Sierra et al v. Mid City Gym and Tanning LLC et al

Filing 52

OPINION AND ORDER re: 49 LETTER addressed to Magistrate Judge Henry B. Pitman from Michael Faillace dated September 11, 2017 re: Fairness of Settlement. I approve the settlement in this matter. In light of the settlement, the action is dismissed w ith prejudice and without costs. The Clerk is respectfully requested to mark this matter closed, and as further set forth herein. (Signed by Magistrate Judge Henry B. Pitman on 10/25/2017) Copies Transferred By Chambers. (ras) Modified on 10/25/2017 (ras).

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DOCUIViE?-IT

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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SANTIAGO SIERRA,
16 Civ. 2892

(HBP)

Plaintiff,
OPINION
AND ORDER

-againstMID CITY GYM AND
TANNING LLC, et al.,
Defendants.

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PITMAN, United States Magistrate Judge:

This matter is before me on the parties'

joint

application to approve their settlement (Docket Item ("D.I.")
49).

The parties have consented to my exercising plenary

jurisdiction pursuant to 28 U.S.C.
The Honorable Kevin N.

§

646(c).

Fox, United States Magistrate

Judge, presided over a settlement conference among the parties
and, thus, my knowledge of the underlying facts and the
justification for settlement is limited to the complaint and
counsel's representations in their joint motion seeking
settlement approval

(Complaint, dated April 19, 2016

(D.I. 1);

Letter of Nolan Klein, Esq., to the undersigned, dated Aug. 18,
2017

(D.I. 47) ("Klein Letter")).

I

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t

Plaintiff formerly worked at defendants' gym and
tanning center, where his duties included maintaining and
repairing exercise equipment and keeping the facility clean.
Plaintiff brings this action under the Fair Labor Standards Act
(the "FLSA"), 29 U.S.C.

§§

201 et al., and the New York Labor Law

(the "NYLL"), and seeks recovery for allegedly unpaid wages and
overtime pay.

Plaintiff also asserts claims based on defendants'

failure to provide certain notice and wage statements as required
by the NYLL and defendants' failure to pay "spread-of-hours" pay.
Plaintiff brought this action as a collective action, but reached
the proposed settlement before conditional certification.
Plaintiff was employed by defendants beginning in
approximately April 2010 through approximately April 2016
Letter, Ex. 2).

(Klein

Plaintiff alleges that he regularly worked

approximately 60 hours per week throughout his employment, but
that defendants failed to compensate him for the overtime hours
that he worked.

Furthermore, plaintiff alleges that he was paid

a fixed salary that was below federal and state mandated minimum
wages.

Plaintiff claims that he is entitled to $30,537.23,

exclusive of liquidated damages, penalties for certain statutory
violations and interest.

If liquidated damages,

2

statutory

penalties and interest are included in the calculation, plaintiff
claims that his total damages are approximately $98,465.39.
Defendants deny plaintiff's allegations.

1

Defendants

dispute the method by which plaintiff alleges he was paid;
defendants contend that they paid plaintiff at an appropriate
hourly rate that had been agreed upon when plaintiff was hired.
Furthermore, defendants argue that because their gym is a small
establishment with only one location, they may not have
sufficient funds to satisfy a potentially greater judgment that
plaintiff might receive at trial,

should he prevail on all or

some of his claims.
The parties have agreed to a total settlement in the
amount of $50,000.00

(Klein Letter, Ex. 1)

also agreed that one-third of that amount,

The parties have
$16,666.67, will be

paid to plaintiff's counsel to reimburse counsel's out-of-pocket
expenses and for attorney's fees.

