Chavez et al v. Besie's Corp

Filing 28

MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 4/3/2015. (kw2s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Divisioll

*
EVEL YN CHAVEZ, et al.
Plaintiff,

*

v.

Case No.: G.JH-14-1338

*

BESIE'S CORP.

*
Defendant.

*
*

*

*

*

*

*

*

MEMORANDUM

*

*

*

*

*

*

*

OPINION

Plaintiffs Evelyn Chavez, Karla Lizama, Jerry Calderon Argueta. Dinora Melendez,
Brenda Campos, and Angelica Albizurez tiled this action against their former employer Besie's
Corp., seeking damages and other relief for Besie's Corp.'s alleged failure to pay them minimum
and overtime wages in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.c. ~ 201 el
seq., the Maryland Wage and Hour Law ("MWHL"), Md. Code, Lab. & Emp!. Article ("LE") ~
3-401 el seq., and the Maryland Wage Payment and Collection Law ("MWPCL"), Md. Code, LE
~ 3-501 el seq. ECF No. I. Besie's Corp. answered the Complaint and tiled a Motion to Dismiss
Plaintiffs' MWPCL claims. See ECF Nos. 8 & 9. The Court granted, in part, and denied, in part,
the motion. See ECF Nos. 18 & 19. At the Rule 16 Scheduling Conference, the paJ1ies requested
an opportunity to conduct limited discovery prior to the entry of a formal Scheduling Order in an
etfort to resolve the case while limiting litigation costs. The request was granted. See ECF No.
22.
The parties now jointly move for approval of a settlement agreement and dismissal of the
action with prejudice. ECF No. 27. The Court has reviewed the Complaint, the Answer filed by

Defendant, the Motion to Dismiss MWPCL claims and the Opposition thereto, the parties' Joint
Motion to Approve Settlement Agreement and to Dismiss Action with Prejudice, the Settlement
and General Release Agreement, and the Itemization of Attorneys' Fees. ECF Nos. I, 8-12, &
27. For the reasons explained below, the Court finds that a bonafide dispute exists regarding
liability under the FLSA, the settlement agreement is a fair and reasonable compromise of the
dispute, and the attorney's fees are reasonable. See Lynn's Food SIOl'es. Inc. v. Uniled Slales, 679
F.2d 1350, 1355 (lIth Cir. 1982); Lopez v. NT!. LLC, 748 F.Supp. 2d 471,478 (D. Md. 2010):
Leigh v. Bol1ling Croup. LLC, DKC-I0-0218, 2012 WL 460468 at

* 4 (D.

Md. Feb. 10,2012).

Therefore, the Court will GRANT the motion and instruct the clerk to CLOSE this case.
I. FACTUAL BACKGROUND
Plaintiffs worked for the Defendant at one of its three restaurants (the Gaithersburg,
Maryland location). ECF NO.3 at ~~ 1-2 & ECF No. 27-1 at 1. The following chart represents
the total hours (with a separate column representing overtime hours) that each Plaintiff claims to
have worked during the three years preceding this lawsuit, the minimum wages that each
Plaintiff believes they should have been paid, and the overtime wages that each Plaintiff believes
they should have been paid. ECF NO.3 at ~ 5-8.

