Galvez v. Americlean Services Corporation et al
Filing
30
MEMORANDUM OPINION Re: 25 Joint MOTION for Settlement Approval. Signed by District Judge James C. Cacheris on 5/15/2012. (stas)
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
WILLIAMS MEDINA GALVEZ,
et al.,
Plaintiffs,
v.
AMERICLEAN SERVICES CORP.,
et al.,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
1:11cv1351 (JCC/TCB)
M E M O R A N D U M
O P I N I O N
This matter is before the Court on the parties’ Joint
Motion for Approval of Settlement Agreement [Dkt. 25] (the
“Motion”).
For the following reasons, the Court will deny the
parties’ Motion without prejudice.
I. Background
This case arises out of Defendants’ alleged violation
of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et
seq.
A.
Factual Background
Defendants Americlean Services Corporation and
Americlean Environmental Services, LLC (collectively
“Americlean”) provide duct cleaning and mold remediation
services to customers in Virginia, Maryland, and the District of
Columbia.
(Am. Compl. ¶ 9.)
Plaintiffs allege that the two
1
corporations are a single enterprise and constitute a “single
employer” or “joint employer” as defined in the FLSA.
Compl. ¶ 10.)
(Am.
Defendants Richard de Azagra and Charles de
Azagra are officers of Americlean.
(Am. Compl. ¶¶ 7-8.)
Plaintiffs Williams Medina Galvez and Adolfo Temoche
Gerrasi worked for Americlean as field technicians, performing
duct cleaning and mold remediation.
(Am. Compl. ¶ 14.)
Plaintiffs were required to report to work at the Americlean
warehouse in Manassas Park, Virginia in order to load company
vehicles with the required equipment before driving to their
assigned worksites.
(Am. Compl. ¶ 16.)
At the end of the day,
Plaintiffs returned the company vehicles to the Americlean
warehouse and unloaded them.
(Id.)
Americlean allegedly did not pay its employees,
including Plaintiffs, for time spent driving to and from
worksites and loading and unloading company vehicles.
Compl. ¶ 17.)
(Am.
Plaintiffs allege that they generally worked
approximately forty hours per week at their worksites, and thus
this unpaid time constituted overtime that should have been paid
at a rate of one and one half times their regular rates of pay.
(Am. Compl. ¶ 18.)
Plaintiffs, along with many co-workers, allegedly
raised this issue with Richard de Azagra on October 4, 2011.
(Am. Compl. ¶ 19.)
In response, Richard allegedly sent
2
Plaintiffs and their co-workers home for the day without pay.
(Id.)
On or about October 12, 2011, Richard assigned Medina
Galvez to a new project, allegedly because Medina Galvez was
“causing problems.”
(Am. Compl. ¶ 20.)
Two days later, Richard
allegedly told Medina Galvez he could return to his previous
project at Quantico Marine Corps base, but only if he promised
“not to cause any more problems.”
(Am. Compl. ¶ 21.)
Plaintiffs allege that the “problems” referred to Medina
Galvez’s role in the October 4 meeting.
(Am. Compl. ¶¶ 20-21.)
On November 16, 2011, Medina Galvez was again told
that he was being assigned to a new project, this time by
Charles de Azagra.
(Am. Compl. ¶ 22.)
Medina Galvez understood
this to mean he would have fewer hours and thus less take-home
pay.
(Id.)
Charles allegedly told Medina Galvez to report to
work the following morning at 8:00 a.m. instead of the usual
7:00 a.m., the starting time for the project at Quantico.
(Id.)
Medina Galvez allegedly arrived at work at 7:00 a.m, and
attempted to make his case as to why he should be allowed to
continue working at Quantico.
(Am. Compl. ¶ 23.)
Charles
allegedly refused to discuss the matter and instead fired Medina
Galvez.
(Id.)
Plaintiffs allege that Medina Galvez’s
termination was in retaliation for his role in organizing coworkers to complain about unpaid compensation.
3
(Am. Compl. ¶
24.)
Temoche Gerrasi resigned from Americlean in late January
or early February 2012.
B.
(Am. Compl. ¶ 25.)
Procedural Background
Plaintiff Medina Galvez commenced this action on
December 14, 2011.
[Dkt. 1.]
On February 14, 2012, an amended
complaint was filed, in which Plaintiff Temoche Gerrasi was
added as a party.
[Dkt. 17.]
Plaintiffs allege violations of
the minimum wage, overtime, and anti-retaliation provisions of
the FLSA.
