK, 2016 WL
8999672, at *5 n.10 (M.D. Fla. Sept. 22, 2016), report and recommendation adopted, No.
614CV149ORL37GJK, 2016 WL 5847123 (M.D. Fla. Oct. 6, 2016) (approving FLSA settlement
including $0.00 settlement for one plaintiff when that plaintiff’s claims were outside the statute
of limitations).
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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)). Because the parties represent the attorney’s fee was separately negotiated, (doc. 60 at
10, ¶ E 9), the court concludes Plaintiffs’ recoveries were not affected by the amount of the
attorneys’ fee. The court has considered the amount of the fee and finds it to be reasonable.
Conclusion
The court finds plaintiffs’ FLSA claims represent a bona fide dispute over FLSA
provisions and the parties’ settlement is a fair and reasonable resolution of these bona fide
disputes. Therefore, the parties’ Supplemental Joint Notice of Settlement and Request for
Approval, (doc. 60), is GRANTED, and the settlement is APPROVED. A separate order will
be entered.
DONE this 29th day of September, 2017.

_______________________________
JOHN H. ENGLAND, III
UNITED STATES MAGISTRATE JUDGE

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