Chandler et al v. Total Relocation Services, LLC et al

Filing 67

OPINION AND ORDER re: 62 NOTICE of Settlement; 66 SECOND LETTER addressed to Magistrate Judge Henry B. Pitman from Matthew Madzelan dated 07/10/2017 re: Settlement - Damages Calculations. This matter is before me on plaintiffs and defendants& #039; joint application to approve their settlement (Docket Items ("D.I.") 62, 66). After a protracted discussion of the strengths and weaknesses of the parties' respective positions, the parties agreed to resolve the dispute f or a total settlement of $95,000.00. The parties have also agreed that $473.50 of the settlement amount will be allocated to reimburse plaintiffs' counsel for their out-of-pocket costs, $31,666.67 (or one-third) of the remaining & #036;94,526.50 will be paid to plaintiffs' counsel and the balance will be paid to plaintiffs. The amount claimed by each of the plaintiffs and the net amount that each will receive after deduction for legal fees and costs are as follows: (See document). Accordingly, for all the foregoing reasons, I approve the settlement in this matter. In light of the settlement, plaintiffs' claims are dismissed with prejudice and without costs. (Signed by Magistrate Judge Henry B. Pitman on 8/2/2017) Copies Transmitted By Chambers. (ras)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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JEFFREY CHANDLER, individually
and on behalf of all others
similarly situated, et al.,
Plaintiffs,
-against-

15 Civ. 6791 (HBP)
OPINION
AND ORDER

TOTAL RELOCATION SERVICES, LLC,
et al.,
Defendants.

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PITMAN, United States Magistrate Judge:

This matter is before me on plaintiffs and defendants'
joint application to approve their settlement (Docket Items
("D.I. ") 62, 66).

Those parties have consented to my exercising

plenary jurisdiction pursuant to 28 U.S.C. § 636(c).
Plaintiffs worked for defendants as movers and drivers,
providing moving services to defendants' clients.

Plaintiffs

seek, by this action, to recover unpaid wages, overtime premium
pay and spread-of-hours pay.

The action is brought under the

Fair Labor Standards Act (the "FLSA"), 29 U.S.C. §§ 201 et seq.,
and the New York Labor Law (the "NYLL").

Plaintiffs also assert

claims based on defendants' alleged failure to provide certain

notices and statements as required by the NYLL. 1

Although the

action was commenced as a collective action with respect to the
FLSA claims and a putative class action with respect to the Labor
Law claims, the parties reached the proposed settlement prior to
the matter being conditionally certified as a collective action
or certified as a class action.

Thus, the only parties to the

settlement are the named plaintiffs and the named defendants.
Plaintiffs contend that movers were not paid for time
spent traveling to work sites.

They also contend that both

movers and drivers were not paid for the time they worked at
defendants' warehouse.

Finally, plaintiffs contend that defen-

dants failed to pay for all hours worked when they thought
plaintiffs spent too much time on a job.
Defendants deny plaintiffs' allegations.

Defendants

contend that they were exempt from paying drivers overtime
premium pay pursuant to the FLSA's motor carrier exemption. 2
Defendants, in turn, filed a third-party complaint against
Tri-State Employment Services, Inc. ("Tri-State") for indemnity
(Third Party Complaint, dated Dec. 1, 2015 (D.I. 21)). Tri-State
failed to answer the third-party complaint or otherwise take any
steps to defend against the claims. After issuing an Order to
Show Cause to Tri-State and receiving no response, the Honorable
Analisa Torres, United States District Judge, entered a judgment
of default against Tri-State on December 13, 2016 (Judgment,
dated Dec. 13, 2016 (D.I. 58)).
1

There are two requirements to fall under this exemption.
First, "the employer must be within the jurisdiction of the
(continued ... )
2

2

Defendants also contend that they were not required to pay
plaintiffs for time spent traveling between the warehouse and the
work sites.

Finally, defendants contend that plaintiffs were not

required to work at the warehouse.
I held a lengthy settlement conference on January 17,
2017 that was attended by the parties and their counsel.

After a

protracted discussion of the strengths and weaknesses of the
parties' respective positions, the parties agreed to resolve the
dispute for a total settlement of $95,000.00.

