RODRIGUEZ FUENTES

v.

KISSIMMEE OPTICAL, INC.

M.D. Fla. | 2022-01-26

No. 17

District Court, M.D. Florida (2022)

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Holding

The court recommended granting the motion to approve the FLSA settlement and dismiss the case with prejudice, finding the settlement fair and reasonable.

Facts & Procedural History

Plaintiff sued for unpaid overtime and minimum wages under the FLSA. The parties reached a settlement agreement and jointly moved for its approval and…

The full statement of facts, procedural history, and disposition for this case are member content.

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Topics

Compromise Of Claims Fair Labor Standards Act (Flsa) Settlement Approval Bona Fide Dispute Settlement Approval

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Opinion of the Court

In Lynn’s Food Stores, Inc. v. United States Department of Labor, 679 F. 2d 1350, 1352-53 (11th Cir. 1982), the Eleventh Circuit addressed the means by which an

FLSA settlement may become final and enforceable: There are only two ways in which back wage claims arising under the FLSA can be settled or compromised by employees. First, under section 216(c), the Secretary of Labor is authorized to supervise payment to employees of unpaid wages owed to them . . . . The only other route for compromise of FLSA claims is provided in the context of suits brought directly by employees against their employer under section 216(b) to recover back wages for FLSA violations. When employees bring a private action for back wages under the FLSA, and present to the district court a proposed settlement, the district court may enter a stipulated judgment after scrutinizing the settlement for fairness.

Thus, unless the parties have the Secretary of Labor supervise the payment of unpaid wages owed or obtain the Court’s approval of the settlement agreement,

In determining whether the settlement is fair and reasonable, the Court should consider the following factors: (1) the existence of collusion behind the settlement; (2) the complexity, expense, and likely duration of the litigation; (3) the stage of the proceedings and the amount of discovery completed; (4) the probability of plaintiff’s success on the merits; (5) the range of possible recovery; and (6) the opinions of counsel.

Leverso v. SouthTrust Bank of Ala., Nat’l Assoc., 18 F. 3d 1527, 1531 n.6 (11th Cir. 1994); Hamilton v. Frito-Lay, Inc., No. 6:05-cv-592-ACC-JGG, 2007 WL 328792, at *2 (M.D. Fla. Jan. 8, 2007), report and recommendation adopted 2007 WL 219981 (M.D. Fla. Jan. 26, 2007). The Court should be mindful of the strong presumption in favor of finding a settlement fair. See Cotton v. Hinton, 559 F. 2d 1326, 1331 (5th Cir. 1977).4 In FLSA cases, the Eleventh Circuit has questioned the validity of contingency fee agreements. Silva v. Miller, 307 F. App’x 349, 351 (11th Cir. 2009) (citing Skidmore v. John J. Casale, Inc., 160 F. 2d 527, 531 (2d Cir. 1947) (“We have considerable doubt as to the validity of the contingent fee agreement; for it may well be that Congress intended that an employee’s recovery should be net[.]”)). In Silva, the Eleventh Circuit stated: That Silva and Zidell entered into a contingency contract to establish Zidell’s compensation if Silva prevailed on the FLSA claim is of little moment in the context of FLSA. 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. FLSA provides for reasonable attorney’s fees; the parties cannot contract in derogation of FLSA’s provisions. See Lynn’s Food, 679 F. 2d at 1352 (“FLSA rights cannot be abridged by contract or otherwise waived.”) (quotation and citation omitted). To turn a blind eye to an agreed upon contingency fee in an amount greater than the amount determined to be reasonable after judicial scrutiny runs counter to FLSA’s provisions for compensating the wronged employee. See United Slate, Tile & Composition Roofers v. G & M Roofing & Sheet Metal Co., 732 F. 2d 495, 504 (6th Cir. 1984) (“the determination of a reasonable fee is to be conducted by the district court regardless of any contract between plaintiff and plaintiff’s counsel”); see also Zegers v. Countrywide Mortg. Ventures, LLC, 569 F. Supp. 2d 1259 (M.D. Fla. 2008).

