Hernandez et al v. Choi et al

Filing 38

MEMORANDUM OPINION. Signed by Judge Theodore D. Chuang on 11/13/2014. (aos, Deputy Clerk)

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UNITED STATES DISTRICT COURT IJISTRICT OF ~IARYLAND JOSE ANTONIO HERNANDEZ, el al., PlaintitTs, v. Civil Action No. TDC-I3-3567 DANIEL B. CHOI, el al., Defendants. MEMORANDUM OPINION Pending before the Court is the parties' Joint Motion for Approval of Settlement. ECF No. 36. The parties assert that the Court should approve their agreed-upon settlement, consisting of back wages, liquidated damages, and attorney's fees, resolving the allegations in the Complaint arising under the Fair Labor Standards Act ("FLSA"), 29 V.S.c. SS 201 el seq. (2012). The Court has reviewed the Motion and held a hearing by telephone on the Motion on October 30, 2014. See ECF No. 37. For the reasons set forth below, the Motion is GRANTED and the settlement is APPROVED. BACKGROUND On November 25, 2010, Plaintiffs Jose Antonio Hernandez and Andelino De Leon filed a Complaint against Daniel B. Choi, Pyoung R. Choi, 01'1 International. Inc. ("DTI"). East Greenhill, Inc., Green World Enterprises. Inc .• Metro Greenfield LLC, and AI1-Sea~ons Food Corporation (collectively, "Defcndants") alleging that. v•. ile working for one or more of the h Defendants as grocery clerks at a Bestway Supermarket in Falls Church. Virginia, they had not received overtime pay (one and one-halftimes their hourly rate) for hours worked in excess of 40 hours per week, in violation of FLSA. Compl. 1,~16-19, ECF No.1. On April 23, 2014, Hernandez, De Leon, and a third plaintiff, Edgar Domingo Chitay (collectively, "Plaintiffs"), filed an Amended Complaint adding allegations that Chilay had not been paid overtime during his work as a grocery clerk for Defendants at a Beshvay Supermarket in Adelphi. Maryland. Am. Compl. ~ 18-27, ECF No. 18. Both the Complaint and the Amended Complaint asserted that the lawsuit was brought as a collective action under 29 U.S.c. * 216(b) on behalf of the class of potential litigants ""'ho had worked for Defendants without receiving overtime pay. ld. 1,\ 29-32. At an Initial Status Conference on June 30. 2014, the parties requested. and the Court agreed, that discovery would proceed in two phases. \vith a three-month first phase of discovery relating to collective action ccrtiJication only, to be follo",'cd by the tiling of a class ccrtification motion. See Revised Scheduling Order, ECF No. 28. The second phase of discovcry, rclating to all other discovery, would not commence until a decision on the collective action certification question had been made. During the first phase of discovery, interrogatories and document requests, to which Defendants responded. Plaintiffs propounded They also conducted depositions of Defendants Daniel Choi and Pyoung Choi. On September 2, 2014, Defendants filed a Motion for Partial Summary Judgment as to Plaintiff Chitay in which they argued that documentary evidence, specifically biometric timecards and pay ledgers, established that Chitay was properly compensated for his overtime work. Mot. Summ. 1. ~ 3, ECF Nos. 31, 32. Plaintiffs opposed the Motion. ECF No. 33. On October 3, 2014, after the close of the first phase of discovery, the parties filed, and the Court granted, a Joint Motion to Stay All Deadlines to allow for a period of settlement negotiations. Joint Mot. to Stay, ECF No. 34, 35. On October 21, 2014, the parties filed a Joint 2 Motion for Approval of Settlement in \\'hich they reported that the parties had conducted settlement discussions beginning on or about August 15.2014. Joint Mot. Approval Settlement'i 14, ECF No. 36. After initial discussions did not lead to a resolution, the parties restarted settlement negotiations on October 8, 2014 and exchanged relevant infonnation. Id. 'i~ 14-15. The parties then reached a settlement consisting of the following: I. Hernandez and De Leon would each receive (a) $15.125.48 in gross wages, minus applicable taxes and deductions; and (b) $15.125.48 in liquidated damages; 2. Chitay would receivc (a) 15,102.90 in gross wages. minus applicable taxes and deductions; and (b) $15,102.90 in liquidated damages; 3. Dcfcndants would pay $90,000 to Plaintiffs' counsel for attorney's fees and costs. 