Leon-Martinez et al v. Central Cafe & Deli et al

Filing 42

OPINION AND ORDER: This matter is before me on the parties' joint application to approve their settlement (Letter from Thomas J. Lamadrid, Esq., to the undersigned, dated Mar. 29, 2017 (Docket Item ("D.I.") 37); Letter from Thom as J. Lamadrid, Esq., to the undersigned, dated May 12, 2017 (D.I. 40) ("Lamadrid May 12 Letter")). All parties have consented to my exercising plenary jurisdiction pursuant to 28 U.S.C. § 636(c); as further set forth herein. Accordingly, for all the foregoing reasons, I approve the settlement in this matter. In light of the settlement, the action is dismissed with prejudice and without costs. The Clerk of the Court is respectfully requested to mark this matter closed. (Signed by Magistrate Judge Henry B. Pitman on 5/22/2017) (mro)

USDCSDNY
DOCUMENT
ELECTRONICALLY FILED

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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DOC#:

; f DATE FIL-E-<D-:-5~/a-~-/-9_0_\--,-

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CARLOS LEON-MARTINEZ, Himself
and on behalf of all others
similarly situated, et al.,

15 Civ. 7942

(HBP)

Plaintiffs,
OPINION
AND ORDER

-againstCENTRAL CAFE & DELI, Jointly
and severally, et al.,
Defendants.

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PITMAN, United States Magistrate Judge:

This matter is before me on the parties'

joint applica-

tion to approve their settlement (Letter from Thomas J. Lamadrid,
Esq., to the undersigned, dated Mar. 29, 2017
("D.I.")

(Docket Item

37); Letter from Thomas J. Lamadrid, Esq., to the

undersigned, dated May 12, 2017
Letter")).

(D.I. 40)

("Lamadrid May 12

All parties have consented to my exercising plenary

jurisdiction pursuant to 28 U.S.C. § 636(c).
This is an action brought by four individuals who were
formerly employed by defendants as restaurant workers and seeks
allegedly unpaid wages, overtime premium pay and spread-of-hours
pay.
Act

The action is brought pursuant to the Fair Labor Standards
(the "FLSA"), 29 U.S.C. §§ 201

et~.,

and the New York

Labor Law.

Plaintiffs also assert claims based on defendants'

alleged failure to maintain certain payroll records and to
provide certain notices as required by the Wage Theft Prevention
Act (the "WTPA") .

Although the action was commenced as a collec-

tive action with respect to the FLSA claim, the parties reached
the proposed settlement prior to the matter being conditionally
certified as a collective action.

Thus, the only parties to the

settlement are the named plaintiffs and the named defendants.
Defendants deny plaintiffs' allegations.

Defendants

claim that they maintained weekly payroll reports for all plaintiffs, except Lopez, that show the number of hours plaintiffs
worked each week, their earnings for the first forty hours worked
at the employees' regular rate, their earnings for overtime
worked at the employees' overtime rate, spread-of-hours pay,
deductions for meals, additions for uniforms and bonus/adjustment
entries.

Defendants also claim that plaintiffs signed most of

their weekly payroll reports.
I held a lengthy settlement conference on May 31, 2016
that was attended by the parties and their counsel.

There was a

protracted discussion of the strengths and weaknesses of the
parties' respective positions; however, the parties were not able
to come to a settlement at the conference.

The parties did agree

to resolve the dispute in August 2016 for a total settlement
2

amount of $18,000.00, to be distributed among the plaintiffs on a
pro rata basis based on the duration of each plaintiff's employment with defendants.

The parties have also agreed that $642.44

of the settlement figure will be allocated to reimburse plaintiffs' counsel for their out-of-pocket costs, $5,785.85

(or one-

third) of the remaining $17,357.56 will be paid to plaintiffs'
counsel and the balance will be paid to plaintiffs.

Each plain-

tiff's length of employment, the amount claimed by each
plaintiff 1 and the net amount that will be received by each
plaintiff after deduction for legal fees and costs are as follows:

Plaintiff

Length of
Employment

Amount
Claimed

Net
Settlement
Amount

Fernando Meza Ramos

6 years

$104,970.00

$3,967.44

Carlos Leon-Martinez

6 years

$101,506.00

$3,967.44

Victor Bautista
Sanchez

4 years

$55,070.00

$2,644.96

Jose Antonio Lopez

1. 5 years

$75,153.00

$991.86

By Opinion and Order dated April 13, 2017, I declined
to approve the settlement agreement (D.I. 39) . 2

First, because

The amount claimed by each plaintiff includes the allegedly
unpaid wages, liquidated damages and statutory damages for
alleged violations of the WTPA.
1

I also refused to approve the agreement on December 21,
2016 (Amended Order, dated Dec. 21, 2016 (D.I. 36)).
2

3

the settlement proceeds were allocated based on the length of
each plaintiff's employment rather than the amount of damages
each plaintiff claimed, the allocation of the settlement proceeds
seemed irrational.

