Singh et al v. MDB Construction Management Inc. et al
Filing
27
OPINION AND ORDER: I am unable to approve the proposed settlement because plaintiffs have not explained why it is fair and reasonable for all four plaintiffs to receive equal shares of the settlement fund when their claimed damages are vastly diffe rent from one another...Accordingly, within 30 days of this Order, the parties are to submit a revised settlement agreement that corrects the foregoing deficiencies, and as further set forth herein. (Signed by Magistrate Judge Henry B. