Filed: Jul. 29, 2013
Latest Update: Feb. 12, 2020
Summary: Case: 12-13528 Date Filed: 07/29/2013 Page: 1 of 10 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 12-13528 _ D.C. Docket No. 6:10-cv-00464-JA-KRS CANDACE NALL, Plaintiff - Appellant, versus MAL-MOTELS, INC., MOHAMMAD MALIK, Defendants - Appellees. _ Appeal from the United States District Court for the Middle District of Florida _ (July 29, 2013) Before CARNES and WILSON, Circuit Judges, and HUCK, * District Judge. CARNES, Circuit Judge: * Honorable Paul C. Huck,
Summary: Case: 12-13528 Date Filed: 07/29/2013 Page: 1 of 10 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 12-13528 _ D.C. Docket No. 6:10-cv-00464-JA-KRS CANDACE NALL, Plaintiff - Appellant, versus MAL-MOTELS, INC., MOHAMMAD MALIK, Defendants - Appellees. _ Appeal from the United States District Court for the Middle District of Florida _ (July 29, 2013) Before CARNES and WILSON, Circuit Judges, and HUCK, * District Judge. CARNES, Circuit Judge: * Honorable Paul C. Huck, U..
More
Case: 12-13528 Date Filed: 07/29/2013 Page: 1 of 10
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-13528
________________________
D.C. Docket No. 6:10-cv-00464-JA-KRS
CANDACE NALL,
Plaintiff - Appellant,
versus
MAL-MOTELS, INC.,
MOHAMMAD MALIK,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(July 29, 2013)
Before CARNES and WILSON, Circuit Judges, and HUCK, * District Judge.
CARNES, Circuit Judge:
*
Honorable Paul C. Huck, United States District Judge for the Southern District of
Florida, sitting by designation.
Case: 12-13528 Date Filed: 07/29/2013 Page: 2 of 10
This appeal grew out of an effort by two people to settle an FLSA lawsuit
involving an overtime claim. They attempted to settle the litigation without the
advice and assistance of attorneys, which only led to the involvement of attorneys
and more litigation. The case presents issues about how a lawsuit involving an
FLSA claim can be settled, and it demonstrates how a few dollars saved can lead to
a lot more dollars spent.
I.
Candace Nall first worked for Mal-Motels, which is owned by Mohammad
Malik, from 2005 to 2006. After taking another job in 2006, she returned to Mal-
Motels in August 2008 to work as a front desk clerk and night auditor. For the first
four months or so after she returned, Nall used a time clock to keep track of the
hours she worked. In December 2008, however, Malik told her to stop using the
time clock and said that he would pay her a “salary” of $8.75 per hour. Nall
started verbally reporting her hours to Malik, and he would call in her hours to a
payroll company, which would issue a paycheck based on what he reported to it.
There are no accurate written records of the hours that Nall actually worked.
Nall claims that she “periodically” worked more than forty hours per week
but was not paid one and one-half times her regular hourly wage for that overtime
work, which was in violation of the Fair Labor Standards Act, 29 U.S.C. §
207(a)(1). She contends that Mal-Motels owes her at least $3,780 in unpaid
2
Case: 12-13528 Date Filed: 07/29/2013 Page: 3 of 10
overtime, plus another $3,780 in liquidated damages, for a total of $7,560. See 29
U.S.C. § 216(b) (“Any employer who violates the provisions of . . . section 207 of
this title shall be liable to the employee or employees affected in the amount of . . .
their unpaid overtime compensation, . . . and in an additional equal amount as
liquidated damages.”). For those figures, Nall relies on the motel’s guest
registration logs, which she argues show that she worked more than forty hours per
week. Mal-Motels concedes that it owed Nall some unpaid overtime (which would
also mean some liquidated damages), but it disputes the number of hours that she
worked and the amount of damages owed.
Nall quit her job at Mal-Motels in February 2010 because she was not being
paid for her overtime. She obtained an attorney, and on March 29, 2010, he filed a
lawsuit on her behalf against Malik and Mal-Motels, claiming a violation of the
Fair Labor Standards Act. On April 28, 2010, Malik, without the assistance of an
attorney, filed an answer for himself and for Mal-Motels. That answer was
stricken and a default entered as to Mal-Motels because Malik, as a non-lawyer,
could not represent it in the lawsuit.
In May 2010, still acting without an attorney, Malik called Nall about
settling her lawsuit. The two of them agreed to meet at the motel. Malik told Nall
not to bring her attorney, and she didn’t. When the two of them met and talked,
Malik told Nall that she was “ruining his business” and that it would be better for
3
Case: 12-13528 Date Filed: 07/29/2013 Page: 4 of 10
him if she would settle the case. He presented her with two documents to sign and
offered her a check for one thousand dollars and another one or two thousand
dollars in cash if she agreed to sign them and dismiss her lawsuit. 1 Malik did not
allow Nall to read the documents he was asking her to sign, but the magistrate
judge found that he explained them to her and there is no contention that the
explanation was inaccurate. Nall testified that even though she felt that Malik was
pressuring her, she agreed to sign the two documents that he gave her because she
trusted him and she “was homeless at the time and needed money.”
