Farkas v. Boschert
Filing
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OPINION AND ORDER granting 15 Motion for Approval of Settlement. Signed by District Judge Paul D. Borman. (DTof)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
GENE FARKAS,
Plaintiff,
Case No. 17-cv-12536
v.
Paul D. Borman
United States District Judge
RON BOSCHERT, d/b/a
RON BOSCHERT AGENCY,
Defendant.
___________________________/
OPINION AND ORDER GRANTING JOINT MOTION
FOR APPROVAL OF SETTLEMENT (ECF NO. 15)
Plaintiff filed his Complaint in this action on August 4, 2017, alleging
violations of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (“the FLSA”) and
breach of contract. (ECF No. 1, Complaint.) Before the Court is a Joint Motion to
Approve Settlement and For Entry of Order of Dismissal With Prejudice and Without
Attorneys’ Fees or Costs. (ECF No. 15.) The parties seek the Court’s approval of Plaintiff’s
FLSA claims and seek an Order of Dismissal With Prejudice of Plaintiff’s Complaint. 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).
The Court finds that the proposed settlement agreement, a copy of which is attached
to the Joint Motion, accomplishes a fair and reasonable settlement of Plaintiff’s bona fide
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FLSA dispute and GRANTS the joint motion for approval of the settlement agreement.
I.
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
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
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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,
2016) (internal quotation marks and citations omitted). In determining whether a
proposed settlement is fair and reasonable, the court may consider 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,
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at *1 (E.D. Mich. Jan. 12, 2015). “Where a proposed settlement of FLSA claims
includes the payment of attorney’s fees, the court must also assess the reasonableness
of the fee award.” Wolinsky, 900 F. Supp. 2d at 336 (citing 29 U.S.C. § 216(b)).
II.
ANALYSIS
Plaintiff, an insurance agent, alleges in his Complaint that Defendant neglected
and/or refused to pay overtime compensation to Plaintiff owed for the period April 25,
2016, to the date of the filing of his Complaint. (Compl. ¶¶ 11-17.) Plaintiff also
alleges that when he complained to Defendant about the failure to pay overtime
wages, Defendant retaliated against Plaintiff. (Id. ¶¶ 18-22.) Plaintiff also asserts that
Defendant failed to pay bonuses and commissions in accordance with the parties
written and verbal agreements. (Id. ¶¶ 32-36.)
The parties have entered into a settlement agreement resolving each of
Plaintiff’s claims asserted in his Complaint, including Plaintiff’s claims under the
FLSA. The FLSA requires this Court to “scrutinize the proposed settlement [of the
FLSA claim] for fairness, and determine whether the settlement is a fair and
reasonable resolution of a bona fide dispute over FLSA provisions.” Williams, 2016
WL 319596, at *1. Here, the parties represent that they reached this settlement
through extensive negotiations between the parties’ respective counsel, both of whom
were experienced in FLSA issues, and with the assistance of a mutually selected
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mediator. (Joint Mot. ¶ 4.) The parties and the mediator had access to all of the
evidence relating to Plaintiff’s and Defendant’s best and worst case scenarios
regarding Plaintiff’s potential to recover overtime pay. (Id.) The parties represent that
the $15,000.00 settlement, pursuant to which Defendant will pay Plaintiff directly
$10,000.00 and will pay Plaintiff’s counsel $5,000.00, is a reasonable compromise of
the issues actually in dispute. (Joint Mot. Ex. 1, Proposed Settlement Agreement ¶ 4.)
Defendant also agrees to pay in full the mediation costs for services provided by the
mutually selected mediator. (Id.) In exchange, Plaintiff agrees to release all claims
that exist or might exist against Defendant. (Id. ¶ 6.) The parties also request the
Court to enter an Order of Dismissal of this action upon the happening of certain
events described in paragraphs 3 and 4 of the Settlement Agreement.
The Court finds that there was a bona fide dispute in this case over whether
Plaintiff was paid the overtime compensation that he seeks and whether Defendant
retaliated against Plaintiff when Plaintiff complained about the failure to pay overtime
wages. The parties explored, through the assistance of their experienced FLSA
counsel and a neutral mediator, the best and worst case scenarios for each party and
arrived at a settlement amount deemed fair by all. The Court finds that the settlement
was a fair and reasonable compromise of Plaintiff’s bona fide disputed claims that the
parties recognize would otherwise require extensive litigation and significant costs.
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“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.” Lynn’s, 679 F.2d at 1354. The Court
also finds that Plaintiff’s counsel fee, representing one-third of the total settlement
amount, is reasonable for the work performed and the result obtained. 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).
III.
CONCLUSION
For the foregoing reasons, the Court GRANTS the Joint Motion to Approve
Settlement. (ECF No. 15.) Although the parties have attached a proposed stipulated
order of dismissal to their motion, it appears from the terms of the Settlement
Agreement that entry of that order may depend upon the happening of certain events
following this Court’s entry of this Order approving the settlement of the FLSA
claims. The Court will enter a Stipulated Order of Dismissal closing this case when
the parties have satisfied themselves of the happening of those events and present the
Court with the Stipulated Order of Dismissal through the Court’s CM/ECF Utilities
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function.
IT IS SO ORDERED.
s/Paul D. Borman
Paul D. Borman
United States District Court
Dated: June 25, 2018
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