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Nelson v. Petro Gate, Inc.

United States District Court, M.D. Florida, Fort Myers Division

August 19, 2019

JENNIE NELSON and SARAH KEAN, Plaintiffs,
v.
PETRO GATE, INC. and BEHNAM BAGHERI, Defendants.

          REPORT AND RECOMMENDATION [1]

          MAC R. MCCOY UNITED STATES MAGISTRATE JUDGE

         The parties filed a Joint Motion for Approval of Settlement Agreement on August 14, 2019. (Doc. 22). Plaintiffs, Sarah Kean and Jennie Nelson, and Defendants, Petro Gate, Inc. and Behnam Bagheri, jointly request that the Court approve the terms of their proposed settlement of the Fair Labor Standards Act (“FLSA”) claims asserted in this case. The proposed Settlement Agreement is fully executed and attached as Exhibit A to the parties' motion. (Doc. 22-1). After a careful review of the parties' submissions and the court file, the Undersigned respectfully recommends that the presiding United States District Judge DENY the parties' motion and reject the proposed settlement without prejudice.

         LEGAL STANDARD

         To approve the settlement of FLSA claims, the Court must determine whether the settlement is a “fair and reasonable resolution of a bona fide dispute” of the claims raised pursuant to the FLSA. Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982); 29 U.S.C. § 216. There are two ways for a claim under the FLSA to be settled or compromised. Id. at 1352-53. The first is under 29 U.S.C. § 216(c), providing for the Secretary of Labor to supervise the payments of unpaid wages owed to employees. Id. at 1353. The second is under 29 U.S.C. § 216(b) when an action is brought by employees against their employer to recover back wages. Id. When the employees file suit, the proposed settlement must be presented to the district court to determine whether the settlement is fair and reasonable. Id. at 1353-54.

         The Eleventh Circuit has found settlements to be permissible when employees bring a lawsuit under the FLSA for back wages. Id. at 1354. The Eleventh Circuit held:

[A lawsuit] provides some assurance of an adversarial context. 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. at 1354.

         The Undersigned evaluates this case and the parties' proposed settlement against this backdrop.

         CLAIMS AND DEFENSES

         In the motion sub judice, the parties succinctly explain that this case involves a bona fide dispute under the FLSA because:

The Plaintiffs alleged that they were paid through a payroll company for all work performed up to forty (40) hours per week, and they were provided a separate check compensating them at a straight time rate for all hours over forty (40) in certain work weeks. Petro Gate disputes that the additional compensation paid to Plaintiffs was pay for hours worked at a straight time rate and has evidence that Plaintiffs may not have worked all hours for which they are claiming overtime pay. Additionally, Ms. Kean alleges that she worked additional hours in her final week of work for which she was never paid, an allegation that Petro Gate disputes.

(Doc. 22 at 2). The parties' explanation of the Plaintiffs' claims is consistent with the allegations in the Complaint. (See Doc. 1). The parties settled this matter before the Defendant filed an Answer, before the Court entered the standard FLSA Scheduling Order, and before Plaintiffs were required to respond to court interrogatories concerning the bases for their claims. (See Docs. 18, 19). Nevertheless, for the reasons advanced in the parties' motion, it is clear that the parties have a bona fide dispute in this case for which they reached a relatively early resolution and settlement. The question is, therefore, whether the specific terms of the proposed settlement are fair and reasonable. In that regard, the Undersigned addresses the monetary terms and the attorney's fees separately below.

         ANALYSIS OF THE PROPOSED SETTLEMENT

         Monetary ...


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