REPORT AND RECOMMENDATION
GREGORY J. KELLY, Magistrate Judge.
This cause came on for consideration without oral argument on the following motion:
MOTION: JOINT MOTION FOR JUDICIAL APPROVAL OF THE
PARTIES' SETTLEMENT AGREEMENT AND
DISMISSAL OF THE ACTION (Doc. No. 50)
FILED: May 18, 2017
THEREON it is RECOMMENDED that the motion be GRANTED in part and DENIED in part.
I. BACKGROUND.
On February 2, 2017, Plaintiff filed a Second Amended Complaint against Defendants, alleging violations of the overtime provisions of the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. § 201, et. seq. (the "FLSA"). Doc. No. 31. Plaintiff alleges she was employed by Defendants as a laborer. Id. at ¶ 4. On May 18, 2017, the parties filed a Joint Motion for Judicial Approval of the Parties' Settlement Agreement and Dismissal of the Action (the "Motion"). Doc. No. 50. This matter has been referred to the undersigned for a report and recommendation. For the reasons that follow, it is recommended that the Motion be granted in part and denied in part.
II. LAW.
In Lynn's Food Stores, Inc. v. United States Department of Labor, 679 F.2d 1350 (11th Cir. 1982), the Eleventh Circuit addressed the means by which an FLSA settlement may become final and enforceable:
There are only two ways in which back wage claims arising under the FLSA can be settled or compromised by employees. First, under section 216(c), the Secretary of Labor is authorized to supervise payment to employees of unpaid wages owed to them. . . . The only other route for compromise of FLSA claims is provided in the context of suits brought directly by employees against their employer under section 216(b) to recover back wages for FLSA violations. When employees bring a private action for back wages under the FLSA, and present to the district court a proposed settlement, the district court may enter a stipulated judgment after scrutinizing the settlement for fairness.
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:
(1) the existence of collusion behind the settlement;
(2) the complexity, expense, and likely duration of the litigation;
(3) the stage of the proceedings and the amount of discovery completed;
(4) the probability of plaintiff's success on the merits;
(5) the range of possible recovery; and
(6) the opinions of counsel.
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., Case 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).1
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[.]")).2 In Silva, the Eleventh Circuit held:
That Silva and Zidell entered into a contingency contract to establish Zidell's compensation if Silva prevailed on the FLSA claim is of little moment in the context of FLSA. 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. FLSA provides for reasonable attorney's fees; the parties cannot contract in derogation of FLSA's provisions. See Lynn's Food, 679 F.2d at 1352 ("FLSA rights cannot be abridged by contract or otherwise waived.") (quotation and citation omitted). 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. See United Slate, Tile & Composition Roofers v. G & M Roofing & Sheet Metal Co., 732 F.2d 495, 504 (6th Cir. 1984) ("the determination of a reasonable fee is to be conducted by the district court regardless of any contract between plaintiff and plaintiff's counsel"); see also Zegers v. Countrywide Mortg. Ventures, LLC, 569 F.Supp.2d 1259 (M.D. Fla. 2008).
Id. at 351-52. For the Court to determine whether the proposed settlement is reasonable, plaintiff's counsel must first disclose the extent to which the FLSA claim has or will be compromised by the deduction of attorney's fees, costs or expenses pursuant to a contract between the plaintiff and counsel, or otherwise. Id. When a plaintiff receives less than a full recovery, any payment from plaintiff's recovery above a reasonable fee improperly detracts from the plaintiff's recovery.3 Thus, a potential conflict can arise between counsel and client regarding how much of the plaintiff's total recovery should be allocated to attorney's fees and costs.4 It is the Court's responsibility to ensure that any such allocation is reasonable. Id. As the Court interprets the Lynn's Food Stores, Inc. and Silva cases, where there is a compromise of the amount due to the plaintiff, the Court should decide the reasonableness of the attorney's fees provision under the parties' settlement agreement using the lodestar method as a guide. In such a case, any compensation for attorney's fees beyond that justified by the lodestar method is unreasonable unless exceptional circumstances would justify such an award.
An alternative means of demonstrating the reasonableness of attorney's fees and costs was set forth in Bonetti v. Embarq Management Co., 715 F.Supp.2d 1222 (M.D. Fla. 2009). In Bonetti, the Honorable Gregory A. Presnell held:
In sum, if the parties submit a proposed FLSA settlement that, (1) constitutes a compromise of the plaintiff's claims; (2) makes full and adequate disclosure of the terms of settlement, including the factors and reasons considered in reaching same and justifying the compromise of the plaintiff's claims; and (3) represents that the plaintiff's attorneys' fee was agreed upon separately and without regard to the amount paid to the plaintiff, then, unless the settlement does not appear reasonable on its face or there is reason to believe that the plaintiff's recovery was adversely affected by the amount of fees paid to his attorney, the Court will approve the settlement without separately considering the reasonableness of the fee to be paid to plaintiff's counsel.