1d.'.j15. DISCUSSION I. Legal Standard Congrcss enacted the FLSA to protect workers from substandard wages and oppressive working hours. Barrentine v. Ark.-Best Freight Sys., 450 U.S. 728, 739 (1981). Because of the significant incqualities in bargaining power bctween employers and employees. the statute's provisions are mandatory and generally are not subject to bargaining, waivcr. or modification by contract or settlement. See Brooklyn Sav. Bank \'. O'Neil, 324 U.S. 697, 706 (1945). A court- approved stipulated judgment or settlement is an exception to that rulc. See D. A. Schulte, Inc. v. Gangi, 328 U.S. 108, 113 n.8 (1946); Lynn's Food Stores. Inc. v. United States, 679 F.2d 1350, 1355 (lIth Cir. 1982). Such a settlement may be approved provided that it reflects a "reasonable compromise of disputed issues" rather than "a mere waiver of statutory rights brought about by 3 an employer's overreaching." Lynn's Food Stores, 679 F.2d at 1354; accord Saman v, LBDP, Inc., No. DKC-12-1083, 2013 WL 2949047, at *2 (D. Md. June 13,2013). Although the United States Court of Appeals for the Fourth Circuit has not specifically identified the factors to be considered in approving FLSA settlements, district courts in this circuit typically employ the considerations set forth by the United States Court of Appeals for the Eleventh Circuit in Lynn's Food Stores. See, e.g., Lopez ". NTI. LLC, 748 F. Supp. 2d 471, 478 (D. Md. 2010); see also Somon, 2013 WL 2949047 at *3; Hoffman v. First Student. In,'., No. WDQ-06-1882, 2010 WL 1176641, at *2 (D. Md. Mar. 23, 2010). An FLSA settlement generally should be approved if it reflects ;,'a fair and reasonable resolution of a bonafide dispute over FLSA provisions." consideration Lynn's Food Stores, 679 F.2d at 1355. The analysis includes of (1) whether there are FLSA issues actually in dispute; (2) the fairness and reasonableness of the settlement; and (3) the reasonableness of the attorney's fees, if included in the agreement. Saman, 2013 WL 2949047, at *3. These factors arc most likely to be satisfied where there is an "assurance of an adversarial context'" and the employees are "represented by an attorney who can protect their rights under the statute." Lynn's Food Stores, 679 F.2d at 1354. II. FLSA Settlement A, Bona Fide Dispute The first step in analyzing the settlement agreement is detennining whether there are FLSA issues that are "actually in dispute." Saman, 2013 WL 2949047 at *3. In the Joint ~totion for Approval of Settlement, the parties state that "Defendants deny all of the allegations in the Complaint, assert that Plaintiffs were properly paid for all hours worked, including any overtime hours, assert that their pay practices were adopted and implemented in good faith and Defendants did not believe that its pay practices violated the FLSA." Joint Mot. Approval Settlement ~ 9. 4 They further claim that "their records reflect all overtime hours worked for Plaintiffs and that for all hours listed. Plaintiffs were paid for overtime, at the appropriate rate. ,- fd. 10. With respect to Hernandez and De Leon, Defendants asserted, during the hearing on this Motion, that they are actually salaried employees who are exempt from FLSA requirements, and that Defendants' records, including biometric timecards that use thumbprint scans to establish entry and exit times from the worksite, establish that Hernandez and Dc Leon did not work as many hours as they have claimed. ("Hearing"), Hernandez I'. Hearing on Joint Motion for Approval of Settlement Choi, No. TDC-13-3567, at 9:09:50 a.m. (D. Md. Oct. 30, 2014). Defendants also have not conceded that any violation \••. \••. as illful, which would need to be established in order to allow for recovery of three years of back overtime pay rather than two years, because there is a three-year statute of limitations on ",,;lIful violations ofFLSA and only a two-year statute of limitations on other violations of FLSA. See 29 U.S,c. ~ 255(a). With respect to Chitay, Defendants have filed a Motion for Summary Judgment as to Plaintiff Chitay, in \\'hich they assert that the biometric timecards and a pay ledger that lists the amount paid each week and