Castillo Ortiz et al v. My Bellys Playlist LLC et al

Filing 45

OPINION AND ORDER. 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 is respectfully requested to mark this matter closed. SO ORDERED. (Signed by Magistrate Judge Henry B. Pitman on 4/18/18) Copies transmitted to: All Counsel. (yv)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

-----------------------------------x
TRANQUILLINO ORTIZ, et al.,
Plaintiffs,

16 Civ. 2924

(HBP)

OPINION
AND ORDER

-againstMY BELLY'S PLAYLIST LLC, et. al.,
Defendants.

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

Plaintiffs commenced this action pursuant to the Fair
Labor Standards Act (the "FLSA"), 29 U.S.C.

§§

201 et

.§..llil.,

and

the New York Labor Law (the "NYLL") to recover unpaid minimum
wage, overtime premium pay and spread-of-hours pay.

Plaintiffs

also asserted claims that defendants failed to keep certain
records, provide certain notices and reimburse plaintiffs for
equipment that they purchased in connection with their employment.

Plaintiffs brought the action as a collective action

pursuant to 29 U.S.C.

§

216(b) with respect to the FLSA claims,

but the parties reached a settlement prior to the matter being
conditionally certified.

The matter is currently before me on

the parties' joint application to approve a proposed settlement
agreement that they have reached (Proposed Settlement Agreement,
annexed as Ex. 1 to Letter of Shawn Clark, Esq., to the under-

signed, dated Dec. 29, 2017

(Docket Item ("D.I.")

44)).

The

parties have consented to my exercising plenary jurisdiction
pursuant to 28 U.S.C. § 636 (c).
Plaintiffs are three individuals who were employees at
defendants' sandwich shop and catering service; they were listed
on defendants' payrolls as deliverymen, but, as described in
greater detail below, they contend that this job title does not
accurately describe their actual duties.

Plaintiffs were em-

ployed by defendants for varying lengths of time between approximately February 2015 and February 2016. 1

Plaintiffs claim that

defendants paid them below minimum wage, and that defendants
deducted tips from their wages despite the fact that they were
not entitled to do so.

Specifically, plaintiffs argue that they

spent more than 20% of their workday performing non-tipped, nondelivery duties, such as preparing food,
with supplies and cleaning.

stocking the restaurant

Accordingly, plaintiffs assert that

defendants were not entitled to pay them at the reduced "tip
credit" rate.

Plaintiffs further argue that even if defendants

were entitled to pay them at the tip credit rate, defendants

1

Plaintiff Tranquilino Ortiz was employed by defendants from
approximately February 2015 through February 15, 2016, plaintiff
Fernando Flores was employed from approximately September 2015
through February 15, 2016 and plaintiff Velasquez was employed
from February 2015 through approximately July 2015.
2

still violated the FLSA because their hourly wages were less than
the proper tip credit rate.

Plaintiffs also claim that they

consistently worked over 40 hours per week, but did not receive
any overtime premium pay.

Plaintiffs' total alleged damages,

exclusive of pre-judgment interest and attorney's fees and costs,
are $55,218.92. 2

In particular, Ortiz claims that he is owed a

total of $24,627.64, Flores claims a total of $13,749.51 and
Velasquez claims a total of $16,841.77. 3

Using these damages

figures, Ortiz's pro rata share of the total damages claimed is
44.6%, Flores's pro rata share is 24.9% and Velasquez's pro rata
share is 30.5%.
Defendants deny plaintiffs' claims.

Defendants assert

that plaintiffs were deliverymen who did not perform substantial
non-tipped duties.

In addition, defendants argue that they paid

plaintiffs correct and full wages under the FLSA and NYLL.

2

This amount includes plaintiffs' approximation of
$12,609.46 in unpaid minimum wages and overtime premium pay,
$12,609.46 in liquidated damages and $30,000 in statutory
damages.
Plaintiffs' damages calculations incorrectly state that
plaintiffs are entitled to $26,218.93, an amount more than double
the alleged unpaid minimum wages and overtime premium pay, in
liquidated damages.
The FLSA authorizes liquidated damages for
an amount "equal" to lost wages and/or overtime.
See 29 U.S.C. §
216 (c).
3

These amounts are exclusive of pre-judgment interest and
inclusive of liquidated damages, and have been adjusted to
correct plaintiffs' inaccurate calculation of liquidated damages.
3

This is not the first time that the parties have sought
judicial approval of a proposed settlement.

I rejected the

parties' previous proposed settlement agreement by Opinion and
Order dated October 16, 2017, because (1) the parties failed to
provide sufficient information to enable me to determine whether
the amount of the settlement fund allocated to each plaintiff was
fair and reasonable and (2) the agreement contained an impermissible provisions (a) prohibiting plaintiffs from reemployment
with defendants and (b) prohibiting plaintiffs from assisting in
any other wage and hour litigation against defendants
and Order of the undersigned, dated Oct. 16, 2017

(Opinion

(D.I. 36)).

On

December 29, 2017, the parties submitted the proposed settlement
agreement currently before me, claiming to have revised the
agreement in accordance with my October 16, 2017 Order.

Because

the parties reached a settlement prior to a settlement conference
being held in this matter, my knowledge of the underlying facts
and the justification for the settlement is limited to counsel's
representations in the letter submitted in support of the settlement.
Under the proposed settlement agreement, defendants
agree to pay plaintiffs $20,000.00 in full and final satisfaction
of plaintiffs' claims.

