Dorn v. Lowman's Enterprises Group, Inc.

          REPORT AND RECOMMENDATION

          THOMAS B. SMITH United States Magistrate Judge.

         Pending before the Court in this Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. case is the parties' Amended Joint Motion for Approval of Settlement Agreement (Doc. 28).

         I. Background

         From an unknown start date in August 2016 through an unknown end date in September 2016, Defendant Lowman's Enterprises Group, Inc., employed Plaintiff Shermon Dorn as a lawn crew member (Doc. 21, ¶¶ 1, 4, 7). Plaintiff alleges that Defendants Jimmie Lowman and Esperanza Lowman were also his employers (Doc. 1, ¶¶ 13-14). Plaintiff's duties included mowing, edging, trimming shrubbery and pulling weeds for which he was paid $75 per day (Id., ¶¶ 4-5). Plaintiff alleges that he worked 66 to 72 hours per week and is owed unpaid wages and overtime (Id., ¶ 7). His complaint includes counts for violation of the FLSA and Fla. Stat. § 448.01 (Doc. 1). Defendants deny liability and affirmatively allege that they are exempt from or otherwise not subject to the FLSA (Doc. 14 at 8).

         The parties filed a joint motion for approval of settlement agreement on January 29, 2018 (Doc. 26), which was referred to me for a report and recommendation. On February 1, 2018, I issued a report and recommendation to deny the motion for several reasons (Doc. 27). My concerns were that: the confidentiality provision in the parties' agreement contravened the policies underlying the FLSA, the general release was too broad and named unnamed parties who have no apparent connection to this case, it restrained Plaintiff from making future claims against Defendant that are unrelated to his complaint, and it incorrectly assumed that this Court would retain jurisdiction to enforce the agreement (Doc. 27). I recommended that the Court give the parties fourteen days to submit an amended agreement for the Court's consideration (Doc. 27 at 8). On February 19, 2018, the parties filed their out-of-time motion for approval of their revised settlement agreement (Doc. 28). The district judge entered an Endorsed Order denying the original motion, finding my report and recommendation moot, and accepting the amended motion (Doc. 29). The parties' amended settlement agreement is an improvement, but still fails to cure all of the defects outlined in my previous report and recommendation. Consequently, I respectfully recommend that the motion be denied.

         II. Standard of Review

         “The principal congressional purpose in enacting the Fair Labor Standards Act of 1938 was to protect all covered workers from substandard wages and oppressive working hours, ‘labor conditions [that are] detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers.'” Barrentine v. Ark.-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981) (alternation in original) (quoting 29 U.S.C. § 202(a)). “Any employer who violates the provisions of section 206 or section 207 of [the FLSA] shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, and in an additional equal amount as liquidated damages.” 29 U.S.C. § 216(b). Section 206 establishes the federally-mandated minimum hourly wage, and § 207 prescribes overtime compensation of “one and one-half times the regular rate” for each hour worked in excess of forty hours during a given workweek. The provisions of the FLSA are mandatory and “cannot be abridged by contract or otherwise waived.” Barrentine, 450 U.S. at 740. To permit otherwise would “‘nullify the purposes' of the [FLSA] and thwart the legislative policies it was designed to effectuate.” Id. (quoting Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 707 (1946)).

         The parties seek judicial review and a determination that their settlement of Plaintiff's FLSA claim is a “fair and reasonable resolution of a bona fide dispute” over FLSA issues. See Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1354-55 (11th Cir. 1982). If a settlement is not one supervised by the Department of Labor, the only other route for compromise of FLSA claims is provided in the context of suits brought directly by employees against their employers under § 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.” Id. at 1353 (citing Schulte, Inc. v. Gangi, 328 U.S. 108 (1946)).

         In the Eleventh Circuit “[s]ettlements may be permissible in the context of a suit brought by employees under the FLSA for back wages because initiation of the action by the employees provides some assurance of an adversarial context.” Id. at 1354. In these cases:

The employees are likely to be represented by an attorney who can protect their rights under the statute. Thus, when the parties submit a settlement to the court for approval, the settlement is more likely to reflect a reasonable compromise of disputed issues than a mere waiver of statutory rights brought about by an employer's overreaching. 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; we allow the district court to approve the settlement in order to promote the policy of encouraging settlement of litigation.

Id.

         In determining whether a settlement is fair and reasonable, the Court considers the following factors: “(1) the existence of fraud or 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 plaintiffs' success on the merits; (5) the range of possible recovery; and (6) the opinions of counsel.” Hamilton v. Frito-Lay, Inc., No. 6:05-cv-592-Orl-22JGG, 2007 WL 328792, at *2 (M.D. Fla. Jan. 8, 2007). There is a “'strong presumption' in favor of finding a settlement fair.” Id. (citing Cotton v. Hinton, 559 F.2d 1331 (5th Cir. 1977)).

         III. Discussion

         I see no badges of fraud in the making of the parties' amended settlement agreement. Defendants have agreed to pay Plaintiff $375 in wages and an additional $375 as liquidated damages (Doc. 28-1, ¶ 1). Under the circumstances presented, this appears to be fair and reasonable. Defendants have also agreed to pay $1, 500 to Plaintiff's attorney (Id.). The parties agree that this payment was negotiated separately from the payments to be made to Plaintiff, and that $1, 500 represents a significant compromise of counsel's fees and costs (Doc. 28, n. 2). The amount of fees to be paid is, in my view, fair and ...