Redwood et al v. Cassway Contracting Corp. et al

Filing 51

OPINION AND ORDER: 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. (Signed by Magistrate Judge Henry B. Pitman on 10/18/2017) (js) Modified on 10/19/2017 (js).

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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\ <. ECI'R0~'1CALLY FILED

JULIO REDWOOD et al.,
Plaintiffs,
OPINION
AND ORDER

-againstCASSWAY CONTRACTING CORP.,
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).

All parties have consented to my exercising plenary

jurisdiction pursuant to 28 U.S.C.

§

636(c).

Plaintiffs allege that they were jointly employed by
Cassway Contracting Corp.

( "Cassway") , a construction company,

and JS & JR Construction Corporation ("JS & JR"), a subcontractor of Cassway's.

1

1

Plaintiffs bring this action under the

According to plaintiffs, Cassway and JS & JR each
controlled certain aspects of their employment such that both
defendants exercised "formal control." For example, plaintiffs
received their salary from JS & JR, but signed into job sites as
Cassway employees using Cassway building ID cards.
Plaintiffs
also reported to Cassway and JS & JR foremen, depending on what
duties they were performing.
Both entities' foremen allegedly
had the power to direct or fire any worker on the job site.
See
(continued ... )

Fair Labor Standards Act

(the "FLSA"), 29 U.S.C. §§ 201

et~.,

and the New York Labor Law (the "NYLL"), and seek to recover
unpaid overtime premium pay.

Plaintiffs also assert claims based

on the defendants' alleged failure to provide certain notices and
statements as required by the NYLL.

Plaintiffs commenced this

action as a collective action, but reached a settlement before
conditional certification.
Defendants deny plaintiffs' allegations.

Cassway

argues that plaintiffs were employees of JS & JR, not Cassway.
Even if plaintiffs were its employees, Cassway argues that they
were exempt from the overtime premium pay provisions of the FLSA
and NYLL as executive, administrative, professional and/or highly
compensated employees. 2

JS & JR argues that plaintiffs were not

its "employees" within the meaning of the FLSA or the NYLL, and,
thus, are not entitled to overtime premium pay from it.

In

addition, JS & JR maintains that it kept detailed logs that
recorded plaintiffs' time worked on a daily and weekly basis, and
records of wages paid.

According to JS & JR, its records

1

( • • • continued)
generally Goldberg v. Whitaker House Co-op., Inc., 366 U.S. 28,
32 (1961) (setting forth the factors to be considered in
determining whether a person is an "employee" within the meaning
of the FLSA) .

2

Cassway also asserts a cross-claim against JS & JR,
alleging breach of contract with respect to 17 construction
agreements.
2

demonstrate that:
wage;

(1) plaintiffs were paid more than the minimum

(2) at least one plaintiff never worked over 40 hours in

one week and (3) to the extent that either plaintiff ever worked
over 40 hours in one week, they were compensated at 150% of their
regular hourly rate.
I held a lengthy settlement conference on November 22,
2016 that was attended by the parties and their counsel.

After a

protracted discussion of the strengths and weaknesses of the
parties' respective positions, the parties agreed to resolve the
dispute for a total settlement of $35,000.00

(Letter of Denise A.

Schulman, Esq., to the undersigned, dated Jan.
Ex. 1) . 3

6, 2017

(D.I. 49),

The agreement also provides that plaintiffs' counsel

will receive $762.10 to reimburse their out-of-pocket expenses
and $11,412.63 for attorneys' fees.

The amount claimed by each

plaintiff 4 and the net amount that will be received by each after
deduction of legal fees and costs are as follows:

3

Under the terms of the settlement agreement, JS & JR will
pay $30,000.00 of the total amount and Cassway will pay the
remaining $5,000.00.
The amount claimed by each plaintiff includes the
allegedly unpaid overtime premium compensation, liquidated
damages, and statutory damages for alleged violations of the
NYLL.
4

3

Plaintiff

Length of
Employment

Amount
Claimed

Net
Settlement
Amount

Julio Redwood

125 weeks

$55,000.00

$15,977.69

Eduardo Redwood

56 weeks

$23,346.67

$6,847.58

Total

181 weeks

$78,346.67

$22,825.27

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."
2d 362, 365

Lliguichuzhca v. Cinema 60, LLC,

(S.D.N.Y. 2013)

quotation marks omitted).
Supp. 2d 332, 335

(Gorenstein, M.J.)