The parties also agree that plaintiffs'

counsel will receive $6,600.00 of the settlement fund for attor4

ney'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:
Net Settlement
Amount

Plaintiff

Amount
Claimed

Tranquillino Ortiz

$24,627.64

$5,976.40

Fernando Flores

$13,749.51

$3,336.60

Roberto Velasquez

$16,841.77

$4,087.00

Total

$55,218.92

$13,400.00

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
(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."

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

5

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

(Gorenstein, M.J.)

(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 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.
(internal quotation marks omitted).

The settlement here satis-

fies these criteria.
First, plaintiffs' total settlement, after deduction of
fees,

represents approximately 24.3% of their total alleged

damages, exclusive of pre-judgment interest.

Defendants dispute

that plaintiffs spent a substantial portion of their workday
performing non-tipped, non-delivery duties.

Further, defendants

assert that plaintiffs were paid their full wages and that
plaintiffs were not entitled to overtime premium pay.

As dis-

cussed in more detail below, given the risks these issues present, plaintiffs' settlement amount is reasonable.

6

Second, the settlement will entirely avoid the expense
and aggravation of litigation.

As noted above, defendants

dispute that plaintiffs performed substantial non-tipped duties,
worked over 40 hours per week and received wages at a rate below
the lawful tip credit rate.

In addition, plaintiffs do not have

any documentary evidence to support their claims.

Thus, trial

preparation would likely require depositions to explore these
issues.

The settlement avoids the necessity of conducting these

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

Plaintiffs will have to establish that

defendants failed to compensate them, that they performed substantial non-tipped duties and that they were entitled to overtime pay.

Given the lack of documentary evidence and the fact

that plaintiffs bear the burden of proof, it is uncertain
whether, or how much, plaintiff 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

II

(internal

quotation marks omitted)), adopted sub nom . .Qy, Bodon v. Domino's
7

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. 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 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 based on the proportion of each plaintiff's
individual claim to the total of all four plaintiff's claims.

In

light of number of hours worked by and the hourly rates paid to
each plaintiff, the allocation of the settlement fund is fair and
reasonable.

Cf. Fu v. Mee May Corp., 15 Civ. 4549 (HBP), 2017 WL

8

2172910 at *1-*2

(S.D.N.Y. Mar. 31, 2017)

(Pitman, M.J.)

(reject-

ing settlement agreement where no explanation provided for
allocation of settlement proceeds).
The parties have also agreed to a mutual general
release. 4

Judges in this Circuit have approved FLSA settlements

containing mutual general releases.
Bistro, 15 Civ. 327
5, 2015)

Souza v. 65 St. Marks

(JLC), 2015 WL 7271747 at *5 (S.D.N.Y. Nov.

(Cott, M.J.); accord Cionca v. Interactive Realty, LLC,

15 Civ. 5123 (BCM), 2016 WL 3440554 at *3-*4
2016)

(S.D.N.Y. June 10,

(Moses, M.J.); Lola v. Skadden, Arps, Meagher, Slate

LLP, 13 Civ. 5008
2016)

(RJS), 2016 WL 922223 at *2

(Sullivan, D.J.).

&

Flom

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

Accordingly, I find the release agreed

to by the parties permissible. 5
4

A general release is truly mutual and, thus, consistent
with the "primary remedial purpose'' of the FLSA where, as here,
plaintiffs receive a general release from all the persons and
entities to whom plaintiffs provide a general release.
Cheeks v.
Freeport Pancake House, Inc., 796 F.3d 199, 207; see Chowdhury v.
Brioni Am., Inc., 16 Civ. 344 (HBP), 2017 WL 5125535 at *3
(S.D.N.Y. Nov. 1, 2017) (Pitman, M.J.) (rejecting settlement
where general release was not "truly mutual" because plaintiffs
released "a broad array of persons and entities other than the
named defendants, including defendants' former, present and
future employees
." yet plaintiffs only received a release
from defendants' claims).
5

The parties have also agreed to remove two impermissible
provisions that were present in their previous proposed
settlement agreement:
(1) a provision barring plaintiffs from
reemployment with defendants and (2) a provision precluding
(continued ... )
9

Finally, the settlement provides that plaintiffs'
counsel will be awarded $6,600.00 as attorney's fees, which
constitutes less than one-third of the total settlement fund.
Contingency fees of one-third in FLSA cases are routinely approved in this Circuit.
15 Civ. 814

Santos v. EL Tepeyac Butcher Shop Inc.,

(RA), 2015 WL 9077172 at *3

(Abrams, D. J.)

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

(" [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
at *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.

Meat & Produce Corp., No. 13 CV 3234
(E.D.N.Y. Sept. 19, 2013)

(PAE), 2015 WL 5122530

639 Grand St.

(LB), 2013 WL 5308277 at *l

(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
(Stein, D. J.)

("[A]

(S.D.N.Y. 2012)

fee that is one-third of the fund is typical"

5

( • • • continued)
plaintiffs from assisting in other wage and hour litigation
against defendants.

10

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, the

action is dismissed with prejudice and without costs.

The Clerk

is respectfully requested to mark this matter closed.

Dated:

New York, New York
April 18, 2018
SO ORDERED

HENRY PITMAN
United States Magistrate Judge
Copies transmitted to:
All Counsel

11