KARLA R. SPAULDING, Magistrate Judge.
This cause came on for consideration without oral argument on the following motion filed herein:
Defendants objected to portions of my initial Report and Recommendation addressing this motion. Doc. No. 219. The presiding District Judge remanded the motion to me for consideration of the objections and the new evidence filed in support of the objections. Doc. No. 221. Accordingly, I issue this Amended Report and Recommendation based on review of the objections and new evidence.
On June 12, 2015, Plaintiffs Kenneth A. Dyer, Jr., Henry L. Kemp, Jr., Marquis D. Grooms and Kirk Sandy filed a complaint alleging violations of the overtime provisions of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b), against Defendant, M&M Asphalt Maintenance, Inc. ("M&M"). Doc. No. 1. Plaintiffs alleged that the complaint was brought on behalf of themselves and other laborers and drivers similarly situated to them. Id. at 8-9. The plaintiffs named in the complaint and a number of individuals ("Opt-In Plaintiffs") filed consents to join the case, as reflected in the chart attached to this Report and Recommendation.
On August 20, 2015, Plaintiffs Dyer, Kemp, Grooms and Sandy along with five Opt-In Plaintiffs filed an amended complaint, naming M&M, All County Paving, Inc. ("All County"), Jeffrey Cohen, Kenneth Goldberg, and David Goldberg as Defendants. Doc. No. 32. In the amended complaint, Plaintiffs
On July 5, 2016, the Court conditionally certified a collective class of Laborers and Drivers who worked at Defendants' Orlando, Lake Worth, or Delray Beach offices. Doc. No. 165, at 13-14. The Court authorized delivery of notices and consent-to-join forms to potential members of the collective action. Id. at 10-11. The Court appointed Dyer, Kemp and Sandy (the "Named Plaintiffs") as class representatives. Id. at 14.
On November 21, 2016, the parties filed a notice of settlement. Doc. No. 213. Thereafter, they filed the above-referenced motion supported by a copy of the Settlement Agreement signed by Defendants and by the Named Plaintiffs (Doc. No. 215-1).
Counsel have now submitted evidence in support of their assertion that each Plaintiff and Opt-In Plaintiff has been advised about the terms of the settlement and does not object to the settlement. Scott C. Adams, Esq., one of the attorneys for Plaintiffs, submitted a declaration in which he attests as follows:
Doc. No. 219-2, at 3-4.
The parties ask that the Court find that the settlement agreement is a fair and reasonable resolution of a bona fide dispute under the FLSA and dismiss the case with prejudice.
In Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1352-55 (11th Cir. 1982), the United States 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." Id. 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 attorney's 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 F. App'x 349, 351 (11th Cir. 2009) (unpublished decision cited as persuasive authority). If the Court finds that the payment to the attorney is not reasonable, the Court 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 that the plaintiff's recovery was adversely affected by the amount of fees paid to his attorney").
The Plaintiffs alleged that they were owed overtime compensation for certain "drive time" and for meal periods being automatically and improperly deducted from their compensation and an equal amount in liquidated damages. See, e.g., Doc. No. 215, at 5. As shown in the chart attached to this Report and Recommendation, under the Settlement Agreement the Plaintiffs who answered the Court's interrogatories have compromised their claims, and counsel for Plaintiffs represents that all of the Plaintiffs compromised their claims. Doc. No. 215, at 8 (explaining the computation of the settlement sums). Counsel for the parties explain the reason for the compromise as follows: (1) after review of Defendants' records, Plaintiffs did not work more than 40 hours in some work weeks and some Plaintiffs were paid for their meal times; (2) Plaintiffs' estimates of travel time may have been overstated; and, (3) evidence was discovered that supported the Defendants' defense to liquidated damages. Doc. No. 215, at 5-6. I recommend that the Court find that this adequately explains the reason for the compromise.
The Court must next consider whether there are terms in the Settlement Agreement that undermine the fairness of the agreement. See generally Bright v. Mental Health Res. Ctr., Inc., No. 3:10-cv-427-J-37TEM, 2012 U.S. Dist. LEXIS 33929, at *17 (M.D. Fla. Mar. 14, 2012). I will discuss problematic issues below.