2

Court approval of an FLSA settlement is appropriate
1

Plaintiff actually calculates total potential recoverable
damages and interest to be $116,596.39.
However, to reach this
sum, plaintiff assumes that he can recover liquidated damages
under both the FLSA and the NYLL.
This assumption is wrong as a
matter of law.
Chowdhurry v. Hamza Express Food Corp., 666 F.
App'x 59, 60-61 (2d Cir. 2016).
Correcting this error in
plaintiff's damages calculations reduces plaintiff's total
potentially recoverable damages by approximately $18,131.00.
2

The parties do not indicate what out-of-pocket expenses,
if any, plaintiff's counsel has incurred.
3

"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,
(S.D.N.Y. Apr.

12 Civ.

4, 2013)

(Baer,

960

(HB),

D.J.)

2013 WL 1401887 at *1

(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."
2d 362, 365

Lliquichuzhca v. Cinema 60, LLC,

(S.O.N.Y. 2013)

tion marks omitted).
Supp. 2d 332,

335

(Gorenstein, M.J.)

948 F. Supp.

(internal quota-

In Wolinsky v. Scholastic Inc.,

(S.D.N.Y.

900 F.

2012), the Honorable Jesse M.

United States District Judge,

Furman,

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 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.

4

(internal quotation marks omitted).

The settlement here satis-

fies these criteria.
First, although the net recovery to plaintiff represents approximately 33.9% of his total potentially recoverable
damages, plaintiff's net recovery exceeds the amount of unpaid
wages, overtime pay and spread-of-hour pay that plaintiff has
alleged, exclusive of liquidated damages, penalties and interMoreover, defendants dispute

ests, by approximately $3,000.00.

the method by which plaintiff alleges he was paid and plaintiff's
entitlement to unpaid wages and overtime pay.

In addition,

defendants warn that they simply do not generate the income
necessary to satisfy a potentially larger award of damages,
creating a real possibility that plaintiff would be unable to
collect a post-trial judgment.

As discussed in greater detail

below, given the risk these issues present at trial, the amount
is reasonable.
Second, the settlement will entirely avoid the burden,
expense and aggravation of litigation.

The settlement was

reached prior to any extensive documentary discovery, depositions
or dispositive motions.

The settlement obviates the burden of

addressing these tasks.
Third, the settlement will enable plaintiffs to avoid
the risks of litigation.

As noted above, defendants argue that

s

plaintiff was compensated appropriately.

In addition, defendants

claim that there is a serious risk that they will be unable to
satisfy any potentially larger judgment that plaintiff might be
awarded at trial.

Thus, how much, or whether, plaintiffs would

recover at trial is far from certain.
Pizza, LLC, No. 09-CV-2941
Jan. 16, 2015)

(Report

&

(SLT)

See Bodon v. Domino's

2015 WL 588656 at *6 (E.D.N.Y.

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
uncertainties the class faces

"

(internal quotation marks

omitted)), adopted sub nom . .Q_y, Bodon v.
2015 WL 588680
Health Plan,

Domino's Pizza,

Inc.,

(E.D.N.Y. Feb. 11, 2015); Massiah v. MetroPlus

Inc., No. ll-cv-05669

(E.D.N.Y. Nov. 20, 2012)

(BMC), 2012 WL 5874655 at *5

("[W]hen a settlement assures immediate

payment of substantial 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))
Fourth, counsel represents that the settlement is the
product of arm's-length bargaining between experienced counsel
and that counsel advocated zealously on behalf of their respective clients during negotiations.
6

Fifth,

there are no factors here that suggest the

existence of fraud.

Counsel represents that the settlement was

agreed upon after extensive negotiations between the parties'
attorneys.
The proposed settlement also contains a release
Letter,

Ex.

1

~

3).

(Klein

It provides that plaintiff releases defen-

dants 3 from "any and all charges, complaints, claims, causes of
action,

. which [p]laintiff at any time has, had,

claimed to have against

claims, or

[d]efendants relating specifically to the

claims in the Litigation that have occurred as of the Effective
Date of this Agreement"

(Klein Letter, Ex.

1

Defendants

3).

~

also agree to release plaintiff "from any and all known claims,
and liabilities of any kind that they have,
have

[had]," relating to the action

had or claimed to

(Klein Letter,

Such a release, although unlimited in duration,

Ex.