The parties have

also agreed that $473.50 of the settlement amount will be allocated to reimburse plaintiffs' counsel for their out-of-pocket
costs, $31,666.67 (or one-third) of the remaining $94,526.50 will

2

continued)
Secretary [of Transportation] by virtue of operating as a motor
carrier [or a motor private carrier], as defined by the statute."
Cruz v. AAA Carting & Rubbish Removal, Inc., 116 F. Supp. 3d 232,
246 (S.D.N.Y. 2015) (Karas, D.J.) (second alteration in original;
internal quotation marks omitted); accord Tang v. Wing Keung
Enters., Inc., 210 F. Supp. 3d 376, 390-91 (E.D.N.Y. 2016).
The
vehicle must also weigh over 10,000 pounds for the employer to be
subject to the jurisdiction of the Secretary of Transportation.
See Tang v. Wing Keung Enters .. Inc., supra, 210 F. Supp. 3d at
391. Second, "the individual employee must fall within an exempt
classification," meaning that the employee "must engage in
activities of a character directly affecting the safety .
. of
operation of motor vehicles in the transportation on the public
highways of passengers or property in interstate or foreign
commerce within the meaning of the [Motor Carrier Act]." Cruz v.
AAA Carting & Rubbish Removal, Inc., supra, 116 F. Supp. 3d at
246 (internal quotation marks omitted); accord Tang v. Wing Keung
Enters., Inc., supra, 210 F. Supp. 3d at 392.
( •••

3

be paid to plaintiffs' counsel and the balance will be paid to
plaintiffs.

The amount claimed by each of the plaintiffs 3 and

the net amount that each will receive 4 after deduction for legal
fees and costs are as follows:
Net
Settlement
Amount

Plaintiff

Amount
Claimed

Jeffrey Chandler

$13,660.00

$8,276.32

Revel George

$13,823.30

$8,315.32

Eugene Griff in

$19,122.05

$9,585.73

Thomas Lloyd

$23,385.50

$10,608.18

Raymond Perez

$23,703.94

$10,686.19

$8,784.00

$7,106.20

Chris Santana

$13,688.50

$8 281. 89

TOTAL

$116,167.29

Laureano Reyes

f

$62,859.83

I previously refused to approve the settlement agreement because the parties did not provide sufficient information
to enable me to determine whether the proposed settlement was
fair and reasonable (Opinion and Order, dated June 22, 2017 (D.I.

3

The amount claimed by each of the plaintiffs includes the
allegedly unpaid wages and overtime premium pay, liquidated
damages and statutory damages for defendants' alleged failure to
provide wage statements and notices.
4

I use the net settlement amounts as they appear in Exhibit
1 to D.I. 66, rather than the amounts listed in Exhibit 2 to D.I.
62, because the former distributes the settlement more equitably.
4

65)).

Specifically, the parties failed to state the damages

claimed by each plaintiff, other than statutory penalties, and
the basis therefore.
The parties have submitted a renewed application for
settlement approval.

In accordance with my previous Opinion and

Order, counsel has identified the damages claimed by each plaintiff and the basis therefore.
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)).
Agudelo v. E & D LLC, 12 Civ. 960 (HB), 2013 WL 1401887 at *1
(S.D.N.Y. Apr. 4, 2013)

(Baer, D.J.)

(alterations in original).

"Generally, there is a strong presumption in favor of finding a
settlement fair,

[because] the Court is generally not in as good

a position as the parties to determine the reasonableness of an
FLSA settlement."

Lliguichuzhca v. Cinema 60, LLC, 948 F. Supp.

2d 362, 365 (S.D.N.Y. 2013)
tion marks omitted) .

(Gorenstein, M.J.)

(internal quota-

"Typically, courts regard the adversarial

nature of a litigated FLSA case to be an adequate indicator of
the fairness of the settlement."

Beckman v. KeyBank, N.A., 293

5

F.R.D. 467, 476 (S.D.N.Y. 2013)

(Ellis, M.J.), citing Lynn's Food

Stores, Inc. v. United States, supra, 679 F.2d at 1353-54.

The

presumption of fairness in this case is bolstered by the caliber
of the parties' attorneys.

Based upon their performance at the

settlement conference that was held, it is clear to me that all
parties are represented by counsel who are extremely knowledgeable regarding all issues in the case and who are well suited to
assess the risks of litigation and the benefits of the proposed
settlement.
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 bargaining between experienced counsel; and (5) the possibility of fraud or collusion.
(Internal quotation marks omitted).
fies these criteria.

6

The settlement here satis-

First, although the net settlement represents approximately 54% of plaintiffs' claimed damages, that fact does not
render it deficient.

Defendants kept records of the number of

hours plaintiffs worked.

