Velandia v. Bruce et al
Filing
136
MEMORANDUM &ORDER: On February 6, 2018, the parties submitted a fully executed settlement agreement for the Court's approval, see Dkt. No. 131-1 (hereafter "Settlement"), along with a joint letter explaining their views on the fairne ss of the settlement, see Dkt. No. 131 (hereafter "Joint Letter"), a calculation of damages for each of the 32 Piaintiffs, see Dkt. No. 131-2, and a declaration requesting attorney's fees and explaining why Plaintiffs' counsel v iews the requested amount as reasonable, see Dkt. No. 131-3 (hereinafter "Pechman Dec."). (As further set forth in this Order.) In sum, the Court approves the settlement agreement and the settlement award. The Court further awards Plaintiffs' counsel attorney's fees and costs in the amount of $316,622.09. The Clerk of Court is directed to close the case. (Signed by Judge Alison J. Nathan on 7/12/2018) (cf)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Irwing Velandia et al.,
Plaintiffs,
16-cv-1799 (AJN)
-vSerendipity 3, Inc. et al.,
MEMORANDUM &
ORDER
Defendants.
ALISON J. NA THAN, District Judge:
On March 10, 2016, Plaintiff Irwing Velandia, on behalf of himself and all others
similarly situated, filed a complaint in the Southern District of New York alleging violations of
the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., New York Labor Law
("NYLL"), Art. 19 § 650 et seq., and the New York Wage Theft Prevention Act ("WTPA").
Dkt. No. 1. Velandia claimed that his employer, the restaurant Serendipity 3, failed to pay
legally required minimum wage and overtime pay, failed to give him required statements and
notifications, imposed an unlawful tip pool upon him, and required him to purchase uniforms
without maintenance pay or reimbursement.
On September 7, 2016, the Parties stipulated to preliminary certification of the FLSA
collective action and mailed a Court-approved notice to members of the putative collective
action. Dkt. No. 31. Thirty-two individuals became plaintiffs to the litigation. The parties
exchanged over six thousand pages of paper discovery; pmiicipated in settlement negotiations
before Magistrate Judge Andrew J. Peck; and submitted pretrial materials including a joint
pretrial report, proposed findings of fact and conclusions of law, motions in limine, and hundreds
of trial exhibits.
On January 5, 2018, during what was scheduled to be the final pretrial conference, the
parties informed the Court that they had reached a settlement. On February 6, 2018, the parties
submitted a fully executed settlement agreement for the Court's approval, see Dkt. No. 131-1
(hereafter "Settlement"), along with a joint letter explaining their views on the fairness of the
settlement, see Dkt. No. 131 (hereafter "Joint Letter"), a calculation of damages for each of the
32 Piaintiffs, see Dkt. No. 131-2, and a declaration requesting attorney's fees and explaining why
Plaintiffs' counsel views the requested amount as reasonable, see Dkt. No. 131-3 (hereinafter
"Pechman Dec.").
The settlement agreement provides that the Plaintiffs will receive a total settlement of
$975,000, which will be allocated proportionally based on the total damages to which each
Plaintiff would have been entitled if Plaintiffs had prevailed at trial. Settlement at 3, 4-5. It
further provides that named Plaintiff Irwing Velandia will receive an additional $10,000 service
award to be deducted from Plaintiffs' counsel's attorney's fees and costs. Settlement at 3. In
addition, the settlement agreement provides that Plaintiffs' counsel will receive $316,622.09 in
attorney's fees and costs. Settlement at 5. The settlement agreement also contains a release
provision, under which the Plaintiffs
unconditionally release and forever discharge Defendants ... from any and all
claims and causes of action for damages, salaries, wages, compensation, spread-ofhours pay, statutory damages, unlawful wage deductions, misappropriation of
gratuities, overtime wages, uniform pay, monetary relief, and any other benefits of
any kind, earnings, back pay, liquidated, statutory, and other damages, statutory
penalties, interest, attorneys' fees, and costs, for the Claims and any other claim
brought, or that could have been brought, in this action under the FLSA, the NYLL,
the WTPA, and/or any local, state, or federal wage statute, code, or ordinance ....
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Settlement at 6. Finally, the settlement agreement contains a non-disparagement provision,
under which the parties "agree that they will not disparage either verbally or in writing ... the
character, quality, or propriety of the person, personnel, or business operations of Defendants or
about Plaintiffs." Settlement at 7. However, the non-disparagement provision further states that
the parties are not precluded "from making truthful references either verbally or in writing to the
character, quality, or propriety of the person, personnel, or business operations of Defendants or
about Plaintiffs," nor are they precluded "from making truthful statements about their experience
in iitigating this action." Settlement at 7. For the following reasons, the Court approves the
settlement and award of attorney's fees and costs in full.
