Liberatore v. AAA Discount Water Outlet-The Waterman, Inc.
Filing
31
REPORT AND RECOMMENDATIONS re 29 Joint MOTION for Approval of Settlement Agreement and Dismissal of All Claims with Prejudice. It is recommended as follows: 1. that the Motion be GRANTED only to the extent that the Court finds the parties 39; settlement is fair and reasonable; 2. that the Court enter an order dismissing the case with prejudice; and 3.that the Court direct the Clerk to close the case. Failure to file written objections to the proposed findings and recommendations conta ined in this report within fourteen 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 in order to expedite the final disposition of this case. Signed by Magistrate Judge Gregory J. Kelly on 12/20/2016. (MB)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
JAMES LIBERATORE,
Plaintiff,
v.
Case No: 6:16-cv-588-Orl-28GJK
AAA DISCOUNT WATER OUTLET –
THE WATERMAN, INC.,
Defendant.
REPORT AND RECOMMENDATION
This cause came on for consideration without oral argument on the following motion:
MOTION:
JOINT MOTION FOR APPROVAL OF SETTLEMENT
AGREEMENT AND FOR DISMISSAL OF ALL CLAIMS
WITH PREJUDICE (Doc. No. 29)
FILED:
October 3, 2016
THEREON it is RECOMMENDED that the motion be GRANTED.
I.
BACKGROUND.
On April 6, 2016, Plaintiff filed a complaint (the “Complaint”) against Defendant, alleging
that it violated the overtime provision of the Fair Labor Standards Act (the “FLSA”), 29 U.S.C. §
207(a). Doc. No. 1. On October 3, 2016, the parties filed a Joint Motion for Approval of Settlement
Agreement and for Dismissal of All Claims with Prejudice (the “Motion”) requesting that the
Court approve their settlement agreement (the “Agreement”) and dismiss the case with prejudice.
Doc. No. 29.
II.
LAW.
In Lynn’s Food Stores, Inc. v. United States Department of Labor, 679 F.2d 1350, 1352-
53 (11th Cir. 1982), the Eleventh Circuit addressed the means by which an FLSA settlement may
become final and enforceable:
There 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.
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., No. 6:07-cv-277-Orl-19DAB,
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 Food because it lacked Court approval or
supervision by the 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. Lynn’s
Food Store, 679 F.2d 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;
(2) the complexity, expense, and likely duration of the litigation;
(3) the stage of the proceedings and the amount of discovery
completed;
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(4) the probability of plaintiff’s success on the merits;
(5) the range of possible recovery; and
(6) the opinions of counsel.
Leverso v. SouthTrust Bank of Ala., Nat’l Assoc., 18 F.3d 1527, 1531 n.6 (11th Cir. 1994);
Hamilton v. Frito-Lay, Inc., No. 6:05-cv-592-Orl-22JGG, 2007 WL 328792, at *2 (M.D. Fla. Jan.
8, 2007), report and recommendation adopted, 2007 WL 219981 (M.D. Fla. Jan. 26, 2007). The
Court should be mindful of the strong presumption in favor of finding a settlement fair. See Cotton
v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977).1
In FLSA cases, the Eleventh Circuit has questioned the validity of contingency fee
agreements. Silva v. Miller, 307 F. App’x 349, 351 (11th Cir. 2009) (citing Skidmore v. John J.
Casale, Inc., 160 F.2d 527, 531 (2d Cir. 1947) (“We have considerable doubt as to the validity of
the contingent fee agreement; for it may well be that Congress intended that an employee’s
recovery should be net[.]”)). In Silva, the Eleventh Circuit stated:
That Silva and Zidell entered into a contingency contract to establish
Zidell’s compensation if Silva prevailed on the FLSA claim is of
little moment in the context of FLSA. 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. FLSA provides for reasonable attorney’s fees; the
parties cannot contract in derogation of FLSA’s provisions. See
Lynn’s Food, 679 F.2d at 1352 (“FLSA rights cannot be abridged
by contract or otherwise waived.”) (quotation and citation omitted).
To turn a blind eye to an agreed upon contingency fee in an amount
greater than the amount determined to be reasonable after judicial
scrutiny runs counter to FLSA’s provisions for compensating the
wronged employee. See United Slate, Tile & Composition Roofers
v. G & M Roofing & Sheet Metal Co., 732 F.2d 495, 504 (6th Cir.
1984) (“the determination of a reasonable fee is to be conducted by
the district court regardless of any contract between plaintiff and
plaintiff’s counsel”); see also Zegers v. Countrywide Mortg.
1
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit adopted as
binding precedent all decisions of the former Fifth Circuit handed down prior to the close of business on September
30, 1981.
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Ventures, LLC, 569 F.Supp.2d 1259 (M.D. Fla. 2008).
