Neri Flores et al v. Hill Country Chicken NY, LLC et al

Filing 45

OPINION AND ORDER: I approve the settlement in this matter. In light of the settlement, the action is dismissed with 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 5/23/2018) Copies Transmitted By Chambers. (ras)

.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SOTERO NELI FLORES and CORNELIO
GUERRERO, individually and on
behalf of others similarly
situated

-against-

..

SDCSDNY
OCUMEI\'T
'ELECTRONICALLY FILED
DOC#:
I
DATEFILED: s/Cxslil

-----------------------------------x

Plaintiffs,

.

J

16 Civ. 2916 (HBP)
OPINION
AND ORDER

HILL COUNTRY CHICKEN NY, LLC
d/b/a HILL COUNTRY CHICKEN and
MARC GLOSSERMAN,
Defendants.

-----------------------------------x
PITMAN, United States Magistrate Judge:

This matter is before me on the parties' joint application to approve their settlement (Fourth Revised Proposed Settlement Agreement ("Proposed Settlement Agreement"), annexed as Ex.
1 to Letter of Joshua S. Androphy, Esq., to the undersigned,
dated May 2, 2018

(Docket Item ("D. I.")

44)

("Androphy Letter")).

All parties have consented to my exercising plenary jurisdiction
pursuant to 28 U.S.C.

§

636(c).

This is an action brought by two individuals who worked
at defendants' restaurant; plaintiff Sotero Neli Flores worked
for defendants from approximately August 5, 2013 through approximately January 24, 2016 and plaintiff Cornelio Guerrero worked

for defendants beginning in approximately November 2013 until
approximately February 12, 2016 (Complaint dated April 19, 2016
(D. I. 1)

("Compl. ")

<JI<JI

36, 61).

Although they were employed as

delivery workers, each maintains that he spent more than 20
percent of his workday performing non-tipped work (Compl. ~~ 39,
63.

Plaintiffs brought this action under the Fair Labor Stan-

dards Act

("FLSA"), 29 U.S.C. §§ 201 et~., and the New York

Labor Law ("NYLL''), claiming that they were paid less than the
minimum wage and did not receive all the overtime premium pay to
which they were entitled.

Specifically, plaintiffs assert that

they were improperly paid at the reduced "tip credit'' rate,
despite the facts that (1) defendants did not provide notice
required by law and more than twenty percent of plaintiffs' time
was spent doing non-tipped work (Compl.

~~

39, 49-57,

63, 73-82).

Plaintiffs also assert claims based on defendants' alleged
failure to maintain certain payroll records, provide certain
notices as required by the NYLL and reimburse plaintiffs for the
cost of equipment that plaintiffs were required to use during
their employment.
Plaintiffs' total alleged damages, exclusive of prejudgment interest and attorney's fees and costs, are $49,064.45.
Of this amount, Flores claims that he is owed $19,466.00, and

2

Guerrero claims that he is owed $29,598.45. 1
figures,

Using these damages

Flores's pro rata share of the total damages claimed is

approximately 39.7% and Guerrero's is approximately 60.3%.
Defendants deny plaintiffs' claims.

Defendants assert

that plaintiffs were tipped deliverymen who performed tip work
almost exclusively each day.

Defendants argue that they lawfully

paid plaintiffs at the reduced tip credit rate and that, in any
event, in recent years they began plaintiffs at the full minimum
wage rate.

Defendants maintain that plaintiffs did not spend any

of their own money on tools of the trade and that they complied
with notice requirements under NYLL at all times.
This is the fourth time that the parties have sought
judicial approval of a proposed settlement.

I rejected the

parties' previous proposed settlement agreements on the grounds
that (1) the parties failed to provide sufficient information to
enable me to determine whether both the total amount of the
settlement and each plaintiff's share of the settlement were fair
and reasonable and (2) the proposed agreements contained imper-

1

Flores's damages include $7,790.50 in unpaid wages and
overtime pay, $7,790.50 in liquidated damages, $2,500.00 in
statutory penalties and $1,385.00 for reimbursement for tools of
the trade.
Guerrero's damages include of $10,174.23 in unpaid
wages and overtime pay, $10,174.23 in liquidated damages,
$10,000.00 in statutory penalties and $1,750.00 for reimbursement
for tools of the trade.
3

missible provisions, including general releases that were not
truly mutual.

On May 2, 2018, the parties submitted the proposed

settlement agreement currently before me, claiming to have
revised it in accordance with my most recent Opinion and Order in
this matter, dated April 2, 2018
undersigned, dated Apr. 2, 2018

(Opinion and Order of the
(D.I. 43)).

Because the parties

reached a settlement after a settlement conference had been
scheduled but before it was actually held, my knowledge of the
underlying facts and the justification for the settlement is
limited to counsel's letters in advance of the settlement conference and the representations in the letter submitted in support
of the settlement.
Under the proposed settlement agreement, defendants
agree to pay plaintiffs $30,000.00 in full and final satisfaction
of plaintiffs' claims.

