Park et al v. Myung Ga of MD, Inc. et al
MEMORANDUM OPINION AND ORDER granting 8 Joint Motion to Approve Settlement. Signed by Judge Paul W. Grimm on 10/12/2016 (c/m 10/13/16 cags, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
MI JA PARK, et a/.,
Civil Case No.: PWG-15-3606
MYUNG GA OF MD, INC.
d/b/a LIGHTHOUSE TOFU, et a/.,
OPINION & ORDER
On November 25, 2015, Plaintiffs Mi Ja Park and Eun Young Bang filed this action
against their former employer, Myung Ga of MD, Inc., doing business as Lighthouse Tofu, and
its owner-operators ("Lighthouse") alleging that Lighthouse failed to pay them minimum wages
and overtime compensation in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.c.
and the Maryland Wage and Hour Law ("MWHL"), Md. Code Ann., Lab. & EmpI.
3-401 to 3-430. CompI. ,-r,-r 1-2, ECF No. 1.
In addition, the Complaint alleges that
failure to pay minimum wages and overtime compensation
also violated the
Maryland Wage Payment and Collection Law ("MWPCL"), Md. Code Ann., Lab. & EmpI.
3-501 to 3-509. Jd. ,-r 2. On July 29,2016, the parties jointly moved for court approval of the
settlement agreement they have executed. Jt. Mot. & Mem., ECF NO.8.
I find the net amount
Park and Bang are to receive to be fair and reasonable in light of the facts of this case.
Park and Bang worked as waitresses at Lighthouse Tofu for periods of about four-and-a-
half and three-and-a-half years respectively before their August 2015 terminations.
17-20. The Plaintiffs allege that Lighthouse paid them hourly wages between $3.00 and $4.00
during their tenures and typically required them to work sixty hours a week. Id. ~~ 22-24.
and Bang also allege that Lighthouse stole their tips by requiring equal distribution of tips among
all Lighthouse employees but subjecting only tips collected by the waitresses and not those
collected by the owner-operators to distribution. Id. ~~ 26-27.
The Plaintiffs further allege that
Lighthouse retaliated against them by terminating their employment
only days after they
complained of underpayment of wages and tip theft. Id. ~~ 36-39.
The Settlement Agreement: "release( s] Defendants ... to and from any claims ... arising
from any omissions, acts, or facts that have occurred up until and including the Effective Date of
this Settlement Agreement .. , .. " Agreement ~ 3, ECF No. 8-1. The Agreement provides for
litigation costs but not attorneys' fees. Jt. Mot. & Mem. 3.'
a. FLSA Settlement Generally
Congress enacted the FLSA to protect workers from the poor wages and long hours that
can result from significant inequalities in bargaining power between employers and employees.
To that end, the statute's provisions are mandatory and generally are not subject to bargaining,
waiver, or modification by contract or settlement.
697, 706 (1945).
Sav. Bank v. 0 'Neil, 324 U.S.
Court-approved 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.'"
v. LBDP, Inc., No.
DKC-12-1083, 2013 WL 2949047, at *2 (D. Md. June 13,2013) (quoting Lynn's Food Stores,
Inc. v. United States, 679 F.2d 1350, 1354 (lIth Cir. 1982)).
Although the Fourth Circuit has not addressed the factors to be considered in approving
FLSA settlements, "district courts in this circuit typically employ the considerations set forth by
the Eleventh Circuit in Lynn's Food Stores." Id. at *3 (citing Hoffman v. First Student, Inc., No.
WDQ-06-1882, 2010 WL 1176641, at *2 (D. Md. Mar. 23, 2010); Lopez v. NT!, 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," which includes findings with regard to (l)
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
attorneys' fees, if included in the agreement. Id. (citing Lynn's Food Stores, 679 F.2d at 1355;
Lomascolo v. Parsons BrinckerhojJ, Inc., No. 08-1310, 2009 WL 3094955, at * 10 (E.D. Va.
