Chavarria v. New York Airport Service, LLC et al
Filing
78
ORDER granting 74 Motion to Certify Class and for Final Approval of Settlement. Ordered by Magistrate Judge Marilyn D. Go on 6/25/2012. (Proujansky, Josh)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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LAZARO CHAVARRIA, et al.,
Plaintiffs,
- against -
ORDER
10-CV-1930 (MDG)
NEW YORK AIRPORT SERVICE, LLC, et
al.,
Defendants.
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GO, United States Magistrate Judge:
Plaintiffs, current and former transportation "ticket
agents" for defendants, bring this collective action under the
Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and
class action under sections 190 and 650 et seq. of the New York
State Labor Law ("NYS Labor Law") alleging that defendants failed
to pay them overtime.
After consenting to having me hear all
matters in this action pursuant to 28 U.S.C. § 636(c), the
parties have moved for final certification of the provisionally
certified class pursuant to Fed. R. Civ. P. 23(a) and (b) and
final approval of the settlement of this class action pursuant to
Fed. R. Civ. P. 23(e).
FACTUAL AND PROCEDURAL BACKGROUND
On April 29, 2010, plaintiff Lazaro Chavarria commenced this
action on behalf of himself and current and former ticket agents
(hereinafter "plaintiffs") who worked at John F. Kennedy and
LaGuardia Airports selling tickets to airline passengers for bus
transportation to Manhattan.
Plaintiffs allege that defendants
failed to pay plaintiffs overtime for hours worked over 40 hours
per week in violation of the FLSA and NYS Labor Law.
Plaintiffs
initially sued the New York Airport Service, Jacob Marmurstein
and Zev Marmurstein (collectively "New York Airport Service
defendants").
Plaintiffs added defendants Contract
Transportation Inc. and Janet West (collectively "Contract
defendants") in an amended complaint filed on April 23, 2010.
In
their answers, both sets of defendants asserted the defense that
plaintiffs were subject to the "outside sales" persons exemption
of the wage and/or hour provisions of applicable federal and
state law.
See ct. docs. 24 (Answer to Amended Complaint and
Counterclaim of Contract defendants ¶ 52), 25 (Answer to Amended
Complaint by New York Airport Service defendants ¶ 48).
On
November 5, 2010, Judge Weinstein denied the plaintiffs' motion
to dismiss the counterclaims of the Contract defendants.
At a
settlement conference held on February 8, 2011, the attorneys
reached an agreement in principle to settle on a class wide basis
for $150,000.
See Cafaro Aff. dated December 8, 2011 ("Cafaro
Aff.") (ct. doc. 76) ¶ 9, Exh. 1.
The plaintiffs filed their motion for preliminary approval
of the settlement on May 6, 2011.
At the hearing on the motion,
the parties advised that different plaintiffs had filed another
FLSA collective action against defendant Contract Transportation
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raising similar claims.
See Clarke v. Contract Transportation,
Inc., et al., Docket No. 2011-CV-0780 (MDG).
After negotiations
among the parties in both cases, their counsel advised at the
June 3, 2011 conference that the four Clarke plaintiffs had
reached an agreement with the Contract defendants to settle their
claims for $16,000, and that the settlement in the instant action
would be reduced by $16,000.1
Accordingly, plaintiffs' counsel
withdrew the motion to certify and for preliminary approval of
the class settlement (ct. doc. 59).
Plaintiff filed a new motion for provisional certification
of the class action and for preliminary approval of the class
settlement on June 21, 2011 (ct. docs. 62, 63, 64).
At a hearing
held on July 19, 2011 and in a Preliminary Approval Order, this
Court: (1) conditionally certified the proposed class for
settlement purposes; (2) granted preliminary approval of the
settlement agreement; (3) appointed plaintiffs' counsel as class
counsel; and (4) approved the proposed class notice of settlement
of the litigation.
See ct. doc. 67.
At a conference held on August 30, 2011, the parties
informed the Court that Contract Transportation had discovered
additional employee records and had determined that 64 additional
employees were within the definition of the class.
The newly
discovered employees fell within three categories: 1) 29
1
On October 31, 2011, I granted the parties' joint motion
to approve the Settlement Agreement in Clarke. See Clarke v.
Contract Transporation, Inc., et al., Docket No. 2011-CV-0780
(MDG) (ct. doc. 16).
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employees did not work any overtime hours during the relevant
time period; 2) 14 employees worked some overtime hours during
the relevant time period; and 3) for the remaining 22 employees,
defendants' records did not show that they worked any overtime
hours.
See Declaration of Janet West dated September 13, 2011
(ct. doc. 70-8).
