United States District Court, N.D. Alabama, Southern Division
JOHN H. ENGLAND, III, Magistrate Judge.
Plaintiffs Lacey Angela Wycoff, Shana Lynn Wycoff, Ellen Christine Sarmiento, Stacey Dawn Otts Santos, Kenneth Robert Otts, Nicholas Bryan Holt, Patrick Tyler Franklin, Caleb Tyler Russell, Amanda Christine Broome, and Madison Nichole Gilbreath jointly move for approval of their settlement agreement. (Doc. 27). The parties seek approval of the terms of their settlement agreement on Plaintiffs' claims for unpaid wages and compensation as well as approval of separately negotiated attorneys' fees and costs to be paid to Plaintiffs' counsel under the settlement. ( Id. ). For the reasons set forth below, the court approves the parties' settlement and will dismiss Plaintiffs' claims with prejudice.
I. Background Facts
Plaintiffs filed this action on January 2, 2013, asserting claims for unpaid time and overtime under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201, et. seq. (Doc. 1). Defendants answered the Complaint, denying Plaintiffs were entitled to any additional or overtime compensation under the FLSA and asserting various affirmative defenses. (Docs. 6, 7 & 9). Defendant Sani E Zehra, Inc. d/b/a Dairy Queen of Trussville ("DQ Trussville") asserted counterclaims against Plaintiff Shana Lynn Wycoff. (Doc. 6). The undersigned issued a memorandum opinion finding DQ Trussville's counterclaims were not so related as to form the same case or controversy as Plaintiffs' FLSA claims and that the court did not have supplemental jurisdiction over the counterclaims. (Doc. 18). On April 18, 2014, Plaintiffs filed an amended complaint, adding Christina Polley as a plaintiff. (Doc. 20). The parties have now reached a settlement, the terms of which are outlined below and contained in their executed Settlement Agreements ("the "Agreement"). (Doc. 27-1). The Plaintiffs have also provided General Releases and executed documents waiving their right to attend a fairness hearing related to this settlement. (Docs. 27-2 & 27-3). The undersigned has reviewed these agreements.
The parties explain the compromise settlement was reached due to uncertainties regarding the applicability of the FLSA to certain time periods of employment. (Doc. 27 at 2). Plaintiffs assert the FLSA applied to all named plaintiffs for the three years prior to the filing of this lawsuit. ( Id. ). Defendants assert that specific periods of time fell outside the FLSA because the minimum threshold amounts of revenue required by the FLSA were not reached. ( Id. ). Time records reflect five plaintiffs performed work outside of the disputed time period and have been allocated compensation under the proposed settlement. ( Id. ). Six plaintiffs performed work solely within the disputed time period and would not be afforded any compensation if the court determined the FLSA did not apply during those time periods. ( Id. ). As a compromise, each plaintiff was allocated $417.47 in compensatory and liquidated damages for work performed during the disputed time period. ( Id. ).
Under the Agreement, Defendant has agreed to pay Plaintiffs certain amounts to settle their claims as follows:
Actual Wages Premium for Signing Name Owed Release Total Settlement Lacey Angela Wycoff $1, 345.73 $417.47 $1, 763.20 Shana Lyn Wycoff $2, 598.05 $417.47 $3, 015, 52 Madison Nichole Gilbreath $85.73 $417.47 $503.20 Ellen Christine Sarmiento $585.51 $417.47 $1, 002.98 Stacey Dawn Otts Santos $0 $417.47 $417.47 Kenneth Robert Otts $0 $417.47 $417.47 Nicholas Bryan Holt $0 $417.47 $417.47 Patrick Tyler Franklin $392.75 $417.47 $810.22 Caleb Tyler Russell $0 $417.47 $417.47 Amanda Christine Broome $0 $417.47 $417.47 Christina Polley $0 $417.47 $417.47
(Doc. 27 at 3). One-half of each plaintiff's settlement proceeds shall be allocated as compensatory damages and subject to federal, state, and local taxes. ( Id. ). One-half of each plaintiff's settlement proceeds shall be allocated as liquidated damages. ( Id. ). Per the terms of the settlement agreement, defendants shall tender payment of the settlement proceeds within six months from the date of the undersigned's order approving the settlement. ( Id. ). Additionally, Defendants have agreed to pay attorney's fees in the amount of $8, 800.00 and expenses in the amount of $683.75. ( Id. ).
Plaintiffs' counsel has discussed the settlement, its terms, and the allocated compensation with each of the plaintiffs. (Doc. 27-4). Counsel believes each of the plaintiffs is informed regarding the same and desires the court approve the settlement as proposed. ( Id. ).
Subject to specific exceptions, the FLSA provides that employees are entitled to receive overtime pay at one and one-half times their regular rate for all hours worked in excess of forty per week. See 29 U.S.C. § 207(a)(1). An employer who violates the FLSA is liable to its employee for both unpaid overtime compensation and for an equal amount in liquidated damages. 29 U.S.C. § 216(b). In an action to recover unpaid overtime compensation, a court is further required to award a prevailing plaintiff a reasonable attorney=s fee and costs of the action. Silva v. Miller, 307 Fed.Appx. 349, 351 (11th Cir. 2009).
Judicial review and approval of an FLSA settlement is necessary to give it final and binding effect. Lynn's Food Stores, Inc. v. U.S. Dept. of Labor, 679 F.2d 1350 (11th Cir. 1982). Before approving a FLSA settlement, a 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 "to promote the policy of encouraging settlement of ...