Additionally, defendants argue that

they were exempt from paying drivers overtime premium pay because
of the FLSA's motor carrier exemption.

As discussed in more

detail below, given the risks these issues present, the settlement amount is reasonable.
Second, the settlement will entirely avoid the burden,
expense and aggravation of litigation.
place yet.

No depositions have taken

If the case were to proceed, several depositions

would need to be taken.

The settlement avoids the necessity of

conducting this discovery.
Third, the settlement will enable plaintiffs to avoid
the risks of litigation.

As noted above, defendants dispute the

number of hours plaintiffs claim to have worked, citing records
defendants kept of the hours worked.

Plaintiffs, therefore, face

the risk that a fact finder may credit defendants.

Moreover,

defendants take the position that they were exempt from paying
drivers overtime premium pay because of the FLSA's motor carrier
exemption.

Thus, whether plaintiffs would recover at trial is

far from certain.

See Bodon v. Domino's Pizza, LLC, No. 09-CV-

2941 (SLT), 2015 WL 588656 at *6 (E.D.N.Y. Jan. 16, 2015)
7

(Report

& Recommendation)

(" [T]he question [in assessing the fairness of

a class action settlement] is not whether the settlement represents the highest recovery possible .

but whether it repre-

sents a reasonable one in light of the many uncertainties the
class faces .

."

(internal quotation marks omitted)), adopted

sub nom. Qy:, Bodon v. Domino's Pizza, Inc., 2015 WL 588680
(E.D.N.Y. Feb. 11, 2015); Massiah v. MetroPlus Health Plan, Inc.,
No. 11-cv-05669 (BMC), 2012 WL 5874655 at *5 (E.D.N.Y. Nov. 20,
2012)

("[W]hen a settlement assures immediate payment of substan-

tial amounts to class members, even if it means sacrificing
speculative payment of a hypothetically larger amount years down
the road, settlement is reasonable .

."

(internal quotation

marks omitted; assessing fairness of class action settlement)).
Fourth, because I presided over the settlement conference that preceded the settlement, I know that the settlement is
the product of arm's-length bargaining between experienced
counsel.

Both counsel represented their clients zealously at the

settlement conference.
Fifth, there are no factors here that suggest the
existence of fraud.

The settlement was reached after a mediation

before the Court, further negating the possibility of fraud or
collusion.

8

The settlement agreement also contains a release.

It

provides that plaintiffs release
all statutory, contract, tort and all other claims
against Defendants, its/their parent companies, subsidiaries and Affiliates, and its/their officers, directors, shareholders, members, managers, trustees, employees, agents, representatives, administrators,
attorneys, insurers, fiduciaries, predecessors, successors and assigns (collectively, the ''Releasees"), and
release and forever discharge Releasees to the fullest
extent permitted by law from all actions, causes of
action,
. claims,
. whatsoever, in law or in
equity, known or unknown, which Plaintiffs .
. may
now have or hereafter can, shall or may have for, upon
or by reason of any matter, cause or thing whatsoever
against Releasees based upon any conduct occurring from
the beginning of the world up to and including the day
of the date of this Agreement for conduct set forth in
the Lawsuit, including claims arising under or pursuant
to the [FLSA], 29 U.S.C. §§ 201 et seg. and [NYLL], and
their governing regulations.
(Letter from Jonathan Schulman, Esq., to the undersigned, dated
Feb. 3, 2017 (D.I. 62)

("Schulman Letter"), Ex. 1

§

3(a))

5

Throughout the settlement agreement, the parties refer
to this release as a general release (Schulman Letter, Ex. 1, at
5 &

§§

8, 16, 17).

General releases in FLSA settlements that run

only in favor of the defendants are impermissible.

See Leon-

Martinez v. Central Cafe & Deli, 15 Civ. 7942 (HBP), 2016 WL

The release does not include claims based on facts that may
arise after execution of the settlement agreement, "any claim or
right Plaintiffs may have under this Agreement" and claims that
cannot be waived as a matter of law (Schulman Letter, Ex. 1 §
5

3 (b) ) .

9

7839187 at *1 (S.D.N.Y. Dec. 19, 2016)
cases).

(Pitman, M.J.)

(collecting

However, this release is nearly identical to the release

in Boyle v. Robert M. Spano Plumbing & Heating. Inc., 15 Civ.
2899 (KMK), 2016 WL 1688014 at *3 (S.D.N.Y. Apr. 27, 2016), in
which the Honorable Kenneth M. Karas, United States District
Judge, noted that "[t]o be sure, the release language [is] broad.
But critically, this broad language is sharply curtailed, being
limited to matters relating to 'conduct set forth in the Lawsuit.'"