The parties also agree that plaintiffs'

counsel will receive $10,600.00 of the settlement fund for
attorney's fees and costs.

The amount claimed by each plaintiff,

exclusive of pre-judgment interest, and the net amount that will
be received by each after deduction of legal fees and costs are
as follows:

4

Plaintiff

Amount
Claimed

Sotero Neli Flores

$19,466.00

$8,000.00

Cornelio Guerrero

$29,598.45

$11,400.00

Total

$49,064.45

Net Settlement
Amount

$19,400.00

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,

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

(Gorenstein, M.J.)

948 F. Supp.

(internal quota-

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:

5

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.
(internal quotation marks omitted).

The settlement here satis-

fies these criteria.
First, plaintiffs total settlement, after deduction of
fees and costs, represents approximately 39.5% of their total
alleged damages, exclusive of pre-judgment interest.

Defendants

dispute that plaintiffs spent a substantial portion of their
workday performing non-tipped duties and that they did not
provide plaintiffs proper notice of the tip-credit provision.
Defendants assert that plaintiffs were paid their full wages.

As

discussed in more detail below, given the risks these issues
present, the settlement amount is reasonable.
Second, the settlement will entirely avoid the expense
and aggravation of litigation.

As noted above, defendants

dispute that plaintiffs performed substantial non-tipped duties
and plaintiffs do not have any documentary evidence supporting
their contention.

Thus, trial preparation would likely require

6

depositions to explore this issue.

The settlement avoids the

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

To prevail on their tip-credit and

overtime claims, plaintiffs will have to establish that they
spent more than 20 percent of their work day performing tasks for
which they did not receive tips and that they were entitled to
overtime premium pay.

Given the lack of documentary evidence

supporting plaintiffs' positions and .the fact that plaintiffs
bear the burden of proof, it is uncertain whether, or how much,
plaintiffs would recover at trial.

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 uncertainties the class faces . . . . "

(internal quotation marks omit-

ted)), 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 substantial amounts to class members, even if it means
sacrificing speculative payment of a hypothetically larger amount
7

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.

There is no evidence to the

contrary.
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 settlement fund will be distributed to plaintiffs
on a pro rata basis approximately identical to the proportion of
each plaintiff's individual claim to the total alleged damages.
Flores's claimed pro rata share of the total damages alleged,
exclusive of pre-judgment interest, is approximately 39.40% and
Guerrero's is 60.33%.

Under the settlement agreement, Flores

will receive approximately 41.24% of the settlement and Guerrero
will receive 58.76%.

Thus, plaintiffs will receive approximately

their claimed proportional share of potential damages.
The proposed settlement agreement also contains a
release (Proposed

Agreement~~

3(2), 5(a)).

8

Specifically, the

plaintiffs release the "Releasees" 2 from "any and all claims,
. suits or causes [of action]

known or unknown, suspected or

unsuspected, arising under the [FLSA]; arising under the [NYLL];
any other claims for alleged unpaid wages, remuneration, or
compensation .

. arising under federal,

state or local laws;

and/or claims for retaliation pursuant to the FLSA and/or the
NYLL"

(Proposed Settlement

Agreement~

5(a)).

Such a release,

although unlimited in duration, is permissible because it is
limited to wage-and-hour claims only.
Inc., 16 Civ. 7262
2017)

See Seek v. Dipna RX,

(PKC), 2017 WL 1906887 at *2 (S.D.N.Y. May 8,

(Castel, D. J.)

(noting that judges in this district have

approved FLSA settlements with language that released only
plaintiffs' claims "(1) relating to wages and hours, including
those under FLSA,

[NYLL]

. or common law;

(2) relating to

retaliation for protected activity concerning wages or hours
[and]

( [3]) asserted in the Action."); Yunda v. SAFI-G, Inc., 15

Civ. 8861 (HBP), 2017 WL 1608898 at *3 (S.D.N.Y. Apr. 28, 2017)

2

Under the terms of the proposed settlement agreement,
"Releasees" are "defendants and each and every one of their
divisions, affiliates, subsidiaries, parents, corporations und3er
common ownership or control, related business entities,
predecessors, successors, management companies, assigns,
insurers, officers, directors, trustees, employees, agents,
shareholders, members, owners, representatives, attorneys, and/or
fiduciaries, past, present or future" (Proposed Settlement
Agreement~ 5(a)).
9

(Pitman, M. J.)

(collecting cases) ; Santos v. Yellowstone Props. ,

Inc., 15 Civ. 3986 (PAE), 2016 WL 2757427 at *1, *3
10, 2016)

(Engelmayer, D.J.)

(S.D.N.Y. May

(approving release that included

both known and unknown claims and was limited to wage and hour
claims).
The proposed settlement agreement also contains a nonpublication clause (Proposed Settlement Agreement

~

10).

