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Williams v. Coventry Health Care of Florida Inc.

United States District Court, M.D. Florida, Orlando Division

March 26, 2018

MIA WILLIAMS, Plaintiff,



         THIS CAUSE is before the Court on the Joint Motion for Final Approval of Settlement (“Joint Motion, ” Doc. 92). United States Magistrate Judge Thomas B. Smith issued a Report and Recommendation (“R&R, ” Doc. 99), recommending that the Joint Motion be denied without prejudice. The Parties filed joint Objections (Doc. 100) to the R&R. As set forth herein, the Court agrees with Judge Smith that the Revised Settlement Agreement (Doc. 92-1) cannot be approved as drafted, and the Joint Motion will be denied without prejudice.

         I. Background

         The Amended Complaint (Doc. 90) alleges that Defendants violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., by failing to pay certain employees required overtime pay. (Doc. 90 ¶¶ 2-3). This case was conditionally certified as a collective action under the FLSA, 29 U.S.C. § 216(b), and the class was defined as “All Social Workers employed by Defendant in the State of Florida within the three-year period immediately preceding the filing of this case.” (Nov. 28, 2016 Order, Doc. 36, at 2). In addition to the named Plaintiff, there are thirty-two other opt-in Plaintiffs. (See Doc. 98-1 at 9). Ultimately, the parties were able to come to a resolution of Plaintiffs' claims and filed the Joint Motion. Judge Smith held a hearing on the matter, (Min. Entry, Doc. 96), and permitted the parties to file a revised settlement agreement based on concerns he expressed at the hearing, (Oct. 3, 2017 Order, Doc. 97, at 1). The parties did so, and Judge Smith thereafter issued his R&R.

         II. Analysis

         Judge Smith points to several areas of concern in the Revised Settlement Agreement, including the reasonableness of the attorneys' fee provision; the requirement that Plaintiffs' pay any fees and costs in excess of those paid by the Defendants; the release of claims; the allocation of mediation costs; the non-publicity clause; and the retention of jurisdiction provision. (Doc. 99 at 8-16). Each will be addressed in turn.

         A. Attorneys' Fees

         The Revised Settlement Agreement provides that Defendant will pay a total of $1, 500, 000.00. (Doc. 98-1 ¶ 1(a)). That amount is to be distributed as follows: $6, 500.00 paid to five of the Plaintiffs for their services in participating in the litigation on behalf of the other Plaintiffs, (id. ¶ 1(a)(1)); $976, 000.00 to Plaintiffs as payment for back wages and liquidated damages, (id. ¶ 1(a)(2)); $500, 000.00 in attorneys' fees, (id. ¶ 1(a)(3)); and $17, 500.00 for costs, (id.). With regard to the attorneys' fees and costs, the provision further states that the “[a]ttorneys' fees were separately negotiated.” (Id.).

         1. Separately Negotiated

         The first issue raised by Judge Smith is whether the amount of attorneys' fees is reasonable. The parties cite Bonetti v. Embarq Management Co., 715 F.Supp.2d 1222, 1228 (M.D. Fla. 2009), which suggests that courts should approve FLSA settlement agreements “without separately considering the reasonableness of the fee to be paid to plaintiff's counsel” where the settlement agreement “(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; . . . (3) represents that the plaintiff's attorneys' fee was agreed upon separately and without regard to the amount paid to the plaintiff, ” and (4) “the settlement does not appear [un]reasonable on its face [and] there is [no] reason to believe that the plaintiff's recovery was adversely affected by the amount of fees paid to his attorney, ” id. at 1228. The parties contend that their settlement meets all of these factors.

         Judge Smith concluded that, despite the parties' argument to the contrary, the attorneys' fees were not separately negotiated. He concluded that the very fact that the amount of the attorneys' fee was contingent on the amount Plaintiffs recovered meant that the fees could not have been separately negotiated. This Court agrees with Judge Smith.

         Per the parties' own representation, the amount of attorneys' fees was directly dependent on the amount of Plaintiffs' recovery. This cannot be reconciled with the concept of “separately negotiated.” Plaintiffs appear to argue that because the percentage-thirty percent-was negotiated at the beginning of the litigation without Plaintiffs' counsel knowing what the ultimate recovery was going to be, it was separately negotiated. This type of “separate negotiation” is not what is contemplated in Bonetti. There, Judge Presnell reasoned that where the parties separately determine what is a reasonable payment to the plaintiff and what-wholly apart from the plaintiff's payment-is a reasonable attorneys' fee in a particular case, then there is a minimal chance that the attorneys' fees impacted the plaintiff's recovery, and therefore, a less in-depth review is necessary. See Id. at 1228. Indeed, Bonetti itself differentiates between a separate negotiation and a contingency fee situation. See Id. at 1226 (distinguishing Eleventh Circuit precedent that addresses contingency fee arrangements).

         The parties argue that this is not a contingency fee case-it is a common fund case. But for purposes of the separately negotiated analysis, such a distinction makes no difference. In both types of cases, the amount of attorneys' fees are directly contingent on the amount of the plaintiffs' recovery, which is the problematic element. The attorneys' fee cannot be separately negotiated if it is derived from the amount of Plaintiffs' recovery.

         2.Common ...

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