Dirocco v. Victory Marketing Agency, LLC, 2:15-cv-00552

Background

Plaintiff Michele DiRocco sued Victory Marketing Agency, LLC and its manager Vincent Antonio under the FLSA and for unjust enrichment, alleging misclassification as exempt and unpaid overtime (worked ~60 hrs/wk).
Defendants moved to compel arbitration; the district court stayed the action and ordered arbitration, finding an individual arbitration and class-action waiver.
The parties later reached a negotiated settlement resolving only DiRocco’s individual FLSA and unjust enrichment claims; collective/class claims were waived by her arbitration agreement.
Settlement terms: $8,750 to Plaintiff for wages; $3,062.50 separately to Plaintiff’s counsel for attorney’s fees and costs. Fees were negotiated independently of Plaintiff’s recovery.
Parties asked the court to approve the FLSA settlement and dismiss the case with prejudice; the magistrate judge recommended approval as a fair and reasonable compromise.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the FLSA settlement is a fair and reasonable resolution of a bona fide dispute	Settlement fairly compensates for alleged unpaid overtime and avoids arbitration risk and expense	Settlement is a reasonable compromise of disputed coverage/amount and avoids continued litigation	Approved: court recommended settlement is fair and reasonable under Lynn’s Food Store standard
Whether the settlement may be limited to individual claims given prior arbitration waiver of class/collective actions	DiRocco’s arbitration agreement waived collective/class claims, so only individual claims are subject to settlement	Agreement similarly treats only individual claims; arbitration waiver precludes collective recovery	Held: Settlement addresses only individual claims because of prior class-action waiver enforced earlier
Whether attorney’s fees create a conflict tainting the plaintiff’s recovery	Plaintiff: fees were negotiated separately and thus did not influence plaintiff’s settlement amount	Defendants: agreed to pay fees separately to avoid conflict concerns	Held: Fees ($3,062.50) were negotiated independently; court found no conflict and approved fees per Bonetti/Silva principles
Whether the case should be dismissed with prejudice after court approval	Plaintiff seeks dismissal after judicial approval of FLSA settlement	Defendants request dismissal following settlement and fee agreement	Held: Recommended dismissal with prejudice after approval of the settlement

Key Cases Cited

Lynn’s Food Store, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982) (district court must approve FLSA settlements as fair and reasonable when lawsuits are compromised)
Bonetti v. Embarq Mgmt. Co., 715 F. Supp. 2d 1228 (M.D. Fla. 2009) (approving separate negotiation of plaintiff recovery and attorney fees to avoid conflict of interest)
Silva v. Miller, 307 F. App’x 349 (11th Cir. 2009) (judicial review of attorneys’ fees in FLSA settlements required to ensure no conflict taints plaintiff recovery)