Lane v. Ko-Me, LLC, No. DKC-10-2261, 2011 WL 3880427, at *2-3 (D. Md.
Aug. 31, 2011)). 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." Lynn's Food Stores, 679 F.2d at 1354.
b. Bona Fide Dispute
In deciding whether a bona fide 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.
Motion and Memorandum
See Lomascolo, 2009 WL 3094955, at *16-17.
makes clear that several issues are in bona fide dispute.
importantly, the parties disagree about whether Park and Bang were permitted to keep all of the
tips they received and whether they received notice of a tip credit; the number of overtime hours
they worked; whether they were paid for hours they did not work; and whether their termination
was retaliation for engaging protected activity under the FLSA and Maryland law.
c. Fairness & Reasonableness
In evaluating the fairness and reasonableness of this settlement, I must consider:
(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 plaintiffT]; (5) the opinions of class counsel ... ; and (6) the
probability of plaintiffT' s] success on the merits and the amount of the settlement
in relation to the potential recovery.
Lomascolo, 2009 WL 3094955, at * 10.
First, the parties engaged in no formal discovery but did exchange and review relevant
records relating to Plaintiffs' employment and hours worked as well as Lighthouse's business
Jt. Mot. & Mem. 3. Second, the parties negotiated the Settlement Agreement at an
early stage in the litigation prior to the initiation of formal discovery.
Id. With regard to the
third factor, the parties state that they
engaged in arms-length and good faith negotIatIOns through. their respective
counsel. Moreover, prior to settlement, Plaintiffs were given the opportunity to
review relevant documents related to their wage claims, and to consider the
potential value of their claims as well as the strength of Defendants' defenses.
Id. at 4. I accept these representations and am satisfied that no fraud or collusion contributed the
parties' decision to settle the claims.
experience with FLSA cases.
Additionally, the parties have established counsel's
See id. As for the fifth factor, it is not relevant in this, as it
pertains to class actions. See Lomascolo, 2009 WL 3094955, at * 10.
With regard to the sixth factor, the Plaintiffs estimate their total damages to be $122,566
each, a figure that "include(es] back pay, liquidated damages, and treble damages."
Jt. Mot. &
Mem. 3. The bases for Park and Bang's liquidated and treble damages claims are sections of the
FLSA and MWPCL that permit enhanced recovery for, among other things, unpaid overtime
wages. See 26 U.S.C.
Lab. & Empl.
3-501 (c)(2)(iv), 3-507.2(b). If Plaintiffs' estimate
is reduced to exclude liquidated and treble damages, their claims for unpaid wages equal
The settlement amount of $39,166.50 per Plaintiff therefore amounts to
95.9% of the unpaid wages that Park and Bang seek. See Agreement ~ 1.
In order to secure liquidated damages, the Plaintiffs would have to prove that the failure
to pay the disputed wages was not the result of a "good faith" belief that the FLSA did not
require such payment.
260. For treble damages, they would have to prove that
nonpayment was "not as a result of a bona fide dispute."
Lab. & Empl.
settlement amount takes
into account the possibility that a finder of fact may determine that defendants
properly complied with the FLSA "tip credit" rules; the possibility, even if
liability were found, any violation of the FLSA may be found to have been made
in good faith and not to be willful; the possibility that Defendants would be
entitled to an offset for payments made for hours not worked by Plaintiffs; [and]
the uncertainty and risks in litigation, including the Court's eventual
determination as to how many hours Plaintiffs worked in a given workweek.
Jt. Mot. & Mem. 5. Given the bonafide disputes in this case there, is a "possibility that, even if
liability were found, Plaintiff may not be entitled to additional liquidated [or treble] damages."
See Berrios v. Green Wireless, LLC, No. GJH-14-3655, 2016 WL 1562902, at *3 (D. Md. Apr.
Under these circumstances, I do not find the settlement amount unreasonable.