is signed by employees, establish that Chitay was always paid the proper amount, including overtime, at the hourly pay rates he claims. Defs.' Mem. in Supp. Mot. Partial Summ. J. as to PI. Chitay at 3-5, ECF No. 31-1. Chitay counters by asserting that these records indicate that the hourly pay rates that he had been told applied to him were actually incorrect, and that his pay did not correlate to consistent hourly pay rates. Mem. Opp. Defs: Mot. Partial Summ. J. as to PI. Chitay ("Chitay Opp.") at 3-4, 9-11, ECr No. 33; Chitay AlT. ~ 7, ECF No. 33-1. The dispute is not easily resolved in part because Defendants paid their employees with a combination of a paycheck and cash pa}ments. Chitay Opp. at II. Chitay Aff. 5 'i 3. Thus, there are genuine disputes with respect to all Plaintiffs that support the concept of a negotiated settlement of FLSA claims. B. Fairness and Reasonableness In assessing the fairness and reasonableness of the settlement agreement, the following factors should be considered: (I) the extent of discovery that has taken place; (2) the stage of the proceedings, including the complexity, expense, and likely duration of the litigation; (3) the absence of fraud or collusion in the settlement; (4) the experience of counsel who have represented the plaintiffs; (5) the opinions of counsel; and (6) the probability of plaintifTs' success on the merits and the amount of the settlement in relation to the potential recovery. Suman, 2013 WL 2949047, at *3 (quoting Lomascolo v. Parsons BrinckerhojJ, Inc., No. 1:08cv1310 (AJT/JFA), 2009 WL 3094955, at '10 (E.D. Va. Sept. 28, 2009)); see also Poulin v. Gen. Dynamies Shared Res .. Ine., No. 3:09-<:v-{)0058, 2010 WL 1813497, at 'I n.1 (W.O. Va. May 5, 20 I 0). Upon consideration of the settlement agreement and the underlying facts, the Court finds that this agreement is fair and reasonable. The primary factor supporting this conclusion is the probability of Plaintiffs' success on the merits and the amount of the settlement in relation to the potential recovery. Plaintiffs Hernandez and De Leon each would receive a total of $30,250.96, consisting of $15,125.48 in back wages and $15,125.48 in liquidated damages. Joint Mot. Approval Settlement' FLSA, liquidated damages consist of 100 percent of back pay. 29 U.S.c. 15. Under * 216(b) (stating that liability for unpaid overtime compensation includes "an additional equal amount as liquidated damages"). In this case, the amount of back wages represents a significant percentage of the potential recovery. Plaintiffs alleged that both Hernandez and De Leon worked for Defendant DTI, were paid $14.58 per hour, and worked, on average, 72 hours per week. Am. Compl. "116, 6 19-20,22. Hernandez worked for DTI from March 1990 until June 3, 2012. Id. ~ 16. De Leon \"locked for DTI from 2001 until June 3, 2012. Id. Because of the statute of limitations, see 29 U.S.C. S 255(a), Hernandez and De Leon acknowledged that the period of employment for which they could seek to recover overtime wages is limited to November 25, 2010 (three years prior to the filing of the Complaint) to June 3, 2012. Hearing at 9:06:45 a.m. Rased on these facts, the available recovery for each of these Plaintiffs would be approximately $18,527 in back wages, calculated by multiplying 50 percent of his hourly rate ($7.29) by the number of overtime hours per week (32) and the number of weeks in this time period (79.42).1 Thus. the settlement provides them with approximately 82 percent of the potential recovery.2 Given the bona fide disputes at issue in this case, see supra Part II. A.. this settlement for a high percentage of the potential recovery is fair and reasonable. Chitay \,,'ould receive a total of $30,205.81, consisting of $15.1 02.90 in back wages and $15,102.91 in liquidated damages. Plaintiffs alleged that Chita)' worked for Defendant East Greenhill LLC from approximately October 2008 until February 28. 2014. and \vorked on average 60-70 hours per week. Am. Compl. ~~ 20, 25. Plaintiffs alleged that Chitay wa<i paid $7.25 hours through October 6.2013, $7.88 per hour from that date until October 20. 2013. and $8.15 per hour from that date until October 27. 