GREGORY J. KELLY, Magistrate Judge.
This cause came on for consideration without oral argument on the following motion filed herein:
On October 26, 2016, Plaintiff filed a complaint (the "Complaint") against Defendant. Doc. No. 1. Count I alleges unpaid overtime in violation of the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. § 201 et seq. Id. at 5. Count II is for recovery of minimum wages for Plaintiff's final work week. Id. at 6; Doc. No. 18 at 1. On January 23, 2017, Plaintiff filed answers to the Court's interrogatories. Doc. No. 15. In the answers, Plaintiff claims $5,220 in damages for unpaid overtime.
In Lynn's Food Stores, Inc. v. United States Department of Labor, 679 F.2d 1350, 1352-53 (11th Cir. 1982), the Eleventh Circuit addressed the means by which an FLSA settlement may become final and enforceable:
Thus, unless the parties have the Secretary of Labor supervise the payment of unpaid wages owed or obtain the Court's approval of the settlement agreement, the parties' agreement is unenforceable. Id. Before approving an FLSA settlement, the Court must scrutinize it to determine if it is a fair and reasonable resolution of a bona fide dispute. Id. at 1354-55. If the settlement reflects a reasonable compromise over issues that are actually in dispute, the Court may approve the settlement. Id. at 1354.
In determining whether the settlement is fair and reasonable, the Court should consider the following factors:
See Leverso v. SouthTrust Bank of Ala., Nat'l Assoc., 18 F.3d 1527, 1531 n.6 (11th Cir. 1994); Hamilton v. Frito-Lay, Inc., No. 6:05-cv-592-Orl-22JGG, 2007 WL 328792, at *2 (M.D. Fla. Jan. 8, 2007), report and recommendation adopted, 2007 WL 219981 (M.D. Fla. Jan. 26, 2007). The Court should be mindful of the strong presumption in favor of finding a settlement fair. See Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977).
In FLSA cases, the Eleventh Circuit has questioned the validity of contingency fee agreements. Silva v. Miller, 307 F. App'x 349, 351 (11th Cir. 2009) (citing Skidmore v. John J. Casale, Inc., 160 F.2d 527, 531 (2d Cir. 1947) ("We have considerable doubt as to the validity of the contingent fee agreement; for it may well be that Congress intended that an employee's recovery should be net[.]")). In Silva, the Eleventh Circuit held:
Id. at 351-52.
An alternate means of demonstrating the reasonableness of attorney fees and costs was set forth in Bonetti v. Embarq Mgmt. Co., 715 F.Supp.2d 1222 (M.D. Fla. 2009). In Bonetti, the Honorable Gregory A. Presnell held:
Id. at 1228 (emphasis added). Judge Presnell maintained that if the matter of attorney fees is "addressed independently and seriatim, there is no reason to assume that the lawyer's fee has influenced the reasonableness of the plaintiff's settlement." Id. The undersigned finds this reasoning persuasive.
As stated above, Plaintiff claims $5,220 in damages for unpaid overtime and an equal amount in liquidated damages. Doc. No. 15 at 4. In the Agreement, Plaintiff will receive $2,200, comprised of $1,100 for unpaid overtime and $1,100 for liquidated damages. Doc. No. 18 at 7. Since Plaintiff is receiving less than the amount he claimed, Plaintiff has compromised his claims under the FLSA. See Caseres v. Texas de Brazil (Orlando) Corp., 6:13-cv-1001-Orl-37KRS, 2014 WL 12617465, at *2 (M.D. Fla. April. 2, 2014) ("Because [plaintiff] will receive under the settlement agreement less than she averred she was owed under the FLSA, she has compromised her claim within the meaning of Lynn's Food Stores").
The case involves a number of disputed issues regarding FLSA liability, which constitutes a bona fide dispute. Doc. No. 18 at 2-3. After exchanging time records, payroll records, and employment policies, the parties decided to settle their dispute in order to avoid the additional time, risks, expense, and uncertainty of protracted litigation. Id. at 3. The parties' settlement was reached after the parties were fully informed of the strength and weaknesses of their respective positions. Id. Considering the foregoing, and the strong presumption favoring settlement, the undersigned finds the settlement amount to be fair and reasonable.
The Agreement contains a waiver of future employment clause in which Plaintiff agrees not to apply for employment with Defendant or any of the released parties. Doc. No. 18 at 9. The undersigned finds that future employment waivers are different from general releases, in that Plaintiff, as a former employee of Defendant, knows exactly what he is relinquishing when he agrees not to seek future employment with Defendant and the released parties. After reviewing the Agreement, the undersigned finds no indication that the future employment waiver undermines the fairness of the Agreement. Accordingly, the undersigned finds the waiver of future employment provision to be fair and reasonable.
