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Buchanan v. Bahama Bob's Beachside Cafe, Inc.

United States District Court, S.D. Alabama, Southern Division

April 3, 2017

BAHAMA BOB'S BEACHSIDE CAFE, INC., et al., Defendants.



         This action is before the Court on the parties' Joint Motion to Approve of Settlement Agreement (doc. 23). Upon consideration, and for the reasons set forth herein, the Joint Motion is GRANTED, and the settlement is APPROVED.

         I. Background

         Plaintiff Andre Buchanan was employed at Bahama Bob's Beachside Café at Gulf Shores, Alabama as a dishwasher and busser. In late September 2016, he filed this action against Defendants Bahama Bob's Beachside Café, Inc., Stephen W. Spellman, Jr., Frank B. Merrill, Jr., and Robert L. Murphy for violations of the Fair Labor Standards Act, 29 U.S.C. § 201, et seq., (FLSA) (doc. 1). Plaintiff alleges that he was a “non-exempt”, hourly employee and was paid $8.00 per hour from July 14, 2015 through June 8, 2016 and $9.00 per hour from June 9, 2016 through September 10, 2016. Plaintiff alleges that when he worked more than forty hours per week, he was paid his regular hourly rate of pay plus $1.00, instead of the one and one-half times his regular hourly rate required by the FLSA. Plaintiff brings two counts against the Defendants: Count I for failure to pay the required hourly minimum wage and Count II for failure to pay overtime compensation. See 29 U.S.C. § 206, § 207. Plaintiff seeks his unpaid compensation, liquidated damages, attorney's fees, costs and other compensation.

         Defendants admit that Bahama Bob's Beachside Café, Inc. employed Plaintiff for the time period alleged, that he was a non-exempt employee, and that they are incorporators or officers of the corporation (doc. 4). Defendants also admit that this Court has jurisdiction. However, they deny the majority of the remaining allegations regarding the FLSA claims, including any claim that they acted willfully within the meaning of 29 U.S.C. § 216(b). They also set forth eleven affirmative defenses, including the defense that Defendants were acting in good faith and had reasonable grounds to believe that their actions did not violate the FLSA.

         The parties engaged in discovery as required by the Court's Preliminary Scheduling Order for FLSA Cases (doc. 6). Plaintiff answered the Court's interrogatories (doc. 10). Defendants provided the Verified Summary of the hours Plaintiff worked and his pay and documents in support (doc. 18, 19). Plaintiff and counsel discussed his overtime claim and formulated proposed settlement figures (doc. 23). The parties engaged in settlement negotiations based on their respective independent calculations and analysis. They participated in a settlement conference on January 31, 2017 and reached a resolution of Plaintiff's claims (do. 21).

         The parties then filed the Joint Motion wherein they set forth the terms of the Settlement and move the Court to approve the Settlement Agreement (doc. 23). The parties did not file a separate written settlement agreement.

         In reaching their decision to settle, the parties recognized that there would be additional expense in time and money should the litigation continue and that they would face the uncertainty and risks of litigation, including the risk that Plaintiff may not recover and the risk of a verdict on the merits against the Defendants. They also acknowledged the difficulties and delays inherent in litigation. Therefore, settlement was a mutually appealing resolution (doc. 23).

         They assert that because of these risks, and because both parties negotiated the Settlement Agreement in good faith and at arms-length while represented by competent and experienced counsel, the settlement is mutually satisfactory and a fair and reasonable resolution of a bona fide dispute under the FLSA. In support, Plaintiff states that he is satisfied that he will be reasonably compensated. Further, Plaintiff's counsel represents that Plaintiff understands the Agreement, has consulted with counsel as to the terms, and knowingly and voluntarily entered into the Agreement.

         II. Analysis

In Lynn's Food Stores, the Court of Appeals for the Eleventh Circuit recognized that [t]here 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.

679 F.2d 1350, 1352-1353 (11th Cir. 1982); (footnotes omitted).

         The Eleventh Circuit further explained that

[o]ther than a section 216(c) payment supervised by the Department of Labor, there is only one context in which compromises of FLSA back wage or liquidated damage claims may be allowed: a stipulated judgment entered by a court which has determined that a settlement proposed by an employer and employees, in a suit brought by the employees under the FLSA, is a fair and reasonable resolution of a bona fide dispute over FLSA provisions.

679 F.2d at 1355.

         Thus, pursuant to the FLSA, the Court must determine whether the settlement is a “fair and reasonable resolution of a bona fide dispute” of FLSA provisions, and if so, approve the parties' Settlement Agreement. 679 F.2d at 1355; Silva v. Miller, 307 Fed.Appx. 349, 351 (11th Cir. 2009); Stalnaker v. Novar Corp., 293 F.Supp.2d 1260, 1263 (N.D. Ala. 2003). If the Plaintiff has compromised his FLSA dispute on issues of coverage or the amount due for back wages, he may do so only with the Court's approval of the Settlement Agreement. The rationale is that

[s]ettlements may be permissible in the context of a suit brought by employees under the FLSA for back wages because initiation of the action by the employees provides some assurance of an adversarial context. The employees are likely to be represented by an attorney who can protect their rights under the statute. Thus, when the parties submit a settlement to the court for approval, the settlement is more likely to reflect a reasonable compromise of disputed issues than a mere waiver of statutory rights brought about by an employer's overreaching. If a settlement in an employee FLSA suit does reflect a reasonable compromise over issues, such as FLSA coverage or computation of ...

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