Abrego v. Yu Lin, Corporation

• Court: District Court, District of Columbia
• Decided: July 9, 2018
• Docket: Civil Action No. 2017-2315
• Status: Published

Opinion

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. 1 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

2 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.

3 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

4 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

5 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

6 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

7 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

8 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.

9 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