Amaya Diaz v. Pho Eatery, Inc. et al

Filing 39

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 5/21/2019. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
JOSE SANTOS AMAYA DIAZ
:
v.

:

Civil Action No. DKC 17-2968

:
PHO EATERY, INC., et al.
:
MEMORANDUM OPINION
The parties in this employment case filed a motion for
appropriate relief on November 23, 2018 (ECF No. 26) and a joint
motion to approve settlement on May 13, 2019 (ECF No. 37).

The

motion to approve settlement states that, upon court approval,
Defendants

Pho

“Defendants”)

Eatery,

will

pay

Inc.

and

Plaintiff

Tim
Jose

(“Plaintiff”) $11,000 in “gross pay.”

Do

(collectively,

Santos

Amaya

Diaz

(ECF No. 37-1, at 3).

Defendants will also pay Plaintiff’s attorneys $1,356.63 for
costs.

(Id., at 2).

The issues have been briefed, and the court

now rules, no hearing being deemed necessary.

Local Rule 105.6.

Because the proposed settlement agreement represents a fair and
reasonable resolution of a bona fide FLSA dispute, the settlement
will be approved and Plaintiff’s motion for appropriate relief
will be denied as moot.

I.

Background
Plaintiff filed a complaint against Pho Eatery, Inc., Tim

Do, Oanh Nguyen, and Quynh Vu on October 6, 2017 alleging four
counts: (1) violation of the Fair Labor Standards Act (“FLSA”);
(2) violation of the Maryland Wage and Hour Law (“MWHL”); (3)
violation

of

the

Maryland

Wage

Payment

and

Collection

Law

(“MWPCL”); and (4) violation of the Montgomery County Code § 2768.

(ECF No. 1, at 7-13).

Defendant Pho Eatery, Inc. filed an

answer and Defendants Do, Nguyen, and Vu filed a motion to
dismiss for failure to state a claim and lack of jurisdiction on
February 8, 2018.

(ECF Nos. 6 & 7).

Plaintiff filed an amended

complaint on March 10, 2018 without consent or leave of court
which

omitted

Consequently,

the

individual

individual

Defendants.

Defendants

Do,

(ECF

Vu

and

No.

11).

Nguyen

were

dismissed and Defendants’ motion to dismiss was denied as moot
on April 3, 2018.

(ECF No. 12).

The parties filed a joint

request for settlement conference on April 17, 2018 (ECF No. 13)
and the case was referred to Magistrate Judge Charles Day on
April 18, 2018 for alternative dispute resolution (ECF No. 14).
Plaintiff filed a second amended complaint on June 4, 2018,
once again naming Tim Do as a Defendant.

(ECF No. 18).

The

parties held a settlement conference before Judge Day on July
2

10, 2018.

The discovery period closed on November 26, 2018 and

the parties filed a joint status report indicating that discovery
was “substantially completed.”

(ECF No. 27, at 1).

The parties

held a second, more fruitful settlement conference on April 5,
2019.

Although

agreement

to

they

the

did

court,

not
the

submit
joint

a

written

motion

sets

settlement
forth

the

significant terms.
According

to

Plaintiff’s

second

amended

complaint,

Defendants employed Plaintiff “from 2013 until approximately
January

6,

2017

as

a

non-exempt

food

preparation

employee

primarily at its Gaithersburg, Maryland Location . . . and
occasionally at its Rockville [] location[.]”
4).

(ECF No. 18, at

Plaintiff asserts that, from June 1, 2015 until the end of

his employment, he “generally worked 60-72 hours per week” and
“Defendants failed to pay [him] the required wage of 150% of his
regular pay . . . for all hours worked in excess of 40 hours per
week[.]”

(Id., at 5-6).

Plaintiff adds that “Defendants failed

to pay the full minimum wage of $10.75” per hour after Maryland
increased the minimum wage to that rate effective October 1,
2016.

(Id., at 6).

