KARLA R. SPAULDING, Magistrate Judge.
This cause came on for consideration without oral argument on the following motion filed herein:
On December 24, 2014, Plaintiff Esam Samara ("Samara") filed a complaint against
Defendant International Food Club, Inc. ("International Food"), raising claims for (1) failure to pay a minimum wage and overtime compensation, in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201, et seq.; and (2) failure to pay the minimum wage to which he was entitled under Article X, Section 24 of the Florida Constitution. Doc. No. 1. On August 24, 2015, the parties filed a joint motion for settlement approval, requesting that the Court (1) approve the settlement as a fair and reasonable resolution of a bona fide dispute under Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982); (2) dismiss the action with prejudice; and (3) reserve jurisdiction to enforce the terms of the settlement, should such enforcement be necessary. Doc. No. 28. The parties attached an unsigned copy of the settlement agreement to the motion. Doc. No. 28-2.
The motion has been referred to me for issuance of a Report and Recommendation, and the matter is now ripe for consideration.
In Lynn's Food, the United States Court of Appeals for the Eleventh Circuit explained that claims for unpaid 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." 679 F.2d at 1352-55. Under Lynn's Food, therefore, a court may only enter a judgment approving a settlement after it determines that the judgment is stipulated, see Nall v. Mal Motels, Inc., 723 F.3d 1304, 1308 (11th Cir. 2013), and that the settlement is fair and reasonable, see Dees v. Hydradry, 706 F.Supp.2d 1227, 1240-41 (M.D. Fla. 2010).
International Food agrees to pay a total of $18,000.00 to Samara and his counsel. Doc. No. 28-2, at 1 ¶ 2. Within ten days of a court order approving the settlement, International Food will pay Samara with a "payroll style check" in the gross sum of $1,500.00, less all applicable deductions and withholdings, and a "non-payroll style check" in the gross and net sum of $1,500.00. Id. at 1 ¶ 2(a)(i)-(ii). International Food will also deliver to Samara's counsel a non-payroll style check in the gross and net sum of $3,000.00. Id. at 1 ¶ 2(a)(iii). Within thirty days of the order, International Food will pay Samara with another payroll style check in the gross sum of $1,500.00, less all applicable deductions and withholdings, and another non-payroll style check in the gross and net sum of $1,500.00. Id. at 1 ¶ 2(b)(i)-(ii). International Food will also deliver to Samara's counsel another non-payroll style check in the gross and net sum of $3,000.00. Id. at 1 ¶ 2(b)(iii). Within sixty days of the order, International Food will pay Samara with a payroll style check in the gross sum of $1,000.00, less all applicable deductions and withholdings, and a non-payroll check in the gross and net sum of $1,000.00. Id. at 1 ¶ 2(c)(i)-(ii). International Food will further deliver to Samara's counsel a non-payroll style check in the gross and net sum of $4,000.00. Id. at 1 ¶ 2(c)(iii).
In return, Samara agrees to a broad release of claims, id. at 3-4 ¶¶ 6-7, which will be discussed in more detail subsequently.
In his answers to the Court's interrogatories, Samara averred that he was entitled to $6,817.25, plus an equal amount in liquidated damages. Doc. No. 13, at 4; see generally 29 U.S.C. § 216(b). Under the settlement agreement, Samara will receive $8,000.00 from International Food. Because the settlement agreement will provide Samara less than the amount to which he is entitled under the FLSA, he has compromised his claim within the meaning of Lynn's Food.
Because Samara has compromised his claims, I must evaluate whether the settlement may be approved as a fair and reasonable resolution of bona fide dispute. I discern three issues that undermine settlement approval.
