SANCHEZ MENA et al v. SEASON TEPPANYAKI BUFFET LLC
MEMORANDUM OPINION. Signed by Magistrate Judge Charles B. Day on 3/22/2017. (jf3s, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
HIRAM SANCHEZ MENA, et al.
SEASON TEPPANYAKI BUFFET,
LLC, d/b/a SEASON SEAFOOD
Civil Action No.: CBD-16-2701
Before this Court is the parties’ “Joint Motion for Approval of Settlement & Dismissal
with Prejudice” (the “Motion”) (ECF No. 14). The Court has reviewed the Motion, the related
memorandum, and applicable law. No hearing is deemed necessary. See Local Rule 105.6 (D.
Md.). For the reasons presented below, the Court does not approve the Motion.
Plaintiffs Hiram Sanchez Mena, Jorge Perez Ordonez, and Santos Pedro Oxlaj Gomez
(collectively “Plaintiffs”), worked for Season Teppanyaki Buffet, LLC d/b/a Season Seafood
Buffet (“Defendant”) as cooks and food preparers. Pls.’ Compl. 2. On July 27, 2016, Plaintiffs
filed a complaint alleging Defendant routinely failed to pay them minimum wage and overtime
pay (ECF No. 1). Specifically, Plaintiffs allege that Plaintiff Hiram Sanchez Mena, during the
course of his employment, was paid what amounts to an hourly rate of $3.49; Plaintiff Jorge
Perez Ordonez, during the course of his employment, was paid what amounts to an hourly rate of
$5.56; and Plaintiff Santos Pedro Oxalaj Gomez, during the course of his employment, was paid
what amounts to an hourly rate ranging from $5.63 to $6.62. 1 Pls.’ Compl. 3-5. As a result,
Plaintiffs allege that Defendant violated the Maryland Wage Payment and Collection Law
(“MWPCL”), the Fair Labor Standards Act (“FLSA”), and the Maryland Wage and Hour Law
when it failed to pay them minimum and overtime wages throughout their employment. Pls.’
Compl. 5-8. Defendant denied all claims. Def.’s Answer 1-6.
On March 13, 2015, the parties filed the Motion seeking approval of their agreement to
settle the case. Under the agreement, Plaintiffs agree to settle, discharge, and terminate all
claims in exchange for a payment of $20,000.00, representing $13,000.00 in damages to
Plaintiffs, and $7,000.00 in attorneys’ fees and costs for Plaintiffs’ counsel.
Under the FLSA, Congress sought to protect workers from the poor wages and long
hours that can result from significant inequalities in bargaining power between employers and
employees. See Saman v. LBDP, Inc., No. DKC-12-1083, 2013 WL 2949047, at *2 (D. Md.
June 13, 2013) (citing Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706 (1945)). FLSA
provisions are mandatory and generally are not subject to bargaining, waiver, or modification by
contract or settlement. Id.; Brooklyn, 324 U.S. at 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, 2013 WL 2949047, at *2 (quoting Lynn’s Food Stores, Inc. v. United
States, 679 F.2d 1350, 1354 (11th Cir. 1982)). The Fourth Circuit has not directly addressed the
factors to be considered when deciding motions for approval of FLSA settlements. See id. at *3
Plaintiffs allege that, throughout the course of their employment, Defendant was
required to pay them a minimum wage of $7.25 per hour, which later increased, through local
and state legislation, to $8.40 per on October 1, 2014, then to $9.55 per hour on October 1, 2015.
Pls.’ Compl. 6.
(citations omitted). However, district courts in this circuit typically follow the Eleventh Circuit’s
analysis in Lynn’s Food Stores. Id. The settlement must “reflect a fair and reasonable
resolution of a bona fide dispute over FLSA provisions.” Id. (citations omitted). In this respect,
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. Riveros v. WWK
Construction, Inc., No. PJM 15-193, 2015 WL 5897749, at *2 (D. Md. Oct. 5, 2015) (citations
A. 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 v. Parsons Brinckerhoff, Inc., No. 08-1310,
2009 WL 3094955, at *16-17 (E.D. Va. Sept. 28, 2009).
After a review of the pleadings, the Court finds that a bona fide dispute exists in this case.