However, the extant records for the third
category of employees showed that all worked for less than one
year and all earned less than $2,000 during their employment.
Id. ¶ 7.
After conferring, the parties moved to modify the
provisional class certification and the settlement (ct. docs. 70,
71).
In their new settlement, the parties agreed to increase the
settlement fund by $1,750 and to redefine the class to include
the second category of newly discovered employees and to exclude
the first and third categories.
The parties further agreed that
the NYS Labor Law claims would be tolled from the date the action
was filed, April 12, 2010, to the date the class was amended,
September 13, 2011, and the FLSA claims would be tolled from the
date of the original agreement, February 8, 2011, to the
amendment date, September 13, 2011.
On September 28, 2011, I granted the parties' request to
modify the Preliminary Approval Order to reflect the proposed new
definition of the class.
I observed that:
"[a]lthough the
modified definition of the class is narrowed to include only
employees for whom the defendants have records reflecting
overtime hours, the original settlement effectively provided for
payment only for those employees for whom there were records of
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overtime."
See Docket Entry dated Sept. 28, 2011.
I thus
concluded that the narrowed definition would "protect the rights
of those employees who would have been included in the previous
definition but would not have received payment."
Id.
On December 8, 2011, the parties jointly filed their motion
for final approval of the Class Settlement indicating that 38
percent of the proposed class members had filed a claim and that
no one objected (ct. docs. 74, 75 and 76).
At the fairness
hearing held on December 19, 2011, I directed the Claims
Administrator to make one further attempt to contact a claimant
who had failed to sign his claim form and extended his time to
submit a claim form to January 6, 2012.
On January 9, 2012, plaintiff's counsel filed a request on
consent to extend the deadline nunc pro tunc for submission of
claims to January 6, 2012 so as to include nine additional class
members.
See ct. doc. 77.
Counsel indicated that after the
fairness hearing, it was discovered that nine plaintiffs had
opted into the FLSA collective action and filed consent forms
with this Court but not the settlement claims administrator.
See
Supplemental Affirmation of William Cafaro in Support dated
January 9, 2012 ("Cafaro Supp. Aff.") (ct. doc. 77) ¶ 1.
Counsel
explained that of the nine class members, all nine had executed
the claim forms and sent them to the settlement claims
administrator after the November 29, 2011 deadline originally
set.
See id. ¶ 4.
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Under the proposed settlement, defendants agree to pay the
plaintiff class $135,750.00.
From the gross settlement amount,
plaintiff proposes that $11,698.27 be allocated to the settlement
administrator, $5,000.00 to the named plaintiff and $45,250.00 to
class plaintiffs' counsel.
Plaintiff and each class member would
receive a pro rata share of the remaining settlement proceeds of
$73,801.73 for overtime wages and liquidated damages owed as
determined according to the formula set forth in the Settlement
Agreement.
Essentially, the total number of hours, as well as
the number of overtime hours each class member worked, would be
based on the records of defendants.
In light of the claims
received by the settlement administrator by January 9, 2012,
counsel estimates that each pro rata share that the participating
class member will be awarded would be at least 100% of the unpaid
wages for overtime hours and 59% of all potential damages,
including liquidated damages.
DISCUSSION
I.
Final Certification of the Settlement Class
The Court certifies the following class under Fed. R. Civ.
P. 23(e), for settlement purposes:
Named Plaintiff[s] and other current and
former Ticket Agents working at New York's
LaGuardia or John F. Kennedy airports while
employed by the Defendants at any time during
the period from April 29, 2004 through the
present for whom the Defendants have
employment records indicating that he or she
worked overtime hours in such capacity, as
defined as more than 40 hours per calendar
week during such period.
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This Court finds that Plaintiffs meet all of the
requirements for class certification under Fed. R. Civ. P. 23(a)
and (b)(3).
Plaintiffs satisfy Fed. R. Civ. P. 23(a)(1) because there
are more than 200 Class Members and therefore joinder is
impracticable.
See Consol. Rail. Corp. v. Town of Hyde Park, 47
F.3d 473, 483 (2d Cir. 1995) ("numerosity is presumed at a level
of 40 members").
Plaintiffs satisfy Fed. R. Civ. P. 23(a)(2), because
Plaintiffs and the Class Members share common issues of fact and
law, including whether Defendants failed to pay Plaintiffs and
the Class Members for all of the overtime they worked.
Plaintiffs satisfy Fed. R. Civ. P. 23(a)(3), typicality,
because plaintiffs' claims arise from the same factual and legal
circumstances that form the bases of the class members' claims.
