Thomas v. Lifestream Behavioral Center, Inc.

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

APRIL THOMAS,

Plaintiff,

v. Case No: 5:21-cv-254-ACC-PRL

LIFESTREAM BEHAVIORAL

CENTER, INC.,

Defendant.

REPORT AND RECOMMENDATION

This cause comes before the Court on the parties’ Joint Second Amended

Motion to Approve Settlement and Dismiss Case (the “Motion”), filed April 11, 2022.

(Doc. 35.) Upon consideration, I respectfully recommend that the Motion be granted

in part.

I. BACKGROUND

On May 7, 2021, Plaintiff instituted this action against Lifestream Behavioral

Center, Inc. (“Lifestream”), alleging violations of the overtime wage provisions of the

Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219. (Doc. 1.) Plaintiff alleges

she worked as an adult case manager for Defendant Lifestream from approximately

January 30, 2020, to September 2, 2020. (Id. ¶¶ 6–7.) Plaintiff asserts that during this

time, she routinely worked in excess of 40 hours per week and that Defendant failed

to pay her overtime compensation. (Id. ¶¶ 8–10.) Defendant responded to the

Complaint and denied these claims. (Doc. 5.)

On October 5, 2021, the Court referred the case for mediation, and the

undersigned subsequently conducted a settlement conference on November 10, 2021.

(Docs. 18, 20.) The parties did not immediately reach a settlement agreement;

however, following the settlement conference, the parties continued settlement

discussions and, on December 15, 2021, filed a joint motion for settlement approval.

(Docs. 26, 31.) The undersigned denied the motion without prejudice due to the

parties’ failure to address whether the attorney’s fee was agreed upon separately and

without regard to the amount paid to Plaintiff. (Doc. 32.) The parties thereafter filed

an amended motion for settlement approval (Doc. 33), which the undersigned again

denied without prejudice due to the inclusion of certain impermissible provisions. (See

Doc. 34.) The parties have now filed the instant Motion seeking approval.

II. STANDARD

“The principal congressional purpose in enacting the Fair Labor Standards Act

of 1938 was to protect all covered workers from substandard wages and oppressive

working hours, ‘labor conditions [that are] detrimental to the maintenance of the

minimum standard of living necessary for health, efficiency and general well-being of

workers.’” Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981)

(alteration in original) (quoting 29 U.S.C. § 202(a)). “Any employer who violates the

provisions of section 206 or section 207 of [the FLSA] shall be liable to the employee

or employees affected in the amount of their unpaid minimum wages, or their unpaid

overtime compensation, . . . and in an additional equal amount as liquidated

damages.” 29 U.S.C. § 216(b). Section 206 establishes the federally mandated

minimum hourly wage, and § 207 prescribes overtime compensation of “one and one-

half times the regular rate” for each hour worked in excess of forty hours during a

given workweek. The provisions of the FLSA are mandatory and “cannot be abridged

by contract or otherwise waived.” Barrentine, 450 U.S. at 740. To permit otherwise

would “‘nullify the purposes’ of the [FLSA] and thwart the legislative policies it was

designed to effectuate.” Id. (quoting Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707

(1945)).

The parties seek judicial review and a determination that their settlement is a

“fair and reasonable resolution of a bona fide dispute” over FLSA issues. See Lynn’s

Food Stores, 679 F.2d at 1354–55. If a settlement is not supervised by the Department

of Labor, the only other route for a compromise of FLSA claims is provided in the

context of suits brought directly by employees against their employers under § 216(b)

to recover back wages for FLSA violations. Id. at 1353. “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.” Id.

The Eleventh Circuit has held 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.” Id. at 1354. In adversarial cases:

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 back wages, that are actually in dispute;

we allow the district court to approve the settlement in order

to promote the policy of encouraging settlement of

litigation.

Id.

When evaluating an FLSA settlement agreement, the district court considers

whether the settlement is fair and reasonable to the employee, the “internal” factors,

and whether the settlement frustrates the purpose of the FLSA, the “external” factors.