Second, the settlement agreement contained

provisions prohibiting plaintiffs from assisting in a lawsuit or
other proceeding against defendants and barring plaintiffs from
ever working for defendants or their parents, subsidiaries,
affiliates, successors, assigns or divisions.

I ordered the

parties to eliminate these provisions from their settlement
agreement.
The parties have submitted a renewed application to
approve an amended settlement agreement.

In accordance with my

previous Opinion and Order, counsel has now provided a rational
explanation for the allocation of the settlement proceeds.
Counsel has explained that the settlement proceeds will not be
distributed on the basis of each plaintiff's claimed damages
because counsel's damages calculation took place prior to discovery and, therefore, may not have been accurate.

Thus, all

parties agreed that the settlement proceeds would be distributed
on a pro rata basis based on the length of each plaintiff's
employment (Lamadrid May 12 Letter, at 1).

Counsel has also

stipulated to the elimination of the objectionable provisions
identified above.
4

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
(S.D.N.Y. Apr. 4, 2013)

(HB), 2013 WL 1401887 at *1

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

Beckman v. KeyBank, N.A., 293
(Ellis, M.J.), citing Lynn's Food

Stores, Inc. v. United States, supra,

679 F.2d at 1353-54.

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
5

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).

The settlement here satis-

fies these criteria.
First, although the settlement represents less than 15%
of each plaintiff's total claimed damages, that fact does not
render it deficient.

Plaintiffs' counsel has explained that

these damages were calculated prior to discovery and, therefore,
may not have been accurate.

Additionally, defendants' dire

financial condition justifies the settlement amount.

The corpo-

rate defendants do not have any assets, and defendant Chu has a
monthly net disposable income of only $650.00

(Letter from Jian

Hang, Esq., to the undersigned, dated Mar. 29, 2017

(D.I. 38),

Ex. A).
Second, the settlement will entirely avoid the burden,
expense and aggravation of litigation.
accuracy of defendants' time records.

Plaintiffs dispute the
Trial preparation would

probably require several depositions to explore these issues, and

6

the settlement avoids the necessity of conducting those depositions.
Third, the settlement will enable plaintiffs to avoid
the risk of litigation.

As noted above, defendants claim that

they maintained weekly payroll reports for each plaintiff, except
Lopez, that showed the number of hours plaintiffs worked each
week, their earnings for the first forty hours worked at the
employees' regular rate, their earnings for overtime worked at
the employees' overtime rate, spread-of-hours pay, deductions for
meals, additions for uniforms and bonus/adjustment entries.
Additionally, defendants claim that plaintiffs signed most of
these reports.

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)
(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 represents 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. ll-cv-05669 (BMC), 2012 WL 5874655 at *5 (E.D.N.y.

Nov. 2 0, 2012)

(" [W] hen a settlement assures immediate payment

of substantial amounts to class members, even if it means sacri7

ficing 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, I am confident that the settlement amounts are
reasonable based on their being agreed to by plaintiffs' counsel.
Plaintiffs' counsel was exceptionally well prepared at the
settlement conference and was fully familiar with the claims and
the pertinent legal and factual issues.

Given the exceptional

diligence and zeal with which plaintiffs' counsel represented
their clients, I am confident that the settlements are fair.
Fifth, there are no factors here that suggest the
existence of fraud or collusion.
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.
Inc., 15 Civ. 814
2015)

Santos v. EL Teoeyac Butcher Shop

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

(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
8

(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
at *3 (S.D.N.Y. Mar. 20, 2014)

(JMF), 2014 WL 1100135

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

Grand St. Meat & Produce Corp., No. 13 CV 3234
5308277 at *l (E.D.N.Y. Sept. 19, 2013)

(LB), 2013 WL

(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
y.

June 22, 2012)

(S.D.N.-

(Freeman, M. J.).

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

In light of the settlement, the

9

action is dismissed with prejudice and without costs.

The Clerk

of the Court is respectfully requested to mark this matter
closed.
Dated:

New York, New York
May 22, 2017
SO ORDERED

Copies transmitted to:
All Counsel of Record

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