Maya v. Green Thumb Landscaping, Inc.

As the economy has worsened, everyone across the board has felt the pinch. As a result, many smaller employers wishing to settle FLSA cases seeking unpaid wages and/or unpaid overtime, have sought to enter into settlement agreements, whereby they payout the agreed upon settlement proceeds in installment payments. In this case, the Magistrate Judge attempted to modify such an agreement, to prevent Plaintiff’s attorney from receiving any attorneys’ fees or costs, until Plaintiff had received his entire settlement proceeds. Although the settlement agreement stated that Plaintiff and his counsel were to receive proportional payments from the installments, the Magistrate issued a Report and Recommendation attempting to modify the settlement agreement’s terms, so that Plaintiff would receive his entire settlement proceeds prior to his attorney receiving any fees or costs.

In a matter of first impression, the Judge, reviewing the Report and Recommendation of the Magistrate, agreed with Objections filed by Plaintiff’s counsel, and found that the Court lacked the power to modify the terms of the settlement agreement at the fairness determination stage. Specifically, the Judge noted, “[a]s best as the Court can determine, whether attorneys’ fees and costs must be paid only after an FLSA plaintiff has been paid all of his settlement proceeds is a question of first impression… the Court concludes that the FLSA does not require counsel to subordinate the payment of his fees and costs to his client’s recovery where the Court has determined that the overall recovery provided to the plaintiff is fair and the amount of fees and costs awarded to the plaintiff’s counsel is reasonable.”