Dees v. Hyrdradry, Inc., 706 F. Supp. 2d 1227, 1241 (M.D. Fla. 2010); Moreno v. Regions

Bank, 729 F. Supp. 2d 1346, 1350–51 (M.D. Fla. 2010). Factors considered “internal”

include: “(1) the existence of fraud or 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 plaintiffs’

success on the merits; (5) the range of possible recovery; and (6) the opinions of the

counsel.” Hamilton v. Frito-Lay, Inc., No. 6:05-CV-592-ORL-22JGG, 2007 WL 328792,

at *2 (M.D. Fla. Jan. 8, 2007). There is a “‘strong presumption’ in favor of finding a

settlement fair.” Id. (quoting Cotton v. Hinton, 559 F.2d 1336, 1331 (5th Cir. 1977)).1

1 See Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1209 (11th Cir. 1981) (holding all

decisions from the Fifth Circuit handed down prior to October 1, 1981, are binding on

the Eleventh Circuit).

III. DISCUSSION

A. The Settlement Sum

Under 29 U.S.C. § 216(b), an employee damaged by a violation of the FLSA is

entitled to unpaid minimum wage and unpaid overtime compensation plus an

additional, equal amount, as liquidated damages. Title 29 U.S.C. § 216(b) (“Any

employer who violates the provisions of [the FLSA] shall be liable to the

employee . . . affected in the amount of their unpaid minimum wages, or their unpaid

overtime compensation . . . and in an additional equal amount as liquidated

damages.”)

According to the proposed settlement agreement (the “Agreement”), Defendant

has agreed to pay Plaintiff a total of $3,500.00 in unpaid overtime compensation and

$3,500.00 in liquidated damages. (Docs. 35 at 2; 35-1 ¶ 3.) Plaintiff initially claimed

she was entitled to $14,214.00 in unpaid overtime compensation. (Doc. 8 at 3.)

Because Plaintiff will receive less than the amount to which she claimed she was

entitled under the FLSA, she has compromised his claim within the meaning of Lynn’s

Food, 679 F.2d at 1354–55.

On review, I find the $3,500.00 Plaintiff has agreed to accept in satisfaction of

her claim to be fair and reasonable in comparison to the original claim, considering

that all parties are represented by counsel and wish to avoid the risk and expense of

further litigation. I also find this amount fair in relation to the nature of the dispute

between the parties contesting Plaintiff’s entitlement to overtime payments. (See Docs.

1, 5.) Thus, I find that the settlement sum represents a fair resolution of a bona fide

dispute between the parties and that Plaintiff has not unfairly compromised her claim.

B. Attorney’s Fees

Plaintiff’s counsel (“Counsel”) will receive $4,000.00 for fees and costs. (Doc.

35 at 2.) Pursuant to 29 U.S.C. § 216(b), “[t]he court [in an FLSA action] shall . . .

allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.”

The 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.”

Silva v. Miller, 307 F. App’x 349, 351 (11th Cir. 2009).

For the Court to determine whether the proposed settlement is reasonable,

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 his counsel, or otherwise. Id. When a plaintiff

receives less than a full recovery, any payment (whether or not agreed to by a

defendant) above a reasonable fee improperly detracts from the plaintiff's recovery.

Thus, a potential conflict can arise between counsel and their client regarding how

much of the plaintiff’s total recovery should be allocated to attorney’s fees and costs.

It is the Court’s responsibility to ensure that any such allocation is reasonable. See id.

Thus, 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. Aponte v. Jugamaxa LLC, No.

6:19-cv-597-Orl-41GJK, 2020 WL 1277527, at *2 (M.D. Fla. Feb. 28, 2020), report and

recommendation adopted sub nom. Aponte v. Jugamaxa LLC, 6:19-cv-597-Orl-41GJK, 2020

WL 1275468 (M.D. Fla. Mar. 17, 2020).

Here, Plaintiff states that “Plaintiff’s recovery and counsel’s recovery were not

negotiated separately. Rather, Plaintiff and her counsel discussed the fees and costs

contemporaneously as counsel for the parties negotiated an overall settlement.” (Doc.

35 at 2.) Given this representation, the Court must examine whether Plaintiff’s

counsel’s attorney’s fees are justified utilizing the lodestar method.