See Prasker v. Asia Five Eight LLC, No. 08 Civ. 5811(MGC), 2010
WL 476009, at *2 (S.D.N.Y. Jan. 6, 2010).
Plaintiffs held
identical positions, worked under similar conditions and suffered
the same injuries as a result of defendants' methods of
calculating and paying wages.
Plaintiffs satisfy Fed. R. Civ. P. 23(a)(4), adequacy,
because plaintiffs' interests are not antagonistic or at odds
with the class members.
See Diaz v. Eastern Locating Servs.,
Inc., No. 10 Civ. 4082(JCF), 2010 WL 2945556, at *2 (S.D.N.Y.
July 22, 2010); Prasker, 2010 WL 476009, at *2.
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Plaintiffs also satisfy Rule 23(b)(3).
The common factual
allegations that Defendants failed to pay Class Members for all
overtime they worked and plaintiffs' common legal claims
predominate over any factual or legal variations among class
members.
See Diaz, 2010 WL 2945556, at *2; Prasker, 2010 WL
476009, at *2.
Class adjudication of this case is superior to
individual adjudication because it will conserve judicial
resources and is more efficient for class members, particularly
those who lack the resources to bring their claims individually.
See Diaz, 2010 WL 2945556, at *2.
II.
Approval of the Settlement Agreement
In evaluating a proposed settlement under Rule 23(e) of the
Federal Rules of Civil Procedure, the Court must determine
whether the settlement, taken as a whole, is fair, reasonable and
adequate.
See Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d
1072, 1079 (2d Cir. 1995).
Settlements are strongly favored as a
matter of policy, because "[b]y lessening docket congestion,
settlements make it possible for the judicial system to operate
more efficiently and more fairly while affording plaintiffs an
opportunity to obtain relief at an earlier time."
D., 475 U.S. 717, 761 n.15 (1986).
Evans v. Jeff
Thus, "[s]ettlement approval
is within the Court's discretion, which 'should be exercised in
light of the general judicial policy favoring settlement.'"
In
re Sumitomo Copper Litig., 189 F.R.D. 274, 280 (S.D.N.Y. 1999)
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(citation omitted); accord Maley v. Del Global Tech. Corp., 186
F. Supp. 2d 358, 361 (S.D.N.Y. 2002).
In evaluating the fairness of a settlement, a court should
examine (1) the negotiating process that led up to the settlement
and (2) the substantive terms of the settlement.
D'Amato v.
Deutsche Bank, 236 F.3d 78, 85-86 (2d Cir. 2001) (citations
omitted).
A court reviewing the procedural fairness of a settlement
"must pay close attention to the negotiating process, to ensure
that the settlement resulted from 'arm's-length negotiations and
that plaintiffs' counsel have possessed the experience and
ability, and have engaged in the discovery necessary to effective
representation of the class's interests.'"
D'Amato, 236 F.3d at
85 (quoting Weinberger v. Kendrick, 698 F.2d 61, 74 (2d Cir.
1982)).
A proposed class action settlement enjoys a strong
presumption that it is fair, reasonable and adequate if, as is
the case here, it was the product of arm's length negotiations
conducted by capable counsel, well experienced in class action
litigation.
See Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396
F.3d 96, 117 (2d Cir. 2005).
In addition, "[i]n appraising the
fairness of a proposed settlement, the view of experienced
counsel favoring the settlement is 'entitled to [] great weight'
. . . .
[T]here is thus a strong initial presumption that the
compromise as negotiated herein under the [c]ourt's supervision
is fair and reasonable."
In re Michael Milken and Assocs. Sec.
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Litig., 150 F.R.D. 46, 54 (S.D.N.Y. 1993) (internal citation
omitted).
The factors to be considered in evaluating a class action
settlement include: (1) the complexity, expense and likely
duration of the litigation; (2) the reaction of the class to the
settlement; (3) the stage of the proceedings and the amount of
discovery completed; (4) the risks of establishing liability; (5)
the risks of establishing damages; (6) the risks of maintaining
the class action through the trial; (7) the ability of the
defendants to withstand a greater judgment; (8) the range of
reasonableness of the settlement fund in light of the best
possible recovery; [and] (9) the range of reasonableness of the
settlement fund to a possible recovery in light of all the
attendant risks of litigation.
City of Detroit v. Grinnell
Corp., 495 F.2d 448, 463 (2d Cir. 1974).
In applying these
factors, the Court may neither substitute its judgment for that
of the parties who negotiated the settlement nor conduct a minitrial of the merits of the action.
74.
See Weinberger, 698 F.2d at
"[T]he role of a court in passing upon the propriety of the
settlement of a . . . class action is a delicate one . . . .
