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Kaikkonen v. Ascent Hospitality Management Co.

United States District Court, N.D. Alabama, Northeastern Division

October 18, 2019




         This opinion concerns a proposed FLSA settlement. In her amended complaint, plaintiff Rhonda Kaikkonen contends that defendant Ascent Hospitality Management Company (d/b/a Huntsville Marriott at the Space & Rocket Center) and Fictitious Defendants 1-5, violated provisions of Title VII of the Civil Rights Act of 1964 and committed state law torts. (Doc. 12, pp. 8-16, ¶¶ 34-66). In addition, in her amended complaint, Ms. Kaikkonen asserts that Ascent violated the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (Doc. 12, p. 16, ¶¶ 67-68). As part of a broader settlement agreement, the parties have agreed to resolve Ms. Kaikkonen's FLSA claim, and the parties have asked the Court to review the terms of the proposed FLSA settlement. (Doc. 19). For the reasons stated below, the Court approves the FLSA settlement because it is a fair and reasonable compromise of a bona fide dispute.

         I. BACKGROUND

         Ms. Kaikkonen filed this action on July 25, 2018, and later amended the complaint to include an FLSA claim. (Doc. 1; Doc. 12). Ms. Kaikkonen worked at the Huntsville Marriott from November 28, 2016 until mid-May 2018. (Doc. 12, p. 5, ¶ 15; Doc. 12, p. 7, ¶ 23).

         Ms. Kaikkonen alleges that Ascent violated the FLSA by failing to pay the overtime compensation rates for work performed in excess of 40 hours per week. (Doc. 12, p. 16, ¶ 68). Ms. Kaikkonen contends that she was employed as a “M-Club concierge.” For this position, Ms. Kaikkonen was paid a base rate of $8.50 per hour during base scheduled hours-5am to 12 pm. (Doc. 12, p. 7, ¶¶ 25-26). Ms. Kaikkonen asserts that she was required to perform duties outside of the base scheduled hours for which she was not paid additional wages. (Doc. 12, p. 7, ¶¶ 27-28). Ms. Kaikkonen also contends that she worked five hours per day beyond her scheduled shift in other departments of the hotel. (Doc. 12, pp. 7-8, ¶¶ 29-30). Ms. Kaikkonen contends that Ascent compensated her at her standard base hourly rate, not the overtime rate, for work performed in excess of forty hours per week. (Doc. 12, p. 8, ¶¶ 32-33).

         With the assistance of a mediator, the parties have negotiated a settlement of all of Ms. Kaikkonen's claims, including the FLSA claim. (Doc. 19, p. 3). In exchange for dismissal of the FLSA claims against it with prejudice, Ascent has agreed to pay Ms. Kaikkonen $61.63 for unpaid overtime wages. (Doc. 19, p. 3). This amount reflects 14.5 overtime hours paid at an overtime premium of $4.25 per hour in addition to what Ms. Kaikkonen was paid at her standard hourly rate. (Doc. 19, p. 3). The parties have agreed to exclude liquidated damages. (Doc. 19, p. 3). Additionally, Ascent will pay to plaintiff's counsel $900 in attorney's fees for three hours devoted to the FLSA claim. (Doc. 19, p. 3). To accommodate a resolution, plaintiff's counsel agrees to compromise this amount below her normal hourly rate of $350 per hour. (Doc. 19, p. 3).

         On this record, the Court considers the parties' motion to approve the proposed settlement of the FLSA claim.


         A. Approval of the Settlement

         “Congress enacted the FLSA in 1938 with the goal of ‘protect[ing] all covered workers from substandard wages and oppressive working hours.' Among other requirements, the FLSA obligates employers to compensate employees for hours in excess of 40 per week at a rate of 1½ times the employees' regular wages.” Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 147 (2012) (quoting Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981)); see also 29 U.S.C. §§ 202, 207(a). Congress designed the FLSA “to ensure that each employee covered by the Act would receive ‘[a] fair day's pay for a fair day's work' and would be protected from ‘the evil of ‘overwork' as well as ‘underpay.''” Barrentine, 450 U.S. at 739 (emphasis in original). In doing so, Congress sought to protect, “the public's independent interest in assuring that employees' wages are fair and thus do not endanger ‘the national health and well-being.'” Stalnaker v. Novar Corp., 293 F.Supp.2d 1260, 1264 (M.D. Ala. 2003) (quoting Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 706 (1945)).

         If an employee proves that her employer violated the FLSA, the employer must remit to the employee all unpaid wages or compensation, liquidated damages in an amount equal to the unpaid wages, a reasonable attorney's fee, and costs. 29 U.S.C. § 216(b). “FLSA provisions are mandatory; the ‘provisions are not subject to negotiation or bargaining between employer and employee.'” Silva v. Miller, 307 Fed.Appx. 349, 351 (11th Cir. 2009) (quoting Lynn's Food Stores, Inc. v. U.S. ex. rel. U.S. Dep't of Labor, 679 F.2d 1350, 1352 (11th Cir. 1982)); see also Brooklyn, 324 U.S. at 707. “Any amount due that is not in dispute must be paid unequivocally; employers may not extract valuable concessions in return for payment that is indisputably owed under the FLSA.” Hogan v. Allstate Beverage Co., Inc., 821 F.Supp.2d 1274, 1282 (M.D. Ala. 2011).

         Consequently, parties may settle an FLSA claim for unpaid wages only if there is a bona fide dispute relating to a material issue concerning the claim. To compromise a claim for unpaid wages, the parties must “present to the district court a proposed settlement, [and] the district court may enter a stipulated judgment after scrutinizing the settlement for fairness.” Lynn's Food, 679 F.2d at 1352; see also Hogan, 821 F.Supp.2d at 1281-82. “[T]he parties requesting review of an FLSA compromise must provide enough information for the court to examine the bona fides of the dispute.” Dees v. Hydradry, Inc., 706 F.Supp.2d 1227, 1241 (M.D. Fla. 2010). The information that the parties provide should enable the Court “to ensure that employees have received all uncontested wages due and that they have received a fair deal regarding any additional amount that remains in controversy.” Hogan, 821 F.Supp.2d at 1282. “If a settlement in an employee FLSA suit does reflect a reasonable compromise over issues, such as FLSA coverage or computation of back wages, that are actually in dispute, ” then a court may approve a settlement. Lynn's Food, 679 F.2d at 1354; see also Silva, 307 Fed.Appx. at 351 (emphasizing that a proposed settlement must be fair and reasonable).

         Based on the Court's review of the proposed settlement agreement, the Court finds that there is a bona fide dispute in this matter that supports the proposed settlement. Ms. Kaikkonen asserts that Ascent failed to pay her overtime compensation for hours she worked in excess of forty hours a week. (Doc. 12, p. 8, ¶ 33). Ascent denies the allegation. (Doc. 13, p. 5, ¶ 33). Ascent also denies that its alleged FLSA violation was willful. (Doc. 19, p. 3). This bona fide dispute supports the parties' proposed settlement.

         The Court finds that the method used to calculate the plaintiff's disputed wages is fair and reasonable under the circumstances of this case. The parties negotiated a broad settlement to resolve Ms. Kaikkonen's FLSA claim and her Title VII and state law claims. As part of this broader settlement, the parties designated $61.63 to compensate Ms. Kaikkonen for 14.5 hours of overtime work for which she was previously paid ...

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