I.
Legal Standard
In order to serve the FLSA's purpose of ensuring "a fair day's pay for a fair day's work,"
settlements in FLSA cases must be approved by a court or by the Department of Labor. Cheeks
v. Freeport Pancake House, Inc., 796 F.3d 199,206 (2d Cir. 2015) (quoting A.H. Phillips, Inc. v.
Walling, 324 U.S. 490, 493 (1945)). As a result of this requirement, the Plaintiffs' claims in this
case cannot be dismissed with prejudice until the Court determines that the settlement is "fair
and reasonable." Wolinsky v. Scholastic Inc., 900 F. Supp. 2d 332, 335 (S.D.N.Y. 2012). A "fair
and reasonable" settlement is one that "reflects a reasonable compromise of disputed issues
rather than a mere waiver of statutory rights brought about by an employer's overreaching."
Mamani v. Licetti, No. 13-CV-7002 (KMW) (JCF), 2014 WL 2971050, at *1 (S.D.N.Y. July 2,
2014) (quoting Lev. SITA Info. Networking Computing USA, Inc., No. 07-cv-0086 (JS) (MLO),
2008 WL 724155, at *1 (E.D.N.Y. Mar. 13, 2008)).
In order to evaluate the fairness of a proposed settlement, the parties must provide the
court with enough information to evaluate "the bona fides of the dispute." Id. (quoting Dees v.
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Hydradry, Inc., 706 F. Supp. 2d 1227, 1241 (M.D. Fla. 2010)). At minimum, this includes
information on "the nature of plaintiffs' claims, ... the litigation and negotiation process, the
employers' potential exposure both to plaintiffs and to any putative class, the bases of estimates
of plaintiffs' maximum possible recovery, the probability of plaintiffs' success on the merits, and
evidence supporting any requested fee award." Lopez v. Nights of Cabiria, LLC, 96 F. Supp. 3d
170, 176 (S.D.N.Y. 2015). The parties must articulate their remaining points of disagreement to
the Court. Mamani, 2014 WL 2971050, at *1. If they disagree over the calculation of wages
owed, they "must provide each party's estimate of the number of hours worked and the
applicable wage." Id. (citation omitted). The Court will also review a proposed award of
attorneys' fees to ensure that they are reasonable. Wolinsky, 900 F. Supp. 2d at 336.
II.
Discussion
For the reasons that follow, the Court concludes that the settlement agreement can be
affirmed in its entirety.
A.
The Settlement Amount Is Fair and Reasonable
In determining whether a settlement award is fair and reasonable, the Court must consider
the totality of the circumstances, including
( 1) the plaintiff's range of possible recovery; (2) the extent to which "the settlement
will enable the patties 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'slength bargaining between experienced counsel"; and (5) the possibility of fraud or
collusion.
Thornhill v. CVS Pharmacy, Inc., No. 13-cv-5507 (IMF), 2014 WL 1100135, at *2 (S.D.N.Y.
Mar. 20, 2014) (quoting Wolinsky, 900 F. Supp. 2d at 335). The Court begins its analysis of the
total settlement amount by comparing its size to that of Plaintiffs' potential recovery at trial. See
id at * 1-2 & n. l. The Plaintiffs represent that their "best day" damage calculations estimate that
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they would collectively be owed $1,105,734.95. Joint Letter at 3. In support of this number, the
Plaintiffs provide the underlying data used to calculate Plaintiffs' estimate of damages and the
total damages that could be awarded to each of the Plaintiffs. Dkt. No. 131-2. The lump sum
recovery of $975,000 thus represents 88% of Plaintiffs' best-case recovery. This discount on
Plaintiffs' claims is justified because the litigation presents significant risks. Defendants have
maintained throughout the litigation, for example, that they had no knowledge that the Plaintiffs
were tipping non-servers and that these payments were instead gifts given of Plaintiffs' own free
wiil. Joint Letter at 6. Defendants had also vigorously asserted that the Plaintiffs could not
recover for uniform maintenance because the uniforms fit within the "wash and wear" exception
to FLSA. Joint Letter at 7. In addition, settlement ensures that the Plaintiffs will not have to
expend additional resources at trial and will avoid having to take the stand and face crossexamination from defense counsel.
Procedurally, the parties negotiated at arm's length over the course of one and one-half
years. Attorneys for both parties are competent and experienced in wage and hour litigation and
engaged in repeated, vigorous settlement negotiations that continued up to the eve of trial. The
length of negotiations, the amount of work performed by the attorneys to further settlement
negotiations, and the fair award negotiated all confirm that there was no collusion or fraud in
reaching this settlement agreement.
