Galvez v. Americlean Services Corporation et al
Filing
44
MEMORANDUM OPINION Re: 36 Amended MOTION for Settlement Approval by Americlean Environmental Services, LLC, Americlean Services Corporation, Charles De Azagra, Richard De Azagra. Signed by District Judge James C. Cacheris on 6/29/2012. (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.
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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’
Amended Motion for Approval of Settlement Agreement [Dkt. 36]
(the “Motion”).
For the following reasons, the Court will grant
the parties’ Motion.
I. Background
The factual background of this case is set forth in
this Court’s Memorandum Opinion dated May 15, 2012 (Memorandum
Opinion [Dkt. 30] (“Mem. Op.”) at 1-4) and will not be recited
in detail here.
To summarize, Plaintiffs Williams Medina Galvez
and Adolfo Temoche Gerrasi allege that their former employer,
Defendants Americlean Services Corporation and Americlean
Environmental Services, LLC (collectively “Americlean”) failed
to pay them wages for all hours worked, in violation of the Fair
Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq.
1
The
parties eventually reached a settlement agreement and filed a
joint motion for approval of settlement [Dkt. 25], which the
Court denied without prejudice on May 15, 2012, [Dkt. 31].
The
Court requested additional information pertaining to the
strength of the parties’ respective positions, Plaintiffs’
potential recovery were they to prevail on the merits, and the
proposed award of attorneys’ fees.
(Mem. Op. at 6-8.)
The
Court also objected to a confidentiality provision in the
parties’ proposed settlement agreement.1
(Mem. Op. at 9-10.)
On
June 5, 2012, the parties filed an Amended Motion for Settlement
Approval.
[Dkt. 36.]
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.”
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
1
The parties have stricken the offending provisions of the proposed
settlement agreement, and thus this is no longer an issue.
2
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 Resources, Inc., No. 3:09-cv-00058, 2010 WL 1813497, at
*1 (W.D. Va. May 5, 2010) (quoting Lomascolo, 2009 WL 3094955,
at *10).
III. Analysis
A.
Reasonableness of Proposed Settlement Agreement
The Court has reviewed the parties’ proposed
settlement agreement and accompanying submissions and will now
address each factor in turn.
1.
The Extent of Discovery
Discovery in this case commenced on February 1, 2012
and was set to close on May 11, 2012.
3
[See Dkt. 10.]
The Court
was first informed that a settlement had been negotiated on May
1, 2012, with just ten days of the discovery period remaining.
[See Dkt. 25.]
Prior to that time, Defendants produced nearly
4,000 pages of documents to Plaintiffs.
Plaintiffs deposed
Defendant Richard de Azagra for approximately seven hours.
While Plaintiffs had not yet deposed their coworkers,
Plaintiffs’ counsel spoke with many of them on the telephone
subsequent to filing suit.
The parties also obtained a preview
of likely trial testimony while litigating the facts surrounding
Plaintiff Medina Galvez’s termination before the Virginia
Employment Commission and the National Labor Relations Board.
As such, “it is clear that the [p]arties had adequate time to
conduct sufficient discovery to ‘fairly evaluate the liability
and financial aspects of [the] case.’”
Lomascolo, 2009 WL
3094955, at *11 (quoting A.H. Robins Co., 88 B.R. 755, 760 (E.D.
Va. 1988)).
2.
Stage of the Proceedings
As noted above, the parties have completed substantial
discovery in this case, which they represent has been costly.
The Court concludes that the “[t]hese proceedings [have]
advanced to a stage sufficient to permit the [p]arties and their
counsel to obtain and review evidence, to evaluate their claims
and defenses and to engage in informed arms-length settlement
negotiations.”
Lomascolo, 2009 WL 3094955, at *11.
4
The
settlements, if approved, would enable the parties to avoid the
time and expense of further litigation, whether through summary
judgment or trial.
3.
Absence 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.”
Id. at *12 (citation omitted).
