Portillo v Intipuqueno Restaurant et al
Filing
61
MEMORANDUM OPINION AND ORDER Granting 60 Joint Motion to Approve Settlement Agreement. Signed by Judge Paul W. Grimm on 2/27/2019. (heps, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division
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MARINA PORTILLO,
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Plaintiff,
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v.
Civil Case No.: PWG-15-3909
INTIPUQUENO
RESTAURANT,
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et aI.,
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Defendants.
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MEMORANDUM
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OPINION & ORDER
Plaintiff Marina Portillo claims that she worked for Intipuqueno Restaurant and its
owner-operator Telbis Elizabeth Garcia (together, "Intipuqueno") for more than a year, but was
not paid for the overtime hours she regularly worked, did not receive any compensation other
than tips, and was not paid "in full at least twice each month."
Compl., ECF NO.1. According
to Portillo, her employment ended when she was fired in retaliation for an epileptic seizure that
she had while at work. Id. ~~ 51-56. Thereafter, she filed suit against Intipuqueno on December
22,2015, bringing claims of discrimination in violation of federal, state, and local law, as well as
claims of violations of federal and state wage payment laws. I
On August 21, 2018, the parties jointly moved for court approval of the settlement
agreement they have executed.
Jt. Mot. & Mem., ECF Nos. 60, 60-1. I find the net settlement
1 Specifically, she alleges violations of the Americans with Disability Act ("ADA"), 42 U.S.c.
~ 12112(a); the Maryland Human Rights Act ("MHRA"), Md. Code Ann., State Gov't ~ 20
606(a)(1)(i); and the Montgomery County Code ("MCC"), Montgomery Cty. Code ~ 2719(a)(1)(A); as well as claims of violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C.
~~ 206, 207(a); the Maryland Wage & Hour Law ("MWHL"), Md. Code Ann., Lab & Empl.
~~ 3-413(b), 3-415(a); and the Maryland Wage Payment and Collection Law ("MWPCL"), Lab.
& Empl. ~~ 3-413(b), 3-507.2(a), (b).
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Plaintiff initially alleged that she worked 51.5 hours per week for 78 weeks. CompI.,-r 37.
2
697, 706 (1945).
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.'"
Saman 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 (1Ith 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 (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 BrinckerhojJ, Inc., No. 08-1310,2009
WL 3094955, at *10 (E.D. Va.
Sept. 28, 2009); 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.
See Lomascolo, 2009 WL 3094955, at *16-17.
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The Joint
Motion and Memorandum
makes clear that several issues are in bona fide dispute.
Most
importantly, the parties disagree about the number of hours Plaintiff worked per week, the
number of total weeks that she worked, and the wage rate at which Plaintiff should be
compensated. J1. Mem. 3-4.
c. Fairness & Reasonableness
In evaluating the fairness and reasonableness of this settlement, I must consider:
(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 plaintiftI]; (5) the opinions of class counsel ... ; and (6) the
probability of plaintiftI' s] success on the merits and the amount of the settlement
in relation to the potential recovery.
Lomascolo, 2009 WL 3094955, at * 10.
The first and second factors can be analyzed together. The parties have completed
discovery, in addition to three 30-day extensions that I granted, and have negotiated the
Settlement Agreement at a late stage in the litigation.
See Scheduling Order, ECF No. 34;
Extension #1, ECF No. 53; Extension #2, ECF No. 55; Extension #3, ECF No. 57. Due to a lack
of record-keeping by Defendants, Plaintiff deposed five witnesses to establish her version of the
facts-that
she worked for 70 weeks, averaging 62 hours per week. J1. Mem. 6. However, the
parties have agreed that these depositions instead corroborate the Defendants' position, and thus
have elected to use the Defendants'
version of the facts-that
Plaintiff worked 56 weeks,
averaging 40 hours per week. !d. at 7. Lastly, the parties have agreed to use the minimum wage
rate of $3.63 rather than $7.25 after due consideration of the materials produced in discovery.
Id.; see Mem. Order & Op. 9-10, ECF No. 31.
With regard to factors three and four, the parties state that:
all of the parties were represented by competent counsel and the settlement was
reached after months of vigorous negotiations by counsel for both parties. On
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these facts alone, there is simply no reason for this Court to believe that this
settlement agreement is the product of any type of fraud or collusion.
Jt. Mem. 7-8. I agree. As for the fifth factor, it is not relevant in this analysis, as it pertains to
class actions. See Lomascolo, 2009 WL 3094955, at * 10.
