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Nelson v. Petro Gate, Inc.

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

September 6, 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.

         Pending before the Court is the parties' Amended Joint Motion for Approval of Settlement Agreement, filed on August 25, 2019. (Doc. 24). 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. 24-1). The parties previously sought approval of the proposed settlement, but the presiding United States District Judge adopted the Undersigned's recommendation that the settlement be rejected because the parties had not explained why Plaintiff Kean should not receive liquidated damages for her minimum wage claim under the proposed settlement. (See Docs. 22, 23, 25). After a careful review of the parties' amended renewed submissions and the court file, the Undersigned respectfully recommends approval of the proposed settlement.

         BACKGROUND

         In the amended 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, this matter involves a bona fide dispute regarding whether and to what extent Ms. Kean is entitled to payment for hours that she alleges that she worked in her final pay period for which she was never paid. Specifically, Defendants allege that Ms. Kean was terminated prior to the time that she alleges that she was not paid, and that the reason for her termination was her decision to close the store earlier than its scheduled closing time, which would result in fewer hours worked. Defendants allege that Kean's final week of work was the week ending December 16, 2019, and that she did not perform any work beyond that date. Defendants have no time records that demonstrate that Kean performed work after December 16, 2019. Ms. Kean alleges that Defendants' Manager-Anthony (last name unknown)-knew she was working after December 16, 2018. However, Defendants denied that Anthony had such knowledge and argue that even assuming arguendo that Ms. Kean performed work after the date that she was terminated, it was without Defendants', or Defendants' management's knowledge.

(Doc. 24 at 1-2). The parties' explanation of the Plaintiffs' claims is consistent with the allegations in the Complaint. (SeeDoc. 1).

         On August 14, 2019, the parties filed a Joint Motion Approval of Settlement Agreement. (Doc. 22). 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).

         On August 19, 2019, the Court entered a Report and Recommendation recommending that the Joint Motion Approval of Settlement Agreement be denied without prejudice. (Doc. 23). The Undersigned found the proposed settlement in this case would have been fair and reasonable but for an unexplained reduction in the amount of liquidated damages to be paid to Plaintiff Kean in connection with her unpaid minimum wage claim. The Undersigned recommended, therefore, that the parties be required to elect one of the following options by an appropriate deadline to be selected by the presiding District Judge: (1) File an amended joint motion to approve a settlement agreement that adequately addresses all the issues identified in the Report and Recommendation; or (2) File an appropriate notice indicating their intention to proceed with the litigation, in which case the Undersigned recommended that the Court (i) order the Defendants to respond to the Complaint by a date certain and (ii) enter a standard FLSA Scheduling Order, if appropriate. (Doc. Id. at 7). The presiding District Judge adopted the Undersigned's Report and Recommendation on September 4, 2019. (Doc. 25).

         On August 25, 2019 the parties filed the Amended Joint Motion for Approval of Settlement Agreement. (Doc. 24). In the Amended Joint Motion for Approval of Settlement Agreement, the parties “address, in further detail, the reasons why Plaintiff Kean is receiving less than full liquidated damages on her minimum wage claim.” (Id. at 6).

         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 ...

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