Weber v. Paramount Transportation Logistics Services, LLC et al

Filing 49

ORDER denying without prejudice 47 Joint Motion for Approval of Settlement and Incorporated Memorandum of Law. The parties shall have up to and including October 23, 2018 to file revised settlement agreements in accordance with the directives set forth in this Order. Signed by Magistrate Judge Carol Mirando on 10/3/2018. (APH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
THOMAS WEBER, on behalf of
himself and those similarly situated,
Plaintiff,
v.

Case No: 2:17-cv-627-FtM-38CM

PARAMOUNT
TRANSPORTATION LOGISTICS
SERVICES, LLC, R&L CARRIERS,
INC. and AFC WORLDWIDE
EXPRESS, INC.,
Defendants.
ORDER
This matter comes before the Court upon review of the Joint Motion for
Approval of Settlement and Incorporated Memorandum of Law filed on September
25, 2018. Doc. 47. The parties request that the Court approve their settlement of
the Fair Labor Standards Act (“FLSA”) claims and dismiss the case with prejudice.

Id. at 6. For the reasons stated below, the motion is denied without prejudice.
To approve the settlement, the Court must determine whether it is a “fair and
reasonable resolution of a bona fide dispute” of the claims raised pursuant to the
FLSA. Lynn’s Food Store, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir.
1982). There are two ways for a claim under the FLSA to be settled or compromised.

Id. at 1352-53. The first is under 29 U.S.C. § 216(c), providing for the Secretary of
Labor to supervise the payments of unpaid wages owed to employees. Id. at 1353.
The second is under 29 U.S.C. § 216(b) when an action is brought by employees

against their employer to recover back wages. Id. When the employees file suit,
the proposed settlement must be presented to the district court for the district court
to review and determine that the settlement is fair and reasonable. Id. at 1353-54.
The Eleventh Circuit has found settlements to be permissible when the lawsuit
is brought by employees under the FLSA for back wages because the lawsuit provides
some assurance of an adversarial context. The employees are likely to
be represented by an attorney who can protect their rights under the
statute. Thus, when the parties submit a settlement to the court for
approval, the settlement is more likely to reflect a reasonable
compromise of disputed issues than a mere waiver of statutory rights
brought about by an employer’s overreaching. 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; we allow the district court to approve the settlement in order
to promote the policy of encouraging settlement of litigation.

Id. at 1354. “Short of a bench trial, the Court is generally not in as good a position
as the parties to determine the reasonableness of an FLSA settlement . . . If the
parties are represented by competent counsel in an adversary context, the settlement
they reach will, almost by definition, be reasonable.” Bonetti v. Embarq Mgmt. Co.,
715 F. Supp. 2d 1222, 1227 (M.D. Fla. 2009).

Nevertheless, the Court must

scrutinize the settlement to determine whether it is a “fair and reasonable
res[o]lution of a bona fide dispute.” Lynn’s Food Store, 679 F.2d at 1355.
Plaintiff Thomas Weber (“Weber”) brought this action against Defendants
Paramount Transportation Logistics Services, LLC (“Paramount”), a Florida
corporation; R&L Carriers, Inc. (“R&L”), an Ohio corporation; and AFC Worldwide
Express, Inc. (“AFC”), a Georgia corporation, alleging Defendants misclassified him
and similarly situated employees as exempt from overtime compensation in violation

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of the FLSA, until Defendants reclassified them on November 1, 2016. See Doc. 1.
¶¶ 1, 10, 11, 18, 20. Weber alleges from December 2013 to August 2017 he “worked
for Defendants” 1 as an account executive and that Defendants “operate[d] under
various trade names under the R&L brand.” Id. ¶¶ 2-3. The parties indicate Weber
and Opt-in Plaintiffs Joseph Carp; Keith Hickman, Jr.; Lerato Mahlangu; Chris
Poole; Jonathan Stegall; Joshua Winkler; and Patricia Reiter (“Plaintiffs”) allege
unpaid wages of $8,973.16 for Weber; $2,211.66 for Carp; $3,551.09 for Hickman;
$5,469.87 for Mahlangu; $7,722.84 for Poole; $3,210.34 for Reiter; $6,861.84 for
Stegall; and $4,983.32 for Winkler. Doc. 47 at 3-4. Plaintiffs allege Defendants
failed to compensate them at a rate of one-and-one-half times their regular hourly
wage for overtime worked based on their misclassification as exempt employees. See