Here, there is no
evidence that the parties’ settlement is the product of fraud or
collusion.
Rather, the parties agreed to the settlement after
engaging in informed, arms-length negotiations.
4.
Experience of Counsel
Counsel representing both Plaintiffs and Defendants
are competent and well-experienced in federal court litigation
in general and FLSA cases in particular.
FLSA cases account for
forty percent of the current caseload of Plaintiffs’ counsel.
Moreover, both of Plaintiffs’ attorneys have litigated cases
involving FLSA claims in this District.
See Tapia v. CSI
Constr., Inc., No. 4:08cv103 (E.D. Va. filed Oct. 16, 2008);
Bland v. Linehaul Solutions, Inc., No. 1:08cv1146 (E.D. Va.
filed Nov. 3, 2008); Ramirez-Ramos v. Donna, No. 1:09cv541 (E.D.
Va. filed May 14, 2009).
Defendants’ counsel is also well-
experienced in employment law and has litigated FLSA cases.
such, the Court concludes that counsel possessed sufficient
knowledge of the applicable law and the procedures of this
5
As
Court, enabling them to evaluate the strength of their
respective cases and provide competent legal advice.
5.
Amount of the Settlement in Relation to the
Potential Recovery
The proposed settlement agreement requires Defendants
to pay Plaintiffs $6,500 each to resolve all claims raised in
this lawsuit.
claims:
Plaintiffs raise essentially three different
(1) that certain payroll practices employed by
Defendants failed to pay Plaintiffs the full amount of overtime
due (the “technical violations claim”); (2) that Defendants
maintained a blanket practice of recording and thus compensating
only eight hours each day regardless of the actual number of
hours worked (the “unpaid hours claim”); and that Plaintiff
Medina Galvez’s termination was retaliatory (the “retaliation
claim”).
To begin, Plaintiffs identified three technical
violations in connection with Defendants’ payroll practices that
resulted in an underpayment of overtime.
First, Defendants
failed to pay Plaintiffs overtime during weeks in which they
worked more than five days for both Americlean entities.
For
example, if in a given week an employee worked twenty-four hours
for Americlean Services Corp. and thirty-five hours for
Americlean Environmental Services (and hence fifty-nine hours
total) that employee was not paid overtime as he or she should
have under the FLSA.
Second, Defendants failed to calculate
6
overtime during weeks in which Plaintiffs worked both
“commercial” and “residential” jobs.
For commercial jobs,
employees were paid at an hourly rate based on the number of
hours worked whereas for residential jobs, employees were paid a
flat rate.
Defendants also did not record the number of hours
worked on residential jobs.
Thus, if an employee worked on both
commercial and residential jobs for more than five days in a
given week, that employee likely worked more than forty hours,
but was not paid overtime.
The number of hours an employee
worked in such a week is not ascertainable, as the number of
hours worked was not recorded for residential jobs, but
Defendants made estimates based on the flat rate amount the
employee was paid.
Third, Defendants failed to adjust
Plaintiffs’ regular rate of pay for weeks in which they were
paid performance bonuses and also worked overtime.
Plaintiffs
have provided payroll records exemplifying each of these
violations.
While the probability of Plaintiffs’ success on
their technical violations claim was very high, the violations
occurred infrequently and resulted in modest damages.
Plaintiffs’ estimated recovery on this claim was $1,900 per
Plaintiff, which, including an equal amount for liquidated
damages, comes to $3,800.2
2
Section 216 of the FLSA holds an employer who violates the provisions of §
206 or § 207 liable to the employee or employees affected in the amount of
their unpaid overtime compensation or unpaid minimum wages and an additional
equal amount as liquidated damages. 29 U.S.C. § 216(b).
7
Turning to the unpaid hours claim, Plaintiffs contend
that on various occasions, they worked more than eight hours per
day on commercial jobs including compensable travel time.
They
allege that Defendants, however, routinely paid employees eight
hours per day, regardless of the actual number of hours worked.