[W]e recognize that since the very purpose of a compromise is to
avoid the trial of sharply disputed issues and to dispense with
wasteful litigation, the court must not turn the settlement
hearing into a trial or a rehearsal for the trial."
Newman v.
Stein, 464 F.2d 689, 691-92 (2d Cir. 1972) (citation and internal
quotations omitted).
The Court must determine whether the
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settlement is within a range that reasonable and experienced
attorneys could accept considering all relevant risks, facts and
circumstances.
See Weinberger, 698 F.2d at 74; Grinnell, 495
F.2d at 455.
A.
Procedural Fairness
The parties reached this settlement after plaintiffs
conducted a thorough investigation and evaluation of the claims,
which included discovery spanning approximately five months and
review of defendants' payroll data and time records dating back
to 2004 which showed the number of hours worked by ticket agents.
See Cafaro Aff. ¶ 6.
The parties also discussed and stipulated
to the relevant tolling periods for both FLSA and New York Labor
Law claims.
See id. ¶ 15.
Even after the parties reached the
initial settlement, and after the intervention of the Clarke
plaintiffs as well as the discovery of the unaccounted for ticket
agents, the parties further negotiated the amended terms of the
settlement to produce the final agreement.
Additionally, plaintiffs' current counsel, William Cafaro of
the Law Offices of William Cafaro recommends that this Court
approve the settlement.
Mr. Cafaro, an attorney with substantial
experience litigating wage and hour claims and complex
litigation, spent significant time and did substantial work
identifying, investigating, and settling Plaintiff's and the
Class Members' claims.
This Court observed counsel's performance
in this action in status conferences and multiple settlement
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conferences and finds that his performance in both litigating and
settling this case demonstrates his commitment to the Class and
to representing the Class' interests.
Based on the Court's supervision of the settlement process
this Court finds that the settlement was a product of extensive
arm's length negotiations by experienced counsel.
There is no
hint of coercion or collusion that affected the process.
See In
re Holocaust Victim Assets Litig., 105 F. Supp. 2d 139, 146
(E.D.N.Y. 2000 (citing In re Warner Communications Sec. Litig.,
798 F.2d 35, 37 (2d Cir. 1986).
Because of all these
circumstances, the presumption of procedural fairness applies
here.
In re Wal-Mart Stores, 396 F.3d at 116.
B.
Substantive Fairness
The settlement is substantively fair.
All of the factors
set forth in Grinnell weigh in favor of final approval.
1.
Complexity, Expense and Likely Duration of
Litigation
Continuing this litigation would have resulted in delay and
further expense.
A trial on damages and any post-judgment
motions and appeals would have required further expenditure of
both time and money.
Absent a settlement, the costs incurred by
continuing this litigation would likely have outweighed any
potential recovery.
In addition, the delay inherent in further
litigation would reduce the value of any potential recovery.
Maley, 186 F. Supp. 2d at 361-62.
See
On the other hand, the
settlement provides certain compensation to the class members now
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rather than awaiting an eventual resolution that would result in
further expense without any definite benefit.
2.
Reaction of the Class
"It is well-settled that the reaction of the class to the
settlement is perhaps the most significant factor to be weighed
in considering its adequacy."
Maley, 186 F. Supp. 2d at 362-63.
As discussed below, infra, the notices regarding the settlement
sent to the 221 Class Members included an explanation of the
allocation formula for the calculation of each class member's
award.
The Notice also informed class members of their right to
object or to exclude themselves from the settlement, and
explained how to do so.
91 class members opted in and the only
putative class members who requested exclusion are the four
Clarke plaintiffs who settled on similar terms through separate
counsel.
Aff.
No class member objected to the settlement.
See Cafaro
¶ 20, Exhibit 10 (Declaration of Krista Tittle of
Simpluris, Inc., Claims Administrator ("Tittle Decl.") ¶¶ 10-15);
Cafaro Supp. Aff. ¶¶ 1-4.
This factor weighs in favor of
approval of the settlement.
See Prasker, 2010 WL 476009, at *4
(granting final approval where no class members objected and only
2 class members opted out).
3.
The Stage of the Proceedings and Amount of
Discovery Completed
The stage of the proceedings and the amount of discovery
completed are evaluated to ensure that the parties "have a clear
view of the strengths and weaknesses of their cases."
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In re
Warner Comm. Sec. Litig., 618 F. Supp. 735, 745 (S.D.N.Y. 1985),
aff'd, 798 F.2d 35 (2d Cir. 1986).
This litigation settled after
approximately five months of discovery.
The discovery process
involved the review of payroll records provided by Contract
defendants dating back to 2004, which showed the number of hours
worked by ticket agents.