id. at 3; Doc. 1 at ¶¶ 24-25.
In the proposed settlement agreements, Defendants agree to pay Plaintiffs the
following:2 (1) Weber—$8,568.50 ($3,855.82 in unpaid wages; $3,855.82 in liquidated
damages; and $856.86 in “mental anguish” damages); (2) Carp—$2,112.25 ($950.51
in unpaid wages; $950.51 in liquidated damages; and $211.23 in “mental anguish”
damages); (3) Hickman—$3,388.19 ($1,524.69 in unpaid wages; $1,524.69 in

Defendants AFC and R&L deny that they ever employed Weber. See Doc. 19 at 1;
Doc. 21 at 1.
1

2

The joint motion states the parties resolved Plaintiffs’ claims “for approximately
95% of the alleged overtime wages owed” but it appears that the amount of unpaid wages
received by Plaintiffs under the agreements equals approximately 43 percent of the alleged
overtime wages owed, although the total amount of compensation received by Plaintiffs
(including liquidated damages) equals approximately 95% of the alleged overtime wages
owed. See Doc. 47 at 4; Doc. 47-1 at 4, 13-14, 23-24, 32-33, 41-42, 50-51, 58-59, 67-68.

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liquidated damages; and $338.81 in “mental anguish” damages); (4) Mahlangu—
$5,213.22 ($2,345.95 in unpaid wages; $2,345.95 in liquidated damages; and $521.32
in “mental anguish” damages); (5) Poole—$7,364.78 ($3,314.15 in unpaid wages;
$3,314.15 in liquidated damages; and $736.48 in “mental anguish” damages); (6)
Reiter—$3,062.65 ($1,378.19 in unpaid wages; $1,378.19 in liquidated damages; and
$306.27 in “mental anguish” damages); (7) Stegall—$6,537.13 ($2,941.71 in unpaid
wages; $2,941.71 in liquidated damages; and $653.71 in “mental anguish” damages);
and (8) Winkler—$4,753.03 ($2,138.86 in unpaid wages; $2,138.86 in liquidated
damages; and $475.31 in “mental anguish” damages). See Doc. 47 at 5; Doc. 47-1 at
4, 13-14, 23-24, 32-33, 41-42, 50-51, 58-59, 67-68.

The parties dispute whether

Plaintiffs were properly classified as exempt employees; whether certain of the
Defendants were Plaintiffs’ “employers” for purposes of FLSA liability; the amount of
overtime hours Plaintiffs worked; the applicable statute of limitations; and whether
liquidated damages are appropriate, but the parties reached a compromise to settle
the case. Doc. 47 at 3. The proposed settlement agreements require each Plaintiff,
except Reiter, 3 to release all claims against Defendants stemming from each

3

The parties indicate in the motion that “[t]here is separate consideration in
Plaintiffs’ favor for the general release, many of the Plaintiffs have not worked for Defendants
in some time such that other claims may be time barred at this point, and there are no other
claims to date brought by any Plaintiff except for Opt-in Plaintiff Reiter which has been
excluded from her release.” Doc. 47 at 4-5 n.1. The motion does not indicate the nature of
Reiter’s separate claim, and Reiter’s settlement agreement omits the paragraphs included in
the rest of the agreements releasing Defendants from all other claims under the FLSA and
all other claims of any other nature arising out of the employment relationship. See Doc.
47-1 at 51-52. Reiter’s agreement does, however, include terms that Reiter agrees not to
bring any claim against Defendants “arising out of claims for violation of the FLSA that
occurred prior to November 1, 2016” and also includes a paragraph (paragraph 7) found in
the other agreements stating Reiter “understands that she is releasing, discharging, and