Under the FLSA, “[e]very employer shall pay to each of his employees . . . the following rates . .
. not less than: (A) 5.85 an hour, beginning on the 60th day after May 25, 2007;(B) $6.55 an
hour, beginning 12 months after that 60th day; and (C) $7.25 an hour, beginning 24 months after
that 60th day[.]” 29 U.S.C. § 206(a)(1). Additionally, “no employer shall employ any of his
employees . . . for a workweek longer than forty hours unless such employee receives
compensation for his employment in excess of the hours above specified at a rate not less than
one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(2)(C). If
an employer violates Section 207, he is liable for unpaid minimum wages, unpaid overtime, and
an equal amount of liquidated damages. 29 U.S.C. § 216(b). In this case, Plaintiffs allege that
Defendant failed to pay them the legal minimum and overtime wages as required under the
FLSA. In response, Defendant denies liability and has asserted several affirmative defenses,
including failure to state a claim, estoppel, and Statute of Frauds. Def.’s Answer 6. A bona fide
dispute exists as to Defendant’s liability under the FLSA.
B. Fairness and Reasonableness of the Settlement Agreement
If a bona fide dispute exists, courts evaluate the fairness and reasonableness of the
settlement using the following factors:
“(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 
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 (quoting Lomascolo, 2009 WL 3094955, at *10).
After reviewing the factors set forth in Saman, the Court concludes that although the
second through fifth factors weigh in favor of a finding of fairness and reasonableness, counsel
have not provided sufficient information as to the first and sixth factor. Consequently, the Court
cannot find that their proposed settlement is a fair and reasonable compromise of the parties’
bona fide dispute.
Although the Court does not find this case to be particularly complex, the Court agrees
with the parties that further litigation was likely going to consume substantial amounts of
resources and time. There is no evidence that the agreement is the product of fraud or collusion.
“There is a presumption that no fraud or collusion occurred between counsel, in the absence of
any evidence to the contrary.” Lomascolo, 2009 WL 3094955, at *12 (citation omitted). The
parties’ agreement was the result of “extensive negotiations.” ECF No. 14, at 3. At all times, the
parties were represented by experienced employment litigation counsel. The parties found “the
probability of success and amount of recovery were both questionable.” Id. at 4.
However, the Court is concerned that the amount of discovery that may have taken place
is insufficient to satisfy the first factor. Pursuant to the Scheduling Order, the parties were due to
complete discovery on January 25, 2017. ECF No. 8, at 2. However, the parties claim that
“[s]ignificant factual investigation regarding Plaintiffs’ claims of hours worked and wage rates
would have necessitated depositions of Plaintiffs and several other witnesses,” and they are
resolving the matter to save costs. ECF No. 14, at 3. This statement indicates that certain
discovery was not necessary in order to save money. While admirable, the parties fail to set
forth what exchanges of information were made in order to arrive at a meaningful understanding
of the likely evidence in the case. Without a reasonable case evaluation based on available
evidence, the parties and the Court are left with a case assessment that does not even measure up
to the proverbial “educated guess.” The Court is therefore left in a position where it cannot
analyze this factor appropriately.
As to the sixth factor, under which the Court must consider the relationship between the
settlement amount and Plaintiffs’ potential recovery, the Court does not find the settlement
amount reasonable. Plaintiffs’ collective claim is a total of $48,299.32 in unpaid minimum and
overtime wages. ECF No. 14, at 3. Under the parties’ agreement, the total settlement amount for
the claims in the case is $20,000, of which $13,000.00 would be paid to Plaintiffs and $7,000.00
to Plaintiffs’ counsel representing attorneys’ fees and costs. If Plaintiffs receive $13,000 of their
$48,299.32, they would be receiving 27% of their claimed total potential recovery. The Court
acknowledges that there are many cases where there is a substantial gap between the settlement
amount and the potential recovery which, of course, accounts for the uncertainty of whether a
plaintiff would be able to recover at trial. See Riveros, 2015 WL 5897749, at *3 (where the court
compared the settlement amount and the potential recovery and concluded that the plaintiff’s
receipt of 42% of his claims was a reasonable settlement). However, the parties have provided
no explanation to the Court as to how this discrepancy is “reasonable” in light of any challenges
facing Plaintiffs’ recovery, and the Court will not speculate as to what those challenges may be
or assume that they exist. Given the limited information the parties have provided the Court, the
Court cannot conclude at this time that the parties’ agreement is fair and reasonable.
