Brown et al v. AK Lawncare, Inc. et al

Filing 39

OPINION AND ORDER granting 38 Motion for approval of settlement. Signed by District Judge Paul D. Borman. (DTof)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

DANIEL BROWN,
NATHANEAL BLACKBURN,
and TIMOTHY MINER,
on behalf of themselves
and all others similarly situated,

Case No. 14-14158
Paul D. Borman
United States District Judge

Plaintiffs,
v.

Mona K. Majzoub
United States Magistrate Judge

AK LAWNCARE, INC., and
ADAM KAROUB,
Defendants.
___________________________/
OPINION AND ORDER GRANTING RENEWED JOINT MOTION
FOR APPROVAL OF SETTLEMENT (ECF NO. 38)
Before the Court is the parties’ Renewed Joint Motion for Approval of Settlement in
this Fair Labor Standards Act putative collective action. (ECF No. 38.) The Court has
determined that oral argument is not necessary for proper resolution of this motion and will
resolve the matter on the parties’ written submissions. E.D. Mich. L. R. 7.1(f)(2).

I.

BACKGROUND
Plaintiffs, manual laborers who provided lawn maintenance and snow removal

services for the Defendants, filed this putative collective action on October 28, 2014,

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claiming that Defendants violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C.
§ 201 et seq., by failing to pay them, and similarly situated individuals, one and onehalf times their regular rates of pay for hours worked over 40 per week. (ECF No. 1,
Complaint ¶¶ 1-3.) On October 14, 2015, this Court entered an Order conditionally
certifying the action as a collective action under the FLSA, 29 U.S.C. § 216(b). (ECF
No. 23, Opinion and Order Granting Conditional Certification and Requiring
Submission of Revised Proposed Notice.) On March 16, 2016, after receiving
Plaintiffs’ revised proposed notices, the Court issued an Order approving the notice
of lawsuit with opportunity to join in and permitting dissemination of the notice.
(ECF No. 30, Order Approving the Notice of Lawsuit With Opportunity to Join In.)
On June 2, 2016, Plaintiffs filed a Notice of Filing of Consents, informing the Court
that only three individuals had elected to opt-in to the putative collective action. (ECF
No. 31, Plaintiffs’ June 2, 2016 Notice of Filing of Consents.)
On November 16, 2016, there having been no activity in the case since the June
2, 2016 Filing of Consents, the Court issued a Notice to Appear for a status conference
on December 12, 2016. At that status conference, Plaintiffs’ counsel informed the
Court that Plaintiffs were still waiting to receive time records from the Defendants for
the three named Plaintiffs and the three opt-ins so that they could begin to assess the
damages. The Court gave the parties 60 days to sort out the time records and
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scheduled another status conference for February 14, 2017. At the February 14, 2017
status conference, it appeared that little progress had made with regard to the time
records and the Court instructed the Plaintiff to prioritize this matter, to be diligent
about resolving this three-year old case, and to report back to the Court within 60 days
with evidence of their efforts or face dismissal of this action for failure to prosecute.
(ECF No. 34, Order Regarding the Court’s Instructions to the Parties at the February
14, 2017 Status Conference.)
The parties have now agreed to a resolution of Plaintiffs’ claims and seek Court
approval of their proposed Settlement Agreement. (ECF No. 38-2, Settlement
Agreement and Release.) Because the Plaintiffs’ claims presented a bona fide legal
dispute regarding compensation for their overtime work, and because the proposed
Settlement Agreement represents a fair and reasonable resolution of those claims, the
Court GRANTS the joint motion for approval of settlement.
II.

LEGAL STANDARD
“The FLSA was enacted for the purpose of protecting workers from

substandard wages and oppressive working hours.” Lynn’s Food Stores, Inc. v. United
States, 679 F.2d 1350, 1352 (11th Cir. 1982)). “Recognizing that there are often great
inequalities in bargaining power between employers and employees, Congress made
the FLSA’s provisions mandatory; thus, the provisions are not subject to negotiation
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or bargaining between employers and employees.” Id. Thus, “an employee may not
waive or otherwise settle a FLSA claim for unpaid wages for less than the full
statutory damages unless the settlement is supervised by the Secretary of Labor or
made pursuant to a judicially supervised stipulated settlement.”