The Court uses the familiar “lodestar” method to determine a reasonable fee

award, which is calculated by multiplying the number of hours reasonably expended

by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). The party

moving for fees has the burden of establishing that the hourly rate(s) and hours

expended are reasonable. See Norman v. Housing Auth. of the City of Montgomery, 836

F.2d 1292, 1303 (11th Cir. 1988). “[A] reasonable hourly rate is the prevailing market

rate in the relevant legal community for similar services by lawyers of reasonably

comparable skills, experience, and reputation.” Duckworth v. Whisenant, 97 F.3d 1393,

1396 (11th Cir. 1996) (internal quotation marks omitted). As for the hours reasonably

expended, counsel must exercise proper “billing judgment” and exclude hours that are

“excessive, redundant, or otherwise unnecessary.” Hensley, 461 U.S. at 434. Finally,

the party seeking an award of expenses bears the burden of submitting a request that

enables the court to determine what expenses the party incurred and why it is entitled

to an award of those expenses. Loranger v. Stierheim, 10 F.3d 776, 784 (11th Cir. 1994).

i. Reasonableness of Hourly Rate

Counsel states his regularly hourly rate is $375.00, but that he has adjusted his

hourly rate to $175.00 for the purpose of settlement here. (See Doc. 35 at 5.) “A

reasonable hourly rate is the prevailing market rate in the relevant legal community

for similar services by lawyers of reasonably comparable skills, experience, and

reputation.” Norman, 836 F.2d at 1299. Fee counsel must “supply the court with

specific and detailed evidence from which the court can determine the reasonable

hourly rate.” Id. at 1303. Satisfactory evidence of the prevailing market rate “at a

minimum is more than the affidavit of the attorney performing the work,” and must

address rates actually billed and paid in similar lawsuits. Id. at 1299. Where the

documentation is inadequate, the district court must still determine a reasonable fee,

which it may do without further pleadings or an evidentiary hearing. Id. at 1303. This

is because the court itself is an expert on the question and “may consider its own

knowledge and experience concerning reasonable and proper fees and may form an

independent judgment either with or without the aid of witnesses as to value.” Id.

(quoting Campbell v. Green, 112 F.2d 143, 144 (5th Cir.1940)).

Counsel here fails to address rates actually billed and paid in similar lawsuits.

However, the undersigned may still determine a reasonable fee. Other courts in this

District have found higher hourly rates to be reasonable. See, e.g., Premier Trailer

Leasing, Inc. v. DM World Transp., LLC, No. 8:19-cv-2558-T-60AA, 2020 WL 8181665,

at *4 (M.D. Fla. Dec. 31, 2020) (noting the Court has previously found $385–$400 as

reasonable for commercial litigators with over 15 years of experience and $250–$275

as reasonable for commercial litigators with three years of experience). Here, Counsel

has approximately 18 years of experience and has spent nearly his “entire career in the

realm of civil litigation.” (Doc. 35-2 ¶ 4.) Therefore, based on the undersigned’s own

knowledge of market rates, and Counsel’s declaration (Doc. 35-2), I find that the

adjusted hourly rate of $175.00 is reasonable.

ii. Reasonableness of Hours Expended

The next step in the analysis is to determine what hours were reasonably

expended. Attorneys “must exercise their own billing judgment to exclude any hours

that are excessive, redundant, or otherwise unnecessary.” Galdames v. N & D Inv. Corp.,

432 F. App’x 801, 806 (11th Cir. 2011) (internal quotation marks omitted). Courts may

cut specific hours, or may engage in “an across-the-board cut,” so long as the court

adequately explains its reasons for doing so. Id.

Counsel seeks compensation for a total of 20.1 hours of time, which Counsel

adjusted down from 29.3 hours of time. (Doc. 35-3.) The undersigned has reviewed

the billing records and finds that the amount of time expended was reasonable. The

billing entries are limited to time spent litigating and settling Plaintiff’s FLSA claims

and do not include tasks that are clerical, secretarial, or excludable as unnecessary.

Because I find the hourly rates and the time spent litigating the Plaintiff’s claims

to be reasonable, I recommend that the Court approve an attorneys’ fee award of

$3,517.50, representing the adjusted attorneys’ fees that Counsel seeks.

iii. Costs

Counsel also seeks “approximately $500.00 in litigation costs.” (Doc. 35 at 5.)