The Agreement contains a broad general release provision. Doc. No. 18 at 8. In the general release, Plaintiff agrees to release Defendant and other released parties from "all rights and claims to date of every nature and description, both known and unknown . . ." Id. The Agreement also contains a non-disparagement provision. Id. at 10. In it, Plaintiff agrees "that he will not make any defamatory remarks, either orally or in writing, about [Defendant], its products, or the [released parties] to any persons whatsoever." Id.
Courts within this District have questioned the propriety of such provisions when evaluating the fairness and reasonableness of FLSA settlements. With regard to general releases, U.S. District Judge Steven D. Merryday explained:
Moreno v. Regions Bank, 729 F.Supp.2d 1346, 1351-52 (M.D. Fla. 2010). See also Weldon v. Backwoods Steakhouse, Inc., No. 6:14-cv-79-Orl-37TBS, 2014 WL 4385593, at *4 (M.D. Fla. Sept. 4, 2014) (noting that non-disparagement clauses are generally rejected in FLSA settlement agreements and citing authority). Nevertheless, courts have approved such provisions when separate consideration is given. See Middleton v. Sonic Brands L.L.C., Case No. 6:13-cv-386-Orl-28KRS, 2013 WL 4854767, at *3 (M.D. Fla. Sept. 10, 2013) (approving a settlement agreement providing $100 as separate consideration for a general release); Bright v. Mental Health Resource Center, No. 3:10-cv-427-J-37TEM, 2012 WL 868804, at *5 (M.D. Fla. Mar. 14, 2012) (approving the settlement agreement as to one employee who signed a general release in exchange for the employer foregoing its counterclaims against her); Caamal v. Shelter Mortg. Co., LLC, Case No. 6:13-cv-706-Orl-36KRS, 2013 WL 5421955, at *4 (M.D. Fla. Sept. 26, 2013) (approving FLSA settlement providing $500 as separate consideration for a non-disparagement clause).
With regard to the general release, the Agreement clearly states that consideration was given for the general release provision. Doc. No. 18 at 7. In exchange for the general release provision, Plaintiff is to receive $500. Id. As mentioned above, courts within this District have approved these provisions when Plaintiff has been provided separate consideration. See Middleton, 2013 WL 4854767 at *3. The parties represent that the general release and consideration for it were negotiated separately from Plaintiff's FLSA claims and do not deprive him of any wages claimed. Doc. No. 18 at 4. Accordingly, the undersigned finds the general release to be fair and reasonable.
With regard to the non-disparagement provision, the Agreement is not clear whether separate consideration was given for the provision. Paragraph three of the Agreement states:
Doc. No. 18 at 7. Thus, paragraph three states that the $500 given in paragraph 2(c) is adequate consideration for the general release, waiver of future employment, and all other terms of the Agreement. Id. However, paragraph 2(c) clearly states that the $500 addressed therein is consideration solely for the general release:
Id. (emphasis added). Furthermore, the Motion contains no justification as to why the non-disparagement provision is included in the Agreement. Id. at 1-5.
Based on the foregoing, the undersigned finds that the parties have not provided sufficient evidence showing that the non-disparagement provision is fair and reasonable. Id. at 8, 10. Thus, the undersigned finds the non-disparagement provision is unenforceable. Id. at 10. Such a defect does not preclude approval of the Agreement. The Agreement contains a severability clause:
Doc. No. 18 at 11. Thus, terms in the Agreement may be severed without affecting the enforceability of the balance of the Agreement. Pursuant to the severability clause, the Court may strike the non-disparagement provision without impacting the enforceability of the remainder of the Agreement. Id. Accordingly, the undersigned recommends that the Court strike the non-disparagement provision as invalid and unenforceable.
Under the Agreement, Plaintiff's counsel will receive $2,800 in attorneys' fees. Doc. No. 18 at 7. The parties represent that attorneys' fees and costs were negotiated separately from Plaintiff's recovery. Id. at 4. Such a representation adequately establishes that the issue of attorney's fees and costs was agreed upon without regard to the amount paid to Plaintiff. See Bonetti, 715 F. Supp. 2d at 1228. Accordingly, pursuant to Bonetti, the undersigned finds the Agreement's attorneys' fee provision to be fair and reasonable.
Accordingly, it is
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. In order to expedite the final disposition of this matter, if the parties have no objections to this report and recommendation, they may promptly file a joint notice of no objection.