Marte v. Gizmo Orlando, Inc.

          REPORT AND RECOMMENDATION

          KARLA R. SPAULDING UNITED STATES MAGISTRATE JUDGE.

         TO THE UNITED STATES DISTRICT COURT:

         This cause came on for consideration without oral argument on the following motion filed herein:

MOTION:	REVISED AND AMENDED UNOPPOSED MOTION FOR APPROVAL OF PROPOSED SETTLEMENT AGREEMENT AND ENTRY OF JUDGMENT OF DISMISSAL WITH PREJUDICE (Doc. No. 11)
FILED:	May 25, 2018

         I. BACKGROUND.

         Plaintiff, Keila Mateo Marte, filed a complaint against Defendants, Gizmo Orlando, Inc., and Kevin Beattie, alleging that Defendants failed to pay all of her overtime wages in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq. Doc. No. 1. In this action, she seeks unpaid overtime wages and liquidated damages for the three years preceding the filing of the complaint. Id. ¶¶ 56, 63.

         On May 7, 2018, Plaintiff filed a notice informing the Court that the parties had settled the case. Doc. No. 6. On May 16, 2018, the parties filed a motion requesting that the Court approve the settlement in accordance with Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982). Doc. No. 8. I denied that motion because the proposed settlement agreement included several terms that arguably undermined its fairness. Doc. No. 10. Specifically, it (1) did not confine the release of claims to only the claims asserted in the complaint; (2) it included a covenant not to sue that arguably constituted a general release; and, (3) it included a provision whereby Plaintiff agreed not to seek re-employment with Defendant. In addition, I noted that the motion did not adequately explain whether and to what extent Plaintiff was compromising her claims.

         The parties were permitted to file a renewed motion for settlement approval and did so on May 25, 2018. Doc. No. 11. The renewed motion attaches a revised settlement agreement, which no longer includes a provision preventing Plaintiff from seeking re-employment with Defendant and no longer includes a covenant not to sue. Doc. No. 11-1. In the settlement agreement, the parties stipulate to the entry of an order dismissing the case with prejudice. The motion is ripe for review.

         I. APPLICABLE LAW.

         In 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).

         When a 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 v. Miller, 307 Fed.Appx. 349, 351 (11th Cir. 2009) (per curiam).^[1] 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 attorney's fees to a reasonable amount. See Id. at 351-52; see also Bonetti v. Embarq Mgmt. Co., 715 F.Supp.2d 1222, 1228 (M.D. Fla. 2009) (finding that the Court must consider the reasonableness of attorney's 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”).

         III. ANALYSIS.

         A. Whether Plaintiff Has Compromised Her Claim.

         Under the terms of the revised settlement agreement, Defendants will pay Plaintiff a total of $10, 000.00-$5, 920 to Plaintiff (representing $2, 960 in unpaid wages and $2, 960 in liquidated ...