Abrego v. Yu Lin, Corporation ( 2018 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_
)
JULIO CESAR ABREGO, )
)
Plaintiff, )
)
v. ) Civil Action No.
) 17-2315(EGS)
YU LIN, CORPORATION D/B/A )
ONE FISH, TWO FISH and )
YU LIN, )
)
Defendants. )
)
MEMORANDUM OPINION
Plaintiff Julio Cesar Abrego filed a complaint against
defendants Yu Lin, Corporation and its owner, Yu Lin, 1 alleging
that defendants failed to pay him overtime wages due to him
under the Fair Labor Standards Act (“FLSA”), the D.C. Minimum
Wage Revision Act, and the D.C. Wage Payment and Collection Law.
Pending before the Court is defendants’ motion to dismiss on the
ground that Mr. Abrego’s lawsuit is barred by a settlement
agreement between the parties. Upon consideration of defendants’
motion, the response and reply thereto, and the applicable case
law, the Court DENIES defendants’ motion to dismiss.
1 Although the complaint alleges that Yu Lin is the owner of
Yu Lin, Corporation, see Compl., ECF No. 1 ¶ 4, defendants’
pleadings suggest that Mr. XiBiao Zou is the owner, see Def.’s
Reply, ECF No. 9.
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I. BACKGROUND
Between November 2015 and October 2017, Mr. Abrego was an
employee of One Fish, Two Fish, a restaurant in the District of
Columbia owned and operated by defendants. Compl., ECF No. 1 ¶¶
3-4, 12. Mr. Abrego alleges that he typically worked at the
restaurant six days a week for approximately eleven and a half
hours a day, for a total of sixty-nine hours a week. Id. ¶ 13.
For this work, Mr. Abrego claims that he was paid $450 in cash
each week, although “in the last few months of his employment,”
his salary was raised to $725 every week. Id. ¶ 15. He claims
that this wage “violated Federal and District of Columbia
overtime compensation laws because Defendants failed to pay
Plaintiff overtime wages at the time-and-one-half rate for hours
worked per week over forty.” Id. ¶ 16. Based on his
calculations, Mr. Abrego claims that defendants owe him $55,000
in unpaid overtime wages. Id. ¶ 17.
Prior to filing suit, Mr. Abrego’s counsel sent a pre-
litigation demand letter for settlement purposes to defendants.
See Pl.’s Opp. Ex. 1, ECF No. 8-1. In that letter, Mr. Abrego’s
counsel explained that, although Mr. Abrego worked sixty nine
hours a week for One Fish, Two Fish, he had only been paid an
average of $500 each week. Id. Counsel asserted that One Fish,
Two Fish’s failure to pay Mr. Abrego overtime wages violated
federal and District of Columbia laws, and he explained that
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those laws permitted Mr. Abrego to recover four times his unpaid
wages in liquidated damages — which would have amounted to
approximately $217,500 — in addition to attorney’s fees. Id.
Counsel proposed settling the matter for $137,000, which was
approximately two and a half times Mr. Abrego’s unpaid wages
plus $2000 in attorney’s fees and costs. Id.
Defendants did not respond to the pre-litigation demand
letter, and on November 2, 2017, Mr. Abrego filed the instant
suit. See generally Compl., ECF No. 1. The next day, on November
3, 2017, Mr. Abrego allegedly signed an agreement settling his
employment claims against defendants for $6,000. See Pl.’s Opp.,
ECF No. 8 at 2-3. The agreement contains a provision releasing
all disputes between Mr. Abrego and Yu Lin, Corporation and its
owner. Def.’s Reply, ECF No. 9 at 3. This settlement agreement
was made “outside the knowledge of [plaintiff’s] counsel and
without the assistance of his counsel.” Pl.’s Opp., ECF No. 8 at
2.
On December 8, 2017, defendants filed a motion to dismiss
on the ground that Mr. Abrego had released his employment claims
when he signed the settlement agreement. Def.’s Mot. to Dismiss,
ECF No. 6. That motion is now ripe and ready for the Court’s
adjudication.