Finally, Plaintiff claims that Defendants

failed to provide him vacation time over a three-year period,
totaling $2,400.00.

(Id., at 7).
3

As a result, Plaintiff seeks

entry

of

judgment

“against

Defendants

in

the

amount

of

$48,372.00, representing base wages of $16,124.00 unpaid[,] plus
statutory

treble

damages

of

an

additional

$32,248.00,

plus

interest, costs and attorneys’ fees as authorized by statute or
rule.”
II.

(Id., at 13).

Joint Motion to Approve Settlement
Because 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, the provisions of the FLSA are mandatory and, except
in

two

narrow

circumstances,

are

generally

not

subject

to

bargaining, waiver, or modification by contract or settlement.
See Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706-07 (1945).
Under the first exception, the Secretary of Labor may supervise
the payment of back wages to employees, who waive their rights
to seek liquidated damages upon accepting the full amount of the
wages owed.

See 29 U.S.C. § 216(c). Under the second exception,

a district court can approve a settlement between an employer
and an employee who has brought a private action for unpaid wages
pursuant

to

Section

216(b),

provided

that

the

settlement

reflects a “reasonable compromise of disputed issues” rather
than “a mere waiver of statutory rights brought about by an
4

employer’s overreaching.”

Lynn’s Food Stores, Inc. v. United

States, 679 F.2d 1350, 1354 (11th Cir. 1982); see also Duprey v.
Scotts Co., 30 F.Supp.3d 404, 407 (D.Md. 2014).
Although the United States Court of Appeals for the Fourth
Circuit has not directly addressed the factors to be considered
in deciding whether to approve such settlements, district courts
in this circuit typically employ the considerations set forth by
the United States Court of Appeals for the Eleventh Circuit in
Lynn’s Food Stores.

See, e.g., Duprey, 30 F.Supp.3d at 407-08;

Lopez v. NTI, LLC, 748 F.Supp.2d 471, 478 (D.Md. 2010).

An FLSA

settlement generally should be approved if it reflects “a fair
and reasonable resolution of a bona fide dispute over FLSA
provisions.”

Lynn’s Food Stores, 679 F.2d at 1355.

Thus, as a

first step, the bona fides of the parties’ dispute must be
examined to determine if there are FLSA issues that are “actually
in dispute.”

Id. at 1354.

Then, as a second step, the terms of

the proposed settlement agreement must be assessed for fairness
and reasonableness, which requires weighing a number of factors,
including:
(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)
5

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.
Hackett v. ADF Restaurant Invs., 259 F.Supp.3d 360, 365 (D.Md.
2016) (quoting Saman v. LBDP, Inc., DKC-12-1083, 2013 WL 2949047,
at *3 (D.Md. June 13, 2013); see also Duprey, 30 F.Supp.3d at
408, 409.

Finally, where a proposed settlement of FLSA claims

includes

a

provision

reasonableness

of

the

regarding
award

must

attorneys’
also

“be

fees,

the

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.’”

Lane v. Ko–Me, LLC,

No. DKC-10-2261, 2011 WL 3880427, at *3 (Aug. 31, 2011) (citation
omitted).
A.

Bona Fide Dispute

“In deciding whether a bona fide dispute exists as to a
defendant’s
pleadings

in

liability
the

under

case,

the

along

FLSA,

with

the

courts

examine

the

representations

and

recitals in the proposed settlement agreement.”
F.Supp.3d at 408.

Duprey, 30

As already explained, Plaintiff’s second

amended complaint alleges that Defendants committed a litany of
6

wage violations.

Defendants’ answers to Plaintiff’s second

amended complaint deny Plaintiff’s allegations, indicating that
the parties differ in their view of the amount of compensation
Plaintiff was owed and whether he received vacation pay.
ECF Nos. 20 & 21).