See Cafaro Aff. ¶ 6.
Legal questions
arose during discovery, particularly after defendants produced a
June 2011 determination by the United States Department of Labor
("DOL") that the ticket agents at issue were exempt from FLSA as
"outside sales" employees.
See id. ¶¶ 6, 7.
Although the
plaintiff attempted to dismiss this defense of the Contract
defendants' counterclaim, the motion was denied by the Court.
Under the circumstances, counsel had sufficient information to
make a meaningful evaluation of the merits of plaintiffs' claims,
the strengths of the defenses asserted by defendants and damages.
See Maley, 186 F. Supp. 2d at 364.
Since the parties engaged in
extensive discovery and motion practice, this factor weighs in
favor of approving the settlement.
4.
Risks Involved in Establishing Liability and
Damages and in Maintaining the Class Action
Through Trial
The risk of establishing liability and damages further
weighs in favor of final approval. "Litigation inherently
involves risks."
deMunecas v. Bold Food, LLC, No. 09 Civ. 0440
(DAB), 2010 WL 3322580, at *1 (S.D.N.Y. Aug. 23, 2010).
One
purpose of a settlement is to avoid the uncertainty of a trial on
the merits.
Id.
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As discussed above, defendants raised the defense that the
DOL ruled in a June 21, 2011 determination that the ticket agents
were exempt from the FLSA as "outside sales" employees under 29
C.F.R. § 541.502.
While this ruling is not binding on the Court,
the fact that such a determination was made reflects the risk
plaintiff faced in establishing liability.
Even if plaintiff
prevailed on his argument, the DOL determination could undermine
plaintiff's claim for liquidated damages.
See Cafaro Aff. ¶ 8.
The risk of maintaining class status throughout trial also
weighs in favor of final approval.
A contested class
certification motion would likely require extensive discovery and
briefing.
If the Court granted a contested class certification
motion, defendants could have sought leave to appeal under Rule
23(f) and/or moved to decertify, which would have required
additional rounds of briefing.
Settlement eliminates the risk,
expense and delay inherent in this process.
See Campos v. Goode,
10 Civ. 0224(DF), 2011 U.S. Dist. LEXIS 22959, at *14 (S.D.N.Y.
Mar. 4, 2011).
Thus, this Grinnell factor weighs in favor of
final approval.
5.
Collectibility and Defendants' Ability to
Withstand a Greater Judgment
It is not certain that defendants could withstand a greater
judgment.
At the time that settlement negotiations were
initiated, defendants were terminating their business operations
after having lost their contract to operate at the airports.
Cafaro Aff. ¶ 8.
See
The risk that defendants would not be able to
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satisfy a larger judgment was a significant factor in plaintiffs'
decision to settle their claims.
See Maley, 186 F. Supp. 2d at
365 (considering defendant's "dire financial condition" and
recognizing that "obtaining a greater recovery than provided by
the settlement would have been difficult").
The Settlement
Agreement eliminates the risk of collection from defendants who
may not be operating after a lengthy litigation.
6.
The Range of Reasonableness of the Settlement
Amount in Light of the Best Possible Recovery and
All Risks of Litigation
The determination of a reasonable settlement "'is not
susceptible of a mathematical equation yielding a particularized
sum,' but turns on whether the settlement falls within 'a range
of reasonableness.'"
In re PaineWebber Ltd. P'ship Litig., 171
F.R.D. 104, 130 (S.D.N.Y. 1993) (quoting Milken, 150 F.R.D. at
66).
As the Second Circuit has stated, "[t]he fact that a
proposed settlement may only amount to a fraction of the
potential recovery does not, in and of itself, mean that the
proposed settlement is grossly inadequate and should be
disapproved."
Grinnell, 495 F.2d at 455.
"In fact, there is no
reason, at least in theory, why a satisfactory settlement could
not amount to a hundredth or even a thousandth part of a single
percent of the potential recovery."
Id. at 455 n.2.
Even assuming that plaintiffs could have obtained a judgment
for substantial damages, the victory may have been illusory since
it was questionable whether defendants would be able to satisfy a
larger judgment, as discussed.
Notably, under the settlement
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agreement, each plaintiff would receive 100% of any unpaid
overtime wages due and approximately 59% of the total aggregate
damages, which includes the award of liquidated damages.
Cafaro Aff. ¶ 21; Cafaro Supp. Aff. ¶ 5 fn.2.
See
This recovery for
each class member is well within the range of reasonableness
given the risks and delay of continued litigation measured
against the value of obtaining certain compensation more quickly.