With regard to the sixth factor, Plaintiff estimates her maximum potential recovery for
her three labor claims (Counts IV, V, and VI) to be $111,165.60, a figure that includes back pay
and treble damages.3
Jt. Mem. 6-7.
The settlement amount of $16,262.60, comprised of
$8,131.20 in back pay and $8,131.20 in liquidated damages, therefore amounts to approximately
15% of Plaintiffs
maximum recovery.
See Agr. ~ 2.
This percentage fairly compensates
Plaintiff in light of the findings the parties made in discovery, which strongly favor Defendants'
version of the events. Jt. Mem. 7.
The Settlement Agreement contains a general release of claims beyond those specified in
the Complaint.
unreasonable.
(concluding
Agr. ~ 5.
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
In addition, Plaintiff
II, and III), for which
Mem. 7. Because the
scrutiny and approval,
3
WL 868804, at *2 (M.D. Fla. Mar. 14,2012)).
I do note, however,
seeks $6,352.32 in compensation for her discrimination claims (Counts I,
the Settlement Agreement includes $3,825 in compensatory damages. Jt.
settlement of the discrimination claims are not subject to mandatory court
I will not analyze the fairness and reasonableness of this figure.
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that insofar as Plaintiff is releasing her claims, she is doing so while receiving $3,825 for the
discrimination claims she brought in this suit. As explained above, the Agreement percentage
for the wage claims fairly compensates the Plaintiff for the general release executed when
considering the probability of Plaintiffs
success on the merits of her wage claims and the
amount of discovery undertaken.
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 (1Ith Cir. 2012)).
But
Brooklyn Savings v. O'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,
however, when there are "bonafide 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
Next, the Settlement Agreement's provisions regarding attorneys' fees must be assessed
for reasonableness.
Saman, 2013 WL 2949047, at *6. In an FLSA case, the court "shall, in
addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee
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to be paid by the defendant, and costs of the action."
judicial review of the reasonableness
of counsel's
29 U.S.C.
S
216(b). "FLSA requires
legal fees to assure both that counsel is
compensated adequately and that no conflict of interest taints the amount the wronged employee
recovers under a settlement agreement." Silva v. Miller, 307 F. App'x 349,351 (lith Cir. 2009).
Notably, to this end, "the wronged employee should receive his full wages plus the [liquidated or
treble damages] penalty without incurring any expense for legal fees or costs." Id. (quoting
Maddrix v. Dize, 153 F.2d 274, 275-76 (4th Cir. 1946) (emphasis added)); see Robertson v.
Alaska Juneau Gold Mining Co., 157 F.2d 876, 879 (9th Cir. 1946), cert. granted in part,
judgment modified, 331 U.S. 793 (1947); Skidmore v. John J Casale, Inc., 160 F.2d 527,531 (2d
Cir. 1947).
Pursuant to the Settlement Agreement, the Defendants will pay Portillo a sum of $78,000
total, with $16,262.60
designated
to compensate
her for wages,
$3,825 designated
as
compensatory damages for her discrimination claims, and $57,912.40 designated to pay her
attorneys' fees. Agr. ~ 2. Thus, the Settlement Agreement provides for Plaintiffs
(albeit based on Defendants'
calculations,
which the evidence
supports),
full wages
plus liquidated
damages, and a separate amount on top of that for attorneys' fees. Id.
The starting point in evaluating the reasonableness of attorneys' fees in FLSA cases is the
lodestar approach. See Lyle v. Food Lion, Inc., 954 F.2d 984,988 (4th Cir. 1992). 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); Plyler v. Evatt, 902 F.2d 273,277 (4th Cir. 1990)).
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"[T]here is a 'strong presumption'
presumption
that the lodestar figure is reasonable,
may be overcome in those rare circumstances
but that
in which the lodestar does not
adequately take into account a factor that may properly be considered
in determining
reasonable fee." Perdue v. Kenny A. ex rei. Winn, 559 U.S. 542, 554 (2010).
a
In determining
whether the lodestar results in a reasonable fee, this Court evaluates "the twelve well-known
factors articulated in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.
1974) and adopted by the Fourth Circuit in Barber v. Kimbrell's, Inc., 577 F.2d 216, 226 (4th
Cir. 1978)." Thompson, 2002 WL 31777631, at *6 (footnotes omitted). Those factors are:
(1) the time and labor required; (2) the novelty and difficulty of the questions; (3)
the skill requisite to properly perform the legal service; (4) the preclusion of other
employment by the attorney due to acceptance of the case; (5) the customary fee;
(6) whether the fee is fixed or contingent; (7) time limitations imposed by the
client or the circumstances; (8) the amount involved and the results obtained; (9)
the experience, reputation, and ability of the attorneys; (10) the "undesirability" of
the case; (11) the nature and length of the professional relationship with the client;
and (12) awards in similar cases.