The parties vigorously dispute this claim.
Defendants recorded
the time at which employees arrived at work and how many hours
they worked each day, but not the time at which employees
clocked out.
While Plaintiffs contended that they routinely
worked more than eight hours per day, no evidence in the record
supported their recollection of the time at which their workday
ended.
Plaintiffs’ counsel attempted to piece this information
together by using gate records at various worksites or credit
card receipts from gas stations, but to no avail.
Plaintiffs’
success on this claim would have rested largely on the jury’s
evaluation of testimony at trial.
While Plaintiffs’ coworkers
had not been deposed at the time the settlement was reached,
Plaintiffs’ counsel spoke with many by telephone who were
prepared to testify that they never worked any unpaid hours.
Plaintiffs estimated that the probability of succeeding on their
unpaid hours claim was roughly one-in-three.
They estimated
that their maximum recovery on the claim was $2,100 per
Plaintiff, or $4,200 including liquidated damages.3
3
This figure was derived from Plaintiffs’ estimate of two unpaid hours per
week over a period of two years. Plaintiffs therefore implicitly concede
8
In light of the foregoing, the Court concludes that
the parties’ settlement “reflects a reasonable compromise over
issues actually in dispute.”
*8.
See Lomascolo, 2009 WL 3094955, at
Plaintiffs estimated that their maximum recovery on the
technical violations claim and unpaid hours claim was $8,000.
The settlement amount -- $6,500 for each Plaintiff -- amounts to
81.3 percent of their maximum recovery on these claims.
Although Plaintiffs have agreed to a settlement which does not
assign value to their retaliation claim, the decision to do so
is not unreasonable given their failure to successfully advance
this claim before two neutral factfinders: the Virginia
Employment Commission and the NLRB.4
Courts have recognized a
role for less-than-full-value compromise in the FLSA settlement
process.
See, e.g., Alleyne v. Time Moving & Storage Inc., 264
F.R.D. 41, 57–58 (E.D.N.Y. 2010) (approving settlement of FLSA
claims at thirteen to seventeen percent of maximum recovery).
Such compromises reflect the “many factors [that] may be in play
as the parties negotiate.”
Bonetti v. Embarq Mgmt. Co., 715 F.
Supp. 2d 1222, 1227 (M.D. Fla. 2009).
Here, Plaintiffs have
that they would have been unable to prove a willful FLSA violation, which
would have extended the limitations period to three years. See 29 U.S.C. §
255(a).
4
The Court need not engage in an in-depth review of the parties’ settlement
of the retaliation claim, provided its terms do not contaminate the
settlement of claims relating to unpaid overtime and unpaid wages. See Yost
v. Wyndham Vacation Resorts, Inc., No. 10-cv-1583, 2012 WL 1165598, at *3
(M.D. Fla. Mar. 26, 2012), report and recommendation adopted 2012 WL 1165468
(M.D. Fla. Apr. 9, 2012); cf. Barrentine v. Ark.-Best Freight Sys., Inc., 450
U.S. 728, 740 (1981) (noting the “nonwaivable nature of an individual
employee’s right to a minimum wage and overtime pay under the [FLSA]”)
(emphasis added).
9
attained a settlement which more than compensates them for their
technical violations claims and compensates them for their
unpaid hours claim at a rate commensurate with that claim’s
probability of success.
Accordingly, the Court concludes that
the settlement in this case is fair and reasonable in relation
to Plaintiffs’ potential recovery.
B.
Attorneys’ Fees
The proposed settlement agreement in this case
prescribes an award of attorneys’ fees in the amount of $21,450.
“[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.”
320–21 (4th Cir. 2008).
Grissom v. The Mills Corp., 549 F.3d 313,
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
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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).
A determination of the hourly rate is the critical
inquiry in setting the reasonable fee, and the burden rests with
the fee applicant to establish the reasonableness of a requested
rate.
Plyer v. Evatt, 902 F.2d 273, 277 (4th Cir. 1990).