2013. atter which Defendants paid overtime. Am. Comp!. ~'I 23-25. As with Hernandez and De Leon. the statute of limitations narrows the Because the parties did not provide specific calculations of Plaintiffs' potential recovery. the approximate calculations provided here are those of the Court, based on the figures provided in the Motion. During the hearing on the Motion, the Court verified that its calculations were generally consistent with the parties' analysis. 1 2 In the absence of a finding of willfulness, the statute of limitations would bar an additional year's worth of unpaid overtime wages, resulting in a potential recovery of only $6,397. See 29 u.s.c. ~ 255(.). 7 potential recovery to overtime wages earned from April 23, 20 It (three years prior to the filing of the Amended Complaint adding Chitay as a plaintitl) to February 28. 2014. Based on these facts, the available recovery for Chita)' would be approximately $11,912 in back v.'ages, calculated by multiplying 50 percent of his hourly rate by the number of weeks worked under each hourly rate and by the average number of overtime hours per week (25). Thus, the settlement arguably provides Chitay with more than the maximum potential recovery of back wages.) During the hearing on this Motion. the parties explained that. because Chita)' worked in Maryland, they recognized that he potentially could seek treble damages in a separate action under the Maryland Wage Payment Collection Law, Md. Code Ann., Lab. & Empi * 3-507.2(c) (West 2014), so they viewed his total potential recovery as three times that amount, Hearing at 9:07:32 a.m., or approximately $35,736. By providing him with wages and double damages as provided under FLSA totaling $30,206. the settlement effectively gives Chitay approximately 85 percent of his total potential recovery. including for unfiled state claims. Particularly given that there remains a bona fide dispute ""'hether Chitay is owed back overtime wages at all. see supra Part II. A., this amount of potential recovery is fair and reasonable. The other live factors also support a finding of a fair and reasonable settlement. The settlement was negotiated after the completion of a first phase of discovery focused the issue of c1a'is certification. which included interrogatories and document requests to ",'hich Defendants responded, as well as depositions of two Defendants. Daniel Choi and Pyoung Choi. discovery revealed Defendants' This time and pay records. which arguably raised questions about Plaintiffs' claims. With the possibility of a motion for a collective action certilication. a second ) Moreover, if the violations were not deemed willful, the statute oflimitations would prevent an additional year of overtime wages. resulting in a potential recovery of only approximately $5,012. 8 phase of discovery, and litigation of all claims leading up to a trial, there would be significant time and expense to continued litigation, which provides further support for the reasonableness of a settlement. The agreement was negotiated by experienced counsel over at least two sessions over a three-month period from August to October 2014 and included consideration of the infonnation and documents exchanged among counsel. Joint Mot. Approval Settlement ~~ 1415. Counsel for both parties have recommended this settlement to their clients. Mot. Joint Settlement f123; Hearing at 9:23:35 a.m. Finally, there is no evidence of fraud or collusion in the settlement. See Lomascolo v. Parsons BrinckerhojJ. Inc., NO.1 :OScv1310 (AJT/JFA), 2009 WL 3094955, at *12 (E.D. Va. Sept. 28, 2009) ("There is a presumption that no fraud or collusion occurred between counsel, in the absence of any evidence to the contrary."). Thus, the Court finds the settlement to be fair and reasonable. C. Attorney's Fees If the proposed settlement includes a proVISion for payment of attorney's fees, the reasonableness of the award must also "be independently assessed, regardless of whether there is any suggestion that a conflict of interest taints the amount the wronged employee recovers under a settlement agreement." 