948 F. Supp.

(internal

In Wolinsky v. Scholastic Inc.,

900 F.

(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
4

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

satisfies these criteria.
First, plaintiffs' net settlement represents
approximately 29.1% of their total alleged damages.
argues that plaintiffs are not employees.

Cassway

JS & JR argues that

its records show that at least one plaintiff never worked more
than 40 hours in a week, and that plaintiffs received overtime
premium pay when they were entitled to it.

As discussed in more

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

Cassway disputes that it employed

JS & JR disputes the number of hours plaintiffs

worked and claims to have detailed time and wage records that
support this contention.

Trial preparation would probably

require additional depositions to explore this issue.

The

settlement avoids the necessity of conducting these depositions.

5

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

Plaintiffs will have to establish that

Cassway exercised control over their employment in order for it
In addition, JS & JR disputes the number of

to be held liable.

hours plaintiffs worked, and apparently kept records of
plaintiffs' time worked and overtime wages paid.

Given the

documentary evidence and the fact that plaintiffs bear the burden
of proof, it is uncertain whether, or how much, plaintiffs would
recover at trial.
2941
&

See Bodon v. Domino's Pizza, LLC, No. 09-CV-

(SLT) 2015 WL 588656 at *6 (E.D.N.Y. Jan. 16, 2015)

Recommendation)

(Report

(" [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. 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
years down the road,

settlement is reasonable .

quotation marks omitted)).
6

"

(internal

Fourth, because I presided over the settlement
conference that immediately preceded plaintiffs' acceptance of
the settlement, I know that the settlement is the product of
arm's-length bargaining between experienced counsel.

Both

counsel represented their clients zealously at the settlement
conference.
Fifth, there are no factors here that suggest the
existence of fraud.

The material terms of the settlement were

reached at the settlement conference.

This fact further negates

the possibility of fraud or collusion.
The settlement agreement allocates approximately %70 of
the net settlement amount to plaintiff Julio Redwood and the
remaining 30% to plaintiff Eduardo Redwood.

According to

information provided by both parties, plaintiff Julio Redwood was
employed by defendants for 126 weeks.
employed for only 58 weeks.

Eduardo Redwood was

Furthermore, Julio Redwood, a

sheetrock foreman, was paid at an hourly rate approximately five
dollars higher than Eduardo Redwood, a laborer.

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

7

2172910 at *1-*2

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

(Pitman, M.J.)

(rejecting settlement agreement where no explanation provided for
allocation of settlement proceeds).
The settlement agreement also contains a release.

It

provides that plaintiffs release defendants "from any and all
wage and hour and/or notice claims that were and/or could have
been brought in this Action."

Such a release, although unlimited

in duration, is permissible because it is limited to claims
relating to wage and hour issues.
Inc., 15 Civ. 8861
28, 2017)

See

~.g.,

(HBP), 2017 WL 1608898 at *3

(S.D.N.Y. April

(Pitman, M.J.); Santos v. Yellowstone Props., Inc., 15

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

Yunda v. SAFI-G,

(Engelmayer, D. J.)

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

(approving release that included both

known and unknown claims but was limited to wage and hour
claims); Hyun v. Ippudo USA Holdings, 14 Civ. 8706 (AJN), 2016 WL
1222347 at *3-*4

(S.D.N.Y. Mar. 24, 2016)

(Nathan, D.J.)

(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
(DRH) (AKT), 2015 WL 10353124 at *1
8

(E.D.N.Y. Aug. 27, 2015)

(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"

(internal quotation marks omitted)).

Finally, the settlement agreement provides that 33.3%
of the settlement fund,

excluding plaintiffs' counsel's out-of-

pocket expenses, will be paid to plaintiffs' counsel as
contingency fees.

Contingency fees of one-third in FLSA cases

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. 6667
2015)

(PAE), 2015 WL 5122530 at *4

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

(Engelmayer, D.J.) and Thornhill v. CVS Pharm., Inc., 13

Civ. 507

(JMF), 2014 WL 1100135 at *3 (S.D.N.Y. Mar. 20, 2014)

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

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

(LB), 2013 WL 5308277 at *1 (E. D. N. Y. Sep. 19, 2013)

(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.,
9

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-CV6126 (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)

(LAP) (DCF), 2012 WL

(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
October 18, 2017
SO ORDERED

H~fruz/~
United States Magistrate Judge
Copies transmitted to:
All Counsel

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