United States District Court, M.D. Georgia, Valdosta Division
LAWSON, SENIOR JUDGE.
the Court is Plaintiff Quintis Reams and Defendants Michael
Angelo Restaurant, Inc. and Michael Regina's
(collectively as “Parties”) Amended Joint Motion
to Approve Settlement Agreement. (Doc. 16). Plaintiff is an
employee of Defendant. (Compl. ¶ 5). The Parties'
proposed settlement agreement seeks to resolve
Plaintiff's claims under the Fair Labor Standards Act
(“FLSA”). See 29 U.S.C. § 201,
et seq. Plaintiff alleges that Defendants failed to
pay his overtime wages. See (Compl. ¶¶
16-21). The FLSA imposes a duty on this Court to review the
proposed settlement agreement for fairness. See
Lynn's Food Stores, Inc. v. United States, 679 F.2d
1350, 1353-54 (11th Cir. 1982). When the Court first took up
this matter, it determined that the evidence in the record
was insufficient to examine the settlement's proposed
attorney's fee award. The Court ordered the Parties to
amend their settlement agreement and to include information
reflecting the number of hours Plaintiff's counsel
expended on this matter and his hourly rate. (Doc. 13).
Accordingly, the Parties filed an amended settlement
agreement. (Doc. 14). Plaintiff's counsel submitted his
billing records for this matter along with a declaration
informing the Court of his hourly rate and experience with
FLSA claims. (Docs. 16-2, 16-3). The Court then held a
telephone conference with the Parties to discuss whether
Plaintiff would receive liquidated damages. (Doc. 15). The
Parties filed a second amended settlement agreement
addressing Plaintiff's liquidated damages award. (Doc.
16). Having reviewed the Parties' amended settlement
agreements, the Court can complete its fairness inquiry.
207 of the FLSA requires employers to pay their employees one
and a half times their regular hourly rate for hours the
employees work overtime, exceeding the standard forty-hour
workweek. 29 U.S.C. § 207. If employers violate this
provision, employees may sue to recover their unpaid overtime
wages. 29 U.S.C. § 216(b). The FLSA allows
plaintiff-employees and defendant-employers to enter into
negotiated settlement agreements to resolve claims for unpaid
wages. Id. Congress recognized, however, that
“there are often great inequalities in bargaining power
between employers and employees.” Lynn's Food
Stores, Inc., 679 F.2d at 1352. Consequently, the
Act's provisions require judicial review and approval of
such settlement agreements. Id. at 1353. Before a
district court can enter the parties' “stipulated
judgment, ” it must first “scrutiniz[e] the
settlement for fairness.” Id. Courts must
evaluate whether the negotiation process and resulting
settlement agreement are fair and reasonable to plaintiff.
Id. at 1355. Judicial scrutiny is not limited to the
plaintiff's award. Courts must also review “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).
proposed settlement agreement reflects “a fair and
reasonable resolution of a bona fide dispute, ” a court
can approve the settlement “to promote the policy of
encouraging settlement of litigation.” Lynn's
Food Stores, Inc., 679 F.2d at 1354, 1355. Here, the
Parties identified the following bona fide disputes: whether
Plaintiff received the statutory rate for his overtime hours;
the number of overtime hours Plaintiff worked; the applicable
statute of limitations; and whether Plaintiff is entitled to
liquidated damages. (Doc. 12, p. 3). The Court evaluates the
proposed settlement agreement and inquires into whether the
settlement agreement fairly and reasonably compromises these
FLSA instructs that employees not paid overtime wages receive
damages in the amount of their unpaid overtime compensation,
plus an additional, equal amount of liquidated damages. 29
U.S.C. § 216(b). The Supreme Court wrote nearly
seventy-five years ago that the FLSA's primary purpose is
“to aid the unprotected, unorganized and lowest paid of
the nation's working population.” Brooklyn Sav.
Bank v. O'Neil, 324 U.S. 697, 707 n.18 (1945). The
liquidated damages clause enforces the Act's purpose; it
deters employers from exploiting their employees by threating
additional damages. Bailey v. TitleMax of Ga., Inc.,
776 F.3d 797, 804 (11th Cir. 2015) (“[T]he FLSA has a
deterrent purpose.”); Brooklyn Sav. Bank, 324
U.S. at 710 (“[T]hat [employers] cannot escape
liability for liquidated damages . . . tends to [e]nsure
compliance.”). An employer's good faith is the only
exception to liquidated damages. See 29 U.S.C.
§ 260; Spires v. Ben Hill Cty., 980 F.2d 683,
689 (11th Cir. 1993) (“[L]iquidated damages are
mandatory absent a showing of good
faith.”). Thus, without a showing of the
employer's good faith, the proposed settlement agreement
must include an award for both the plaintiff's unpaid
wages and liquidated damages.
Settlement Agreement and Release before the Court requires
Defendants to pay $20, 000. (Doc. 16-1, p. 1). Of that sum,
the settlement awards Plaintiff $11, 064.78. (Doc. 16, p. 5).
$5, 532.39, or half of Plaintiff's recovery, represents
payment for his unpaid overtime wages. (Id.). The
other $5, 532.39 is full payment for Plaintiff's
liquidated damages. (Id.). The Parties arrived at
the $5, 532.39 award by first compromising on the number of
overtime hours Plaintiff worked and the hourly wage owed to
him. (Id. at 5-6). Plaintiff's regular hourly
wage was $12.25 when he worked for Defendants. (Id.
at p. 5, n. 2). Therefore, his overtime hourly wage would
have been $18.37. (Id.). Plaintiff argues that
Defendants paid him cash for his overtime wages, and that
cash compensation was less than $18.37 per hour.