See In re "Agent Orange" Prod. Liab. Litig., 611 F. Supp. 1396,
1405 (E.D.N.Y. 1985) ("much of the value of a settlement lies in
the ability to make funds available promptly").
7.
The Plan of Allocation
"To warrant approval, the plan of allocation must also meet
the standards by which the settlement was scrutinized - namely,
it must be fair and adequate."
Maley, 186 F. Supp. 2d at 367
(internal citation and quotations omitted).
"An allocation
formula need only have a reasonable, rational basis, particularly
if recommended by experienced and competent class counsel."
Id.
In determining whether a plan of allocation is fair, courts look
primarily to the opinion of counsel.
at 133.
See PaineWebber, 171 F.R.D.
That is, "[a]s a general rule, the adequacy of an
allocation plan turns on whether counsel has properly apprised
itself of the merits of all claims, and whether the proposed
apportionment is fair and reasonable in light of that
information."
Id.
Courts also consider the reaction of the class to a plan of
allocation.
See Maley, 186 F. Supp. 2d at 367; PaineWebber, 171
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F.R.D. at 126.
The notices, which this Court reviewed and
approved, were sent to 221 class members for whom plaintiffs'
counsel and the Claims Administrator were able to obtain
addresses.
See Cafaro Aff. ¶¶ 8, 14, 20; Tittle Decl. ¶¶ 5-11;
Cafaro Supp. Aff., ¶¶ 2-4.
The Notice provided the class members
with an explanation of how their award would be calculated
according to the plan of allocation.
See generally Cafaro Aff.,
Exhs. 3, 4, 7, 9; Tittle Decl. ¶¶ 5-11 and accompanying exhibits.
No objections to the settlement have been received.
See Cafaro
Aff. ¶ 20; Tittle Decl. ¶ 15.
The Settlement Agreement provides that the participating
class members shall receive a pro rata share of the Settlement
Fund calculated as follows:
(1) divide the amount allegedly due and owing
for back overtime under NYLL and FLSA (plus
25% liquidated damages on all hours accrued
between April 29, 2004 and April 29, 2007,
and 100% liquidated damages on all hours
accrued between April 30, 2007 and April 29,
2010) to that individual by the total sum
allegedly due and owing to all known Class
Members; (2) convert that number to a
percentage; and then (3) multiply that
percentage by the Net Settlement Fund. For
the purposes of this calculation, liquidated
damages are calculated based on the time
period in which the wages were allegedly
earned and unpaid: for wages earned from
April 29, 2007 and after, liquidated damages
will be an amount equal (100%) to those
wages, representing liquidated damages
available under FLSA; for wages earned
between April 29, 2004 and April 29, 2007,
liquidated damages will be twenty-five (25%)
of those wages, representing liquidated
damages available under the NYLL. If wage
data cannot be obtained for precisely before
and after April 28, 2007, quarterly or weekly
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payroll records will be prorated to reach an
approximation.
Cafaro Aff. ¶¶ 17-19, Exhs. 2 (Amended Settlement Agreement and
Release ¶ 3.4(D)), 11 (Addendum to Amended Settlement Agreement
and Release ¶ 1.18).
Since this formula is based on records of
hours worked, this Court finds the allocation is reasonable.
III. Approval of FLSA Settlement
The standard for approval of an FLSA settlement is lower
than for a Rule 23 settlement because an FLSA settlement does not
implicate the same due process concerns as a Rule 23 settlement.
See Khait v. Whirlpool Corp., No. 06-6381 (ALC), 2010 WL 2025106
at *6 (E.D.N.Y. Jan. 20, 2010) (citing McKenna v. Champion Int'l
Corp., 747 F.2d 1211, 1213 (8th Cir. 1984)).
The majority of federal courts have required parties
settling claims under the FLSA to obtain court approval or
supervision by the Department of Labor.
See, e.g., Mateo v.
Greenwich Village Entertainment Group LLC, No. 10 Civ. 2465
(DLC), 2011 WL 321146 (S.D.N.Y. Feb. 1, 2011);
Dees v. Hydradry,
Inc., No. 8:09-cv-1404-T-23TBM, 2010 WL 1539813 (M.D. Fla. Apr.
19, 2010); Le v. SITA Information Networking Computing USA, Inc.,
No. 07-cv-86 (JS)(MLO), 2008 WL 724155 (E.D.N.Y. Mar. 13, 2008).
Since the parties have filed this motion, this Court will review
the fairness of the settlement despite doubts whether the formal
motion filed herein for court approval is necessary.
11-cv-780, ct. doc. 16 at 2-6.
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See Clarke,
Courts generally approve FLSA settlements when they are
reached as a result of contested litigation to resolve bona fide
disputes.