For the reasons stated, the Court concludes that the settlement amount properly reflects
the range of possible recovery and the risks and expenses of litigation. The Court is also
satisfied that an arms-length negotiation took place between experienced counsel. Accordingly,
the overall settlement amount of $975,000 is fair and reasonable.
B.
The Court Approves the Narrow Release Provision
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The Court concludes that the settlement agreement's release provision, which releases
Defendants only from liability to any wage and hour claims or other related claims that could
have been brought by the Plaintiffs as part of this action, 1 is sufficiently narrow to be approved.
"Courts in this District routinely reject release provisions that 'waive practically any possible
claim against the defendants, including unknown claims and claims that have no relationship
whatsoever to wage-and-hour issues."' Martinez v. Gulluoglu LLC, No. 15-cv-2727 (PAE),
2016 WL 206474, at *2 (S.D.N.Y. Jan. 15, 2016) (quoting Lopez, 96 F. Supp. 3d at 181).
However, "[t]he parties have every right lo 1:nler into a settlement that waives claims relating to
the existing suit in exchange for a settlement payment." Lopez, 96 F. Supp. 3d at 181; see also
Order, Hernandez v. McGee's Bar & Grill, Inc., No. 15-cv-6067 (FM) (S.D.N.Y. Aug. 23,
2016), Dkt. No. 57 (approving similar release provision). Additionally, no Plaintiff remains in
the employment of Serendipity 3, so the release provision could not have any effect on potential
claims accumulating in the future. Because the release provision is appropriately limited only to
claims that could have been brought with this litigation and pertain to wages, hours, and the
related subjects covered by FLSA and related state law, the Court approves the settlement with
the release provision in it as written.
C.
The Court Approves the Narrow Non-Disparagement Provision
The settlement agreement in this case contains a narrow non-disparagement provision
that prevents the parties from "disparag[ing] either verbally or in writing the character, quality,
or propriety of the person, personnel, or business operations of Defendants or about Plaintiffs"
1
As stated previously, the release provision applies only to "claims and causes of action for damages,
salaries, wages, compensation, spread-of-hours pay, statutory damages, unlawful wage deductions, misappropriation
of gratuities, overtime wages, uniform pay, monetary relief, and any other benefits of any kind, earnings, back pay,
liquidated, statutory, and other damages, statutory penalties, interest, attorneys' fees, and costs, for the Claims and
any other claim brought, or that could have been brought, in this action under the FLSA, the NYLL, the WTPA,
and/or any local, state, or federal wage statute, code, or ordinance." Settlement at 6.
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but allows the parties to "mak[ e] truthful references either verbally or in writing to the character,
quality, or propriety of the person, personnel, or business operations of Defendants or about
Plaintiffs," as well as "mak[ e] truthful statements about their experience in litigating this action."
Settlement at 7. The Court concludes that this provision is sufficiently narrow to be approved as
part of the settlement agreement. "As consideration for a settlement payment, plaintiffs may
contract away their right to say things that are insulting or calumnious about the defendants."
Lopez, 96 F. Supp. 3d at 180 n.65. However, non-disparagement provisions can be contrary to
public policy if they ''prevent the spread of information about PLSA actions to other workers
(both employees of Defendants and others), who can use that information to vindicate their
statutory rights." Gaspar v. Pers. Touch Moving, Inc., No. 13-cv-8187 (AJN), 2015 WL
7871036, at *3 (S.D.N.Y. Dec. 3, 2015). As a result, a non-disparagement provision is only
acceptable if it is "narrowly tailor[ ed] ... to allow Plaintiffs to discuss their litigation of th[ e]
case." Id.; accord Amaro v. Barbuto, LLC, No. 16-cv-1581 (AJN), 2017 WL 476730, at *3
(S.D.N.Y. Feb. 2, 2017).
Here, the parties have narrowly tailored the non-disparagement provision to prevent
either party from making insulting statements about the other while expressly providing that both
parties can discuss the litigation. Settlement at 7. As a result, the Court approves the settlement
agreement with the non-disparagement provision in it.
D.
The Request for Attorney's Fees Is Granted as Reasonable
The Court also concludes that the requested attorney's fees and costs is reasonable and
will therefore grant the request. Plaintiff's counsel requests $316,622.09 in attorney's fees and
costs, Settlement at 5, which represents 32% of the total settlement. Courts routinely award onethird of a settlement as a reasonable fee in FLSA cases. See Zhang v. Lin Kumo Japanese Rest.,
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Inc., No. 13-cv-6667(PAE), 2015 WL 5122530, at *4 (S.D.N.Y. Aug. 31, 2015) (collecting
cases).