Counsel does not provide an itemized breakdown of how those costs were allocated.

While the undersigned notes that Plaintiff paid a $402.00 filing fee to initiate the

instant action,2 counsel does not present evidence of other costs and the Court cannot

otherwise ascertain any amount from the Motion or the exhibits thereto. (See Doc. 1.)

As such, the undersigned recommends the Court find costs in the amount of $402.00

to be reasonable.

C. Release

Plaintiff has agreed to release all claims for overtime under the FLSA in the

Settlement Agreement. (Doc. 35-1 ¶ 2.) General releases in FLSA cases are frequently

viewed as “a ‘side deal’ in which the employer extracts a gratuitous (although usually

valueless) release of all claims in exchange for money unconditionally owed to the

employee” and therefore, such releases “confer[] an uncompensated, unevaluated, and

unfair benefit on the employer.” Moreno, 729 F. Supp. 2d at 1351–52 (footnote

omitted). As such, “[a] compromise of an FLSA claim that contains a pervasive release

of unknown claims fails judicial scrutiny.” Id. at 1352. Furthermore, releases given to

2 The cost of filing fees is found on the Court’s website at:

https://www.flmd.uscourts.gov/fees-for-filing-a-case.

numerous unnamed individuals, collectively referred to as “Releasees,” are

insufficient where the parties are not identified. Correa v. House of Glass, Inc., No. 6:17-

cv-676-Orl-28TBS, 2017 WL 8794847, at *4 (M.D. Fla. Oct. 19, 2017) (recommending

rejection of the settlement agreement in part because the release extended to numerous

unnamed individuals), denied as moot by, 2018 WL 1801207 (denying the R&R as moot

due to the parties’ subsequent filing of a renewed motion for settlement approval);

Schultz v. Tartini at Rock Springs Ridge, LLC, No. 6:17-cv-815-Orl-37KRS, 2017 WL

11062615, at *2 (M.D. Fla. Sept. 22, 2017) (ordering the parties to file a renewed

motion for settlement agreement approval in part because the motion did not address

the breadth of the release given to defendants).

Judges in this District have found releases similar to the one presented here to

pass judicial scrutiny because they do not require Plaintiff to release unknown claims

that are unrelated to her wage claim. Pond v. Red Lambda, Inc., No. 6:19-cv-1975-ORL-

37EJK, 2020 WL 4808744, at *4 (M.D. Fla. Aug. 3, 2020), report and recommendation

adopted, No. 6:19-cv-1975-ORL-37EJK, 2020 WL 4785449 (M.D. Fla. Aug. 18, 2020);

Batchelor v. Gen. Mar. Corp., No. 6:15-cv-2082-Orl-41KRS, 2016 WL 4467136, at *1

(M.D. Fla. Aug. 24, 2016) (approving release where it was “limited to wage claims.”).

Furthermore, the parties to the FLSA Release are specifically identified. Therefore,

because the release provision releases only Plaintiff’s FLSA claims against Defendant

and does not seek to release other non-FLSA related claims against unnamed parties,

I recommend that the Court find this release passes judicial scrutiny. See Moreno, 729

F. Supp. 2d at 1351–52 (footnote omitted).

D. Amendments Provision

The Agreement contains a provision that grants the parties leave to amend the

Agreement (the “Amendment Provision”). It provides that “[t]his Agreement may not

be amended, modified, altered, or changed, except by a written agreement that is

signed by all Parties and that makes specific reference to this Agreement.” (Doc. 35-1

¶ 11.) Generally, approval of a settlement agreement with an amendment provision

leaves “the parties free to circumvent Lynn’s Food review through post hoc

modifications of an already-approved agreement.” Dumas v. 1 ABLE REALTY, LLC,

No. 6:17-cv-765-Orl-37KRS, 2018 WL 5020134, at *3 (M.D. Fla. Mar. 9, 2018). As

such, I cannot approve an agreement that is not in its “final form, with [] opportunity

for amendment.” Id. However, the undersigned notes that the Agreement contains a

severability provision that provides:

Except as set forth below, should any provision of this

Agreement set forth herein be declared illegal or

unenforceable by any court of competent jurisdiction, such

that it cannot be modified to be enforceable, excluding the

release language and the payment obligations set forth

above, such provision shall immediately become null and

void, leaving the remainder of this Agreement in full force

and effect.

