Douglas et al v. Spartan Demolition Company LLC et al

Filing 62

OPINION AND ORDER re: 56 MOTION to Approve FLSA Settlement Agreement. The application of plaintiffs, AJS and C&R for approval of their proposed settlement agreement is denied without prejudice to renewal. Any renewed application for approval of th e settlement should either include a revised allocation of the settlement proceeds or provide a reasonable explanation of the rationale for the allocation of the proceeds among the plaintiffs. Plaintiffs' counsel is directed to provide a copy of this Order to A.J.S. Project Management, Inc. and AJS Construction & Renovation Inc., and as further set forth herein. (Signed by Magistrate Judge Henry B. Pitman on 10/19/2017) Copies Transmitted By Chambers. (ras)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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SHREAL DOUGLAS, individually and
on behalf of all other persons
similarly situated, et al.,

15 Civ. 5126 (HBP)
OPINION
AND ORDER

Plaintiffs,
-againstSPARTAN DEMOLITION COMPANY LLC,
et al.,
Defendants.

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PITMAN, United States Magistrate Judge:

This matter is before me on the joint application of
plaintiffs and defendants A.J.S. Management, Inc.
Construction & Renovation Inc.
settlement.

("AJS") and AJS

( "C&R") to approve their proposed

Plaintiffs, AJS and C&R have consented to my exer-

cising plenary jurisdiction pursuant to 28 U.S.C.

§

636(c).

The

remaining defendants have failed to answer or move with respect
to the complaint and are in default.

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Plaintiffs commenced this action under the Fair Labor
Standards Act, 29 U.S.C.

1

§§

201

et~.,

and the New York Labor

0n September 15, 2017, I granted AJS and C&R's counsel's
motion to withdraw (Order, dated Sept. 15, 2017 (D.I. 61)).
No
attorney has since filed a notice of appearance on behalf of
these defendants.

Law alleging that they did not receive the minimum wage, overtime
premium pay and the prevailing wage for demolition work that they
performed at a site located on the campus of Queens College.

The

plaintiffs were directly employed by Spartan Demolition Company
LLC ("Spartan") .

They have asserted claims against AJS and C&R

as the prime contractors and allege that AJS and C&R are liable
as joint employers.

Plaintiffs also allege that they have

standing to assert claims as third-party beneficiaries of the
contract between AJS and New York City.
AJS and C&R contest the plaintiffs' allegations and
argue that they are not liable as joint employers under the wageand-hour laws.

AJS and C&R also argue that they are not liable

for unpaid prevailing wages because they paid Spartan, and
Spartan provided AJS and C&R with payroll reports certifying that
Spartan paid plaintiffs the wages to which they were legally
entitled.
The amounts claimed by the plaintiffs, exclusive of
liquidated damages,

interest and attorney's fees, are as follows:

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Plaintiff

Amount
Claimed

Douglas

$8,380.64

Bautista

$8,380.64

Smith

$8,380.64

Dupree

$6,285.48

Jones

$4,190.32
I held a lengthy settlement conference with the parties

and counsel on May 17, 2017.

Although the matter did not settle

at that time, the parties advised me that they were subsequently
able to reach a settlement.

The proposed settlement requires AJS

and C&R to pay a total of $24,000.00 to settle the claims against
$2,324.90 of this sum is allocated to reimburse plain-

them.

tiffs' counsel for out-of-pocket costs.

Of the remainder, one-

third, or $7,225.10, is allocated to plaintiffs' counsel as a
fee.

The proposed settlement calls for the balance of $14,450.00

to be distributed among the plaintiffs as follows:

Plaintiff

Amount of Settlement
Proceeds to be Received

Douglas

$4,450.00

Bautista

$3,500.00

Smith

$2,000.00

Dupree

$3,000.00

Jones

$1,500.00
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Each plaintiff's pro rata share of the proposed settlement, after deduction of costs and fees,

is as follows:

Plaintiff

Pro Rata Share of
the Claims
Asserted

Pro Rata Share of
the Proposed
Settlement

Douglas

23.53%

30.80%

Bautista

23.53%

24.22%

Smith

23.53%

13.84%

Dupree

17.65%

20.76%

Jones

11.76%

10.38%

The parties initially moved for approval of the settlement agreement in June of 2017

(see Letter from the Parties to

the Undersigned, dated June 20, 2017
and Order dated July 7, 2017,

(D.I. 56)).

In an Opinion

I declined to approve the settle-

ment, in part because it contained a provision, which, contrary
to prevailing law, prohibited plaintiffs from assisting in a
lawsuit or proceeding against defendants
July 7, 2017

(D.I. 57) at 4-5).

(Opinion & Order, dated

Accordingly, the parties submit-

ted an amended settlement agreement that omits this provision
(see Letter from Parties' Counsel to the Undersigned, dated July
14, 2017

("Parties' July 2017 Letter")

(D.I. 59), Ex. 1 (D.I. 59-

1))

In the prior Opinion & Order, I also declined to
approve the settlement because the parties had not offered a
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basis for finding that the allocation of the settlement amount
was fair and reasonable (Opinion & Order, dated July 7, 2017
(D.I. 57) at 4).

The parties offered no explanation for the

disparity between each plaintiff's Q£Q rata share of the total
amount claimed and the amount each would receive in the settlement.

Specifically, I noted that there was no explanation as to

why plaintiffs Douglas, Bautista and Smith, who all have claims
for the same amount, are each receiving widely differing amounts
(Opinion & Order, dated July 7, 2017

(D.I. 57) at 4).

The

parties subsequently submitted a letter in which they attempted
to explain why two of the plaintiffs received lower settlement
amounts than the other plaintiffs.

The parties explained that

plaintiff Jones took slightly less than his Q£Q rata share of the
overall claim as a compromise in an effort to finalize the
settlement (Parties' July 2017 Letter at 2).

Given the minimal

difference between Jones' claimed share and his allocable share
(less than 2%), this a sufficient explanation for the disparity
in Jones' allocated settlement amount.

The parties have failed,

however, to explain why Douglas, Bautista and Smith received
different settlement amounts.

The parties explain that Smith

took a lower amount than his counterparts because he missed the
settlement conference, and therefore unlike Douglas and Bautista,
he did not have to take a day off of work (Parties' July 2017
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Letter at 2).

However, Smith's allocated share is $1,500 less

than Bautista's share and $2,450 less than Douglas' share of the
settlement amount.

Although Douglas and Bautista are entitled to

a larger share to compensate for the wages they lost by attending
the settlement conference, I cannot believe that this factor
justifies the difference between what Douglas and Smith would
receive under the settlement ($2,450.00) or the difference
between what Bautista and Smith would receive under the settlement ($1,500)

Therefore, the parties have again failed to

justify the allocation of the settlement proceeds as fair and
reasonable.
Accordingly, the application of plaintiffs, AJS and C&R
for approval of their proposed settlement agreement is denied
without prejudice to renewal.

Any renewed application for

approval of the settlement should either include a revised
allocation of the settlement proceeds or provide a reasonable
explanation of the rationale for the allocation of the proceeds

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among the plaintiffs.

Plaintiffs' counsel is directed to provide

a copy of this Order to A.J.S. Project Management, Inc. and AJS
Construction & Renovation Inc.
Dated:

New York, New York
October 19, 2017
SO ORDERED

HENRYPTJiAN
United States Magistrate Judge
Copies transmitted to:
William C. Rand, Esq.
Law Office of William Coudert Rand
Suite 1100
488 Madison Avenue
New York, New York 10022

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