Wolinsky v.

Scholastic Inc., 900 F. Supp. 2d 332, 335 (S.D.N.Y. 2012).
Settlements of FLSA claims that are reached in the context of litigation, where
“[t]he employees are likely to be represented by an attorney who can protect their
rights under the statute,” are proper subjects for judicial review and possible approval
because they are “more likely to reflect a reasonable compromise of disputed issues
than a mere waiver of statutory rights brought about by an employer’s overreaching.”
Lynn’s, 679 F.2d at 1354. “If a settlement in an employee FLSA suit does reflect a
reasonable compromise over issues, such as FLSA coverage or computation of back
wages, that are actually in dispute . . . the district court [may] approve the settlement
in order to promote the policy of encouraging settlement of litigation.” Id. (alterations
added).
“In reviewing a settlement of an FLSA private claim, a court must scrutinize the
proposed settlement for fairness, and determine whether the settlement is a fair and
reasonable resolution of a bona fide dispute over FLSA provisions.” Williams v. K&K
Assisted Living LLC, No. 15-cv-11565, 2016 WL 319596, at *1 (E.D. Mich. Jan. 27,
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2016) (internal quotation marks and citations omitted). In determining whether a
proposed settlement is fair and reasonable, the court considers several factors:
(1) the plaintiff’s range of possible recovery; (2) the extent to which the
settlement will enable the parties to avoid anticipated burdens and
expenses in establishing their respective claims and defenses; (3) the
seriousness of the litigation risks faced by the parties; (4) whether the
settlement agreement is the product of arm’s-length bargaining between
experienced counsel; (5) and the possibility of fraud or collusion.
Wolinsky, 900 F. Supp. 2d at 335 (internal quotation marks and citations omitted). See
also Williams v. Alimar Security, Inc., No. 13-cv-12732, 2017 WL 427727, at *2-3
(E.D. Mich. Feb. 1, 2017) (citing Wolinsky and analyzing these same factors to
conclude that proposed FLSA settlement agreement was fair and reasonable). “A
district court may choose to consider only factors that are relevant to the settlement
at hand.” Snook v. Valley OB-Gyn Clinic, P.C., No. 14-cv-12302, 2015 WL 144400,
at *1 (E.D. Mich. Jan. 12, 2015). “Where a proposed settlement of FLSA claims
includes the payment of attorneys’ fees, the must also assess the reasonableness of the
fee award.” Wolinsky, 900 F. Supp. 2d at 336.
III.

ANALYSIS
In this case, there was a bona fide FLSA dispute over whether Plaintiffs’ were