The documents that Nall signed were a voluntary dismissal with prejudice of
her complaint and a letter to her attorney informing him that the case had been
settled. They had been prepared by a non-attorney legal assistant Malik sometimes
used to prepare documents for his business. There was no written settlement
agreement. On June 2, 2010, the voluntary dismissal document Nall had signed
was filed (the record does not indicate by whom) in district court. On June 8,
2010, however, the court issued an order (apparently on its own motion) stating
that because Nall’s complaint had been filed by an attorney and she had not
received permission to appear without that attorney, her pro se voluntary dismissal
with prejudice “has no effect and [the complaint] remains pending.”
1
At the hearing before the magistrate judge, Malik testified that he gave Nall $2,000 in
cash, but Nall testified that he gave her only $1,000. The district court did not resolve that
factual dispute, which does not matter to the result in this appeal anyway.
4
Case: 12-13528 Date Filed: 07/29/2013 Page: 5 of 10
Shortly thereafter, Malik hired a lawyer to represent him and Mal-Motels in
the case. The lawyer filed a motion to set aside the default as to Mal-Motels,
which the district court granted, and he also filed a “motion to enforce the
settlement agreement.” A magistrate judge held an evidentiary hearing on that
motion. At the hearing, Malik and Nall gave conflicting testimony about the
number of hours of overtime that Nall had worked, and they also testified about the
circumstances surrounding the settlement agreement. After the hearing, the
magistrate judge issued a report recommending that the district court approve the
settlement and dismiss the case with prejudice because the agreement that Nall and
Malik had reached was “a fair and reasonable resolution of a bona fide dispute
under the FLSA.” 2 The district court adopted the magistrate judge’s report and
recommendation, overruled Nall’s objections to it, and dismissed her complaint
with prejudice. This is her appeal of that judgment of dismissal.
II.
In Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir.
1982), we held that “[t]here are only two ways in which back wage claims arising
under the FLSA can be settled or compromised by
employees.” 679 F.2d at 1352.
The first is under the supervision of the Secretary of Labor.
Id. at 1353; 29 U.S.C.
2
The magistrate judge also determined that the settlement agreement was enforceable
under Florida law, and the district court agreed. Neither party has raised the enforceability of the
agreement under state law as an issue on appeal, and we therefore express no opinion on what
effect, if any, state law principles have on the enforceability of a settlement of a FLSA claim.
5
Case: 12-13528 Date Filed: 07/29/2013 Page: 6 of 10
§ 216(c). The second, which is “[t]he only other route for compromise of FLSA
claims[,] is provided in the context of suits brought directly by employees against
their employer . . . to recover back wages for FLSA violations.” Lynn’s Food, 679
F.2d at 1353. In those lawsuits, the parties may “present to the district court a
proposed settlement” and “the district court may enter a stipulated judgment after
scrutinizing the settlement for fairness.”
Id.
The parties, the magistrate judge, and the district court all assumed that
Lynn’s Food applies to this case, but Lynn’s Food involved a settlement agreement
between employees and their current employer.
Id. at 1352–53. The decision in
that case recognized Congress’ concern that “there are often great inequalities in
bargaining power between employers and employees.”
Id. at 1352. It would seem
that the most cause for concern exists when the plaintiff employee is still working
for the defendant employer. An employee is subject to the supervision and
personnel decisions of her employer and the possibility of retaliation may pervade
the negotiations. That is not this case, however, because Nall no longer worked for
Mal-Motels when she negotiated the settlement agreement with Malik, or when she
filed the lawsuit for that matter.
Still, we believe that the rule of Lynn’s Food applies to settlements between
former employees and employers. The Lynn’s Food decision relied on Brooklyn
Savings Bank v. O’Neil, 324 U.S. 697,
65 S. Ct. 895 (1945). In that decision, the
6
Case: 12-13528 Date Filed: 07/29/2013 Page: 7 of 10
Supreme Court held that a plaintiff cannot waive her right to liquidated damages in
a FLSA settlement when there is no genuine dispute about whether she is entitled
to them. Id. at 706, 65 S.Ct. at 902. In reaching that holding, the Court reasoned
that by enacting the FLSA, Congress intended “to protect certain groups of the
population from substandard wages and excessive hours which endangered the
national health and well-being and the free flow of goods in interstate commerce.”