First, a court cannot scrutinize a settlement for fairness unless the parties provide a "full and adequate disclosure of the terms of the settlement, including the factors and reasons considered in reaching same and justifying the compromise of the plaintiff's claims." Bonetti v. Embarq Mgmt. Co., 715 F.Supp.2d 1222, 1228 (M.D. Fla. 2009); see also Saunders v. Daytona Beach Kennel Club, Inc., No. 6:11-cv-1117-Orl-TBS, 2012 U.S. Dist. LEXIS 104773, at *3 (M.D. Fla. July 27, 2012). While the parties are not required to disclose every aspect of their negotiations, they "must provide enough information for the court to examine the bona fides of the dispute." Dees, 706 F. Supp. 2d at 1241. In Dees, the court described the parties' obligation as follows:
Id. at 1241-42. The present motion largely fails to address the factors justifying the compromise, other than saying that the parties dispute liability, desire to avoid the costs and uncertainty of further litigation, and agree that a bona fide dispute exists. Doc. No. 28, at 1-3 ¶¶1-2, 6-7. Such representations fail to provide the Court sufficient information upon which it could evaluate the bona fides of the dispute.
Second, 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) (per curiam).
715 F. Supp. 2d at 1228. The agreement provides that of the $18,000.00 settlement sum, $10,000.00 will be paid to Samara's counsel. Doc. No. 28-2, at 1 ¶ 2. The parties, however, have not stated that this amount was negotiated separately and without regard to the amount Samara agreed to accept. Counsel for Samara has also failed to submit any evidence establishing that the amount is reasonable under the lodestar approach. Id. Therefore, under Bonetti, the parties have not presented sufficient information for the Court to determine that Samara's recovery has not been tainted by a conflict of interest.
Finally, because plaintiffs can only compromise FLSA claims on the basis of a "dispute over FLSA provisions," gratuitous concessions typically have no place in FLSA settlements. See 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); Moreno v. Regions Bank, 729 F.Supp.2d 1346, 1348-49 (M.D. Fla. 2010). For pervasive general releases to be properly included in FLSA settlements, they must be supported by independent and meaningful compensation. Bright, 2012 U.S. Dist. LEXIS 33929, at *18-20; Moreno, 729 F. Supp. 2d at 1352; see also Biscardi v. Fla. Sport & Recreation Network, LLC, No. 6:14-cv-1632-Orl-41KRS, 2015 U.S. Dist. LEXIS 54857, at *4-5 (M.D. Fla. Mar. 25, 2015), adopted by 2015 U.S. Dist. LEXIS 54850 (M.D. Fla. Apr. 27, 2015).
Although the title of the settlement agreement suggests that it contains a "limited FLSA release," Doc. No. 28-2, at 1, the plain language of the agreement reveals a very different reality. The relevant release provisions are as follows:
Doc. No. 28-2 ¶¶ 6-7.
The releases contained in the settlement agreement are sweeping. They encompass "all claims for monetary recovery . . . from the beginning of the world to the date Plaintiff executes this agreement." Id. ¶ 6. While the above language indicates that the release includes claims under the Fair Labor Standards Act and Article X, Section 24 of the Florida Constitution, it also explicitly provides that it is not limited to such claims. Id. This fact is reinforced when the agreement subsequently states that Samara intends to — and does — extinguish "any and all claims" that he might have based on unknown or suspected facts or information. Id. ¶ 7. This release, while overbroad even with respect to International Food, is not limited merely to that entity. It also includes successors and heirs, who are incapable of identification until some future time, and releases all categories of claims against them as well. By its plain language, this pervasive release even purports to extend to any claims of Samara's heirs, executors, administrators, successors, and assigns, regardless of whether those claims were ever personal to Samara. Id. ¶ 6. The release provisions are overbroad and render the agreement unreasonable.
For all these reasons, the parties have not established that the settlement is a fair and reasonable resolution of a bona fide dispute under the FLSA.
In light of the foregoing, I respectfully
Failure to file written objections to the proposed findings and recommendations contained in this Report and Recommendation within fourteen (14) days from the date of its filing shall bar an aggrieved party from challenging on appeal the district court's order based on unobjected-to factual findings and legal conclusions.