United States District Court, M.D. Florida, Orlando Division
REPORT AND RECOMMENDATION
R. SPAULDING UNITED STATES MAGISTRATE JUDGE
THE UNITED STATES DISTRICT COURT:
cause came on for consideration without oral argument on the
following motions filed herein:
MOTION: JOINT MOTION FOR A FAIRNESS FINDING, APPROVAL
OF SETTLEMENT, AND DISMISSAL WITH PREJUDICE (Doc. No.
FILED: August 24, 2017
MOTION: JOINT MOTION TO REFORM SETTLEMENT
AGREEMENT AND ENFORCE SETTLEMENT (Doc. No.
FILED: November 26, 2017
previously reviewed the history of this case. Doc. No. 48.
Because the procedural history of this case is complicated, I
again review the history of this case in detail
Rebecka Johnson, filed a complaint in state court against
Defendant, Steak N Shake Operations, alleging that Defendant
failed to pay her overtime wages in violation of the Fair
Labor Standards Act (“FLSA”), 29 U.S.C. §
201, et seq.; failed to pay her minimum wages in
violation of the Florida Minimum Wage Act, Fla. Stat.§
448.110; and failed to pay her wages in violation of Florida
Constitution Article X, § 24(c). Doc. No. 2. Defendant
removed the case to this Court on January 25, 2016.
served an Offer of Judgment on Plaintiff. Doc. No. 37-1. In
the Offer of Judgment, Defendant offered to pay Plaintiff $2,
500 if Plaintiff executed a proposed settlement agreement and
dismissed with prejudice her claims against Defendant.
Defendant also agreed that it would pay Plaintiff a
reasonable sum for the recovery of attorneys' fees and
costs and, if agreement could not be reached, that the Court
would be asked to determine the reasonable sum to be paid.
Id. Plaintiff timely accepted the offer on March 30,
2017. Doc. No. 37-2.
5, 2017, Plaintiff filed a notice of voluntary dismissal with
prejudice except as to the issue of attorneys' fees and
costs. Doc. No. 32. I struck the notice because Defendant had
filed an answer and, therefore, Plaintiff could not
voluntarily dismiss the case under Federal Rule of Procedure
41(a)(1)(A)(i). Doc. No. 33.
10 and 11, 2017, the parties executed the settlement
agreement contemplated by the Offer of Judgment. Doc. No.
50-1 (“May 2017 Settlement Agreement”). The May
2017 Settlement Agreement called for Plaintiff to receive $2,
500 divided into two payments of $1, 250. In keeping with the
terms of the Offer of Judgment, it did not address the issue
of attorneys' fees and costs. Id. On May 17,
2017, the parties filed a joint stipulation of dismissal with
prejudice except as to the issue of Plaintiff's
attorneys' fees. Doc. No. 34. On May 22, 2017, Plaintiff
also filed a motion for attorneys' fees and costs. Doc.
No. 37. On May 26, 2017, I held a hearing on the joint
stipulation of dismissal, noting that the self-executing
stipulation of dismissal did not likely result in Plaintiff
being entitled to an award of attorneys' fees under the
FLSA or Florida law. Doc. No. 35; see also Doc. Nos.
40, 41. Following the hearing, I denied Plaintiff's
motion for attorneys' fees without prejudice. Doc. No.
1, 2017, Defendant transmitted the settlement payment of $2,
500 to Plaintiff's counsel. Doc. No. 58-2. It appears
that Plaintiff's counsel transmitted that payment to
Plaintiff, and she has never returned the funds to Defendant.
15, 2017, Plaintiff filed a motion to withdraw the joint
stipulation for dismissal. Doc. No. 44. That motion was
granted on August 21, 2017. Doc. No. 49. In granting the
motion, the Court ordered the parties to file a motion
requesting that the Court approve their settlement in
accordance with Lynn's Food Stores, Inc. v. United
States, 679 F.2d 1350 (11th Cir. 1982), no later than
August 31, 2017. Id.
August 24, 2017, the parties filed the currently-pending
Joint Motion for a Fairness Finding, Approval of Settlement,
and Dismissal with Prejudice. Doc. No. 50. In the motion, the
parties sought approval of their settlement. The attorneys
also informed they Court that they had reached a resolution
on the issue of Plaintiff's attorneys' fees and
costs. Specifically, Defendant had agreed to pay
Plaintiff's counsel $5, 000 in full resolution of
Plaintiff's claims for attorneys' fees and costs.
Id. The parties attached the May 2017 Settlement
Agreement to their motion. Doc. No. 50-1. As explained above,
that settlement agreement does not include the agreement to
pay $5, 000 in attorneys' fees. On August 30, 2017, I
entered a supplemental briefing order. Doc. No. 51. I
required the parties to address several issues, including:
(1) whether Plaintiff had compromised her FLSA claim and, if
so, to what extent; and (2) why the scope of the release
contained in the settlement agreement (which runs to
individuals and entities who are not parties to this case and
releases claims other than the wage claims raised in the
complaint) does not undermine the fairness of the agreement.
