Ortega v. Choice Stairways, Inc. et al
MEMORANDUM OPINION. Signed by Judge Paula Xinis on 8/31/2016. (kns, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Case No.: PX-16-2694
Choice Stairways, et. al
Plaintiff Wilman Ortega (Plaintiff) and Defendants Choice Stairways, Inc., Kenneth T.
Cleaver and Juan David Lopez, (collectively, “Defendants”), jointly move for approval of a
settlement agreement. Plaintiff filed this action alleging that Defendants denied him overtime
pay in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and the
Maryland Wage and Hour Law (“MWHL”), Md. Code, Lab. & Empl. Article (“LE”) § 3-401 et
seq., and the Maryland Wage Payment and Collection Law (“MWPCL”), Md. Code, LE § 3-501
et seq. ECF No. 1.
The Court has reviewed the Complaint, the parties’ Joint Motion for Approval of
Settlement Agreement, and the Settlement Agreement and Release. ECF No. 7. For the reasons
explained below, the Court finds that bona fide disputes exist under the FLSA, the settlement
agreement is a fair and reasonable compromise of the disputes, and the attorney’s fees are
reasonable. See Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982);
Leigh v. Bottling Group, LLC, No. DKC 10-0218, 2012 WL 460468, at * 4 (D. Md. Feb. 10,
2012); Lopez v. NTI, LLC, 748 F. Supp. 2d 471, 478 (D. Md. 2010). Therefore, the Court will
GRANT the motion and instruct the clerk to close this case.
Plaintiff Ortega worked for Defendants as an hourly employee in the manufacturing and
distributing operations on a reoccurring basis between May 2014 and and July 22, 2016. ECF
No. 1 at ¶¶ 10-11. Plaintiff alleges that he was denied overtime wages during this time period for
hours worked in excess of forty hours per work week. Id. ¶¶ 12-16.
Plaintiff filed the initial Complaint on July 26, 2016. The parties engaged in early and
fruitful settlement negotiations. ECF No. 7-1 at 6. On August 29, 2016, the parties submitted the
Joint Motion for Settlement Approval. Id.
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. 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 bona fide dispute over FLSA provisions.” Lynn’s Food Stores, Inc.,
679 F.2d at 1355 (emphasis added). To do so, courts examine whether there are FLSA issues
actually in dispute, the fairness and reasonableness of the settlement, and the reasonableness of
the attorney’s fees. Duprey, 30 F. Supp. 3d. at 408 (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.’” 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.
See Lomascolo v. Parsons Brinkernoff, Inc., No. 1:08cv1310 (AJT/JFA), 2009 WL 3094955 at
*10 (E.D. Va. Sept. 28, 2009). Here, defendants expressly denied liability in response to
Plaintiff’s complaint and make no admissions of liability. Whether Plaintiff is entitled to
overtime wages as a covered employee under the FLSA is a fact-specific inquiry that is
frequently at the heart of FLSA litigation. See, e.g., Schultz v. Capital Int’l Sec., Inc., 466 F.3d
298 (4th Cir. 2006). Further, the parties also agree that bona fide disputes exist with regard to
awarding exemplary damages under the MWPCL. ECF No. 7-1 at 4. Accordingly, this factor is
C. Fairness & Reasonableness
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.
Lomascolo, 2009 WL 3094955, at *10. Here, the request for attorney’s fees demonstrate that the
parties devoted appropriate time to settlement negotiations. ECF No. 7-1. For example, the
parties exchanged quickly after suit informal discovery and participated in prompt, efficient
discussions. Id. at 5. Thus, the parties had sufficient opportunity to “obtain and review evidence,
to evaluate their claims and defenses[,] and to engage in informed arms-length settlement
negotiations with the understanding that it would be a difficult and costly undertaking to proceed
to trial of this case.” Lomascolo, 2009 WL 3094955 at *11.
No evidence suggests that the parties engaged in any fraud or collusion in the settlement.
Under the settlement agreement, Plaintiff will receive $11, 604.41, which includes total recovery
for lost overtime and 80% of his maximum possible recovery of liquidated damages under the
MWPCL. Id. at 4. “In light of the risks and costs associated with proceeding further and
Defendants’ potentially viable defenses, this amount appears to reflect a reasonable compromise
over issues actually in dispute.” Saman v. LBDP, Inc., No. DKC-12-1083, 2013 WL 2949047, at
*5 (D. Md. June 13, 2013) (citation and internal quotation marks and brackets omitted).
Finally, 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-wage-dispute claims if the employee is compensated reasonably for the release
executed. Duprey, 30 F. Supp. 3d. at 410. Considering all of the above, the Court finds that the
proposed settlement is fair and reasonable.
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, 895 n.11 (1984). This Court has established rates that are
presumptively reasonable for lodestar calculations. See Loc. R. App. B.
Here, Plaintiffs have been represented by Roberto N. Allen, Esq. ECF No. 7-1 at 6. Mr.
Allen has been admitted to the bar for over eighteen years and billed in this case at a rate of $425
per hour for time spent on investigation, case preparation, and settlement negotiations. The total
amount in attorney’s fees accrued by Plaintiff’s counsel in this litigation was $2,975. Id. While
the rate charged is at the high end of the range set forth in Appendix B of this Court’s Local
Rules, it is nonetheless presumptively reasonable. Plaintiffs’ counsel also reduced his fees by
more than 20%. Id. The Court, therefore, finds the attorney’s fees and costs (an additional
$400) to be fair and reasonable under the lodestar approach.
For the reasons stated above, the Joint Motion for Approval of Settlement Agreement is
A separate Order shall issue.
Dated: August 31, 2016
United States District Judge
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