(See

Additionally, the parties’ memorandum in

support of motion to approve settlement agreement states that
the parties dispute:
1) precisely how many hours and weeks
Plaintiff worked during the relevant period;
2) the effective hourly rate for Plaintiff
as calculated over the disputed hours; 3)
the lack of strict uniformity in hours over
the
roughly
18-month
period
from
approximately July 1, 2015 until early
January 2017[;] 4) the issue of whether the
[MWPCL] applied to Plaintiff’s claims, and,
if so, whether wages had been withheld as a
result of a bona fide dispute within the
meaning
of
the
[MWPCL];
5)
whether
Defendants acted willfully or recklessly of
their obligations under the FLSA; [] 6)
whether the Defendants [] acted reasonably
and in good faith for purposes of potential
defenses to a liquidated damages claim,
under the FLSA and its Portal-to-Portal Act
provisions[;] and 7) whether Plaintiff may
have been exempt as an executive employee
under applicable case law and regulations.
(ECF No. 37-1, at 1-2).

Defendants’ denials and the parties’

disagreements indicate the presence of a bona fide dispute.

7

B.

Fairness & Reasonableness

Upon

review

of

the

parties’

submissions

and

after

considering the relevant factors, the agreement appears to be a
fair and reasonable compromise of the parties’ bona fide dispute.
The

parties,

represented

by

counsel

with

“experience

in

litigating employment law disputes,” participated in extended
discovery,

substantial

conferences.

negotiations,

(ECF No. 37-1, at 1-4).

and

two

settlement

Thus, the parties have

had sufficient opportunity to obtain additional evidence through
the discovery and negotiation processes, evaluate their claims
and

defenses,

and

conclude

appropriate resolution.

that

settlement

is

the

most

Moreover, there is no evidence that the

agreement is the product of fraud or collusion.
The

settlement

reasonable.

In

amount

his

also

second

appears

amended

to

be

complaint,

fair

and

Plaintiff

requested $19,288 in unpaid overtime, unpaid vacation wages, and
minimum and overtime wage adjustment.

(ECF No. 18, at 9-14).

Additionally, Plaintiff requested liquidated and treble damages
and interest.

Id.

The parties agreed to an $11,000 settlement

after “extended, contentious negotiations made in good faith.”
(ECF No. 37-1, at 4).

Although the total settlement amount is

substantially less than Plaintiff’s total requested regular,
8

liquidated and treble damages, the legal and factual disputes in
this case make it uncertain whether Plaintiff would ultimately
be able to recover the full amount of requested damages.

Thus,

in light of the risks and costs to both parties in proceeding
with

this

lawsuit,

the

agreement

constitutes

a

fair

and

reasonable resolution of Plaintiff’s disputed claims.
C.

Attorneys’ Fees and Costs

Finally, provisions regarding attorneys’ fees and costs
“must

also

be

independently

Hackett, 259 F.Supp.3d at 367.

assessed”

for

reasonableness.

In “the interest of judicial

economy” and compliance with their pro bono obligation under Md.
Code Ann., Pro Bono Pub. Serv. § 19-306.1, Plaintiffs’ counsel
agreed to “waiv[e] the entirety of its claim for fees[.]”
No. 37-1, at 2-3).

(ECF

As for costs, Defendants agreed to pay

Plaintiff’s counsel $1,356.53 for accrued filing, service, and
deposition

fees.

Id.

Plaintiffs’

counsel

provided

an

itemization of the total fee amount, indicating that it is a
reasonable total of their accrued costs.
III. Motion for Appropriate Relief
Plaintiff’s motion for appropriate relief requested “that
Defendants be barred from asserting the executive exemption to
the [FLSA] and [MWHL] for the disputed period . . . due to
9

Defendant’s failure to maintain proper work pay, work date and
work hour records.”

(ECF No. 26, at 5).

Because the parties’

joint motion to approve settlement will be granted, Plaintiff’s
motion will be denied as moot.
IV.

Conclusion
For the foregoing reasons, the joint motion to approve

settlement

will

be

granted

and

Plaintiff’s

appropriate relief will be denied as moot.

motion

A separate order

will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

10

for