Id. Liquidated damages, the Court said, are an important way of enforcing that
protection, because “[k]nowledge on the part of the employer that he cannot escape
liability for liquidated damages by taking advantage of the needs of his employees
tends to insure compliance in the first place.”
Id. at 709–10, 65 S.Ct. at 903.
Those same public policy justifications led the Court to place limits on the
ability of private parties to settle FLSA lawsuits. See id. at 704–05, 65 S.Ct. at
900–01 (“It has been held in this and other courts that a statutory right conferred on
a private party, but affecting the public interest, may not be waived or released if
such waiver or release contravenes the statutory policy.”). In the Court’s view,
permitting “an employer to secure a release from the worker who needs his wages
promptly will tend to nullify the deterrent effect which Congress plainly intended
that [the FLSA] should have.”
Id. at 709–10, 65 S.Ct. at 903. Given the “often
great inequalities in bargaining power between employers and employees,”
mandatory protections “not subject to negotiation or bargaining between employers
7
Case: 12-13528 Date Filed: 07/29/2013 Page: 8 of 10
and employees” are needed to ensure that an employer — who has a strong
bargaining position — does not take advantage of an employee. Lynn’s Food, 679
F.2d at 1352 (citing Brooklyn Sav.
Bank, 324 U.S. at 706–08, 65 S.Ct. at 902).
Allowing the employer to escape liquidated damages by simply giving an
employee the wages she was entitled to earn in the first place — or in some cases,
less than that — would undermine the deterrent effect of the statutory provisions.
Ensuring that each FLSA plaintiff receives the damages, including
liquidated damages, to which she is statutorily entitled is no less important when
the plaintiff is a former employee. One of the cases that was consolidated for
decision in Brooklyn Savings Bank involved a plaintiff who had accepted a
settlement for unpaid overtime wages more than two years after he had stopped
working for the employer defendant. Brooklyn Sav. Bank, 324 U.S. at 699–700,
65 S.Ct. at 898–99. The Supreme Court’s decision that the settlement of that
former employee’s claim was invalid means that the limitations on settlement of
FLSA claims apply to settlements by former employees as well as current
employees. And that makes sense. The purposes of the FLSA are undermined
whenever an employer is allowed to escape liability for violations of the statute,
regardless of whether those who were victimized by those violations are still
employees. See
id. at 707, 65 S.Ct. at 902 (“No one can doubt but that to allow
8
Case: 12-13528 Date Filed: 07/29/2013 Page: 9 of 10
waiver of statutory wages by agreement would nullify the purposes of the
[FLSA].”).
III.
Having decided that the Lynn’s Food requirements apply here, the next
question is whether the settlement in question met them. It is not a difficult
question. The agreement between Nall and Malik was not made under the
supervision of the Secretary of Labor, so it is valid only if the district court entered
a “stipulated judgment” approving it. Lynn’s Food, 679 F.2d at 1352–54. The
court did enter a judgment approving the settlement, but it was not a stipulated one.
Lynn’s Food did not define the term “stipulated judgment,” and we do not
have any decisions defining it in this context. But it takes two (or more) to
stipulate, and a judgment to which one side objects is not a stipulated one. When
the magistrate judge held an evidentiary hearing on whether to approve the
settlement agreement, Nall’s attorney objected to approval, contending that the
terms were not fair and reasonable. When a plaintiff’s attorney asks the district
court to reject a settlement agreement that was reached without the attorney’s
knowledge or participation, whatever else the judgment approving the agreement
may be, it is not a “stipulated judgment” within the meaning of Lynn’s Food. Cf.
Lynn’s Food, 679 F.2d at 1354 (noting that “[s]ettlements may be permissible in
the context of a suit brought by employees under the FLSA” because the
9
Case: 12-13528 Date Filed: 07/29/2013 Page: 10 of 10
employees are “likely to be represented by an attorney who can protect their rights
under the statute” when the settlement is reached within the “adversarial context”
of a lawsuit). 3
The district court should not have granted the opposed motion to approve
and enforce the settlement agreement and dismissed the complaint. The district
court judgment is vacated and the case is remanded for further proceedings
consistent with this opinion. 4
VACATED AND REMANDED.
3
We need not decide whether a judgment approving an out-of-court agreement entered
with the assistance of counsel is a stipulated judgment even if the attorney later objects. That
issue is not before us. Likewise, we need not decide whether the terms of the agreement in this
case would have satisfied the additional requirement that the agreement be “a fair and reasonable
resolution of a bona fide dispute over FLSA provisions.” See Lynn’s Food, 679 F.2d at 1355.
4
We note that on remand it may be necessary for the district court to make a factual
finding about how much money Nall has already received from Malik in the unsuccessful
settlement attempt so that amount may be set off against the amount of any future judgment for
Nall.
10