1

~

3).

is permissible

because it is limited to claims relating to wage and hour issues.
See

~.g.,

Yunda v.

1608898 at *3

SAFI-G,

Inc.,

(S.D.N.Y. Apr.

Yellowstone Props.,

Inc.,

15 Civ.

28,

2017)

15 Civ.

3986

8861

(HBP),

2017 WL

(Pitman, M.J.); Santos v.
(PAE),

2016 WL 2757427 at

Under the terms of the provision, plaintiff also agrees to
release defendants' "heirs, successors, assigns, affiliates,
parent organizations, subsidiaries, directors, owners,
shareholders, members, agents, attorneys, legal representatives,
and managers" (Klein Letter, Ex. l~ 3).
3

7

*1, *3

(S.D.N.Y. May 10, 2016)

(Engelmayer, D.J.)

(approving

release that included both known and unknown claims but was
limited to wage and hour claims); Hyun v. Ippudo USA Holdings,
Civ. 8706 (AJN), 2016 WL 1222347 at *3-*4
2016)

(Nathan,

D. J.)

14

(S.D.N.Y. Mar. 24,

(approving release that included both known

and unknown claims and claims through the date of the settlement
that was limited to wage and hour issues; rejecting other release
that included both known and unknown claims and claims through
the date of the settlement that was not limited to wage and hour
issues); cf. Alvarez v. Michael Anthony George Constr. Corp., No.
11 CV 1012
2015)

(DRH) (AKT), 2015 WL 10353124 at *1

(E.D.N.Y. Aug. 27,

(rejecting release of all claims "whether known or unknown,

arising up to and as of the date of the execution of this Agreement" because it included "the release of claims unrelated to
wage and hour issues"
Lopez v.
2016)

(internal quotation marks omitted)); cf.

Poko-St. Ann L.P.,

(Moses, M.J)

176 F. Supp. 3d 340, 344

(S.D.N.Y.

(rejecting a general release that released a

"long list" of entities and persons related to defendants from
"every imaginable claim") .
Finally, the settlement agreement provides that onethird (or 33.3%) of the settlement fund will be paid to plaintiffs' counsel to reimburse counsel's out-of-pocket expenses and
as contingency fees.

Contingency fees of one-third in FLSA cases
8

are routinely approved in this Circuit.
Butcher Shop Inc.,

15 Civ. 814

(S.D.N.Y. Dec. 15, 2015)

Santos v. EL Tepeyac

(RA), 2015 WL 9077172 at *3

(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.
2015)

6667

(PAE), 2015 WL 5122530 at *4

(Engelmayer,

Civ. 507

D.J.)

and Thornhill v. CVS Pharm.,

(JMF), 2014 WL 1100135 at *3

(Furman, D.J.); Rangel v.
13 CV 3234

Inc.,

13

(S.D.N.Y. Mar. 20, 2014)

639 Grand St. Meat & Produce Corp., No.

(LB), 2013 WL 5308277 at *l

(approving attorneys'

(S.D.N.Y. Aug. 31,

(E.D.N. Y. Sep. 19, 2013)

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,
6126

(NGG) (VMS), 2014 WL 6621081 at *3

(E.D.N.Y. Nov. 21, 2014);

Palacio v. E*TRADE Fin. Corp., 10 Civ. 4030
2384419 at *6-*7

(S.D.N.Y. June 22, 2012)

9

Inc., No. 13-CV-

(LAP) (DCF), 2012 WL

(Freeman, M.J.).

Accordingly,

for all the foregoing reasons,

the settlement in this matter.

I approve

In light of the settlement, the

action is dismissed with prejudice and without costs.

The Clerk

is respectfully requested to mark this matter closed.
Dated:

New York, New York
October 25, 2017
SO ORDERED

H~t7mzN~

United States Magistrate Judge
Copies transmitted to:
All Counsel

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