Therefore, like Judge Karas, I interpret this release

as well as the accompanying covenant not to sue in Section 5 of
the agreement -- to be limited to matters relating to "conduct
set forth in the Lawsuit." 6
The agreement also contains a mutual non-disparagement
clause (Schulman Letter, Ex. 1

7).

§

However, it does not

include a carve-out for truthful statements about plaintiffs'
experience litigating their case.

A non-disparagement clause in

an FLSA settlement must include such a carve-out.

Lopez v.

Nights of Cabiria, LLC, 96 F. Supp. 3d 170, 180 n.65 (S.D.N.Y.
2015)

(Kaplan, D.J.); accord Weng v. T&W Rest., Inc., 15 Civ.

My interpreting this release does not void the settlement
agreement because the agreement provides that " [if] any provision
of this Agreement is held by a court of competent jurisdiction to
be void, voidable, unlawful or unenforceable, that court shall
interpret, administer or modify it to be enforceable" (Schulman
Letter, Ex. 12 § 12).
6

10

8167 (PAE) (BCM), 2016 WL 3566849 at *4 (S.D.N.Y. June 22, 2016)
(Moses, M.J.); see Lopez v. Ploy Dee, Inc., 15 Civ. 647 (AJN),
2016 WL 1626631 at *3 (S.D.N.Y. Apr. 21, 2016)

(Nathan, D.J.).

This is true even in the case of a mutual non-disparagement
clause.

g.g., Howard v. Don Coleman Advertising Inc., 16 Civ.

5060 (JLC), 2017 WL 773695 at *2 (S.D.N.Y. Feb. 28, 2017)
M.J.).

(Cott,

Thus, pursuant to Section 12 of the settlement agreement,

I modify the clause to include a carve-out for truthful statements about plaintiffs' experience litigating their case.
The settlement agreement also provides that, after
deduction of out-of-pocket costs, one-third of the total settlement amount will be paid to plaintiffs' counsel as a contingency
fee.

Contingency fees of one-third in FLSA cases are routinely

approved in this circuit.

Santos v. EL Tepeyac Butcher Shop

Inc., 15 Civ. 814 (RA), 2015 WL 9077172 at *3 (S.D.N.Y. Dec. 15,
2015)

(Abrams, D.J.)

(" [C)ourts in this District have declined to

award more than one third of the net settlement amount as attorney's fees except in extraordinary circumstances."), citing Zhang
v. Lin Kumo Japanese Rest. Inc., 13 Civ. 6667 (PAE), 2015 WL
5122530 at *4 (S.D.N.Y. Aug. 31, 2015)

(Engelmayer, D.J.) and

Thornhill v. CVS Pharm., Inc., 13 Civ. 507 (JMF), 2014 WL 1100135
at *3 (S.D.N.Y. Mar. 20, 2014)

(Furman, D.J.); Rangel v. 639

Grand St. Meat & Produce Corp., No. 13 CV 3234 (LB), 2013 WL
11

5308277 at *1 (E.D.N.Y. Sept. 19, 2013)

(approving attorneys'

fees of one-third of FLSA settlement amount, plus costs, pursuant
to plaintiff's retainer agreement, and noting that such a fee
arrangement "is routinely approved by courts in this Circuit");
Febus v. Guardian First Funding Grp., LLC, 870 F. Supp. 2d 337,
340 (S.D.N.Y. 2012)

(Stein, D.J.)

("[A]

fee that is one-third of

the fund is typical" in FLSA cases); accord Calle v. Elite
Specialty Coatings Plus, Inc., No. 13-CV-6126 (NGG) (VMS), 2014 WL
6621081 at *3 (E.D.N.Y. Nov. 21, 2014); Palacio v. E*TRADE Fin.
Corp., 10 Civ. 4030 (LAP) (DCF), 2012 WL 2384419 at *6-*7 (S.D.N.Y. June 22, 2012)

(Freeman, M.J.).

Accordingly, for all the foregoing reasons, I approve
the settlement in this matter.

In light of the settlement,

plaintiffs' claims are dismissed with prejudice and without
costs.
Dated:

New York, New York
August 2, 2017
SO ORDERED

HENRY PI
United States Magistrate Judge
Copies transmitted to:
All Counsel of Record

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