Hernandez et al v. Choi et al
Filing
38
MEMORANDUM OPINION. Signed by Judge Theodore D. Chuang on 11/13/2014. (aos, Deputy Clerk)
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
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