United States District Court, N.D. Indiana, Fort Wayne Division
JENNIFER M. NELSON, Plaintiff,
PROXEMICS CONSULTING, INC., Defendant.
REPORT AND RECOMMENDATION
Collins United States Magistrate Judge
the Court in this case under the Fair Labor Standards Act
(“FLSA”) is a Joint Motion to Approve Settlement
and for Entry of Order of Dismissal with Prejudice and
Without Attorneys' Fees or Costs (DE 19). Pursuant to 28
U.S.C. § 636(b)(1), Federal Rule of Civil Procedure
72(b), and Northern District of Indiana Local Rule 72-1,
District Judge Jon E. DeGuilio referred this motion to the
undersigned Magistrate Judge for the issuance of a Report and
Recommendation. (DE 20). Having reviewed the record, and
having conducted a hearing on the motion (DE 22), the
undersigned Magistrate Judge recommends that the motion
approving the settlement and dismissing the case be GRANTED.
Factual and Procedural Background
filed this FLSA case against her purported former employer,
Defendant Proxemics Consulting, Inc.
(“Proxemics”), on July 8, 2015, alleging that at
the time of her termination, Proxemics owed her for 2, 080
hours of unpaid overtime, amounting to approximately $16,
120. (DE 1). At a preliminary pretrial conference on
September 24, 2015, the Court set a discovery deadline of
July 1, 2016. (DE 18). The parties filed the instant joint
motion on January 18, 2016, requesting that a Confidential
Settlement Agreement and General Release entered into by the
parties (“the Agreement”) be approved and that
the case be dismissed with prejudice. (DE 19). A hearing was
held on the motion on February 17, 2016, at which counsel for
the parties appeared in person. (DE 22).
Applicable Legal Standard
settlements in a FLSA case must be approved by the Court . .
. .” Burkholder v. City of Fort Wayne, 750
F.Supp.2d 990, 994 (N.D. Ind. 2010) (second alteration in
original) (quoting Misiewicz v. D'Onofrio Gen.
Contractors Corp., No. 08 CV 4377 (KAM)(CLP), 2010 WL
2545439, at *3 (E.D.N.Y. May 17, 2010)). “To determine
the fairness of a settlement under [the] FLSA, the court must
consider whether the agreement reflects a reasonable
compromise of disputed issues rather than a mere waiver of
statutory rights brought about by an employer's
overreaching.” Id. (alteration in original)
(quoting Misiewicz, 2010 WL 2545439, at *3)
(internal quotation marks omitted). “Normally, a
settlement is approved where it is the result of contentious
arm's-length negotiations, which were undertaken in good
faith by counsel . . . and serious questions of law and fact
exist such that the value of an immediate recovery outweighs
the mere possibility of further relief after protracted and
expensive litigation.” Id. (alteration in
original) (quoting Misiewicz, 2010 WL 2545439, at
*3) (internal quotation marks omitted).
hearing, counsel presented the Agreement to the Court for
review, and counsel's statements were heard concerning
its terms. Counsel discussed the complexity, expense, and
likely duration of this litigation, the risks with respect to
establishing liability and damages; the reasonableness of the
settlement in light of the best and lowest possible recovery;
the release of claims required by Nelson, and the proportion
of attorneys' fees (one-third) relative to the
settlement. Counsel agree that the Agreement is fair and just
to the parties.
counsel acknowledged that a point of contention between the
parties was Nelson's status: she contends that she was an
employee, while Proxemics asserts that she was an independent
contractor. Counsel further observed that even if Nelson was
determined to be an employee, a significant disparity exists
between the amount of unpaid overtime she claims, more than
1, 000 hours per year, and the amount that Proxemics arguably
acknowledges, 20 hours per year. Counsel explained that the
settlement amount strikes a middle ground between the
parties' disparate positions.
further reported that the parties have engaged in four months
of extensive discovery in an attempt to reach an early
resolution of this case, even before it proceeded to
mediation. In fact, Nelson's counsel stated that the
discovery process was complete from his perspective.
Accordingly, the parties have been able to thoroughly
evaluate the strengths and weaknesses of their claims and
defenses; in particular, the parties have been able to review
their positions regarding Nelson's status as an employee
or independent contractor and the disparity in the number of
hours of unpaid overtime. Counsel acknowledged that based on
the evidence at present, either party could win or lose if
the case proceeds to summary judgment or trial.
counsel stated that this case has required, and would require
in the future, a considerable amount of attorney time. In
fact, Proxemics's attorneys' fees at this early stage
of the case are already at least as much as the settlement
amount. Both counsel agree that entering into the Agreement
is the most cost-efficient way to resolve this case.
Furthermore, the Agreement is a global settlement of not only
Nelson's overtime claims, but also her claims set forth
in an EEOC charge of discrimination, which counsel agree
would result in more attorneys' fees.
added that the Agreement was reached through extensive
negotiations between the parties' counsel while assessing
the evidence that affected Nelson's and Proxemics's
best and worst case scenarios. Counsel stated that the
settlement negotiations were initiated in November and a
resolution was achieved in January, revealing that the
settlement was not hastily negotiated. Counsel each agreed
that the Agreement reflects a reasonable compromise of the
issues in dispute and was reached in an adversarial context
in which both parties were represented by counsel.
considered the Agreement and counsel's statements, the
undersigned Magistrate Judge is persuaded that the Agreement
reflects a fair and reasonable compromise of the parties'
dispute. This suit was filed in July 2015, and discovery has
proceeded for four months, allowing the parties sufficient
opportunity to gain a fairly clear understanding of the
nature of the case and Nelson's claims. The parties are
represented by experienced counsel, who have negotiated in
good faith and at arm's length, and such counsel have
concluded that the value of an immediate settlement
concerning overtime wages and the EEOC charge outweighs the
possibility of additional relief after lengthy, expensive
litigation. The amount that will be received by Nelson is
fair, reasonable, and adequate in light of the claims set
forth in the complaint.
the amount of attorneys' fees awarded under the
Agreement, “[p]roportionality is the comparison between
a plaintiff's damages and attorneys' fees.”
Dominguez v. Quigley's Irish Pub., Inc., 897
F.Supp.2d 674, 686 (N.D. Ill. 2012) (citing Anderson v.
AB Painting & Sandblasting, Inc., 578 F.3d 542, 546
(7th Cir. 2009)). “There is no strict rule of
proportionality, and the Seventh Circuit has repeatedly
rejected the notion that the fees must be calculated
proportionally to damages.” Id. (quoting
Estate of Enoch ex rel. Enoch v. Tienor, 570 F.3d
821, 823 (7th Cir. 2009); Anderson, 578 F.3d at
544-45) (internal quotation marks omitted). However,
“[a] request for fees that is a large multiple of the
amount awarded should cause the court to pause and reflect on
the fee requested.” Id. (citing
Anderson, 578 F.3d at 546). Here, the attorneys'
fees under the Agreement are one-third of the settlement
amount, which is a proportion commonly approved by courts in
FLSA actions. See Campbell v. Advantage Sales ...