Bonetti, 715 F. Supp. 2d at 1228 (emphasis added). Judge Presnell maintained that if the matter of attorney’s fees is “addressed independently and seriatim, there is no reason to assume that the lawyer’s fee has influenced the reasonableness of the plaintiff’s settlement.” Id. The undersigned finds this reasoning persuasive.

III. ANALYSIS

A. Settlement Amount

In Plaintiff’s Answers to the Court’s Interrogatories, she states that her damages are $3,657 in unpaid overtime wages and $9,881.25 in unpaid off-theclock wages. Doc. No. 16-1 at 2-3. Under the FLSA Settlement Agreement, Plaintiff will receive $5,996 for unpaid wages and $5,996 for liquidated damages. Doc. No. 17-1 at 3. Because Plaintiff is receiving less than the amount she claimed, Plaintiff compromised her claims under the FLSA. Caseres v. Texas de Brazil (Orlando) Corp., 6:13-cv-1001-RBD-KRS, 2014 WL 12617465, at *2 (M.D. Fla. April.², 2014) (“Because [plaintiff] will receive under the settlement agreement less than she averred she was owed under the FLSA, she has compromised her claim within the meaning of Lynn’s Food Stores”).

This case involves disputed issues of FLSA liability, which constitutes a bona fide dispute. Doc. No. 17 at 6, ¶ 22. The parties reached a settlement after holding an in person meeting between counsel of record. Id. at 4, ¶ 15-16. Each party was represented by “experienced wage & hour counsel in an adversarial context.” Id. at 9, ¶ 26. Considering the foregoing, and the strong presumption favoring settlement, the settlement amount is fair and reasonable. B. Attorneys’ Fees

Under the FLSA Settlement Agreement, Plaintiff’s counsel will receive $10,508 in attorney’s fees and costs. Doc. No. 17-1 at 3. The parties state that attorney’s fees and costs were negotiated separately from Plaintiff’s FLSA claim.

Doc. No. 17 at 10, ¶29. Such a representation adequately establishes that the issue of attorney’s fees and costs was agreed upon without regard to the amount paid to Plaintiff. See Bonetti, 715 F. Supp. 2d at 1228. Accordingly, pursuant to Bonetti, the FLSA Settlement Agreement’s attorney’s fee provision is fair and reasonable.

IV. CONCLUSION

Based on the foregoing, it is RECOMMENDED that the Court: 1) GRANT the Motion (Doc. No. 17); 2) APPROVE the FLSA Settlement Agreement to the extent that the Court finds the Agreement to be a fair and reasonable resolution of Plaintiff's claims; and 3) DISMISS the case with prejudice.

NOTICE TO PARTIES

A party has fourteen days from the date the Report and Recommendation is served to serve and file written objections to the Report and Recommendation’s factual findings and legal conclusions. Failure to serve written objections waives that party’s right to challenge on appeal any unobjected-to factual finding or legal conclusion the district judge adopts from the Report and Recommendation. 11th Cir. R. 3-1. If the parties have no objection to this Report and Recommendation, they may promptly file a joint notice of no objection in order to expedite the final disposition of this case. RECOMMENDED in Orlando, Florida, on January 26, 2022. David A. DAVID A fate

UNITED STATES MAGISTRATE JUDGE

Copies furnished to:

Presiding District Judge Counsel of Record

Footnotes

2 Doc. No. 17-1. 3 The parties also entered into a separate confidential settlement settling claims unrelated to Plaintiff’s FLSA claims against Defendants. Doc. No. 17-1 at ¶ 9. the parties’ agreement is unenforceable. Id.; see also Sammons v. Sonic-North Cadillac, Inc., No. 6:07-cv-277-PCF-DAB, 2007 WL 2298032, at *5 (M.D. Fla. Aug. 7, 2007) (noting that settlement of FLSA claim in arbitration proceeding is not enforceable under Lynn’s Food because it lacked Court approval or supervision by the Secretary of Labor). Before approving an FLSA settlement, the Court must scrutinize it to determine if it is a fair and reasonable resolution of a bona fide dispute. Lynn’s Food Store, 679 F. 2d at 1354-55. If the settlement reflects a reasonable compromise over issues that are actually in dispute, the Court may approve the settlement. Id. at 1354.

