Pitts et al v. Levy Family Associates LLC et al

Filing 24

MEMORANDUM OPINION. Signed by Judge Peter J. Messitte on 4/27/2015. (jf2s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

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.FllED
lODGED

,ENTERED
.RECEIVED

APR 2 7 2015

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CHRISTINE PITTS, ET AL.,
Plaintiffs

BY

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v.
LEVY FAMILY
ASSOCIATES, LLC, ET AL.

AT GREENBELT
CLERK U,S. DISTRICT COURT
DIST
OF MARYLAND
DEPUT\'

Civil No. pJM 14-1682

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Defendants

MEMORANDUM

OPINION

Christine Pitts, Brenda Fortune, Nancy Rivas, Sylvia Walker, and Rosa Cruz
("Plaintiffs") have sued Kash King, LLC, Levy Family Associates, LLC and Mitchell Levy
("Kash King"), alleging violations of the Maryland Wage Payment and Collection Law
("MWPCL"), Md. Code Ann., Lab. & Empl.
("FLSA"), 29 U.S.C.

SS 206,207.

SS 3-501

et seq., and the Fair Labor Standards Act

Plaintiffs and Kash King have now reached a settlement, and

ask for the Court to approve the settlement and dismiss with prejudice all claims in the
Complaint. For the reasons that follow, the Court GRANTS the Joint Motion for Settlement,
ECF No. 19, and DISMISSES WITH PREJUDICE the remaining counts of the Complaint,
ECF No. I, as to all Defendants.

I.
Factual and Procedural Background
Kash King LLC and Levy Family Associates LLC are businesses owned and operated by
Mitchell Levy that provide check cashing services in Maryland. The Plaintiffs are all former

."
employees of Kash King who worked as either cashiers/tellers or lottery clerks at one or more of
the Defendants' check cashing stores in Maryland.
Plaintiffs allege that Kash King failed to pay each plaintifftheir

final paycheck following

their separations from employment. They also claim that Kash King failed to pay wages and
overtime for hours worked off the clock at the close of the business day. They also claim that
Kash King made improper deductions from their paychecks. Christine Pitts also alleges that
Kash King misclassified her as an exempt employee, and failed to pay her overtime as a result.
Plaintiffs filed the Complaint in May 2014. ECF No. I. After an exchange of informal
discovery, Kash King recognized that certain claims related to final paychecks and unpaid
overtime hours were meritorious

1 Accordingly,

on August 27, 2014, Kash King made payments

to each of the plaintiffs for unpaid wages or overtime, and for liquidated damages in an amount
equal to the unpaid wages or overtime. Kash King asserts that these underpayments were not the
result of deliberate actions, but rather administrative or ministerial error.
Kash King answered the Complaint on September 5, 2014. ECF No. 10. The parties filed
various motions to extend deadlines to facilitate the parties' settlement negotiations. On January
1,2015, the parties submitted a Joint Motion for Settlement, ECF No. 19, and filed a supplement
to that Motion on February 9, 2015. ECF No. 21. At the direction ofthe Court, ECF No. 22, the
parties filed a further supplement to the Motion on April 15,2015. ECF No. 23.
II.
Standard of Review
Congress enacted the FLSA to protect workers from the poor wages and long hours that

I Kash King admitted that wages for .11 hours were not included in Ms. Araujo's final paycheck, and that wages for
29.64 hours were not included in Ms. Rivas's final paycheck. Kash King asserts that as to the other three plaintiffs,
the final paychecks included pay for more hours than the plaintiffs actually worked during the relevant pay period:
1.18 hours for Ms. Pitts, 8.3 hours for Ms. Fortune, and .07 hours for Ms. Walker. See ECF No. 21. at 2.

2

may result from significant inequalities in bargaining power between employers and employees.
To that end, the statute's provisions are mandatory and generally not subject to bargaining,
waiver, or modification by contract or settlement.
697, 706 (1945).

Court-approved

See Brooklyn Sav. Bank v. 0 'Neil, 324 U.S.

settlement is an exception to that rule, "provided 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.'''

Saman v. LBDP, Inc., 2013 WL

2949047, at *2 (D. Md. June 13,2013) (quoting Lynn's Food Stores, Inc. v. United States, 679
F.2d 1350, 1354 (1lth Cir. 1982)).
In reviewing FLSA settlements for approval, "district courts in this circuit typically
employ the considerations

set forth by the Eleventh Circuit in Lynn's Food Stores."

Saman,

2013 WL 2949047, at *3 (citing Hoffman v. First Student, Inc., 2010 WL 1176641, at *2 (D.
Md. Mar. 23, 2010); Lopez v. NTI, LLC, 748 F. Supp. 2d 471, 478 (D. Md. 2010)).