Id. at 351-52.2 For the Court to determine whether the proposed settlement is reasonable, counsel
for the claimant must first disclose the extent to which the FLSA claim has or will be compromised
by the deduction of attorney’s fees, costs or expenses pursuant to a contract between the plaintiff
and his counsel, or otherwise. Id. When a plaintiff receives less than a full recovery, any payment
(whether or not agreed to by a defendant) above a reasonable fee improperly detracts from the
plaintiff’s recovery.3 Thus, a potential conflict can arise between counsel and their client regarding
how much of the plaintiff’s total recovery should be allocated to attorney’s fees and costs. 4 It is
the Court’s responsibility to ensure that any such allocation is reasonable. See Silva, 307 F. App’x
at 351-52. As the Court interprets Lynn’s Food and Silva, where there is a compromise of the
amount due to the plaintiff, the Court should decide the reasonableness of the attorney’s fees
provision under the parties’ settlement agreement using the lodestar method as a guide. In such a
case, any compensation for attorney’s fees beyond that justified by the lodestar method is
unreasonable unless exceptional circumstances would justify such an award.
An alternate means of demonstrating the reasonableness of attorney’s fees and costs was
set forth in Bonetti v. Embarq Mgmt. Co., 715 F. Supp. 2d 1222 (M.D. Fla. 2009). In Bonetti, the
Honorable Gregory A. Presnell held:
In sum, if the parties submit a proposed FLSA settlement that, (1)
constitutes a compromise of the plaintiff’s claims; (2) makes full and
adequate disclosure of the terms of settlement, including the factors
and reasons considered in reaching same and justifying the
In this circuit, “[u]npublished opinions are not considered binding precedent, but they may be cited as persuasive
authority.” 11th Cir. R. 36-2.
2
3
From a purely economic standpoint, defendants are largely indifferent as to how their settlement proceeds are divided
as between plaintiffs and their counsel. Where a plaintiff is receiving less than full compensation, payment of fees
necessarily reduces the plaintiff’s potential recovery.
4
This potential conflict is exacerbated in cases where the defendant makes a lump sum offer which is less than full
compensation, because any allocation between fees and the client’s recovery could become somewhat arbitrary.
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compromise of the plaintiff’s claims; and (3) represents that the
plaintiff’s attorneys’ fee was agreed upon separately and 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.
Id. at 1228 (emphasis added). Judge Presnell maintained that if the matter of attorney’s fees is
“addressed independently and seriatim, there is no reason to assume that the lawyer’s fee has
influenced the reasonableness of the plaintiff’s settlement.” Id. The undersigned finds this
reasoning persuasive.
III.
ANALYSIS.
A. Settlement Amount.
This case involved disputed issues of FLSA liability, which constitutes a bona fide dispute.
Doc. No. 29 at 5. The parties are represented by independent counsel. Id. Under the Agreement,
Plaintiff is receiving $9,950.00 in unpaid wages and $9,950.00 in liquidated damages. Doc. No.
29-1 at 3. Plaintiff represents that he is receiving full compensation for his FLSA claim. Doc. No.
29 at ¶¶ 10, 15. When, as in this case, Plaintiff does not compromise his claim, the settlement is
necessarily a fair and reasonable resolution of a bona fide dispute over FLSA provisions. Lynn’s
Food Stores, 679 F.2d. at 1354; see also Natera v. Mastercorp of Tenn., Inc., No. 6:08-cv-2088Orl-22DAB, 2009 WL 1515747, at *2 (M.D. Fla. June 1, 2009) (finding “[f]ull recompense of the
[FLSA] damage claim is per se fair and reasonable”). After reviewing the Motion and Agreement,
it is RECOMMENDED that the Court find the amount of Plaintiff’s settlement to be fair and
reasonable.
B. Attorney’s fees and Costs.
Under the Agreement, Plaintiff’s counsel will receive a total of $9,500.00 in attorney’s fees
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and costs. Doc. No. 29-1 at 3. The parties represent that attorney’s fees and costs were negotiated
separately from Plaintiff’s recovery. Doc. No. 29 at ¶ 17. The settlement is reasonable on its face,
and the parties’ representation adequately establishes that the issue of attorney’s fees and costs
was agreed upon separately and without regard to the amount paid to Plaintiff. See Bonetti, 715 F.
Supp. 2d at 1228. Accordingly, pursuant to Bonetti, it is RECOMMENDED that the Court find
the Agreement to be a fair and reasonable settlement of Plaintiff’s FLSA claim.
IV.
CONCLUSION.
Accordingly, it is RECOMMENDED that:
1. The Motion (Doc. No. 29) be GRANTED only to the extent that the Court finds the
parties’ settlement is fair and reasonable;
2. The Court enter an order dismissing the case with prejudice; and
3. Direct the Clerk to close the case.
Failure to file written objections to the proposed findings and recommendations contained
in this report within fourteen 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 in order to expedite
the final disposition of this case.
Recommended in Orlando, Florida on December 20, 2016.
Copies furnished to:
Presiding District Judge
Counsel of Record
Unrepresented Party
Courtroom Deputy
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