Elejalde et al v. Perdomo Construction and Management Services, LLC et al

Filing 30

MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 10/27/2016. (jf3s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT.
FOR THE DISTRICT OF MARYLAND
Southern Division

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ALFONSO F. ELEJALDE,

et al,

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Plaintiffs,

Case No.: GJH-14-3278

v.
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PERDOMO CONTRUCTION
MANAGEMENT SERVICES,
et al.,

AND
LLC

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Defendants.

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MEMORANDUM

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OPINION

Plaintiffs Alfonso F. Elejalde, Bernard J. Junior Coles, Mauriel Grant, Carlos Antonio
Castro Blanco, Ramon Pina Rodriguez, Ronni Alexis Martinez Reyes, Stanley L. Diggs,
Shannon D. Edwards, Jr., Norman E. Coleman, Everett A. Warren, DeSalles W. Nelson,
Jonathan L. Green, Jose J. Martinez Graziano, David Colston, Jr., Franklin Rene Alvarez, Larry
Rondell Hawkins, Jesse Ronell Fields, Robert Eric Hunt, Jamar Turrell Delonta Caper, Curtis
Greene, Ramone Beasley, Darrell R. Green, Daryl Christopher Wilson, Derrick Adkins, Tachere
A. Diggs and Khamsay Syrapcanakoun (collectively, "Plaintiffs") filed this action against their
former employer, Defendants Perdomo Construction and Management Services, LLC and
Orlando Perdomo (collectively, "Defendants"), seeking damages and other relief for Breach of
Contract and for Defendants' alleged failure to pay them overtime and minimum wages in
violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C.
Minimum Wage Act ("VMWA"), VA Code Ann.

S 40.1-28.10.

S 201 et seq.,

and the Virginia

The parties now jointly move for

approval of a settlement agreement. ECF Nos. 28 and 29. The Court has reviewed the

Complaint, the Answer and Affirmative Defenses of the Defendants, the parties' Joint Motion
for Approval of Settlement Agreement, the Settlement Agreement and Release and the Joint
Supplemental Submission Regarding Motion for Approval of Settlement Agreement. ECF Nos.
1,8,28,28-2

& 29. For the reasons explained below, the Court finds that bonafide disputes exist

regarding liability under the FLSA, the settlement agreement is a fair and reasonable
compromise of the disputes, and the attorney's fees are reasonable. See Leigh v. Bottling Group,
LLC, DKC-IO-218, 2012 WL 460468 at

* 4 (D. Md. Feb.

10,2012); Lopez v. NT!, LLC, 748

F.Supp. 2d 471,478 (D. Md. 2010); Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350,
1355 (11th Cir. 1982). Therefore, the Court will GRANT the motion and instruct the clerk to
close this case.
I. FACTUAL BACKGROUND
According to the Complaint, Plaintiffs worked for Defendants as laborers from March
2014 through July 2014. See ECF No. 1 ~ 21. Payments made to Plaintiffs for their work was
below the amount the parties had agreed to by contract and below the legal minimum wage
requirement. Id. ~ 22, 24. Additionally, Plaintiffs were not paid at the overtime rate of one and a
half times their wage when they worked in excess of forty hours per week as required by federal
and state law. Id. at 6. The Complaint further alleges that Plaintiffs are owed "approximately
$190,320 in straight time and overtime," id. ~ 25, and "$50,000 in minimum and overtime wages
under the FLSA and the VMWA," id. ~ 26.
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

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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. Scotts Co. LLC,
30 F.Supp.3d 404,407 (D. Md. 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 "(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." Duprey, 30 F. Supp. 3d at 408. "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. '" Id. (citing Lynn's Food Stores, Inc., 679 F.2d at
1354).
B. Bona Fide Dispute
In determining whether a bona fide 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 Brinkernoff, Inc., No. 1:08cv 1310 (AJT /JF A), 2009 WL 3094955 at

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(E.D. Va. Sept. 28, 2009). Here, a review of the filings demonstrates that while Plaintiffs contend
they are entitled to overtime and minimum wages, Plaintiffs lacked accurate records and had
little evidence with regard to hours worked or agreed upon wages. ECF No. 29 at 2. Indeed

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Defendants assert that, for some Plaintiffs, there is no record that they were ever employed by
the Defendants or that, if they were, they would be classified as employees under relevant law.
Id. Under these circumstances, the parties have sufficiently shown that bonafide disputes
regarding the extent of liability under the FLSA exist in this case.
C. Fairness & Reasonableness
In determining whether a settlement of FLSA claims is fair and reasonable, the
Court may consider the following:
(l) 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.
Lomascolo, 2009 WL 3094955 at *10. Here, the parties began settlement talks soon after the
entry of a discovery scheduling order. ECF Nos. 12, 13. Given the current stage of the litigation,
significant expenses would be incurred if the parties engaged in formal discovery, dispositive
motions, and possibly trial. See, e.g., Saman v. LBDP, DKC-12-1083, 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. See ECF No. 30 at 2. The settlement agreement is for a total of
$20,000. See ECF No. 28-1 at 6. Although this is a modest sum in comparison to the amount
claimed in the Complaint, in addition to the challenges to the Plaintiffs' case caused by lack of
documentation, the parties also considered that the Defendant corporation is no longer a going
concern and further litigation may have diminished Defendants' ability to later pay any
compensation to Plaintiffs. As was the case in Saman, "[i]n light ofthe risks and costs associated

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with proceeding further and Defendants' potentially viable defenses, this amount appears to
reflect a reasonable compromise over issues actually in dispute." 2013 WL 2949047 at *5
(citation and internal quotation marks and brackets omitted).
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. See Duprey,
2014 WL 2174751 at *4. As explained above, the Court finds that $20,000 is reasonable for the
release executed. Cf id. ("This percentage fairly compensates Duprey for the general 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. XTEL Const. Grp., LLC, 838 F. Supp. 2d 346,348 (D. Md. 2012) (citing Grissom v. The
Mills Corp., 549 F.3d 313, 320-21 (4th Cir. 2008) and Plyler v. Evatt, 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.11 (1984). This Court has established rates that are
presumptively reasonable for lodestar calculations. See Loc. R. App. B.
Here, Plaintiffs were represented by Mary Lombardo, who has been admitted to practice
law for over sixteen years; Jonathan Lieberman, who has been practicing for over sixteen years;
and Eduardo Garcia, an attorney with two-years' experience. See ECF No. 29 at 3. Each
attorney billed their time at a rate higher than the rates viewed by this Court as being

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presumptively reasonable.) Importantly, however, Plaintiffs' counsel is taking a signi~cant
reduction in fees by only accepting $6,162.97 in attorneys' fees and $836.03 in costs despite
totaling $26,987 in attorney fees and $6,163.97 in costs. The hours devoted to the case were
reasonable given the stage of the litigation and the number of plaintiffs involved, and the
significant reduction in fees more than compensates for the difference between counsel's rates
and the rates adopted in this Court's local rules. In light of the facts of this case and the disputes
explained above, the Court finds the attorney's fees to be fair and reasonable.
III. CONCLUSION
For the reasons stated above, the Joint Motion for Approval of Settlement Agreement,
ECF No. 28, is GRANTED.
A separate Order shall issue.

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Dated: October 27,2016

GEORGE J. HAZEL
United States District Judge

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In their joint submission, the parties indicated that the rates charged are consistent with rates charged by

similar firms in the Washington, D.C. metropolitan area. ECF No. 29 at 3.

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