The

settlement must "reflect[] a fair and reasonable resolution of a bona fide dispute over FLSA
provisions."

Id. The Court considers (1) whether there are FLSA issues actually in dispute, (2)

the fairness and reasonableness

of the settlement in light of the relevant factors from Rule 23,

and (3) the reasonableness of the attorneys' fees, if included in the agreement.

Id. (citing Lynn's

Food Stores, 679 F.2d at 1355; Lomascolo v. Parsons Brinckerhoff, Inc., 2009 WL 3094955, at
* 10 (E.D. Va. Sept. 28, 2009); Lane v. Ko-Me, LLC, 2011 WL 3880427, at *2-3 (D. Md. Aug.
31,2011)).

3

•

to

III.

Bona Fide Dispute
In deciding whether a bonafide dispute exists as to a defendant's liability under the
FLSA, courts examine the pleadings in the case, along with the representations and recitals in the
proposed settlement agreement. See Lomascolo, 2009 WL 3094955, at * 16-17.
The parties stipulate that, after exchange of informal discovery, all other issues raised in
the Complaint either lacked merit or had undisputed merit. In particular, Kash King paid the
plaintiffs a total of $6,860.14, reflecting both amounts owed and an equal amount in liquidated
damages, for claims involving unpaid wages on final paychecks and unpaid straight time and
overtime hours. Accordingly, the parties submit that only two factual and legal disputes remain
as to Kash King's liability under the FLSA.
First, the parties dispute whether Ms: Pitts qualified as an exempt employee between May
2011 and October 2012 under either the adlilinistrative or executive exemptions to the FLSA.
The parties dispute Ms. Pitts's duties and responsibilities at Kash King; for example, whether she
was in charge of the store on a day-to-day basis, whether she was responsible for dealing with
customer and staff concerns, or whether she regularly supervised two or more individuals.
Second, the parties dispute whether Kash King's practice of making deductions from
plaintiffs' paychecks for "check cashing errors" violates the Maryland Wage Payment and
Collection Law. While the parties are unclear about precisely what constitutes "check cashing
errors," it appears from the Complaint thatKash King would charge Plaintiffs when, at the end
of their shift, there was a cash shortage or dishonored check. It is undisputed that Kash King's
employee handbook clearly indicated that ,iuch deductions would be made from paychecks. But

4

the parties dispute whether Plaintiffs' signing of the employee handbook acknowledgements
constitutes an acceptable form of "express authorization" under the MWPCL.
In light of the foregoing, the Court concludes that a bona fide dispute exists as to Kash
.

.

King's liability under the FLSA based on Ms. Pitts's status as an exempt employee. The Court
finds this dispute genuine, whose resolutiOJ; would depend on both further factual development
as well as rulings oflaw.
The parties appear to argue that the dispute regarding Kash King's practice of making
deductions from plaintiffs' paychecks is only a dispute about Kash King's liability under the
MWPCL. Indeed, Plaintiffs appear to plead their improper withholding claims only as violations
of the MWPCL. Compare Compl. ~~ 101-02; 106-07 with Compl. ~~ 82-95. The Court is not
aware of any authority instructing the court to consider disputes over Iion-FLSA claims in
deciding whether an FLSA dispute is bona-fide. That said, the Court has no reason to believe that
this MWPCL dispute is anything but genuine.
IV.
Fairness and Reasonableness
If a bona fide dispute is found to exist, courts must then evaluate the fairness and
reasonableness of the settlement based on the following factors:
"(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 plaintiffs' success on the merits and the amount of the settlement in
relation to the potential recovery."
Saman, 2013 WL 2949047, at *3 (quotingLomascolo,

2009 WL 3094955, at *10).

Having reviewed the parties' submissions and after considering the relevant factors
enumerated by the Lomascolo court, the Court concludes that the Settlement Agreement is a fair
and reasonable compromise of the parties' bonafide dispute.
5

