The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
GRACE MUNOZ, on behalf of herself and
others similarly situated, CIVIL ACTION
Plaintiff, NO. 21-297
v.
GOLDBERG, MILLER & RUBIN, P.C.,
Defendant.
PAPPERT, J. October 21, 2021
MEMORANDUM
Grace Munoz, a paralegal, sued her former employer, Goldberg, Miller & Rubin,
P.C., on behalf of herself and others similarly situated alleging they were misclassified
as exempt employees and owed overtime wages under the Fair Labor Standards Act,
Pennsylvania Minimum Wage Act, New Jersey Wage Act, New York Minimum Wage
Act, New York Payment of Wages Act, New York Labor Laws and other legal
requirements. (See Compl., ECF 1.) One other similarly situated employee – Joharis
Byas – “opted in” to this collective action. The parties reached a settlement of Munoz
and Byas’s individual claims and now move for the Court’s approval. The Court grants
the Motion and approves the settlement.
I
Munoz worked for Goldberg, Miller & Rubin as a paralegal from approximately
May 2, 2019 through November 3, 2020. (Pl.’s Mem., ECF 33-1 at 1.) She claims she
regularly worked fifty to fifty-five-hours per week (i.e., ten to eleven hours per day five
days per week). (Id. at 1-2.) Byas claims she routinely worked forty-five to fifty hours
per week (i.e., nine to ten hours per day) during her brief term as a firm paralegal from
December 23, 2019 through January 13, 2020. (Id. at 2.)
Goldberg, Miller & Rubin denies the material allegations and claims in the
Complaint. (Id.) It contends “it maintained a policy prohibiting paralegals from
working more than forty[ ] hours per week” and required “written approval in advance
of any overtime work.” (Id.) The firm contends it performed an investigation into
Munoz’s alleged overtime and, although it disagreed with her assertions, paid her “for
all claimed overtime hours.” (Id.) Specifically, it paid Munoz approximately $3,606 in
July 2019 based on her contention that she worked 100 hours of overtime. (Id.) Munoz
contends the payment did not account for all the overtime she worked beyond that date
until her departure from the firm. (Id.) Byas never received overtime compensation
during her short time at the firm. (Id.) Goldberg, Miller & Rubin contends she was in
training for the first two weeks of her employment and, during her third and final
week, “she did not work any overtime.” (Id.)
The Court conditionally certified a FLSA collective in March 2021. (ECF 27.) In
April, Plaintiffs’ counsel filed a Notice of Byas’s Consent to Join the Collective Action
along with the consent of a second person. (ECF 29-1.) The second opt-in withdrew his
consent to join the action on June 4. (ECF 31.) That month, the parties commenced an
exchange of settlement offers and counteroffers and attended an unsuccessful
settlement conference with Magistrate Judge Elizabeth Hey. (Pl.’s Mem., ECF 33-1 at
at 2-3.) They continued their arms-length negotiations thereafter and, one week later,
reached an agreement to settle Munoz’s and Byas’s claims on an individual basis. (Id.
at 3.)
Under the agreement’s terms, Munoz will receive $3,125.00, less lawful
deductions for her alleged unpaid wages and $3,125.00 for alleged liquidated damages,
statutory penalties and a release of her claims. (Pl.’s Mem. (Ex. A.), ECF 33-2 at ¶¶ 4a-
b.) For her alleged unpaid wages, Byas will receive $100.05, less lawful deductions.
(Id. ¶ 4c.) She will receive the same amount for alleged liquidated damages, statutory
penalties and a release of her claims. (Id. ¶ 4d.) The parties now ask the Court to
approve their settlement.
II
A
Congress enacted the FLSA to correct and eliminate “labor conditions
detrimental to the maintenance of the minimum standard of living necessary for
health, efficiency and general well-being of workers . . . ” 29 U.S.C. § 202. It concluded
that such conditions create unfair competition, lead to labor disputes, burden commerce
and the free flow of goods and interfere with orderly and fair marketing of goods. Id.
The statute guards against “unequal bargaining power as between employer and
employee.” Brooklyn Sav. Bank v. O’Neill, 324 U.S. 697, 706 (1945).
Parties may settle FLSA claims by reaching a compromise supervised by either
the Department of Labor or by a district court. See 29 U.S.C. § 216(b), (c); Kraus v. PA
Fit II, LLC, 155 F. Supp. 3d 516, 522 (E.D. Pa. 2016). Although the Third Circuit has
not addressed whether parties may settle FLSA claims without court approval, most
district courts in this Circuit deem it necessary. See Howard v. Phila. Housing Auth.,
197 F. Supp. 3d 773, 776 (E.D. Pa. 2016).
i
To approve the parties’ settlement, the Court must find it resolves a bona fide
dispute – that is, one involving “factual issues rather than legal issues such as the
[FLSA’s] coverage and applicability.” Id. at 777 (internal quotations omitted). There is
such a dispute here, as the parties disagree about the hours Munoz and Byas worked
and the compensation owed to them, if any. Whether Plaintiffs were entitled to
overtime compensation and how much might be owed presents “an issue of fact that is
precisely the kind of dispute that qualifies as a bona fide dispute.” Katherine Devine v.