First, the parties define the "Defendants" to be released as follows:
Doc. No. 215-1, at 2 (emphasis added). Although the plain language of this release includes individuals and entities not named as Defendants in this case, counsel for both parties aver in newly submitted declarations that they intended the above-italicized language to limit the release to only individuals and entities who acted as joint employers of Plaintiffs. Adams Decl., Doc. No. 219-2, at 4 ¶ 23; Beige Decl., Doc. No. 219-1, at 2 ¶ 8. In the alternative, counsel ask that the Court sever the portion of the definition of released Defendants that it determines to be overbroad based on the modification provision of the Settlement Agreement (Doc. No. 215-1, at 12 ¶ 11). Doc. No. 219, at 5.
I recommend that the Court sever and revise portions of definition of released Defendants, as follows, to make clear counsel's stated intent for the scope of the release:
Under the Settlement Agreement, Plaintiffs' release reads as follows:
Doc. No. 215-1, at 2-3.
The Amended Complaint asserted only one claim for failure to pay overtime compensation in violation of the FLSA. Doc. No. 32, at 17-20. The release also includes release of minimum wage claims that were not asserted in this case. While some Judges have found similar releases to be overbroad if they are not limited to only the claims asserted in the FLSA case, other Judges have found that releases limited to wage claims generally are reasonable. Compare Colon v. Garda CL Se., Inc., No. 6:14-cv-1777-Orl-37KRS, 2015 U.S. Dist. LEXIS 94775, at *3 n.1 (M.D. Fla. July 21, 2015) (finding unreasonable release of wage claims under the Florida Minimum Wage Act and the Florida Constitution when complaint raised only overtime compensation claim under the FLSA) with Cooper v. Garda CL Se., Inc., No. 15-cv-1677-Orl-40KRS, 2015 WL 9244682, at *1 (M.D. Fla. Dec. 18, 2015) (finding reasonable a release of all claims existing prior to the execution of the settlement agreement that related to the payment of wages and/or overtime for all hours worked, including, but not limited to, claims arising under the FLSA, the Florida Constitution and the Florida Minimum Wage Act).
If the Court believes the release is overly broad, I recommend that the Court sever the portion of the release pertaining to minimum wage claims, as follows:
Because counsel represent that the Plaintiffs do not have minimum wage claims, Doc. No. 215, at 11 n. 13, modifying the release in this manner should not undermine an essential term of the Settlement Agreement.
If, however, the Court finds that the release is appropriately limited to wage claims as written, then the Court may conclude that the release does not undermine the reasonableness of the settlement.
The Settlement Agreement is signed on behalf of all Plaintiffs only by Plaintiff Dyer, Plaintiff Kemp and Plaintiff Sandy. Doc. No. 215-1, at 14. In some of the consent-to-join forms, Opt-In Plaintiffs designated these class representatives "as my agents to make decisions on my behalf concerning the litigation, the method and manner of conducting the litigation, the entering of any agreement with Plaintiffs' counsel concerning attorneys' fees and costs, and all other matters pertaining to this lawsuit." See, e.g., Doc. No. 184-1, at 1. However, in other consent-to-join forms, the Opt-In Plaintiffs did not authorize the class representatives to make decisions regarding the litigation on his or her behalf. See, e.g., Doc. No. 18-1.
Assuming for purposes of this analysis only that the Court intended to give the class representatives authority to enter into a settlement agreement on behalf of each member of the collective action, there must be some mechanism for the Court to ensure that each member of the collective action has been appropriately notified of the terms of the Settlement Agreement and agrees to those terms. So, for example, in Fernandez v. Harvard Maintenance, Inc., No. 2:11-cv-509-FtM-36SPC, 2011 WL 6934123, at *3-4 (M.D. Fla. Dec. 14, 2011), report and recommendation adopted, id., 2011 WL 6934134 (M.D. Fla. Dec 30, 2011), the Court adopted the recommendation that a Court-ordered notice of the settlement be sent to members of the collective action to determine if any of the opt-in plaintiffs objected to the settlement.