The case is settling at an early stage; indeed, the parties do not represent that any formal
discovery has taken place. In Saman, which settled at a similarly early stage, plaintiffs counsel
averred that he had the opportunity through mediation to review wage/hour records of sufficient
quantity and quality to determine the potential range of recovery in the case. See Saman, 2013
WL 2949047, at *3. On this basis, Judge Chasanow of this Court concluded that the parties had
had sufficient opportunity to obtain and review evidence, to evaluate their claims and defenses
and to engage in informed arms-length settlement negotiations. See id. (citing Lomascolo, 2009
WL 3094955, at *11). Counsel in the present case represent that they engaged in informal
discovery, and that informal discovery was sufficient for the parties to agree to dismiss certain
claims as lacking merit, and to agree that certain claims had undisputed merit. For purposes of
the one remaining FLSA dispute, any formal discovery would focus on Ms. Pitts's duties and
responsibilities at Kash King. Formal discovery as to remaining MWPCL dispute would focus on
whether or not the payroll deductions were authorized. The Court is satisfied the parties have had
sufficient opportunity to evaluate their claims and defenses as to these disputed legal and factual
issues and to engage in informed arms-length settlement negotiations.
Similarly, the Court finds no fraud or collusion in the proposed settlement, given the
experience of Plaintiffs' counsel, and the endorsement of settlement by counsel for both parties,
and the quality of the filings submitted to date.
Finally, as to the probability of plaintiffs' success on the merits and the amount of the
settlement in relation to the potential recovery, the Court is satisfied that the settlement of each
Plaintiffs claim is fair and reasonable under the circumstances. The proposed settlement is as
follows:

6

Plaintiffs' claims for unpaid wages on final paychecks and for overtime were settled and
__

Daid~on"A.ugiJst 7, 20 11,jor the actuaLllmounts owe~,. plus an equal amou~t"in li_q_u"i_d_a~te_d
2
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I
I

"

Unpaid
Wages on
Final
Paycheck

Plaintiff
Christine Pitts
Brenda Fortune
Nancy Rivas
Sylvia Walker
Rosa Araujo
Total

$
$
$
$
$
$

281.58

1.65
283.23

Unpaid
Overtime
Plaintiff
Christine Pitts
Brenda Fortune
Nancy Rivas
Sylvia Walker
Rosa Araujo
Total

$
$
$
$
$
$

5,543.68

5,543.68

August 27, 2014 Payment
Unpaid
Liquidated
Liquidated
Damages
Overtime
Damages
resulting
resulting
from Unpaid
fro~ Unpaid
Wages on
Overtime
Final
Paycheck

-

$
$
$
$
$
$

281.58

1.65
283.23

$
$
$
$
$
$

602.06
942.98
26.42
199.35
1,376.03
3,146.84

$
$
$
$
$
$

602.06
942.98
26.42
199.35
1,376.03
3,146.84

Proposed Settlement
Liquidated
Liquidated
Damages
Damages
Paycheck
resulting
resulting
Deductions
from
from Unpaid
Paycheck
Overtime
Deductions
$ 6,585.02 $ .3,292.51
$.
$ 1,719.00 $
$
859.50
453.71 $
226.86
$
$
$ "
$ 1,776.00 $
888.00
$ "
$
621.45 $
310.73
$ 11,155.18 $ 5,577.59
$
-

-

Total Amont
Paid to
Plaintiffs on
Aug. 27,
2014

$
$
$
$
$
$

1,204.12
1,885.96
616.00
398.70
2,755.36
6,860.14

Total
Settlement

$ 15,421.21
$ 2,578.50
$
680.57
$ 2,664.00
$
932.18
$ 22,276.45
Total
Recovery

"

Plaintiff
Christine Pitts
Brenda Fortune
Nancy Rivas
Sylvia Walker
Rosa Araujo
Total

$ 16,625.33
$ 4,464.46
$ 1,296.57.
$ 3,062.70
$ 3,687.54
$ 29,136.59

7

... _'

Given the potential that such FLSA claims could be asserted as to these deductions, as
well as the parties' request for "court approval ofthe entire settlement," ECF No. 19-2, at I n.l,
the Court will consider the fairness and reasonableness of the settlement as to the improper
deduction claims.
The settlement reflects the amount that each Plaintiff alleged was improperly deducted,
plus half of that amount in liquidated damages. In light of Kash King's arguments that Plaintiffs
are barred as a matter of law from recovering any deductions at all from Kash King, the Court
finds these proposed settlement amounts reasonable under the circumstances.
In sum, the settlement agreement would recover the actual amounts that each Plaintiff
alleges she is owed, plus at least some proportion of liquidated damages that would be owed
were the Plaintiffs to win on the issue at trial. The Court finds this settlement reasonable in
relation to the potential recovery in the case.

v.
Attorneys' Fees
The reasonableness of the fee award proposed in an FLSA settlement must 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." Lane, 2011
WL 3880427, at *3 (citing Dees v. Hydradry, Inc., 706 F.Supp.2d 1227,1243 (M.D. Fla. 2010».
In making that assessment, courts typically use the principles ofthe traditional lodestar method
as a guide. Id. (citing cases).
Traditionally, in 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.
Duprey v, Scotts Co. LLC, 2014 WL 2174751, at *6 (D. Md. May 23, 2014)(citing Lopez v.

9

XTEL Const. Grp., LLC, 838 F. Supp. 2d 346, 348 (D. Md. 2012». An hourly rate is reasonable
if it is "in line with those prevailing in the community for similar services by lawyers of
.