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Plaintiff’s employment, not just those asserted in the Complaint. See Doc. 47-1 at 56, 14-15, 24-25, 33-34, 42-43, 59-60, 68-69.
Although the Court recognizes the policy in this circuit of promoting settlement
of litigation, the Court cannot recommend approval of the settlements in this case
because each of the proposed settlement agreements, except Reiter’s agreement,
contains a general release of claims without independent consideration4 and Carp’s
agreement indicates he will be paid liquidated damages less than the compromised
amount of unpaid overtime wages. See Doc. 47-1 at 4, 13-14, 23-24, 32-33, 41-42, 5051, 58-59, 67-68. General releases typically are disfavored in FLSA cases. See, e.g.,

Moreno v. Regions Bank, 729 F. Supp. 2d 1346, 1351-52 (M.D. Fla. 2010) (proposed
FLSA settlement agreement was unfair and precluded evaluation of the compromise
because “a pervasive release in an FLSA settlement confers an uncompensated,
unevaluated, and unfair benefit on the employer”).

giving up all of her rights, causes of action, claims, and demands of any kind whatsoever
against Defendants growing out of or in any way connected . . . with . . . her tenure with
Defendants[.]” Doc. 47-1 at 51-52.
4

In their joint motion, the parties indicate that “[n]inety percent . . . of the settlement
funds [are] in consideration of the Plaintiffs’ release of their FLSA claims, while ten percent
. . . of the settlement funds are in separate consideration of a general release of all claims.”
Doc. 47 at 4 n.1. The settlement agreements themselves, however, do not indicate that any
portion of the funds to be paid to each Plaintiff is in separate consideration for a general
release. See Doc. 47-1 at 4, 13-14, 23-24, 32-33, 41-42, 50-51, 58-59, 67-68. The agreements
only differentiate between the amounts in each agreement representing unpaid wages,
liquidated damages, and “mental anguish” damages, but do not differentiate which amounts
in each agreement are in separate consideration for the general releases. See id. In each
agreement, the amount of unpaid wages and liquidated damages equals approximately
ninety percent of the total and the amount of “mental anguish” damages equals
approximately ten percent. See id.

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As acknowledged by the parties, this Court as well as other courts within this
district, however, have approved general releases in FLSA cases when the plaintiff
receives compensation that is separate and apart from the benefits to which the
plaintiff is entitled under the FLSA, or when such releases are mutual and thus
confer a benefit on the plaintiff. Doc. 47 at 4 n.1; see, e.g., Prieto v. Scheeler’s Cafe

De Marco, Inc., No. 2:16-cv-139-FtM-99CM, 2017 WL 359220, at *3 (M.D. Fla. Jan.
9, 2017) (finding mutual general release fair and reasonable because it would ensure
there would not be future litigation regarding events prior to settlement, including
claims the defendants could have against the plaintiff in state court), report and

recommendation adopted, 2017 WL 347508 (M.D. Fla. Jan. 24, 2017); Weldon v.
Backwoods Steakhouse, Inc., No. 6:14-cv-79-Orl-37TBS, 2014 WL 4385593, at *4
(approving settlement agreement with general release because plaintiffs received
independent consideration for it); Buntin v. Square Foot Management Company,

LLC, 6:14-cv-1394-Orl-37GJK, 2015 WL 3407866, at *2-3 (M.D. Fla. May 27, 2015)
(approving settlement agreement where the defendant’s general release of claims and
neutral reference served as independent consideration for the plaintiff’s general
release).
Here, the parties have made no such showing that the general releases are
supported by independent consideration, as the settlement agreements themselves
are silent as to any independent consideration. See generally Doc. 47-1. Nor have
the parties shown in the settlement agreements any other form of benefit conferred
upon Plaintiffs by the releases. See generally id. Accordingly, the Court cannot

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recommend approval of the settlement agreements with the incorporated general
releases absent a showing of independent consideration in the agreements.

See

Weldon, 2014 WL 4385593, at *4. The Court will give the parties an opportunity to
amend the settlement agreements to correct the offending provisions in accordance
with this Order.
ACCORDINGLY, it is
ORDERED:
Joint Motion for Approval of Settlement and Incorporated Memorandum of
Law (Doc. 47) is DENIED without prejudice.

The parties shall have up to and

including October 23, 2018 to file revised settlement agreements in accordance with
the directives set forth in this Order.
DONE and ORDERED in Fort Myers, Florida on this 3rd day of October, 2018.

Copies:
Counsel of record

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