Ne. Treatment Ctrs., Inc., No. 20-02417, 2021 WL 4803819, at *2 (E.D. Pa. Oct. 14,
2021); see also Joseph v. Caesar’s Ent. Corp., No. 10-6293, 2012 WL 12898816, at *2
(D.N.J. July 23, 2012) (“A disagreement over hours worked or compensation due clearly
establishes a bona fide dispute.”) (citations and internal quotations omitted).
ii
Because the settlement resolves a bona fide dispute, the Court considers whether
it is “fair and reasonable” for the employees. Howard, 197 F. Supp. 3d at 777. This
standard applies “to assess the propriety of FLSA collective action settlements and
private (i.e., single-plaintiff) FLSA settlements alike.” Id. To make this determination
in the context of an FLSA settlement, courts often consider the factors used to evaluate
the fairness of class action settlements. See Girsh v. Jepson, 521 F.2d 153 (3d Cir.
1975); Kraus, 155 F. Supp. 3d at 523 n.3 (discussing whether and how courts should
apply the Girsh factors in FLSA actions). When considering the settlement of
individual FLSA claims, however, “at least some of the Girsh factors appear to be little
help, if not irrelevant” and “courts need not fall into the alluring trap of mechanically
applying Girsh . . . .” Howard, 197 F. Supp 3d at 777 n.1 (citation omitted). Here, the
relevant factors include: the complexity, expense and likely duration of the
litigation; the stage of the proceedings and the amount of discovery completed; the risks
of establishing liability and damages; and the best possible recovery balanced against
the attendant risks of litigation. See Girsh, 521 F.2d at 157.
Although the case is not complex, litigating it would be expensive and time-
consuming. Absent a settlement, the parties would expend time and money on
discovery, contested motions for class certification and summary judgment and possibly
a trial. (Pl.’s Mem., ECF 33-1 at 6.)
Counsel also “adequately appreciated the merits of the case while
negotiating . . . .” DiFlavis v. Choice Hotels, Int’l, Inc., No. 18-3914, 2020 WL 6728806,
at *3 (E.D. Pa. 2020) (citation and internal quotation omitted). Plaintiffs’ counsel
prepared and served seven deposition notices, interrogatories and requests for
production of documents before the parties ultimately agreed to stay discovery while
pursuing a settlement. (Pl.’s Mem., ECF 33-1 at 7.) In February, they received detailed
payroll information from the firm for forty-seven members of the putative collective and
used the information to prepare a complex damage model and Plaintiffs’ settlement
demand. (Id.) The payroll documents, the parties’ settlement conference with
Magistrate Judge Hey and their other settlement discussions provided enough
information to support settlement approval.
In addition, Plaintiffs risk being unable to establish liability at trial due to an
absence of time records. (Id. at 7-8.) Nevertheless, Munoz estimates her unpaid
overtime wages are $5,348.10, while Byas estimates she is owed $200.10 in unpaid
overtime. (Id. at 8.) The proposed settlement will award Munoz more than her
estimated unpaid overtime and Byas will receive the full amount she claims is due.
(Id.) The proposed settlement will fairly compensate Plaintiffs for their alleged unpaid
time considering the possibility that they might not have evidence needed to support
their claims.
Also, given the small size of the collective – just two individuals – and the
absence of time records, success in litigation is not assured for either side. As the firm
continues to deny all material allegations and claims, there is a chance Plaintiffs would
not succeed in recovering the amounts they seek. (Id. at 8-9.) Were this matter to
proceed to trial, the best possible recovery for Munoz and Byas – including liquidated
damages if the firm cannot mount a good-faith defense – would be $10,696.20 and
$400.20, respectively. (Id.) Balancing the attendant risks of litigation and the best
possible recovery supports approval of the settlement.
iii
The Court then must consider whether the settlement “furthers or impermissibly
frustrates” the FLSA’s implementation in the workplace. Howard, 197 F. Supp. 3d at
777. Courts considering proposed FLSA settlements caution against “overly
burdensome confidentiality agreements, overbroad release language, or sealed filings.”
VanOrden v. Lebanon Farms Disposal, Inc., No. 17-1310, 2019 U.S. Dist. LEXIS 181897
at *4 (M.D. Pa. Oct. 18, 2019). The parties’ proposed agreement does not include any
provisions which would be antithetical to the statute’s aims. It includes no
confidentiality provision and there are no sealed filings. The agreement’s release is
limited to claims specific to this litigation and does not apply to events occurring after
the agreement’s date. Further, the release and Plaintiffs’ waiver of future employment
by the firm are supported by consideration beyond any amount due for their alleged
unpaid hours. Cf. Lyons v. Gerhard’s Inc., No. 14-6693, 2015 WL 4378514, at *5 (E.D.