entitled to the overtime compensation they seek. If this case were to proceed to trial,
Defendants would take the position that Plaintiffs were paid for all of the hours they
actually worked and would dispute Plaintiffs’ estimates of their hours. Additionally,
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in response to the 64 opt-in notices that were purportedly mailed, only three
employees opted to join the putative collective action and two of those three were
unable to demonstrate any overtime hours. (ECF No. 38, Mot. at 1, PgID 292, Ex.
2, Attorney Time Records and Costs, PgID 319.)
The parties have agreed to a total settlement amount of $30,000.00, payable to
Plaintiffs’ counsel in three equal monthly installments commencing on the first day
of the month immediately following the Court’s approval of the Settlement
Agreement. (ECF No. 38, Ex. 1, Settlement Agreement ¶ 2.) From this amount,
Plaintiffs’ counsel will recover $11,755.39 in attorneys’ fees and $611.52 in costs.
The net settlement proceeds to the Plaintiffs of $17,633.09 represents the following
for each of the three named Plaintiffs and opt-in Thompson, distributed based upon
the total number of hours worked by each: Daniel Brown: $11,859.74; Timothy
Miner: $4,127.98; Nathaniel Blackburn: $1,481.56; and Frank Thompson: $163.81.
The parties represent that the total amount of actual damages that Plaintiffs could have
recovered at trial based on their testimony would have been $24,220.00 and that the
maximum amount of liquidated damages which might have been recovered if
Plaintiffs had been able to establish the full measure of their actual damages would
have been $24,220.00, for a total possible best case recovery of $48,440.00. Thus,
the $30,000.00 recovery represents approximately 60% of the total amount of
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damages Plaintiffs could have recovered at trial had they prevailed on every issue.
Given that Defendants robustly denied the correctness of the number of overtime
hours reported by the Plaintiffs, and were prepared to dispute these characterizations
at trial, the recovery bears a reasonable relation to Plaintiffs’ real potential recovery
and eliminates completely the cost burdens and potential unfavorable results of a trial.
As both parties were represented by experienced employment law counsel, and the
Court has no grounds to suspect fraud or collusion, the settlement of Plaintiffs’ claims
appears fair and reasonable and promotes the policy of encouraging settlement of
litigation.
Finally, the Court must assess the reasonableness of Plaintiffs’ counsel’s
requested attorney fee award. Plaintiffs attach the relevant attorney billing records,
which document that Plaintiffs’ attorneys have incurred $15,172.50 in fees for the
work they have performed on this case, not including preparation of the approval
motion and other related settlement work. (ECF No. 38, Mot. at 4, PgID 295; Ex. 2,
Attorney Time Records and Costs.) The parties represent in their joint motion that the
retainer agreement executed by the named Plaintiffs called for reimbursement of costs
and an attorneys’ fee of “40% of the net recovery” in the event that resolution
occurred more than 15 months after the date of filing the Complaint. (ECF No. 38,
Mot. at 4, PgID 295.) The parties further define the “net settlement” as the amount
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remaining after deduction of attorney fees and costs. (ECF No. 38, Mot. at 3, PgID
294.) Although this characterization of the fee arrangement causes some confusion,
the math suggests that the attorney fee award of $11,755.39 actually represents 40%
of the “total settlement amount minus costs ($611.52),” i.e. $30,000.00 - $611.52 =
$29,388.48, and $29,388.48 x .40 = $11,755.39.

Although the parties have not

produced the relevant retainer agreement, the parties have agreed to the breakdown
of the settlement amount in submitting their joint request for approval, and the Court
assumes that the attorneys’ fee award is consistent with the terms of the retainer
agreement. The attorneys’ fee award is less than the $15,172.50 actually incurred by
Plaintiffs’ counsel. See Williams, 2016 WL 319596, at *2 (noting that courts in this
district have approved FLSA settlements where the attorneys’ fees were “slightly
greater” than the plaintiff’s recovery).
The Court finds that Plaintiffs’ counsel’s attorney fee award representing
approximately 40% of the total settlement amount, a formula that was disclosed to the
named Plaintiffs in the retainer agreement they executed, is reasonable for the work
performed and the result obtained.
IV.

CONCLUSION
For the foregoing reasons, the Court GRANTS the Renewed Joint Motion for

Approval of Settlement and APPROVES the Settlement Agreement as a fair and
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reasonable resolution of a bona fide FLSA dispute.
According to the parties’ request, the Court will enter an Order of Dismissal of
this action WITH PREJUDICE upon Plaintiffs’ counsel’s notice to the Court of
receipt of the settlement funds, which shall occur on or before August 28, 2017, per
the terms of paragraph 2 of the Settlement Agreement. (Settlement Agreement, ¶ 2,
PgID 306.)
IT IS SO ORDERED.

s/Paul D. Borman
PAUL D. BORMAN
UNITED STATES DISTRICT JUDGE
Dated: May 11, 2017
CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing order was served upon each
attorney or party of record herein by electronic means or first class U.S. mail on May
11, 2017.

s/Deborah Tofil
Case Manager

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