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II. LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) “tests the legal sufficiency of a complaint.” Browning
v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A complaint must
contain a “short and plain statement of the claim showing that
the pleader is entitled to relief, in order to give the
defendant fair notice of what the . . . claim is and the grounds
upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007) (internal quotation marks and citation omitted).
While detailed factual allegations are not necessary, the
plaintiff must plead enough facts to “raise a right to relief
above the speculative level.” Id.
When ruling on a Rule 12(b)(6) motion, the Court may
consider “the facts alleged in the complaint, documents attached
as exhibits or incorporated by reference in the complaint, and
matters about which the Court may take judicial notice.”
Gustave–Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002).
The Court must accept as true all of the factual allegations
contained in the complaint and must give the plaintiff the
“benefit of all inferences that can be derived from the facts
alleged.” Kowal v. MCI Commc’ns Corp., 16 F.3d 1271, 1276 (D.C.
Cir. 1994). Importantly, the Court need not accept inferences
that are “unsupported by the facts set out in the complaint.”
Id. “Nor must the court accept legal conclusions cast in the
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form of factual allegations.” Id. “[O]nly a complaint that
states a plausible claim for relief survives a motion to
dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
III. ANALYSIS
Plaintiff alleges defendants violated the FLSA, the D.C.
Minimum Wage Revision Act, and the D.C. Wage Payment and
Collection Law. See Compl., ECF No. 1 ¶¶ 21-35. With respect to
employers' liability, the District of Columbia statutes are
construed consistently with the FLSA. Thompson v. Linda And A.,
Inc., 779 F. Supp. 2d 139, 146 (D.D.C. 2011). Defendants only
argument in their motion to dismiss is that Mr. Abrego’s claims
must be dismissed because plaintiff “has reached a Settlement
Agreement” that contains a release of his claims. See Def.’s
Mot. to Dismiss, ECF No. 6; see also Def’s Reply, ECF No. 9 at 1
(“Plaintiff, Julio Cesar Abrego, has negotiated a solid
Settlement Agreement with Mr. Zou and Yu Lin Corp. a.k.a. One
Fish Two Fish all by himself.”); id. at 3-4 (“The most important
issue is that if both parties settle the matter, there is no
need for the court to get involved.”).
Congress enacted the FLSA “to protect certain groups of the
population from substandard wages and excessive hours” that can
result from the “unequal bargaining power as between employer
and employee.” Brooklyn Savings Bank v. O’Neil, 324 U.S. 697,
706 (1945). To that end, because allowing “waiver of statutory
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wages by agreement would nullify the purposes of the Act,” id.
at 707, the provisions of the FLSA are “‘mandatory and generally
are not subject to bargaining, waiver, or modification by
contract or settlement,’” Sarceno v. Choi, 66 F. Supp. 3d 157,
166 (D.D.C. 2014) (quoting Duprey v. Scotts Co. LLC, 30 F. Supp.
3d 404, 407 (D. Md. 2014)); see also Beard v. D.C. Hous. Auth.,
584 F. Supp. 2d 139, 143 (D.D.C. 2008) (“It is a long-held view
that FLSA rights cannot be abridged or otherwise waived by
contract because such private settlements would allow parties to
circumvent the purposes of the statute by agreeing on sub-
minimum wages.”). In other words, “protections for employees
trump any purported settlement or waiver of the employees’
rights to bring suit for FLSA violations.” Carrillo v. Dandan,
Inc., 51 F. Supp. 3d 124, 128 (D.D.C. 2014); cf. Sarceno, 66 F.
Supp. 3d at 166 (“typical tenets of contract law do not apply to
FLSA settlements”).
Consistent with these principles, other courts in this
district have found that a private settlement agreement in an
FLSA suit is only enforceable if the agreement “resolves a bona
fide dispute between the parties and the terms of the settlement
are fair and reasonable.” Sarceno, 66 F. Supp. 3d at 170 (citing
Martin v. Spring Break ‘83 Productions, 688 F.3d 247 (5th Cir.