Id. at 1228 (emphasis added). Judge Presnell maintained that if the matter of attorney's 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.
III. ANALYSIS.
A. Settlement of Plaintiff's FLSA Claims.
Plaintiff claims $4,252.50 in damages for unpaid overtime and an equal amount in liquidated damages. Doc. No. 35-1 at 2; Doc. No. 50 at 2. In the Settlement Agreement (the "Agreement"), Plaintiff will receive $1,000 for her claims for unpaid overtime wages and $1,000 for liquidated damages. Doc. No. 50 at 2; Doc. No. 50-1 at 1. Since Plaintiff is receiving less than the amount she claimed, Plaintiff has compromised her 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").5
The case involves a bona fide dispute regarding Plaintiff's FLSA overtime claim. Doc. No. 50 at 5. After receiving sufficient information to make informed decisions, the parties decided to settle their dispute in order to avoid the risk of litigation. Id. at 2. Considering the foregoing, and the strong presumption favoring settlement, the undersigned finds the settlement amount to be fair and reasonable.
B. Attorneys' Fees and Costs.
Under the Agreement, Plaintiff's counsel will receive $5,000 in attorney's fees and $500 as costs. Doc. No. 50-1 at 1. The parties represent that attorney's fees were negotiated separately from Plaintiff's recovery. Doc. No. at 50 at 3. 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 attorney's fee provision to be fair and reasonable.
C. Confidentiality Provision.
The Agreement contains a confidentiality clause. Doc. No. 22-1 at 2-3. The confidentiality clause states the following:
All aspects of this Agreement are contingent upon the Court's approval of this Agreement and the dismissal of the Litigation with prejudice in a confidential proceeding that does not publicly disclose the terms of the Agreement. In the event such a confidential approval is not forthcoming, this Agreement shall be null and void, but the parties will meet and confer in good faith to explore alternatives.
Doc. No. 50-1 at 4.
Courts within this circuit routinely reject confidentiality clauses in FLSA settlement agreements because they "`thwart[] Congress's intent to ensure widespread compliance with' the FLSA." Pariente v. CLC Resorts and Devs., Inc., No. 6:14-cv-615-Orl-37TBS, 2014 WL 6389756, at *5 (M.D. Fla. Oct. 24, 2014). Additionally, such provisions have been rejected because they are inherently unenforceable due to the public filing of the settlement agreements containing the confidentiality clauses. See Housen v. Econosweep & Maint. Servs., Inc., No. 3:12-cv-461-J-34TEM, 2013 WL 2455958, at *2 (M.D. Fla. Jun. 6, 2013) (confidentiality clauses are unenforceable when the settlement agreement is filed on the public docket and citing authority).
While such provisions have been approved when the plaintiff receives separate consideration, in this case there is no such consideration, and the undersigned finds that the confidentiality clause would unduly thwart Congress's intent to ensure widespread compliance with the FLSA. See Smith v. Aramark Corp., Case No. 6:14-cv-409-Orl-22KRS, 2014 WL 5690488, at *3-4 (M.D. Fla. Nov. 4, 2014) (approving FLSA settlement providing separate consideration for confidentiality and non-disparagement clauses).
Even though the confidentiality provision is unenforceable, it does not preclude approval of the Agreement in this case. The Agreement contains a severability clause, providing:
Should any provision of this Agreement be declared or be determined by any Court to be illegal or invalid, the validity of the remaining parts, terms, or provisions shall not be affected thereby, and the illegal or invalid part, term, or provision shall be deemed not to be a part of this Agreement.
Doc. No. 50-1 at 3. Thus, all other terms may be severed without effecting the enforceability of the balance of the Agreement. Id. Pursuant to the severability clause, the Court may strike the confidentiality provision from the Settlement Agreement without impacting the enforceability of the remainder of the Agreement. See Pariente, No. 6:14-cv-615-Orl-37TBS, 2014 WL 6389756, at *5-6 (M.D. Fla. Oct. 24, 2014) (striking confidentiality clause pursuant to severability clause).
IV. CONCLUSION.
Based on the foregoing, it is RECOMMENDED that the Court enter an order GRANTING in part and DENYING in part the Motion (Doc. No. 50) as follows:
1. That the Court STRIKE the confidentiality provision from the Agreement;
2. That the Motion (Doc. No. 50) be GRANTED to the extent that the Court finds the Settlement Agreement (Doc. No. 50-1), with the modification set forth above, to be a fair and reasonable compromise of Plaintiff's FLSA claims;
3. That the Motion be otherwise DENIED;
4. That this case be DISMISSED with prejudice; and
5. That the Clerk be directed to close the case.
NOTICE TO PARTIES
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. 11th Cir. R. 3-1. In order to expedite the final disposition of this matter, if the parties have no objection to this Report and Recommendation, they may promptly file a joint notice of no objection.