Khait, 2010 WL 2025106 at *7 (citing Lynn's Food
Stores, Inc. v. United States, 679 F.2d 1350, 1353 n.8 (11th Cir.
1982)).
As discussed above, supra, the settlement was the result
of "extensive negotiations which were highly spirited" and
conducted at arm's length.
See Cafaro Aff. ¶ 9.
Clearly, the
settlement of the FLSA claims meets the legal standards for
approval.
IV.
Dissemination of the Notice
Notices of the settlement, including the amendment of the
settlement were timely sent by first-class mail to each class
member at his or her last known address (with re-mailing of
return notices).
See id. ¶ 11.
Beside the notice sent after
issuance of the Preliminary Approval Order, the plaintiffs sent
notices of the amended settlement to all class members newly
discovered and other newly discovered employees, some of who were
not included in the class.
See Cafaro Aff. ¶¶ 12-14.
In
addition, the two employees who received the original notice
after preliminary approval and were later not included in the
redefined class received specialized notices advising them of the
change to the settlement and explaining their rights.
Aff. ¶ 14.
See Cafaro
To ensure that all Class Members were on "equal
footing[,]" the deadline for filing claim forms was extended an
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additional 60 days and the Fairness Hearing was postponed until
after the filing of those documents.
See Cafaro Aff. ¶ 14.
Having reviewed the two notices to prospective class
members, both before mailing and in conjunction with the instant
motion, this Court finds that the Notices fairly and adequately
advised class members of the terms of the settlement, as well as
the right of members of the class to opt out of the class, to
object to the settlement and to appear at the fairness hearing
conducted on December 19, 2011.
Class Members were provided the
best notice practicable under the circumstances.
The Court
further finds that the Notice and distribution of such Notice
comported with all constitutional requirements, including due
process.
Finally, the Court confirms Simpluris, Inc. as the Claims
Administrator.
V.
Service Award to Plaintiff
The Court finds reasonable the service award of $5,000.00
proposed for Lazaro Chavarria, the Class Representative.
This
amount shall be paid from the Gross Settlement Fund.
Such awards are common in class action cases and are
important to compensate plaintiff for the time and effort
expended in assisting the prosecution of the litigation, the
risks incurred by becoming and continuing as a litigant and any
other burdens sustained by the plaintiff.
See Parker v. Jekyll &
Hyde Entm't Holdings, LLC, No. 08 Civ. 7670 (BSJ)(JCF), 2010 WL
-21-
532960, at *1 (S.D.N.Y. Feb. 9, 2010); McMahon v. Oliver Cheng
Catering and Events, LLC, No. 08 Civ. 8713 (PGG), 2010 U.S. Dist.
LEXIS 18913, 2010 WL 2399328, at *8-9 (S.D.N.Y. Mar. 3, 2010);
Khait, 2010 WL 2025106, at *9; see also Roberts v. Texaco, Inc.,
979 F. Supp. 185, 200-01 (S.D.N.Y. 1997).
According to plaintiffs' counsel, Mr. Chavarria aided
counsel in the fact-finding process and was instrumental in
locating and contacting Class Members.
Mr. Chavarria also
attended meetings between counsel and various other ticket
agents, both at counsel's office and elsewhere.
See Cafaro Aff.
¶ 25.
VI.
Attorneys' Fees
Attorneys who create a common fund from which members of a
class are compensated are entitled to "a reasonable fee--set by
the court--to be taken from the fund."
Goldberger v. Integrated
Resources, Inc., 209 F.3d 43, 47 (2d Cir. 2000) (internal
citation omitted).
"What constitutes a reasonable fee is
properly committed to the sound discretion of the district
court[.]"
Id. at 47.
Fees may be awarded under either the
lodestar or percentage of the funds methods, but in this Circuit,
the percentage method is the "trend."
McDaniel v. County of
Schenectady, 595 F.3d 411, 417 (2d Cir. 2010); Wal-Mart Stores,
396 F.3d at 121.
This is because:
[T]he percentage method directly aligns the interests
of the class and its counsel and provides a powerful
incentive for the efficient prosecution and early
resolution of litigation . . . . [It] is also the most
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efficient means of rewarding the work of class action
attorneys, and avoids the wasteful and burdensome
process - to both counsel and the courts - of preparing
and evaluating fee petitions . . . .
In re Lloyd's American Trust Litig., No 96 Civ. 1262 RWS, 2002 WL
31663577, at *25 (S.D.N.Y. Nov. 26, 2002).
In addition, the
percentage method is intended to mirror the private marketplace
where contingent fee attorneys typically negotiate percentage fee
arrangements with their clients.