.

ieasomtbly comparable skill, experience, and reputation." Id. (citing Blum v. Stenson, 465 U.S.
886, 890 n. II (1984». In Appendix B to its Local Rules, this Court has established rates that are
presumptively reasonable for lodestar calculations. Id. (citing Poole ex rei. Elliott v. Textron,
Inc., 192 F.R.D. 494, 509 (D. Md. 2000». Plaintiffs should also provide all documentation
necessary for the Court to make a lodestar determination as to the hours reasonably expended,
including but not limited to declarations establishing the hours expended by counsel, broken
down for each task. See Saman, 2013 WL 2949047, at *7; Local Rule 109.2; Appendix B to the
Local Rules.
The Parties submit that the rates charged by Plaintiffs' counsel reflect Appendix B rates.
ECF NO.6, at 6. However, from the Court's review of Plaintiffs' counsel's billing records, it
appears that Plaintiffs' counsel in fact bills according to the 2014-2015 Laffey Matrix rates often
used by the U.S. District Court for the District of Columbia, rather than Appendix B of the Local
Rules of this Court. See ECF 23-1. Use of the Laffey Matrix results in fees above the high end of
the Appendix B rates: for example, Plaintiffs' counsel charged $2551hr for an attorney with 1-3
years of legal experience, while the Appendix B rate for an attorney with 1-5 years of legal
experience is $150-$225. Similarly, Plaintiffs

counsel charged $5201hr for attorneys with over

20 years of experience, while the Appendix B rate for an attorney with over 20 years of
experience is $300-$475.
It is unclear exactly how many hours Plaintiffs' counsel spent litigating this case.
Plaintiffs' counsel originally filed redacted billing statements indicating 169.60 hours billed.
ECF No. 21-1, at 25. At the direction of the Court, Plaintiffs' counsel supplemented their billing

10

records with the total number of hours billed by lawyers or other professionals at each billing
rate. This document indicates that Plaintiffs' counsel billed 145.8 hours, and listed an additional
39.20 hours in non-billable hours, for a total of 185 hours. ECF No. 23-1. As a result, the Court
is uncertain whether the original 169.60 hours figure included non-billable hours. The Court will
therefore assume that the parties are representing that Plaintiffs' counsel has expended 145.8
hours litigating the case.
The parties submit that Plaintiffs' counsel has incurred $39,970 in attorneys' fees, and
$572.83 in reimbursable expenses as of January 13,2015. ECF No. 212 In the settlement, the
parties have agreed to attorneys' fees and costs to $27,723.55, or approximately 69% of
Plaintiffs' counsel's claim.
The Court, in its discretion, is satisfied that the settlement amount of $27,723.55 for
145.8 hours expended by Plaintiffs' counsel are reasonable, especially in light of the number of
plaintiffs involved in the case, and the presence of multiple types of claims (underpayments,
overtime, and improper deductions) requiring investigation and research. Plaintiffs' counsel's
tasks included client intake, preparing a complaint, reviewing documents provided by Kash
King, negotiating the settlement, and preparing the Joint Settlement Motion. The settlement of
$27,723.55 in attorneys' fees and costs represents approximately 69% of the $39,970 in fees and
costs incurred by Plaintiffs, a reduction thdt reasonably reflects the risks associated with taking
the case to trial. In light of the settlement reduction, the Court is satisfied with Plaintiffs'

In Plaintiffs' counsel's latest submission to the Court, the attorneys' fees incurred is listed as $44,495.50 for
145.80 billable hours. ECF No. 23-1. It seems likely that this increased amount offees relative to the $39,970 in fees
contained Plaintiffs' counsel's initial submission reflects additional work performed after January 13,2015.

2

II

.

,.

counsel's use of Laffey Matrix rates, rather than Appendix B rates.3 Accordingly, the Court finds
the attorney fee award of$27,723.55

in the proposed settlement to be reasonable.
VI.
Conclusion

For the foregoing reasons, the Court GRANTS the Joint Motion for Settlement and
DISMISSES WITH PREJUDICE all remaining counts of the Complaint as to all Defendants.
A separate Order will ISSUE.

./ lsI
ETER J. MESSITTE
D TATES DISTRICT JUDGE

. 7.---'7

April_,2015

3 Based on Plaintiffs' counsel's latest submission to the Court, ECF No. 23-1, the difference in this case between the
total billable hours under Laffey Matrix rates for 145.80 hours billed ($44,495.50) and the high end of Appendix B
rates for 145.80 hours billed ($40,920) is $3575. The Court finds that the reduction in fees reached in settlement
reasonably accounts for this discrepancy between Leffey Matrix and Appendix B rates,

12