(Id.). Defendants deny that they paid Plaintiff less
than time and a half for his overtime hours. (Id.).
To compromise the factual dispute, the Parties stipulate that
Defendants paid Plaintiff $10 per hour cash for his overtime
work, and Defendants owed Plaintiff $8.37 per hour in unpaid
wages. (Id.). The Parties compromised on a total of
660.5 overtime hours. (Id.). The $5, 532.39 award
represents approximately $8.37 per hour paid for 660.5
overtime hours. (Id.).
Court finds that $5, 532.39 reflects a reasonable compromise
over the issues. Procedural safeguards ensured that the
inherent “inequalities in bargaining power between
employers and employees” did not taint their
negotiation process. Lynn's Food Stores, Inc.,
679 F.2d at 1352. Plaintiff initiated suit, and the Parties
resolved Plaintiff's claim within an adversarial context.
See id. at 1354 (emphasizing that the
“adversarial context” produces fair settlement
agreements). Plaintiff was represented by counsel experienced
in FLSA litigation at every stage of this dispute. See
id. (finding that settlements are more likely to be fair
when employees are “represented by an attorney who can
protect their rights under the statute”).
Plaintiff's counsel filed the Complaint, participated in
settlement discussions and mediation, and drafted the
proposed settlement agreement. (Roberts Decl. ¶ 4).
Mediation provided neutral oversight for their negotiations.
During mediation, each counsel “formulated and
exchanged [his] own proposed settlement figures . . . based
upon [his] independent calculations.” (Doc. 16, p. 4).
The Parties now represent that they both “voluntarily
agreed to the terms of their settlement agreements.”
(Id.). Nothing before the Court suggests undue
influence by the defendants-employers that could undermine
the settlement's fairness. The Court, thus, has no reason
to believe the Parties arrived at the settlement's unpaid
wages award by means other than fairness.
settlement awards Plaintiff an additional, equal amount of
liquidated damages. (Id. at p. 5). This figure, of
course, is fair because it is the full payment required by
statute. 29 U.S.C. § 216(b). The Court accepts the
Parties' stipulated settlement agreement to the extent of
the Plaintiff's award.
Attorney's Fee Award
successful plaintiffs, the district court shall “allow
a reasonable attorney's fee to be paid by the defendant,
and costs of the action.” Id. “The
language of the statute contemplates that the wronged
employee should receive his full wages plus the [liquidated
damages] penalty without incurring any expense for legal fees
or costs.” Silva, 307 Fed.Appx. at 351
(citations omitted). The Court must “assure both that
counsel is compensated adequately and that no conflict of
interest taints the amount the wronged employee recovers
under a settlement agreement.” Id.
the proposed settlement agreement, Plaintiff's counsel is
to receive $8, 000 in attorney's fees plus $935.23 for
costs. (Doc. 16-1, p. 2). The Parties' Motion indicates
that Plaintiff entered into a contingency fee agreement with
his counsel, and the settlement's attorney's fee
award merely reflects Plaintiff's contract. (Doc. 16, p.
6). That Plaintiff has consented to a fee agreement does not
relieve this Court of its duty to review an attorney's
fee award for reasonableness. See Silva, 307
Fed.Appx. at 351 (“[A] contingency contract to
establish [attorney's] compensation . . . is of little
moment in the context of FLSA.”). First, the FLSA's
provisions are mandatory, and parties cannot contract around
its requirements. See Lynn's Food Stores, Inc.,
679 F.2d at 1352 (“FLSA rights cannot be abridged by
contract or otherwise waived . . . .” (quoting
Barrentine v. Arkansas-Best Freight Sys., Inc., 450
U.S. 728, 740 (1981)). Second, the Eleventh Circuit is wary
of contingency fee agreements for FLSA settlements because
the risk of conflict of interest. See Silva, 307
Fed.Appx. at 351-52 (“To turn a blind eye to an agreed
upon contingency fee in an amount greater than the amount
determined to be reasonable after judicial scrutiny runs
counter to FLSA's provisions for compensating the wronged
employee.”). Therefore, the Court must assess the
Parties' proposed attorney's fees award for
reasonableness irrespective of a previously-agreed-upon
contract between Plaintiff and Plaintiff's counsel.
evaluate the reasonableness of attorney's fees using the
“lodestar approach.” Norman v. Hous. Auth. of
Montgomery, 836 F.2d 1292, 1299 (11th Cir. 1988)
(“The Supreme Court elected the lodestar approach
because it produces a more objective estimate . . .
.”); see Walker v. Iron Sushi LLC, 752
Fed.Appx. 910, 912-16 (11th Cir. 2018) (per curiam) (applying
the lodestar approach to a FLSA settlement
agreement). To calculate a lodestar figure, the Court
multiplies “the number of hours reasonably expended on
the litigation” by “a reasonable hourly
rate.” Hensley v. Eckerhart, 461 U.S. 424, 433
(1983). Counsel seeking fees bears the burden of producing
evidence of his hourly rate and time spent on the litigation.
Norman, 836 F.2d at 1303. If the court determines
that counsel's evidence represents a
“reasonable” hourly rate and amount of time
expended on the matter, the court calculates the lodestar
amount from those figures. Otherwise, the court has
discretion to reduce an unreasonable hourly rate or number of
hours expended. See Walker, 752 ...