Fu et al v. Mee May Corp. et al
Filing
60
OPINION AND ORDER: This matter is before me on the parties' joint application to approve the parties' settlement (Docket Items 54 & 55). (As further set forth in this Order.) Accordingly, the parties' application to approve the propose d settlement in this matter is denied without prejudice. Any renewed application should address the factors identified by Judge Furman in Wolinsky, the amount of damages claimed by each plaintiff and the basis therefore and an explanation for the allocation of the settlement amount. (Signed by Magistrate Judge Henry B. Pitman on 11/14/2016) Copies Sent By Chambers (cf)
USDCSDNY
DOCUMEJ\TT
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ELECfRONICALLY FILED
DOC#: ______~~-DATEFILED: JJ/14 b~
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BAO CHENG FU, GUANG LI ZHANG
and ZHONG QI LIN,
Plaintiffs,
15 Civ. 4549 (HBP)
OPINION
AND ORDER
-againstMEE MAY CORP., JIANG QING CHEN
KUANG CHU WU, JANE DOE #1-10,
JOHN DOE #1-10 and JOHN WU,
Defendants.
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PITMAN, United States Magistrate Judge:
This matter is before me on the parties• joint application to approve the parties• settlement (Docket Items 54 & 55).
All parties have consented to my exercising plenary jurisdiction
pursuant to 28 U.S.C.
§
636(c).
This is an action brought by three individuals who
formerly performed delivery work at a small Chinese restaurant in
Manhattan and seeks allegedly unpaid wages, overtime premium pay
and spread-of-hours pay.
The action is brought under the Fair
Labor Standards Act ( 11 FLSA 11 ) , 29 U.S.C.
New York Labor Law.
§§
201 et seq., and the
Plaintiffs also assert claims based on
defendants• alleged failure to maintain certain payroll records,
to provide certain notices as required by the Labor Law and to
reimburse plaintiffs for the cost of bicycles that plaintiffs
used to make deliveries.
The parties advise that plaintiffs' unpaid wages,
exclusive of liquidated damages and, apparently, exclusive of
damages for the Labor Law claims, total $35,425.16.
The parties
have not explained what each plaintiff's pro rata share of this
damages figure is.
The proposed settlement calls for the defen-
dants to pay a total of $24,000.00 in full and final satisfaction
of plaintiffs' claims.
The proposed settlement further provides
that $3,000.00 of the settlement figure will be allocated to
reimburse plaintiffs' counsel for their out-of-pocket costs,
$7,000 (or one-third) of the remaining $21,000.00 will be paid to
plaintiffs' counsel as fees and the remaining $14,000.00 will be
divided among the plaintiffs as follows:
Bao Cheng Fu
$2,500.00
Guang Li Zhang
$3,500.00
Zhong Qi Lin
$8,000.00
The parties reached their proposed settlement before
the settlement conference that I had scheduled in this matter,
and therefore, my knowledge of the underlying facts and the
justification for the settlement is limited to counsels' representations in the letters submitted in support of the settlement.
Plaintiffs advise that when they were employed by defendants,
2
they received a fixed weekly sum, regardless of the hours they
worked.
They further claim that this fixed weekly sum was less
than the minimum wage and overtime premium required by law.
Plaintiffs have not provided any information regarding how many
hours they worked, how much they were paid, whether they were
paid in cash or by check nor have they provided any information
concerning the unreimbursed expenses they incurred in purchasing
equipment necessary to do their jobs.
Defendants advise that
they maintained wage and hour documents, including time cards and
pay records; samples of these records have not been provided to
me.
Defendants also claim that they provided plaintiffs with
proper notice of the tip credit and were, therefore, entitled to
pay a reduced hourly wage; a copy of the notice has not been
provided to me.
Finally, defendants also claim that plaintiffs'
allegations concerning the number of hours they worked is inflated.
Court approval of an FLSA settlement is appropriate
"when [the settlement] [is] reached as a result of
contested litigation to resolve bona fide disputes."