Plaintiff

Total Hours

Overtime I-Iours

Minimum
Wages Earned

Overtime
Wages Earned

Melendez

2,420

660

$17,545.00

$2.393.00

Albizurez

1.440

680

$10,440.00

$2.465.00

Chavez

3,075

507

$22,294.00

$1,838.00

2

Campos

4,716

1,890

$34,191.00

$6,851.00

Argueta

2,400

400

$17,400.00

$1,450.00

Lizama

1,440

160

$10,440.00

$580.00

Plaintiffs agree that Defendant paid some of the Plaintiffs a small amount of money during the
course of the employment, but Plaintiffs believe that the amount did not collectively exceed
$5,000.00 in addition to tips. Id. at ~ 10-11.
II. DISCUSSION
A. FLSA Settlements
The FLSA does not permit settlement or compromise over alleged FLSA violations
except with (1) supervision by the Secretary of Labor or (2) a judicial finding that the settlement
reflects "a reasonable compromise of disputed issues" rather than "a mere waiver of statutory
rights brought about by an employer's overreaching." Lynn's Food Stores. Inc., 679 F.2d at
1354; see also Lopez, 748 F. Supp. 2d at 478 (explaining that courts assess FLSA settlements for
reasonableness). These restrictions help carry out the purpose of the FLSA, which was enacted
"to protect workers from the poor wages and long hours that can result from significant
inequalities in bargaining power between employers and employees." Duprey v. Scolls Co. LLC,
PWG-13-3496, 2014 WL 2174751 at *2 (D. Md. May 23, 2014). Before approving an FLSA
settlement, courts must evaluate whether the "settlement proposed by an employer and
employees ... is a fair and reasonable resolution of a bonafide dispute over FLSA provisions."
Lynn's Food Stores. Inc., 679 F.2d at 1355 (italics not in original). To do so, courts examine
whether there are FLSA issues actually in dispute, the fairness and reasonableness of the

3

settlement, and the reasonableness of the attorney's fees. Duprey, 2014 WL 2174751 at *2
(internal citations omitted). "These factors are most likely to be satisfied where there is an
'assurance of an adversarial context' and the employee is 'represented by an attorney who can
protect [his] rights under the statute.'" ld. (citing Lynn's Food Stores, Inc., 679 F.2d at 1354).
B.

BOlla

Fide Dispute

In determining whether a bonafide dispute over FLSA liability exists, the Court reviews
the pleadings, any subsequent court filings, and the parties' recitals in the proposed settlement.
Lomascolo v. Parsons BrinkernoffJ. Inc., 1:08cvI31O, 2009 WL 3094955 at * 10 (E.D. Va. Sept.
28, 2009). Here, the parties indicate that they disagree over the number of hours Plaintiffs
worked, whether Defendant would receive a "tip credit" under the FLSA provisions, whether
certain Plaintiffs would be precluded from receiving damages due to their undocumented worker
status, whether Defendant's failure to pay Plaintiffs on time was due to Defendant's actions or
Plaintiffs' actions, and whether Defendant acted in good faith. See ECF No. 27-1 at 3-6; see also
Lopez, 748 F.Supp. 2d at 478 ("[FLSA settlements] reflect many factors that may be in playas
the parties negotiate, including disagreements over the number of hours worked by the plaintin~
the plaintiffs

status as an exempt employee, or the defendant's status as a covered employer.").

Specifically, both parties agree that the lack of any written time sheets created uncertainty
surrounding the amount of hours worked, payments owed, and tips received for the Plaintiffs.
See ECF No. 27 at 4-6. Thus, recognizing that this settlement is taking place at an early stage in
this litigation, the Court finds that a bonafide dispute exists as to Defendant's liability under the
FLSA.

4

C. Fair & Reasonable
In determining whether a settlement of FLSA claims is fair and reasonable, the
Court may consider the following:
(1) 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 class counsel and class members after
receiving notice of the settlement whether expressed directly or
through failure to object; and (6) the probability of plaintiffs'
success on the merits and the amount of the settlement in relation
to the potential recovery.
Lomasc%,

2009 WL 3094955 at * 10. Here, the parties have propounded and responded to

limited discovery requests. See ECF No. 27-1 at 2-3 & ECF No. 22. Given the current stage of
the litigation, significant expenses would be incurred if the parties continued with formal
discovery, dispositive motions, and possibly trial. See, e.g., Saman v. LBDP, DKC-12-1 083,
2013 WL 2949047 at *3 (D. Md. June 13,2013). Additionally, there has been no evidence to
suggest any fraud or collusion in the settlement, and counsels' filings demonstrate their
competence and experience. See ECF No. 27-1 at 2 ("Over a span of a few months. [P]laintifTs[]
presented settlement demands and counter-demands, and [D]efendant responded with offers and
counter-offers.").

"[Plaintiffs'] counsel, Mr. Batt, is a named partner at the firm of Sullivan,

Talbott, & Batt and has practiced in the area of labor and employment law in Maryland for more
than 20 years ....