C. Attorney’s Fees and Costs
“Where a proposed settlement of FLSA claims includes a provision regarding attorneys’
fees, the reasonableness of the award must also ‘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.’” Saman, 2013 WL 2949047, at *3 (quoting
Lane v. Ko-Me, LLC, No. 10-2261, 2011 WL 3880427, at *3 (D. Md. Aug. 31, 2011)). “In
making that assessment, courts typically use the principles of the traditional lodestar method as a
guide.” Lane, 2011 WL 3880427, at *3 (citation omitted). The lodestar amount is the
reasonable hourly rate multiplied by hours reasonably expended. See Riveros, 2015 WL
5897749, at *4. “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.’” Id. (citation omitted). The federal court in Maryland uses Appendix B to the Local
Rules as a reference to the rates “that are presumptively reasonable for lodestar calculations.” Id.
“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.” Id.
In assessing reasonableness, the Fourth Circuit has instructed district courts to also
consider certain factors, including:
(1) the time and labor expended; (2) the novelty and difficulty of the
questions raised; (3) the skill required to properly perform the legal services
rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5)
the customary fee for like work; (6) the attorney's expectations at the outset of the
litigation; (7) the time limitations imposed by the client or circumstances; (8) the
amount in controversy and the results obtained; (9) the experience, reputation and
ability of the attorney; (10) the undesirability of the case within the legal
community in which the suit arose; (11) the nature and length of the professional
relationship between attorney and client; and (12) attorneys’ fees awards in
Saman, 2013 WL 2949047, at *6-7 (citing Barber v. Kimbrell’s Inc., 577 F.2d 216, 226 n. 28
(4th Cir. 1978).
The Court finds that Plaintiffs’ counsel have not carried their burden of proving that the
attorneys’ fees requested are reasonable. Under the parties’ agreement in this case, Plaintiffs’
counsel would receive $7,000.00. ECF No. 14, at 4. The parties do not parse out what amount
of that $7,000 is attorneys’ fees and what is for costs incurred. Plaintiff’s counsel did not submit
a billing statement detailing the hourly rate charged, the hours spent on this case, the nature of
the costs incurred, nor an invoice for the expenses. Neither was an affidavit from counsel
submitted in support that detailed their hourly rates and the hours each spent on the case.
Plaintiffs’ counsel also failed to provide any other documentation that would help the Court
apply all the relevant factors and reach a conclusion as to the reasonableness of the fees
requested. See Plyler v. Evatt, 902 F.2d 273, 277 (4th Cir.1990) (“In addition to the attorney’s
own affidavits, the fee applicant must produce satisfactory specific evidence of the prevailing
market rates in the relevant community for the type of work for which he seeks an award.”).
Plaintiffs merely include a footnote in the Motion, stating that when the settlement was reached,
“the hourly attorneys’ fees incurred by Plaintiffs were $11,335.50, which amount did not include
the preparation of settlement documents or this motion.” ECF No. 14, at 4 n.1. Accordingly, the
Court finds the attorneys’ fee award in the parties’ agreement to be unreasonable.
For the foregoing reasons, the Court DENIES the Motion without prejudice. Counsel is
permitted to submit supplemental documentation within (14) days of this Order. Specifically,
counsel is permitted to submit information on the extent of discovery that has taken place in the
case, the relationship between the settlement amount and Plaintiffs’ potential recovery, and the
reasonableness of the attorneys’ fees requested.
March 22, 2017
Charles B. Day
United States Magistrate Judge
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