(the “Severability Provision”) (Doc. 35-1 ¶ 7.) Judges in this District routinely approve

settlement agreements while striking unfair or unenforceable provisions of the

agreement when the agreement contains a severability provision. See, e.g., Encarnacion

v. Dannix Painting LLC, No. 6:18-cv-682-Orl-41KRS, 2018 WL 5084749, at *3 (M.D.

Fla. Aug. 13, 2018), report and recommendation adopted, 2018 WL 5840509 (M.D. Fla.

Nov. 8, 2018) (recommending that the contradictory provisions and the general release

provision be stricken where the settlement agreement contained a severability

provision); Raynon v. RHA/Fern Park Mr., Inc., No. 6:14-cv-1112-Orl-37TBS, 2014 WL

5454395, at *1 (M.D. Fla. Oct. 27, 2014) (approving FLSA settlement agreement while

severing jury trial waiver provision).

Because the Severability Provision permits striking the Amendment Provision,

the undersigned will sever the Amendment Provision (Doc. 35-1 ¶ 11) from the

Agreement.

E. Retaining Jurisdiction

The parties request that the Court retain jurisdiction to enforce the terms of the

amended Settlement Agreement. (Doc. 35 at 5.) However, such requests are typically

denied. See, e.g., Correa v. Goldblatt, No. 6:10-cv-1656-Orl-28DAB, 2011 WL 4596224,

at *3 (M.D. Fla. Sept. 9, 2011) (denying request to retain jurisdiction to enforce terms

of FLSA settlement agreement due to the absence of any compelling reason to retain

jurisdiction), report and recommendation adopted, 2011 WL 4704196 (M.D. Fla. Oct. 4,

2011); Smither v. Dolphin Pools of SW Fla., Inc., No. 2:11-cv-65-FtM-29DNF, 2011 WL

2565494, at *2 (M.D. Fla. June 9, 2011) (denying request to retain jurisdiction to

enforce terms of FLSA settlement agreement due to parties’ failure to present

arguments or reasons in support of retaining jurisdiction), report and recommendation

adopted, 2011 WL 2580459 (M.D. Fla. June 29, 2011). Because the parties have

provided no compelling argument in support of their request, the undersigned

recommends that the Court deny the parties’ request to retain jurisdiction to enforce

the terms of the settlement.

IV. RECOMMENDATION

Upon consideration of the foregoing, I respectfully recommend that the Court:

1. GRANT IN PART the parties’ Joint Amended Motion to Approve

Settlement and Dismiss Case (Doc. 35);

2. FIND Plaintiff’s counsel’s reasonable attorney’s fees and costs to be

$3,919.50.

3. DENY the Motion as to the parties’ request for the Court to retain

jurisdiction;

4. SEVER the Amendments Provision (Doc. 35-1 ¶ 11);

5. FIND that the parties’ Agreement (Doc. 35-1), as revised, is a fair and

reasonable resolution of a bona fide dispute under the FLSA;

6. DISMISS the case with prejudice; and

7. DIRECT the Clerk of Court to close the file.

NOTICE TO PARTIES

The party has fourteen days from the date the party is served a copy of this

report to file written objections to this report’s proposed findings and

recommendations or to seek an extension of the fourteen-day deadline to file written

objections. 28 U.S.C. § 636(b)(1)(C). A party’s failure to file written objections waives

that party’s night to challenge on appeal any unobjected-to factual finding or legal

conclusion the district judge adopts from the Report and Recommendation. See 11th

Cir. R. 3-1; 28 U.S.C. § 636(b)(1). If the parties do not object to this Report and

Recommendation, then they may expedite the approval process by filing notices of

no objection.

Recommended in Orlando, Florida on April 13, 2022.

gM KIDD

UNITED STATES MAGISTRATE JUDGE