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Zambrano v. Motorcity Burger Company, Inc.

United States District Court, E.D. Michigan, Southern Division

April 25, 2017

Jose Zambrano, Plaintiff,
Motorcity Burger Company Inc., d/b/a Motorcity Burger & Company, and Nikola Lulgjuraj, Defendants.

          Elizabeth A. Stafford Mag. Judge


          JUDITH E. LEVY United States District Judge

         On January 30, 2017, plaintiff brought this action against Defendants alleging that they violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., and the Michigan Worker Opportunity Wage Act.

         The parties have agreed upon a settlement amount and the material settlement terms and have executed a Settlement Agreement and Release. According to the Settlement Agreement, defendants agree to pay $3, 565.76 as compensation, and $3, 396.24 in attorney fees and costs, for a total of $6, 962.00.

         Plaintiff's counsel subsequently filed supplemental briefs and affidavits indicating that 25 hours was spent working on the case by five attorneys who charge between $250 and $350 per hour. (Dkts. 9, 10.) Counsel state the amount of attorney fees and costs that would be owed absent the settlement agreement would be $7, 791.00. (Id.)

         Judicial approval of settlement agreements in FLSA cases is necessary for an agreement to be enforceable. Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199, 206 (2d Cir. 2015); Smolinski v. Ruben & Michelle Enters. Inc., Case No. 16-cv-13612, 2017 WL 835592, at *1 (E.D. Mich. Mar. 3, 2017). This requires the court to determine whether the settlement is a “fair and reasonable resolution of a bona fide dispute over FLSA provisions.” Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1355 (11th Cir. 1982).

         Although there is not a prescribed process for making this determination, courts generally consider the following factors in non-collective FLSA cases:

(1) the plaintiff's range of possible recovery; (2) the extent to which the settlement will enable the parties to avoid anticipated burdens and expenses in establishing their respective claims and defenses; (3) the seriousness of the litigation risks faced by the parties; (4) whether the settlement agreement is the product of arm's-length bargaining between experienced counsel; and (5) the possibility of fraud or collusion.

See Wolinsky v. Scholastic, Inc., 900 F.Supp.2d 332, 335 (S.D.N.Y. 2012) (internal quotation marks and citation omitted); see Williams v. Alimar Sec., Inc., No. 13-12732, 2017 U.S. Dist. LEXIS 13530, at *2 (E.D. Mich. Feb. 1, 2017); Arrington v. Mich. Bell Tel. Co., No. 10-10975, 2012 U.S. Dist. LEXIS 157362, at *3 (E.D. Mich. Nov. 2, 2012). And when the settlement agreement includes the payment of attorney's fees, the court must also assess the reasonableness of that amount before approving the settlement. Wolinsky, 900 F.Supp.2d at 336.

         After reviewing plaintiff's complaint, the settlement agreement, and plaintiff's counsel's billing, the Court finds that the settlement agreement is fair and reasonable.

         The complaint lacks a number of details relevant to determining whether the $3, 565.76 in compensation is fair. But plaintiff states that he was not paid overtime “since September 2015” and until the end of his employment, the date of which is not specified. Further, the complaint alleges he was not paid for nine hours of overtime the week of November 2. Assuming plaintiff was paid his base hourly pay of $8.50 for nine hours of overtime each week from September 2015, to the filing of the complaint on January 30, 2017, instead of $12.75 in overtime, plaintiff would be owed approximately $2, 945.25 in unpaid wages. This amount is slightly less than what defendant agreed to pay in the settlement, $3, 565.76, and the Court therefore finds the settlement fair and reasonable as to compensation.

         Moreover, because the parties agreed to settle before discovery began, they saved substantial time and resources from continuing to develop their claims and defenses.

         The negotiation was also the product of an arm's-length transaction. Plaintiff's interests were represented by Hawks Quindel S.C. and Mahany Law, and defendants' interests were represented by Starr, Butler, Alexopoulos, & Stoner, PLLC. And counsel for each side is experienced in handling FLSA cases. Further, there is no evidence of fraud or collusion.

         The Court also finds that the attorney fee to which the parties agreed is fair and reasonable. Plaintiff's counsel agreed to take the case on contingency, and the settlement provides for $3, 396.24 in attorney fees and costs, which is approximately 43.6% of the ...

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