Id. at *6 n.19 (citing Johnson, 488 F.2d at 717-19). However, the Supreme Court has noted (and
experience awarding attorneys' fees has confirmed) that the subjective Johnson factors provide
very little guidance and, in any event, that '''the lodestar figure includes most, if not all, of the
relevant factors constituting a 'reasonable
attorney's
fee.'''
Perdue, 559 U.S. at 551, 553
(quoting Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 478 U.S. 549, 566 (1986)).
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); see Thompson v. HUD, No. MJG-95-309, 2002 WL
31777631, at *6 n.18 (D. Md. Nov. 21, 2002) (same). In Appendix B to its Local Rules, this
Court has established rates that are presumptively reasonable for lodestar calculations. See, e.g.,
Poole ex rei. Elliott v. Textron, Inc., 192 F.R.D. 494, 509 (D. Md. 2000).
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Although
the attorneys'
fees are almost three times the damages
and represent
approximately 74% of the total settlement, attorneys' fees awards may "substantially exceed [ ]
damages" in FLSA cases. See Almendarez v. JTT
Enters. Corp., No. JKS-06-68, 2010 WL
3385362, at *3 (D. Md. Aug. 25, 2010) (concluding that $84,058 attorneys' fee award was
reasonable, even though jury verdict in favor of three of eight plaintiffs awarded plaintiffs only
$3,200, $1,200, and $2,200 each); e.g., Butler v. Directsat USA, LLC, No. DKC-I0-2747,
2016
WL 1077158, at *7 (D. Md. Mar. 18,2016) (approving attorneys' fees award of $258,390.67 in
FLSA collective action where plaintiffs had received between $54.36 and $4,197.78, for a total
of approximately $36,000); see also Reyes v. Clime, No. PWG-14-1908, 2015 WL 3644639, at
*4 (D. Md. June 8, 2015) (finding "relatively modest fee of $15,516 [to be] reasonable" where
one plaintiff received $5,500 and other plaintiff received $2,500, even though "the fee sought
[was] nearly double the total recovery realized by Plaintiffs," given that "this is likely to occur in
FLSA actions, where vulnerable plaintiffs may be vindicating important rights that entitle them
to relatively modest compensation").
Fourth Circuit has ...
Indeed, "[t]he FLSA is a civil rights statute," and "[t]he
recognized that '[a]wards of attorney's
damages are not unusual in civil rights litigation.'''
fees substantially exceeding
Nelson v. A & H Motors, Inc., No. JKS-12-
2288, 2013 WL 388991, at *2 & n.3 (D. Md. Jan. 30, 2013) (quoting Thorn v. Jefferson-Pilot
Life Ins. Co., 445 F.3d 311, 328 n.20 (4th Cir. 2006) (noting award of $349,244 in attorneys'
fees in Title IX suit where court awarded only nominal damages, and $13,317 attorneys' fees
award in Fair Housing Act case where court awarded only $1,000 in compensatory damages).
The parties did not address the Johnson factors; however, counsel's
experience, the
genuine dispute in this case, and the hours attributed to each stage of the litigation supports a
finding that the number of hours expended were reasonable. Moreover, Portillo's attorneys have
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attached a detailed summary of the requested attorneys' fees and costs using the guidelines set
forth in this Court's Local Rules.
Fee Summary 1-4, ECF No. 60-3; Loc. R. App'x B.
Plaintiffs counsel recorded a total of $139,609.70 in billable fees and costs, while the Settlement
Agreement provides for $57,912.40, or approximately 42% of the total fees and costs. Jt. Mem.
8-9.
Further, the Agreement indicates that this amount is in addition to and not a part of the
$20,087.60 to be paid to Portillo. Agr. ~ 2; Jt. Mem. 8 ("The settlement agreement includes the
payment of Plaintiffs
attorney's [sic] fees and costs as a separately paid item.").
Taking into
account the period of litigation of almost four and a half years, which included extended
discovery, depositions, motions practice, and a settlement conference, I find that $57,912.40 for
fees and costs is reasonable.
III.
ORDER
Accordingly, it is
~
tJUs?i/
rth
day of
~M-I ,
2019, hereby ORDERED that:
1. The Joint Motion to Approve Settlement, ECF No. 60, IS
2. The Clerk is DIRECTED to CLOSE THE CASE.
lSI
Paul W. Grimm
United States District Judge
sam
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