4 In Bonner v. City of Prichard, 661 F. 2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981. Silva, 307 F. App’x at 351-52.5 For the Court to determine whether the proposed settlement is reasonable, counsel for the claimant must first disclose the extent to which the FLSA claim has or will be compromised by the deduction of attorney’s fees, costs, or expenses pursuant to a contract between the plaintiff and his counsel, or otherwise. Id. When a plaintiff receives less than a full recovery, any payment (whether or not agreed to by a defendant) above a reasonable fee improperly detracts from the plaintiff’s recovery.6 Thus, a potential conflict can arise between counsel and their clients regarding how much of the plaintiff’s total recovery should be allocated to attorney’s fees and costs.7 It is the Court’s responsibility to ensure that any such allocation is reasonable. See id. As the Court interprets Lynn’s Food and Silva, where there is a compromise of the amount due to the plaintiff, the Court should decide the reasonableness of the attorney’s fees provision under the parties’ settlement agreement using the lodestar method as a guide. In such a case, any compensation for attorney’s fees beyond that justified by the lodestar method is unreasonable unless exceptional circumstances would justify such an award.

5 In this circuit, “[u]npublished opinions are not considered binding precedent, but they may be cited as persuasive authority.” 11th Cir. R. 36-2. 6 From a purely economic standpoint, defendants are largely indifferent as to how their settlement proceeds are divided as between plaintiffs and their counsel. Where a plaintiff is receiving less than full compensation, payment of fees necessarily reduces the plaintiff’s potential recovery. 7 This potential conflict is exacerbated in cases where the defendant makes a lump sum offer which is less than full compensation, because any allocation between fees and the client’s recovery could become somewhat arbitrary. An alternate means of demonstrating the reasonableness of attorney’s fees and costs was set forth in Bonetti v. Embarq Management Co., 715 F. Supp. 2d 1222 (M.D. Fla. 2009). In Bonetti, the Honorable Gregory A. Presnell held: In sum, if the parties submit a proposed FLSA settlement that, (1) constitutes a compromise of the plaintiff’s claims; (2) makes full and adequate disclosure of the terms of settlement, including the factors and reasons considered in reaching same and justifying the compromise of the plaintiff’s claims; and (3) represents that the plaintiff’s attorneys’ fee was agreed upon separately and without regard to the amount paid to the plaintiff, then, unless the settlement does not appear reasonable on its face or there is reason to believe that the plaintiff’s recovery was adversely affected by the amount of fees paid to his attorney, the Court will approve the settlement without separately considering the reasonableness of the fee to be paid to plaintiff’s counsel.

Cases With Similar Vibessemantic neighbors from the corpus

Citator

Authorities Cited

Bonner v. City OF Prichard, 661 F.2d 1206 (11th Cir. 1981)
O'Neal v. Am. Shaman Franchise Sys., Inc., 679 F. 2d 1350 (11th Cir. 2026)
Bonetti v. Embarq Mgmt. Co., 715 F. Supp. 2d 1222 (M.D. Fla. 2009)
Hollie Cotton and Young Herrod v. Ravon Hinton and Chauncey L. Gardner, 559 F.2d 1326 (5th Cir. 1977)
Leverso v. Southtrust Bank OF AL., 18 F.3d 1527 (11th Cir. 1994)
Skidmore v. John J. Casale, Inc., 160 F.2d 527 (2d Cir. 1947)
Zegers v. Countrywide Mortg. Ventures, LLC, 569 F. Supp. 2d 1259 (M.D. Fla. 2008)

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RODRIGUEZ FUENTES v. KISSIMMEE OPTICAL, INC.