See In re Am. Bank Note
Holographics, Inc., 127 F. Supp. 2d 418, 432 (S.D.N.Y. 2001).
However, in wage and hour class action lawsuits, public
policy favors a common fund attorneys' fee award.
See Frank v.
Eastman Kodak Co., 228 F.R.D. 174, 189 (W.D.N.Y. 2005).
Fee
awards in wage and hour cases are meant to "'encourage members of
the bar to provide legal services to those whose wage claims
might otherwise be too small to justify the retention of able,
legal counsel.'"
deMunecas, 2010 WL 3322580, at *8 (quoting Sand
v. Greenberg, No. 08 Civ. 7840 (PAC), 2010 WL 69359, at *3
(S.D.N.Y. Jan. 7, 2010)).
Adequately compensating attorneys who
protect wage and hour rights will serve the remedial purposes of
the FLSA and NYS Labor Law.
See McMahon, 2010 WL 2399328, at *7;
Khait, 2010 WL 2025106, at *8.
"If not, wage and hour abuses
would go without remedy because attorneys would be unwilling to
take on the risk."
Campos, 2011 U.S. Dist. LEXIS 22959, at *19
(citing deMunecas, 2010 WL 3322580, at *8).
Regardless of which method is utilized, courts in this
Circuit must consider the following factors in determining what
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constitutes a reasonable fee: (1) the time and labor expended by
counsel; (2) the magnitude and complexities of the litigation;
(3) the risk of the litigation; (4) the quality of
representation; (5) the requested fee in relation to the
settlement; and (6) public policy considerations.
See
Goldberger, 209 F.3d at 50.
Here, Class Counsel risked time and effort and advanced
costs and expenses with no ultimate guarantee of compensation,
and is therefore entitled to attorneys' fees.
Although this case
is not as complex as a large scale national class action,
plaintiffs' claims involved a serious question of whether the
work performed was protected under the applicable labor laws as
well as the tedious determination of the number of hours that
they worked.
Moreover, plaintiffs faced a high risk of non-
recovery given the imminent closing of defendants' operation.
Additionally, I find that counsel was well qualified to
conduct this litigation.
Counsel appeared before me over ten
times and I had the opportunity to observe that he had a good
grasp of the facts and the legal issues in this case and capably
handled settlement discussions and settlement administration
issues.
Although he did hot have prior experience litigating
class actions, he had experience handling labor law cases and
complex commercial litigation.
Plaintiffs request attorneys' fees in the amount of
$45,250.00 or 1/3 of the amount of the settlement, including the
cost of administering the settlement up to the time plaintiffs
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filed the instant motion.
See Cafaro Aff. ¶¶ 22-24.
Plaintiffs'
counsel's billing records show 155.1 hours of work that Mr.
Cafaro performed at a rate of $350 per hour for a total of
$54,285 fees claimed, not including the hours expended by an
associate and administrative staff.
Counsel conducted pre-filing
investigation and interviews, researched and drafted the
complaint and amended complaint, prepared and argued a motion to
dismiss, and engaged in discovery and settlement negotiations.
See generally Cafaro Aff. ¶¶ 22-24, Exh. 13 (billing records).
I
find the number of hours claimed to be generally reasonable and
counsel's rate of $350 reasonable for an attorney of his
experience in commercial litigation.
The fact that the fee
sought by Class Counsel does not include compensation for time
and effort they will be required to spend administering the
settlement going forward also supports their fee request.
See
deMunecas, 2010 WL 3322580, at *10.
Applying the lodestar method as a "cross-check," see
Goldberger, 209 F.3d at 50, the award counsel seeks is almost
$10,000.00 less than the amount he could have charged a client
for his billable hours alone.
Thus, no multiplier is sought.
In
addition, counsel is waiving any claim for expenses incurred.
Thus, I find Class counsel's requested fee, 33% of the
settlement, reasonable under the circumstances of this case and
"well within the range accepted by courts in this Circuit."
e.g., deMunecas, 2010 WL 3322580, at *9 (33%);
See,
Maley, 186 F.
Supp. 2d at 369 (33 1/3%); Klein v. PDG Remediation, Inc., No. 95
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CV 4954 (DAB), 1999 WL 38179, at *4 (S.D.N.Y. Jan. 28, 1999)
(33%).
Given the relatively small settlement amount, the
percentage requested is necessary to adequately compensate
counsel.
CONCLUSION
For the foregoing reasons, the settlement is approved.
SO ORDERED.
Dated:
Brooklyn, New York
June 25, 2012
/s/
MARILYN DOLAN GO
UNITED STATES MAGISTRATE JUDGE
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