They also assert claims for breach of contract and
quantum meruit.
As relief, Plaintiffs seek, among other things:
(1) actual damages in the amount of all unpaid minimum wages and
overtime; (2) an additional amount of liquidated damages equal
to the unpaid minimum wages and overtime; (3) an award of
consequential damages, including pain, suffering, and emotional
distress; (4) an award of punitive damages; and (5) an award of
Plaintiffs’ costs and reasonable attorneys’ fees.
Defendants
answered the amended complaint on February 29, 2012.
[Dkt. 19.]
On May 1, 2012, the parties filed a Joint Motion for
Approval of Settlement [Dkt. 25], attaching a fully executed
settlement agreement [Dkt. 26-1].
The parties’ Motion is before
the Court.
II.
Standard of Review
Under the FLSA, “there is a judicial prohibition
against the unsupervised waiver or settlement of claims.”
4
Taylor v. Progress Energy, Inc., 493 F.3d 454, 460 (4th Cir.
2007) (citing D.A. Schulte, Inc. v. Gangi, 328 U.S. 108, 114-16,
(1946)).
Claims for FLSA violations can only be settled when
the settlement is supervised by the Department of Labor or a
court.
Taylor v. Progress Energy, Inc., 415 F.3d 364, 374 (4th
Cir. 2005).
A proposed settlement should be approved if it
reflects a reasonable compromise over issues actually in
dispute.
See Lomascolo v. Parsons Brinckerhoff, Inc., No.
1:08cv1210, 2009 WL 3094955, at *8 (E.D. Va. Sept. 29, 2009)
(citing Lynn’s Food Stores, Inc. v. United States, 679 F.2d
1350, 1355 (11th Cir. 1982)).
In assessing whether a proposed
settlement is reasonable, adequate, and fair, the court should
consider 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;’ and finally, ‘the probability of plaintiffs’
success on the merits and the amount of the settlement in
relation to the potential recovery.’”
Poulin v. Gen. Dynamics
Shared Res., Inc., No. 3:09-cv-00058, 2010 WL 1813497, at *1
(W.D. Va. May 5, 2010) (quoting Lomascolo, 2009 WL 3094955, at
*10).
5
III. Analysis
The parties’ Motion fails to set forth sufficient
facts and arguments that would enable the Court to evaluate the
proposed settlement agreement for fairness.
In addressing the
probability of Plaintiffs’ success on the merits, Defendants
assert that they have “extensive payroll records which
represented their efforts to pay employees fairly,” while
acknowledging Plaintiffs’ contention that the “payroll records
did not reflect the time they spent traveling to and from job
sites.”
(Defs.’ Mem. [Dkt. 26] at 3.)
conclusory assertions are insufficient.
These vague and
See Kianpour v. Rest.
Zone, Inc., No. DKC 11-0802, 2011 WL 5375082, at *4 (D. Md. Nov.
4, 2011) (holding that it is not “sufficient for [defendant] to
assert, in conclusory fashion, that an [FLSA] exemption applies
–- particularly where . . . the complaint strongly suggests that
it does not”).
The parties must put forth a more detailed
description of their respective positions.
The Motion is equally devoid of facts that would allow
the Court to approximate Plaintiffs’ potential recovery were
they to prevail on the merits.
Under the terms of the proposed
settlement agreement, each Plaintiff will receive $6,500, half
of which represents lost wages for the years 2009, 2010, and
2011, and half of which represents liquidated damages.
(Defs.’
Mem. Ex. 1 (“Proposed Settlement Agreement”) [Dkt. 26-1] ¶¶ 6-
6
7.)
However, the parties provide no information as to
Plaintiffs’ regular rates of pay or the number of hours
Plaintiffs worked during the three years prior to the filing of
the complaint for which they were allegedly uncompensated.
Without such information (or at least reasonable estimates) the
Court is unable to compare Plaintiffs’ potential recovery with
the amount of the proposed settlement and hence cannot assess
whether the proposed settlement amount is reasonable.
See
Kianpour, 2011 WL 5375082, at *4 (denying settlement where
parties failed to provide calculation of overtime hours).
Compare Lomascolo, 2009 WL 3094955, at *15 (approving settlement
where the proposed settlement agreement “describe[d] in detail
the formula the Parties negotiated to determine the value of
overtime worked by Plaintiffs”).
The parties also fail to support the proposed award of
attorneys’ fees.