In this case, counsel for Plaintiff attests that he spoke with some Plaintiffs and mailed a letter to Plaintiffs he had not spoken to advising them of the essential terms of the settlement. Counsel for Plaintiff avers that no Plaintiff objected to the settlement. If the Court finds that this form of notice by counsel for Plaintiffs is sufficient to give each Plaintiff notice of the settlement and an adequate opportunity to object, then at least one court has determined that the settlement may be approved based on notice of the settlement provided to members of the collective action by counsel. See Moore v. Ackerman Inv. Co., No. C 07-3058-MWB, 2009 WL 2848858, at *3 (N.D. Iowa Sept. 1, 2009). If the Court has concerns about the adequacy of notice to each Plaintiff in this case, however, it may require Court-ordered notice of the settlement to be provided to each Plaintiff. See, e.g., Goldsby v. Renosol Seating, LLC, No. 2:08-0148-KD-N, 2013 WL 6535253, at *10 (S.D. Ala. Dec. 13, 2013).
Under the Settlement Agreement, counsel for Plaintiffs will receive $320,000.00 in attorneys' fees and costs, $280,663.24 of which is allocated to fees and $39,336.76 to costs. Plaintiffs have presented no evidence of the actual costs incurred, the time worked and tasks performed or the reasonable hourly rates of the professionals performing the work.
In newly filed evidence, counsel for the parties attest that they negotiated the attorneys' fees and costs separate from, and without consideration of, the amount to be paid to the class. Adams Decl., Doc. No. 219-2, at 4 ¶¶ 25-26; Beige Decl., Doc. No. 219-1, at 2 ¶¶ 11-12. The complaint in this case was filed on June 12, 2015, Doc. No. 1, and the Court was first advised that the case had been settled on November 21, 2016, Doc. No. 213. While the amount of attorneys' fees incurred is very high in my experience with litigation of FLSA cases
The Settlement Agreement provides that the following members of the collective action will be paid service fees, as follows:
Doc. No. 215-1, at 5-6. Judges have approved service fees for individuals who perform substantial services for the benefit of the settlement class. See Signorelli v. Utiliquest, LLC, Nos. 5:08-cv-38-OC-10GRJ, 5:08-cv-39-OC-10GRJ, 5:08-cv-40-OC-10GRJ, 2008 WL 7825757, at *2 (M.D. Fla. July 25, 2008)(approving service fees in a combined Rule 23 class action and FLSA collective action for individuals "who performed substantial services for the benefit of the Settlement Classes"); Hosier v. Mattress Firm, Inc., No. 3:10-cv-294-J-32JRK, 2012 WL 2813960, at *5 (M.D. Fla. June 8, 2012)(and cases cited therein).
In newly submitted evidence, counsel for Plaintiffs avers that Plaintiffs Dyer, Kemp, Grooms and Sandy met with counsel on numerous occasions, responded to interrogatories and reviewed document requests and documents produced by M&M, and were present at both mediations. Adams Decl., Doc. No. 219-2, at 5 ¶¶ 32-35, 40. Plaintiffs Duckett, Jr. and Duckett III also participated in discovery, advised counsel of attempts by a supervisor for M&M to pay Plaintiffs to withdraw from the lawsuit, and took time off from work to meet with counsel. Id. at 5 ¶¶ 36-39. Plaintiffs Dyer, Sandy and Kemp also provided declarations regarding their participation in the litigation. Doc. Nos. 219-3 through 219-5. Additionally, counsel attest that the service payments were negotiated separately from the settlement amounts to be paid to Plaintiffs. Adams Decl., Doc. No. 219-2, at 6 ¶¶ 42-43; Beige Decl., Doc. No. 219-1, at 2 ¶¶ 9-10. Based on this new information, and in the absence of objection to the service payments by any Plaintiff, the Court may find that the service payments do not undermine the fairness of the settlement.
For the reasons discussed above, I make three alternative recommendations.
First, if the Court finds that the Settlement Agreement, with modifications recommended above, is fair and reasonable and that each Plaintiff has been provided adequate notice of the terms of the Settlement Agreement and did not object to those terms, I recommend that the Court do the following:
Second, if the Court finds that Plaintiffs have not received adequate notice of the Settlement Agreement and an opportunity to object, I recommend that the Court
Third, if the Court finds that any of the terms of the Settlement Agreement undermine the fairness of the settlement, I recommend that the Court
A party has fourteen days from this date to file written objections to the Report and Recommendation's factual findings and legal conclusions. A party's failure to file written objections waives that party's right to challenge on appeal any unobjected-to factual finding or legal conclusion the district judge adopts from the Report and Recommendation. See 11th Cir. R. 3-1.
Recommended in Orlando, Florida on May 12, 2017.
Id. at 8-9 (internal footnotes omitted).