Johnson v. Brennan, No. 10 Civ. 4712, 2011 WL 4357376,
at *12 (S.D.N.Y. Sept. 16, 2011).
"If the proposed
settlement reflects a reasonable compromise over contested issues, the court should approve the settlement." Id. (citing Lynn's Food Stores, Inc. v. United
States, 679 F.2d 1350, 1353 n. 8 (11th Cir. 1982)).
3
Agudelo v. E & D LLC, 12 Civ. 960 (HB), 2013 WL 1401887 at *1
(S.D.N.Y. Apr. 4, 2013)
(Baer, D.J.).
11
Generally, there is a
strong presumption in favor of finding a settlement fair,
[be-
cause] the Court is generally not in as good a position as the
parties to determine the reasonableness of an FLSA settlement.
11
Lliguichuzhca v. Cinema 60, LLC, 948 F. Supp. 2d 362, 365
(S.D.N.Y. 2013)
(Gorenstein, M.J.)
citations omitted) .
11
(inner quotation marks and
Typically, courts regard the adversarial
nature of a litigated FLSA case to be an adequate indicator of
the fairness of the settlement.
F.R.D. 467, 476 (S.D.N.Y. 2013)
Beckman v. Keybank, N.A., 293
11
(Ellis, M.J.), citing Lynn's Food
Stores, Inc. v. United States, 679 F.2d 1350, 1353-54 (11th Cir.
1982) .
In Wolinsky v. Scholastic, Inc., 900 F. Supp. 2d 332,
335 (S.D.N.Y. 2012), the Honorable Jesse M. Furman, United States
District Judge, identified five factors that are relevant to an
assessment of the fairness of an FLSA settlement:
In determining whether [a] proposed [FLSA] settlement
is fair and reasonable, a court should consider the
totality of circumstances, including but not limited to
the following factors:
(1) the plaintiff's range of
possible recovery; (2) the extent to which the settlement will enable the parties to avoid anticipated
burdens and expenses in establishing their respective
claims and defenses; (3) the seriousness of the litigation risks faced by the parties; (4) whether the settlement agreement is the product of arm's-length bar-
4
gaining between experienced counsel; and (5) the possibility of fraud or collusion.
(Inner quotations and citations omitted)
The parties have not submitted sufficient information
to enable me to determine whether the proposed settlement is fair
and reasonable.
Even before deduction for costs and attorney's
fees, the settlement does not even cover plaintiffs' claimed
unpaid wages, nor does it cover the statutory damages that would
result from plaintiffs' notice claims.
The parties have also
failed to explain the basis for the allocation of the settlement
proceeds.
Counsel advises that plaintiff Fu worked for defen-
dants one and one-half years while Zhang and Lin worked for
defendants for four and five months, respectively.
Because Fu
had the longest tenure with defendants, if defendants did have
the policy of underpaying employees that plaintiffs allege, Fu
should be receiving the largest share of the settlement proceeds
because he would have been subject to defendants' allegedly
illegal practices the longest.
Yet, Fu is receiving the smallest
share of the settlement proceeds.
Lin, who worked for defendants
for five months, or less than one-third of Fu's tenure, will
receive more than three times Fu's share.
There may be a good
explanation for these apparent disparities, but the parties'
submission does not provide one.
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I appreciate that modest settlements are sometimes
appropriate in FLSA/Labor Law actions where there are substantial
issues with the strength of plaintiffs' claims or there are
serious issues with respect to defendants' liquidity and ability
to pay a larger amount.
However, neither of these explanations
have been offered here.
Accordingly, the parties' application to approve the
proposed settlement in this matter is denied without prejudice.
Any renewed application should address the factors identified by
Judge Furman in Wolinsky, the amount of damages claimed by each
plaintiff and the basis therefore and an explanation for the
allocation of the settlement amount.
Dated:
New York, New York
November 14, 2016
SO ORDERED
United States Magistrate Judge
Copies transmitted to:
All Counsel
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