I also required Defendant's counsel to represent that
they had received the settlement funds in their trust account
and would disburse those funds upon a favorable ruling by the
parties twice requested extensions of time to provide the
requested information. Doc. Nos. 52, 56. In those motions,
they represented that they planned to draft a new settlement
agreement that addressed my concerns and have Plaintiff
execute that revised agreement. Doc. No. 52. They also
explained that Plaintiff's counsel had been attempting to
have Plaintiff sign the new agreement but she had not yet
done so. Id.
November 26, 2017, counsel for the parties filed the
currently-pending Joint Motion to Reform Settlement Agreement
and Enforce Settlement. Doc. No. 58. In the motion, they
explained that Plaintiff's counsel had repeatedly
attempted to have Plaintiff sign the revised settlement
agreement. Nonetheless, she did not do so and, around October
20, 2017, stopped communicating with Plaintiff's counsel.
Accordingly, counsel asked the Court to “reform”
the parties' settlement agreement to contain only terms
that are legally enforceable and approve the terms of that
settlement. Defendant's counsel also represented that
they had received the $5, 000 in attorneys' fees from
Defendant and would disburse those funds to Plaintiff's
counsel upon a favorable ruling from the Court.
motions were referred to me, and they are ripe for
JOINT MOTION TO REFORM SETTLEMENT AGREEMENT AND ENFORCE
explained above, the parties executed a settlement agreement
on May 10 and 11, 2017. That May 2017 Settlement Agreement
disposed of Plaintiff's FLSA claims, but it did not
address Plaintiff's claims for attorneys' fees. It
also included a release that was arguably too broad. Counsel
drafted a revised settlement agreement that addressed these
issues. Plaintiff's counsel was, however, unable to
obtain Plaintiff's signature on the revised settlement
agreement. As a result, counsel ask the Court to essentially
re-write the May 2017 Settlement Agreement (which was signed
by Plaintiff) to reflect the revised terms and enforce the
agreement as revised. The problem with this approach, at
least as to the attorneys' fees award, is that the record
does not include any evidence that Plaintiff ever agreed to
the $5, 000 amount. Because, as discussed below, Plaintiff has
significantly compromised her claim, her assent to the amount
of attorneys' fees is not something the Court can simply
overlook. See Silva v. Miller, 307 F. App'x 349,
351 (11th Cir. 2009) (per curiam) (cited as persuasive
authority) (“[The] 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.”). Without
Plaintiff's assent, I cannot, as counsel requests,
recommend that the Court “enforce” the agreement
to the $5, 000 in fees. Accordingly, I recommend that the
Court DENY the Joint Motion to Reform
Settlement Agreement and Enforce Settlement (Doc. No. 58).
said, Plaintiff agreed to have the amount of attorneys'
fees be determined by the Court when she accepted the Offer
of Judgment. Doc. No. 37-1. It also appears that, despite a
previous motion claiming in excess of $20, 000 in fees,
Plaintiff's counsel has agreed to accept $5, 000 and
Defendant has agreed to pay that amount. Based on these
facts, I will first discuss whether the original settlement
agreement signed by Plaintiff (the “May 2017 Settlement
Agreement”) with recommended revisions is fair and
reasonable. I will then address whether the separate
agreement to pay $5, 000 in attorney's fees taints the
Settlement Agreement. Cf. Bonetti v. Embarq Mgmt.
Co., 715 F.Supp.2d 1222, 1228 (M.D. Fla. 2009)
(“[I]f the parties can only agree as to the amount to
be paid to the plaintiff, the Court will continue the
practice of determining a reasonable fee using the lodestar
JOINT MOTION FOR A FAIRNESS FINDING, APPROVAL OF SETTLEMENT,
AND DISMISSAL WITH PREJUDICE.
Lynn's Food, the U.S. Court of Appeals for the
Eleventh Circuit explained that claims for compensation under
the FLSA may only be settled or compromised when the
Department of Labor supervises the payment of back wages or
when the district court enters a stipulated judgment
“after scrutinizing the settlement for fairness.”
679 F.2d at 1353. Under Lynn's Food, a court may
only enter an order approving a settlement if it finds that
the settlement is fair and reasonable, Dees v. Hydradry,
Inc., 706 F.Supp.2d 1227, 1240 (M.D. Fla. 2010), and
that the ensuing judgment is stipulated, Nall v. Mal
Motels, Inc., 723 F.3d 1304, 1308 (11th Cir. 2013).
settlement agreement includes an amount to be used to pay
attorneys' fees and costs, the “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.” Silva, 307 F. App'x at 351. If
the Court finds that the payment to the attorney is not
reasonable, it must consider whether a plaintiff's
recovery might have been greater if the parties had reduced
the attorneys' fees to a reasonable amount. See
Id. at 351-52; see also Bonetti, 715 F.Supp.2d
at 1228 (finding that the Court must consider the
reasonableness of attorneys' fees when a
“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”). If the parties agree only on the amount to
be paid to the plaintiff, the Court determines a reasonable
fee using the lodestar approach. Bonetti, 715
F.Supp.2d at 1228.