“[T]he FLSA ‘requires judicial review of the
reasonableness of counsel’s legal fees to assure both that
counsel is compensated adequately and that no conflict of
interest taints the amount the wronged employee recovers under a
settlement agreement.’”
Poulin, 2010 WL 1813497, at *1 (quoting
Silva v. Miller, 307 F. App’x 349, 351 (11th Cir. 2009)).
In
calculating an award of attorneys’ fees, the Court must
determine the lodestar amount, defined as a “reasonable hourly
rate multiplied by hours reasonably expended.”
7
Grissom v. The
Mills Corp., 549 F.3d 313, 320–21 (4th Cir. 2008).
The Court’s
assessment of reasonableness involves consideration of the
following factors:
(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 similar cases.
Barber v. Kimbrell's, Inc., 577 F.2d 216, 226 n.28 (4th Cir.
1978).
Here, the parties have provided no declarations,
invoices, or similar documentation that would allow the Court to
perform a lodestar analysis and assess the reasonableness of
counsel’s hourly rate or the number of hours expended on the
case.
See Poulin, 2010 WL 1813497, at *1 (denying settlement,
in part, because “[t]he parties have offered no justification
underlying their request for an award of attorney’s fees, much
less the factual basis required for the Court to apply the
lodestar analysis as a guide in determining the reasonableness
[of] the requested attorney’s fees”).
8
Finally, the proposed settlement agreement contains a
confidentiality provision.
The provision provides, in pertinent
part:
The parties shall strictly maintain the
confidentiality of the amount and fact of this
Settlement Agreement and Release and any amounts
offered or demanded by either party. The parties
shall not disclose any information relating to the
amount and fact of this Settlement Agreement and
Release to any individual other than their respective
tax advisors, counsel, and spouses, or as necessary to
enforce compliance with this agreement. The parties
agree that if any of them is asked about the claims,
the Charge, or the Lawsuit by a person who was aware
of the claims, Charge, or lawsuit prior to the
execution of this agreement, he or she may state “the
matter has been resolved” and may state nothing
further.
(Proposed Settlement Agreement § 9(a).)
Other courts have held that confidentiality provisions
in FLSA settlement agreements undermine the purposes of the Act.
See, e.g., Poulin, 2010 WL 1813497, at *2.
Specifically, such
agreements
further[] resolution of no bona fide dispute between
the parties; rather, compelled silence unreasonably
frustrates implementation of the ‘public-private’
rights granted by the FLSA and thwarts Congress’s
intent to ensure widespread compliance with the
statute. To further Congress’s intent, the Department
of Labor requires the employer of an employee covered
by the FLSA to display conspicuously in the workplace
a detailed notice of the employee's FLSA rights. By
including a confidentiality provision, the employer
thwarts the informational objective of the notice
requirement by silencing the employee who has
vindicated a disputed FLSA right.
9
Dees v. Hydradry, Inc., 706 F. Supp. 2d 1227, 1242 (M.D. Fla.
2010).
Adhering to this rationale, many courts have rejected
proposed settlement agreements containing confidentiality
provisions, finding them unenforceable and operating in
contravention of the FLSA.
See Brumley v. Camin Cargo Control
Inc., Nos. 08-1798, 10-2461, 09-6128, 2012 WL 1019337, at *7
(D.N.J. Mar. 26, 2010) (collecting cases).
Here, the parties
have cited no interests in maintaining confidentiality which
would override the FSLA’s policy of transparency.
Furthermore,
the confidentiality provision in this case is likely
unenforceable, as the parties have not filed a motion to seal
and the settlement agreement, if ultimately approved, will be
publicly filed.
See Poulin, 2010 WL 1813497, at *2 (citing Head
v. V. & L Servs. III, Inc., No. 6:08-cv-917, 2009 WL 3582133, at
*3 (M.D. Fla. Oct. 27, 2009)).
For these reasons, the Court
declines to approve a settlement agreement which includes a
confidentiality provision.1
1
The Court is not opposed to the inclusion of Sections 9(b) and 9(c) of the
proposed settlement agreement, which provide that Defendants agree not to
disparage Plaintiffs and vice versa, so long as Section 9(c) specifies that
Plaintiffs are not precluded from revealing the amount and fact of the
settlement. The removal of Section 9(a) obviates the need for Sections 10
and 11.
10
IV.
Conclusion
For these reasons, the Court will deny the parties’
Motion without prejudice.
An appropriate Order will issue.
May 15, 2012
Alexandria, Virginia
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
11
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?