Here,
the Court finds the requested attorneys’ fees reasonable under
Kimbrell’s.
Plaintiffs’ counsel, Simon Sandoval-Moshenberg,
attests that he and his co-counsel expended 151.3 hours
litigating this case, which included client meetings, creating a
discovery plan, responding to interrogatories, telephone calls
and meetings with witnesses, review of payroll records and other
documents, and the deposition of Richard de Azagra.5
(See
generally Pls.’ Mem. [Dkt. 39] Ex. B (“Sandoval-Moshenberg
Decl.”).)
Taking $21,450 in attorneys’ fees and 151.3 as the
number of hours expended on this case yields an imputed hourly
rate of $141.77.
This Court has previously awarded Mr.
5
This figure is based on time spent up to and including April 30, 2012. It
therefore excludes hours spent on the parties’ initial motion for approval of
settlement and on Plaintiffs’ memorandum of law submitted in connection with
the instant Motion. The figure also excludes time spent by paralegals
organizing and cataloguing time records, which Plaintiffs estimate was at
least ten hours.
11
Sandoval-Moshenberg attorneys’ fees in an FLSA case based on a
$250 hourly rate.
See Ramirez-Ramos v. Donna, No. 1:09cv541
(E.D. Va. Mar. 22, 2010) (order granting plaintiffs’ application
for award of attorneys’ fees and costs).
And, because
Plaintiffs’ co-counsel, Erin Trodden, has more experience than
Mr. Sandoval-Moshenberg, she would ostensibly be able to bill
her time at a higher rate.
The imputed hourly rate is also
substantially below the $240 hourly rate for an attorney with
one to three years of experience set forth in the Laffey Matrix.6
Based on the foregoing, the Court finds that the imputed hourly
rate is reasonable.
The other Kimbrell’s factors also support the
requested attorneys’ fees.
While the legal questions in this
case were not particularly novel, Plaintiffs’ counsel engaged in
a detailed factual inquiry.
The opportunity cost of litigating
this case was also relatively high, as two attorneys invested a
significant amount of time on behalf of two low wage workers
unable to pay litigation costs.
for this reason as well.
The case was an undesirable one
While the award of attorneys’ fees
6
The Laffey Matrix is used as a guideline for reasonable attorneys’ fees in
the Washington/Baltimore area. See United States ex rel. Thyssenkrupp
Safway, Inc. v. Tessa Structures, LLC, No. 1:10cv512, 2011 WL 2633902, at *67 & n.2 (E.D. Va. July 5, 2011) (using the Laffey Matrix as evidence of
reasonableness). The matrix is hosted on the website of the United States
Attorney’s Office for the District of Columbia. See http://www.justice.gov/
usao/dc/divisions/civil_Laffey_Matrix_2003-2012.pdf. The rates are adjusted
for cost of living and are based on rates found reasonable in Laffey v. Nw.
Airlines, 746 F.2d 4, 24–25 (D.C. Cir. 1984), overruled in part on other
grounds by Save Our Cumberland Mountains, Inc. v. Hodel, 857 F.2d 1516, 1524
(D.C. Cir. 1988).
12
sought exceeds the recovery obtained by Plaintiffs, the Court is
mindful that Plaintiffs were able to recover 81.3 percent of
their maximum recovery.
See Mercer v. Duke Univ., 401 F.3d 199,
204 (4th Cir. 2005) (noting that the extent of relief obtained
–- meaning the amount of damages sought to the amount awarded –is of primary importance in all cases where a court is asked to
award attorneys’ fees).
Given the record in this case, there is
no reason to believe Plaintiffs’ recovery was adversely affected
by the amount of attorneys’ fees agreed upon by the parties.
In
sum, the Court finds the parties’ settlement, including the
award of attorneys’ fees, fair and reasonable.
IV.
Conclusion
For these reasons, the Court will grant the parties’
Motion.
An appropriate Order will issue.
June 29, 2012
Alexandria, Virginia
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
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