[and D]efendant's counsel, Mr. Bohn, is a named partner in the firm of Bohn

& Kouretas, PLC, and has practiced in the area of labor and employment law in Maryland for

more than 15 years." Jd. at 6-7.
Finally, the settlement agreement entitles Plaintiffs to $65,992.76. See ECF No. 27-2.
According to the parties, this compensates Chavez and Campos for all unpaid minimum and

5

overtime wages and provides liquidated damages at 60% of unpaid wages and overtime. See
ECF No. 27-1 at 4. It compensates the remaining Plaintiffs-Lizama,
Galindo-for

Argueta, Melendez, and

the difference between the hours Plaintiffs claimed to have worked and the hours

Defendant claims to have previously paid. Id.
Although the settlement agreement contains a general release of claims beyond those in
the Complaint, and a general release can render an FLSA settlement agreement unreasonable, the
Court is not required to evaluate the reasonableness of the settlement as it relates to non-wagedispute claims if the employee is compensated reasonably for the release executed. Duprey, 2014
WL 2174751 at *4. The Court finds that $65,992.76 is reasonable for the release executed.
D. Attorney's

Fees

Traditionally, "[i]n calculating an award of attorney's fees, the Court must determine the
lodestar amount, defined as a 'reasonable hourly rate multiplied by hours reasonably expended. ,.,
Lopez v. Jl.7EL Const. G'7J., LLC, 838 F. Supp. 2d 346, 348 (D. Md. 2012) (citing Grissom v. The
Mills CO/p., 549 F.3d 313, 320-21 (4th Cir. 2008); Plyler v. Evall, 902 F.2d 273, 277 (4th Cir.
1990)). An hourly rate is reasonable if it is "in line with those prevailing in the community for
similar services by lawyers of reasonably comparable skill, experience and reputation." Blum v.
Stenson, 465 U.S. 886, 890 n.ll (1984).
Here, Mitchell I. Batt represents Plaintiffs. He spent 58.25 hours on this case at the rate of
$375.00 per hour, resulting in $21,843.75 in legal fees. See ECF No. 27-4. Mr. Batt also incurred
$778.68 in costs. Defendant has agreed to pay $21,843.75 in legal fees and $778.68 in costs in
addition to the $65,992.76 paid to Plaintiffs. See ECF No. 27-2. Mr. Batt's $375.00 hourly rate is
consistent with this Court's rules and guidelines for determining attorney's fees, which notes a
guideline range of $300.00-$475.00

per hour for attorneys with twenty or more years of

6

experience. See Loc. R. App. B.3. Further, Mr. Batt worked with six plaintiffs in this case. He
performed calculations based on Plaintiffs' claims, sent a demand letter to Defendant, drafted
and filed the Complaint in April 2014, drafted an opposition to Defendant's motion to dismiss,
propounded discovery on Defendant, drafted responses to Defendant's written discovery
requests, met with Plaintiffs on several occasions, engaged in settlement discussions with
Defendant, and assisted in drafting the settlement agreement. See ECF No. 27-4. Mr. Batt also
did not include a number of smaller activities that he engaged in for this case, such as phone calls
and email correspondences, when he calculated the hours he worked on this case. See ECF No.
27-1 at 7. The time expenditure of 58.25 hours is reasonable given the work completed. In light
of the facts of this case and the disputes explained above, the COUl1finds the attorney's fees to be
fair and reasonable under the lodestar approach.
III. CONCLUSION
Upon review of the parties' submissions and after considering the relevant factors
enumerated by the Lomascolo court, the settlement appears to be a fair and reasonable
compromise of a bonafide dispute. The parties agreed to settle at an early stage of the litigation
to avoid costs of further litigation and discovery. The settlement is a product of arms-length
negotiation between parties represented by experienced counsel. Therefore, the Joint Motion to
Approve Settlement Agreement and to Dismiss Action with Prejudice, ECF No. 27. is
GRANTED.
A separate Order shall issue.

Dated: April 3, 2015
GEORGE J. HAZEL
United States District Judge

7