10-2261,2011 Saman, 2013 WL 2949047, at *3 (quoting Lane v, Ko-Me. LLC, No. WL 3880427, at *3 (D. Md. Aug. 31, 2011)). In this case, the parties negotiated attorney's fees separately from the amount to be paid to Plaintiffs and agreed on an amount of $90,000. Joint Mot. Approval Settlement 17. To assess this amount, the Court applies the traditional lodestar methodology factors, beginning ""ith a lodestar calculation defined as the number of hours "reasonably expended" by counsel multiplied by a "reasonable hourly rate." Robinson v. Equifax Info Sm's .. LLC, 560 F.3d 235, 243 (4th Cir. 2009); Saman, 2013 WL 2949047, at *6. An hourly rate is reasonable if it is "in line with those prevailing in the 9 community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Blum v. Stenson, 465 U.S. 886, 890 n.II (1984). In Appendix B to the Local Rules of the United States District Court for the District of Maryland,4 this Court has established rates that are presumptively reasonable for lodestar calculations. See, e.g., Poole ex reI. Elliott v. Textron. Inc., 192 F.R.D. 494, 509 (D. Md. 2000). Plaintiffs' counsel represents that he expended approximately 210 hours on this case. He further represents that his hourly billing rate is $425 per hour, which is at the high end of the guidelines set by this Court for an attorney of his experience, consisting of 17 years as a member of the Court of Appeals of Maryland. Joint Mot. Approval Settlement .~ 17; see Local Rules, Appendix B (D. Md. 2014) (setting a range of S275-425 per hour for attorneys with 15-19 years of experience). Plaintiffs' counsel acknowledges that he had an associate with a lower billing rate assist him \\-ith the case, but represented to the Court that the associate's hours would have been additional to these calculations. Hearing at 9:18:50 a.m., 9:22:20 a.m. Thus, a lodestar calculation would be $89,250. He also reports approximately $8,000 in costs, including the cost of the two depositions, which required the retention of Korean interpreters, the filing fee, the cost of multiple attempts at service of process, and travel expenses. ld. at 9:16:40 a.m. PlaintitTs' total attorney's fees and costs would therefore be $97.250. Notably, the agreed upon figure for attorney's fees, $90.000, is approximately the same as the total amount to be provided to the three Plaintiffs, $90,707.73. Put another way, the attorney's fees and costs would be approximately 50 percent of the total settlement. Plaintiffs' counsel has acknovdedged that his fee arrangement is a 40 percent contingency fee, but that if attorney's fees arc awarded by the Court and actual attorney's fees awarded meet or exceed 40 4Amilable at http://www.mdd.uscourts.gov/localrulesiLocaIRulcs.pdf. 10 percent of the total recovery, Plaintiffs need not contribute to attorney's fees out of their portion of the recovery. Although Plaintiffs' counsel has not provided detailed billing records, he represented to the Court that the 210 hours represent his actual \,,:ork on this case. Jd. at 9:19:30 a.m. These hours included preparation and filing of the Complaint and Amended Complaint, extensive research into the nature and relationship of the various corporate entity defendants. preparation of a response to a Motion to Strike, preparation of interrogatories and documents requests, review of documents received. preparation for and conduct of t\••.. depositions, o interviews of potential class members, preparation of a Memorandum Motion for Partial Summary Judgment, and settlement negotiations. in Opposition to the Jd at 9:14:44 a.m. Because this ease has been actively litigated for almost a year, involved a collective action claim. included depositions and other discovery, and required the research and drafting of memoranda responding to two substantive motions. the Court accepts Plaintiffs' counsel's representations at the hearing regarding attorney's fees, as described above. including that the actual attorney's fees and costs were approximately $97.000. Based on these calculations. the proposed settlement figure of $90,000 for attorney's fees and costs is deemed to be fair and reasonable. CONCLUSIO:'i For the foregoing reasons, the Joint Motion for Approval of Settlement is GRANTED. ECF No. 36. A separate Order follows. Date: November 13,2014 TIIEODORE D. ell United States District Ju gc II

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