2012)). A settlement resolves a bona fide dispute if it
“reflects a reasonable compromise over issues that are actually
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in dispute, since merely waiving a right to wages owed is
disallowed.” Carrillo, 51 F. Supp. 3d at 132 (citations and
internal quotation marks omitted, emphasis added). If the Court
determines that the threshold requirement that there be a bona
fide dispute is not met, it need not analyze the settlement
agreement for indicia of fairness and reasonableness. See
Hernandez v. Stringer, 210 F. Supp. 3d 54, 62 n.6 (D.D.C. 2016).
In Brooklyn Savings, which considered two consolidated
cases, the Supreme Court emphasized the importance of the
existence of a bona fide dispute in assessing the enforceability
of private settlement agreements. 324 U.S. 697. In the first of
the two consolidated cases, the employer paid the former
employee the overtime wages owed to him prior to the
commencement of any litigation and obtained a release of all the
employee’s rights under the FLSA. Id. at 700. Noting that the
state courts had made “no findings of fact” on the issue of
whether the release in the employee’s settlement “was given in
settlement of a bona fide dispute between the parties with
respect to coverage or amount due . . . or whether it
constituted a mere waiver of his right to liquidated damages,”
the Supreme Court held that that release was ineffective to
waive the employee’s rights under the FLSA. Id. at 703-704.
In the second case of the two consolidated cases, the
employer offered the employee a settlement in the amount of $500
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in exchange for the release of all claims. Brooklyn Savings, 324
U.S. at 701-02. When the employee sued for the balance of the
statutory wages due to him and the liquidated damages available
under the FLSA, the employed asserted that the settlement
agreement precluded suit. Id. at 702. The Supreme Court
disagreed, explaining that the “invalidity of the release or
waiver in [the first consolidated case] makes the release and
waiver [in the second consolidated case] a fortiori invalid.”
Id. at 713. This was because, at the time of the settlement,
“both parties knew more than $500.00 was due” to the employee
under the FLSA. Id. (emphasis added). Thus, because the
settlement was not “made as the result of a bona fide dispute
between the two parties in consideration of a bona fide
compromise and settlement,” the release contained in the
settlement was unenforceable. Id. at 714.
Here, there is nothing in the complaint that supports a
finding that the parties’ purported settlement agreement is “the
result of a bona fide dispute between the two parties.”
Defendants’ purported liability stems from an alleged violation
of the FLSA, which provides that “[a]ny employer who violates
the provisions of section 206 or section 207 . . . shall be
liable to the employee . . . affected in the amount of their
unpaid minimum wages, or their unpaid overtime compensation, as
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the case may be, and in an additional equal amount as liquidated
damages.” 29 U.S.C. § 216(b). Section 207 states as follows:
Except as otherwise provided in this section,
no employer shall employ any of his employees
who in any workweek is engaged in commerce or
in the production of goods for commerce, or is
employed in an enterprise engaged in commerce
or in the production of goods for commerce,
for a workweek longer than forty hours unless
such employee receives compensation for his
employment in excess of the hours above
specified at a rate not less than one and one-
half times the regular rate at which he is
employed.
Id. § 207(a)(1). Mr. Abrego claims that defendants violated
these provisions by failing to pay him overtime wages for the
time he worked in excess of forty hours per week. See Compl.,
ECF No. 1. On the record before the Court, there is no dispute
between the parties as to applicability of the FLSA’s overtime
requirements to Mr. Abrego, the number of hours worked by Mr.
Abrego, or the wages owed to him under the FLSA. See Hernandez,
210 F. Supp. 3d at 62. In the absence of a bona fide dispute,
the settlement agreement signed by Mr. Abrego appears to be the
sort of “mere waiver” of FLSA rights that is clearly prohibited.
Brooklyn Savings, 324 U.S. at 707. Accordingly, the settlement
agreement does not bar Mr. Abrego’s claims in this action.
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IV. CONCLUSION
For the reasons set forth in this Memorandum Opinion,
defendants’ motion to dismiss is DENIED. A separate Order
accompanies this Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan
United States District Judge
July 9, 2018
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