Pa. July 16, 2015) (approving settlement containing general release where half the
payment to plaintiff was for non-wage compensatory damages). Approving the
settlement does not frustrate the FLSA’s purpose.
B
In approving FLSA settlements, courts may “allow a reasonable attorney’s fee to
be paid by the defendant, and costs of the action.” 29 U.S.C. § 216(b); see also Kraus,
155 F. Supp. 3d at 533. Courts determine attorneys’ fees under either the percentage-
of-recovery method or the lodestar method. In re Chickie's & Pete's Wage & Hour Litig.,
No. CIV.A. 12-6820, 2014 WL 911718, at *4 (E.D. Pa. Mar. 7, 2014). The percentage of
recovery approach “awards a fixed portion of the settlement fund to counsel.” Solkoff v.
Pennsylvania State Univ., 435 F. Supp. 3d 646, 658 (E.D. Pa. 2020) (citations omitted).
Although it is generally favored in wage and hour cases in the Third Circuit, see id., the
Court declines to apply it here given the ultimate settlement is a one of individual
claims, and is not on behalf of a larger FLSA collective.
The total payment due to Munoz and Byas is just $6,450.10, less any lawful
deductions. (See Pl.’s Mem. (Ex. A.), ECF 33-2 at ¶ 4e.) Pursuant to the parties’
agreement, Plaintiffs’ counsel is entitled to receive $38,549.90 in fees and costs. (Pl.’s
Mem. (Ex. A.), ECF 33-2 at ¶ 4e.) $811.16 in costs have been advanced in this litigation
on Plaintiffs’ behalf ((Pl.’s Mem., Jason Thompson Decl. (Ex. B), ECF 33-3 at ¶ 17), a
reasonable sum proportional to the litigation’s complexity. However, $36,549.90 (i.e.
$38,549,90 - $811.6 (costs)) is 569.58% of the payment due to Plaintiffs before any
deductions. Using the percentage of recovery approach in the circumstances presented
by this settlement suggests the negotiated fee award is unreasonable.
Application of the lodestar formula (as Plaintiffs do in their motion) yields a
different result. It multiplies the reasonable number of hours expended by a reasonable
hourly rate. See Loughner v. Univ. of Pittsburgh, 260 F.3d 173, 177-78 (3d Cir. 2001)
(internal citations omitted). “When the applicant for a fee has carried his burden of
showing that the claimed rates and number of hours are reasonable, the resulting
product is presumed to be the reasonable fee to which counsel is entitled.” Id. (internal
citations omitted). Plaintiffs’ counsel have expended 254.58 hours on this case. (Pl.’s
Mem., ECF 33-1 at 13.) The time spent over the seven months between filing the
Complaint and the Motion for settlement approval is reasonable in light of the steps
required to reach a resolution of Plaintiffs’ claims, including discovery and analysis of
payroll information for forty-seven members of the putative collective and settlement
efforts including the conference with Magistrate Judge Hey.
Plaintiffs posit that if a fee award was calculated using the lodestar method
based on a “blended firm rate of $373.04 per hour” derived from the participating
attorneys’ hourly rates (ranging from $725 per hour down to $300 per hour), it would
result in an $88,646.35 fee award. (Pl.’s Mem., ECF 33-1 at 13.) The attorneys’ hourly
rates are consistent with prevailing market rates given counsel’s experience and skill.
(See Pl.’s Mem., Jason Thompson Decl. (Ex. B), ECF 33-3 at ¶¶ 3-6, 12-16; Pl.’s Mem.
Jason Thompson Bio. (Ex. C).) See also Loughner, 260 F.3d at 180 (3d Cir. 2001)
(“Generally, a reasonable hourly rate is calculated according to the prevailing market
rates in the relevant community.”) If, instead, an award was calculated using the
lowest hourly rate of a participating attorney (i.e., $300), it would equal $76,374.00. As
the fee award stands, it represents a substantially lower hourly rate of $148.24 (i.e.
$38,549,90 - $811.6 (costs) = $36,738.74.; $36,738.74 ÷ 254.48 hours = $148.24/hour), an
appropriate reduction given the eventual failure to have more than one opt-in plaintiff
from a putative class of forty-seven. When compared to the actual lodestar fees claimed
to be incurred in the prosecution of this case, the negotiated fee award represents a
significant reduction. It is reasonable as required by 29 U.S.C. § 216(b).
An appropriate Order follows.
BY THE COURT:
/s/ Gerald J. Pappert
GERALD J. PAPPERT, J.