That

provision states, in pertinent part:
Plaintiffs, Plaintiffs' Counsel, Defendants, and Defendants' Counsel agree that they will not issue, send or
post, or cause to be issued, sent or posted, any press
release, posting, e-mail or other verbal or written
communication to any electronic, print or digital
media, blogs, or social networking sites .
(collectively, the "Media") regarding the Litigation, the
Parties' settlement discussions, the existence and/or
terms of this Agreement, and/or the facts and events
leading up to the same
(Proposed Settlement Agreement

~

10).

If asked, the parties and

counsel "will simply state that the Litigation has been resolved
to the satisfaction of the parties"
ment

~

10).

(Proposed Settlement Agree-

The clause also provides that notwithstanding this

proscription, the parties and counsel shall not be prevented
"from discussing their experiences in this case with thirdparties other than the [M]edia"

(Proposed Settlement Agreement

10).

10

~

Judges in this district have found that similar provisions are permissible.

See Lola v. Skadden, Arps, Meagher, Slate

& Flom LLP, 13 Civ. 5008
Feb. 3, 2016)

(RJS), 2016 WL 922223 at *2 (S.D.N.Y.

(Sullivan, D.J.); accord Flores v. Studio Castelano

Architect, P.C., 15 Civ. 9158
(S.D.N.Y. Oct. 2, 2017)

(TPG), 2017 WL 4417697 at *3

(Griesa, D.J.); Ramirez v. Greenside

Corp., 16 Civ. 729 (HBP), 2017 WL 880878 at *2
2017)

(Pitman, M.J.).

(S.D.N.Y. Mar. 3,

In Lola v. Skadden, Arps, Slate, Meagher &

Flom LLP, supra, 2016 WL 922223 at *2, Judge Sullivan found
permissible a non-disparagement clause that did not "unduly
restrict plaintiff's ability to discuss the settlement" because
the settlement was available on the public docket and the plaintiff was "free to decline commenting on the case in response to
any future inquiries by the press or other-wise."

See Flores v.

Studia Castelano Architect, P.C., supra, 2017 WL 4417697 at *3
(finding non-disclosure provision permissible where it had "none
of the hallmarks of the overly-broad provisions rejected by
courts in this Circuit, such as an all-encompassing non-disparagement clause," citing Ramirez v. Greenside Corp., supra, 2017
WL 880878 at *2 (S.D.N.Y. Mar. 3, 2017)

(Pitman, M.J.)).

Judge

Sullivan also found it significant that the non-disclosure clause
was the result "of fair bargaining between well-represented

11

parties and embodies reasonable compromise."

Lola v. Skadden,

Arps, Meagher, Slate & Flom LLP, supra, 2016 WL 922223 at *2.
Similar considerations here also lead to the conclusion
that the non-disclosure clause in the proposed settlement agreement does not conflict with the FLSA's remedial purposes.

The

settlement agreement will be available on the public docket to
anyone with an interest in reading it.

Plaintiffs are free to

decline commenting on the case if members of the press should
inquire (Proposed Settlement Agreement

~

10).

In addition, the

clause specifically permits plaintiffs to make= truthful statements about their experiences litigating their claims.

See

Flores v. Studio Castelano Architect, P.C., supra, 2017 WL
4417697 at *3 (finding that one of the "hallmarks" of an impermissible non-disclosure provision is an "all-encompassing nondisparagement clause").
Finally, the proposed settlement agreement allocates
$10,600.00 of the total settlement to plaintiffs' counsel; this
amount includes $10,200.00 for attorney's fees, or approximately
one-third of the settlement amount, plus $400.00 in costs.
Attorney's fees of one-third in FLSA cases are routinely approved
in this Circuit.
814

Santos v. EL Tepeyac Butcher Shop Inc., 15 Civ.

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

D. J.)

("

(Abrams,

[C] ourts in this District have declined to award more
12

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
*4

(S.D.N.Y. Aug. 31, 2015)

(Engelmayer, D.J.) and Thornhill v.

CVS Pharm., Inc., 13 Civ. 507
(S.D.N.Y. Mar. 20, 2014)

(JMF), 2014 WL 1100135 at *3

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

Meat & Produce Corp., 13 CV 3234
(E.D.N.Y. Sep. 19, 2013)

(PAE), 2015 WL 5122530 at

(LB), 2013 WL 5308277 at *1

(approving attorney's fees of one-third

of FLSA settlement amount, plus costs, pursuant to plaintiff's
retainer agreement and noting that such an agreement "is routinely approved 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., 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)

(Freman, M.J.).
Accordingly, for all the foregoing reasons, I approve
the settlement in this matter.

In light of the settlement, the

13

action is dismissed with prejudice and without costs.

The Clerk

is respectfully requested to mark this matter closed.
Dated:

New York, New York
May 23, 2018
SO ORDERED

HEZ~~~
United States Magistrate Judge
Copies transmitted to:
All Counsel

14