"Plaintiffs are entitled to recover liquidated damages under the FLSA or treble damages under
the [MWPCL], but not both." Quiroz v. Wilhelm Commercial Builders, Inc., No. WGC-10-2016,
2011 WL 5826677, at *3 (D. Md. Nov. 17, 2011). Thus, in order to calculate Park and Bang's
unpaid wage claims, I divided $122,566 by 3 to eliminate treble damages.
2 The Settlement Agreement designates half of the settlement amount as unpaid wages and the
other half as liquidated damages. Agreement ~ 3; Jt. Mot. & Mem. 3. Nevertheless, given the
existence of bona fide disputes among the parties, it is possible that Park and Bang would be
unable to recover either liquidated or treble damages at trial. See Berrios, 2016 WL 145902, at
The Settlement Agreement contains a general release of claims beyond those specified in
Agreement ~ 3. A general release like this can render settlement agreements
See, e.g., Moreno v. Regions Bank, 729 F. Supp. 2d 1346, 1352 (M.D. Fla. 2010)
that "a pervasive release in an FLSA settlement confers an uncompensated,
unevaluated, and unfair benefit on the employer" that "fails judicial scrutiny"); McKeen-Chaplin
v. Franklin Am. Mortg. Co., No. 10-5243,2012
WL 6629608, at *3 (N.D. Cal. Dec. 19,2012).
But, if the employee is compensated reasonably for the release executed, the settlement can be
accepted, and I am not required to evaluate the reasonableness of the settlement as to the nonFLSA claims. See Saman, 2013 WL 2949047, at *5 (citing Robertson v. Ther-Rx Corp., No. 091010-MHT, 2011 WL 1810193, at *2 (M.D. Ala. May 12,2011); Bright v. Mental Health Res.
Ctr., Inc., No. 09-1010, 2012 WL 868804, at *2 (M.D. Fla. Mar. 14, 2012)).
above, the Agreement compensates Park and Bang for 95.9% of their claims for unpaid wages.
This percentage fairly compensates the Plaintiffs for the general release executed.
The proposed settlement does not provide for an entry of judgment, and some courts view
settlements without such a stipulated judgment as per se unreasonable.
See Duprey v. Scotts Co.
LLC, 30 F. Supp. 3d 404,410 (D. Md. 2014) (citing, inter alia, Lynn's Food Stores, 679 F.2d at
1353; Dionne v. Floormasters
Enters., Inc., 667 F.3d 1199, 1205 (lith
Brooklyn Savings v. 0 'Neil, 324 U.S. 697 (1945), on which these courts rely, did not "involve a
settlement executed between an employer and employee as the result of a bona fide dispute as to
the coverage of the FLSA." Duprey, 30 F. Supp. 3d at 410 (quoting O'Connor v. United States,
308 F.3d 1233, 1242 (Fed. Cir. 2002)). In the absence of clear binding authority to the contrary,
*3. Irrespective of the parties' designation that the settlement covers both unpaid wages and
liquidated damages, the appropriate comparison for the reasonableness inquiry is the amount of
unpaid wages the Plaintiffs seek compared to the total settlement amount. See id.
however, when there are "bona fide disputes as to liability and the costs and risks of proceeding
on the merits" a plaintiff "is permitted to agree that.
ultimately could receive at trial is reasonable."
accepting a lesser amount than he
Id. This settlement, like the one in Duprey, "is
better viewed as a stipulation to an amount that fairly compensates [Plaintiff] for the release,
given the specific risks of the case at bar, rather than an impermissible waiver under Brooklyn
Savings." Id. The amount provided in consideration for the release is fair and reasonable.
d. Attorneys' Fees
for no attorneys'
reasonableness inquiry is restricted to the settlement amount.
Accordingly, it is this Ifday
,2016, hereby ORDERED that:
1. The Joint Motion to Approve Settlement, ECF NO.8, I
2. The Clerk is DIRECTED to CLOSE THE CAS "
Paul W. Grimm
United States District Judge
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