Using the lodestar as a "cross check" further demonstrates the reasonableness of this
amount, although the Court must first reduce the lodestar because some of Plaintiffs' counsel
have requested hourly fees that are excessive. Plaintiffs' counsel states that the lodestar in this
case (not including costs and disbursements) is $286,060. Pechman Dec. at 8; Ex. 1 to Pechman
Dec. at 33. This amount reflects a billing rate of $600 per hour for Louis Pechman, founding
partner of Pechman Law Group; $400 for associate Lillian M. Marquez; $300 for associate
Vivianna Morales; $225 for associate Gregory Slotnick; $200 for associate Washcarina Martinez
Alonzo; and $100 for law clerk Christina Brito. Pechman Dec. at 8. The Court respectfully
concludes that the requested rates for Mr. Pechman and Ms. Marquez are excessive and will
reduce them in calculating the lodestar. The Court concludes that the rates for the other
attorneys for Plaintiffs are reasonable for this District. See Allende v. Unitech Design, Inc., 783
F. Supp. 2d 509, 514-15 (S.D.N.Y. 2011) (collecting cases on reasonable hourly rates).
First, an hourly rate of $600 per hour is excessive in a FLSA action, even for a senior
litigator with over 25 years of experience. As another court in this District recognized, "FLSA
litigators are rarely awarded over $450 per hour." Manley v. Midan Rest. Inc., No. 14-cv-1693
(HBP), 2017 WL 1155916, at* 11 (S.D.N.Y. Mar. 27, 2017) (collecting cases). In that case,
Magistrate Judge Pitman reduced the hourly rate for Mr. Pechman to $500. Id. at *11-12. Other
courts have reduced his rate to $400 per hour. See Cazarez v. Atl. Farm & Food Inc., No. 15-cv2666 (CBA) (RML), 2017 WL 3701687, at *7 (E.D.N.Y. May 31, 2017); Kahlil v. Original Old
Homestead Rest., Inc., 657 F. Supp. 2d 470, 475-76 (S.D.N.Y. 2009). This Court agrees that
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$500 per hour is an appropriate hourly rate for Mr. Pechman in this FLSA action and will reduce
the lodestar accordingly.
Second, the Court concludes that a rate of $400 per hour is an excessively high rate for an
associate in a FLSA action. Comis in this District routinely approve of an hourly rate for
associates between $200 and $300. Allende, 783 F. Supp. 2d at 514-15 (collecting cases).
Nothing in Ms. Marquez's experience suggests that a higher rate would be warranted. Ms.
Marquez graduated from law school in 2011 and served as a law clerk and staff attorney for
approximately five years. Pccl1man Dec. at 6. She has \Vorked for PLG for a little under t,vo
years. Pechman Dec. at 6-7. In this District, the range of fees for "employment law litigators
with approximately ten years' experience is between $250 per hour and $350 per hour." Wong v.
Hunda Glass Corp., No. 09-cv-4402 (RLE), 2010 WL 3452417, at *3 (S.D.N.Y. Sept. 1, 2010).
For this reason, in Cazarez, a court in the Eastern District reduced Ms. Marquez's hourly rate to
$250 per hour. 2017 WL 3701687, at *7. Consistent with rates approved of in this District, the
Comi will reduce Ms. Marquez's hourly rate to $300 per hour.
After the rates for Mr. Pechman and Ms. Marquez are reduced as described above, the
lodestar amount for this case is $268,580. See Pechman Dec. at 8 (listing the hours worked by
each attorney and the rate charged). The attorney's fees requested in this case thus represent a
lodestar multiplier of 1.2. This is a reasonable lodestar modifier. See Lizondro-Garcia v. Kefi
LLC, No. 12-cv-1906 (HBP), 2015 WL 4006896, at *10 (S.D.N.Y. July 1, 2015) ("[A] multiplier
near 2 should, in most cases, be sufficient compensation for the risk associated with contingent
fees in FLSA cases." (quoting Fujiwara v. Sushi Yasuda Ltd., 58 F. Supp. 3d 424,439 (S.D.N.Y.
2014)); see also Cortes v. New Creators, Inc., No. 15-cv-5680 (PAE), 2016 WL 3455383, at *9
(S.D.N.Y. June 20, 2016) (collecting cases and applying a multiplier of 1.24).
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Because the requested attorney's fees represent both a reasonable percentage of the
overall settlement award and a reasonable lodestar multiplier, the request for attorney's fees is
granted.
III.
Conclusion
In sum, the Court approves the settlement agreement and the settlement award. The
Court further awards Plaintiffs' counsel attorney's fees and costs in the amount of$316,622.09.
The Clerk of Court is directed to close the case.
SO ORDERED.
Dated: July l;t ,2018
New York, New York
ALISON J. NATHAN
United States District Judge
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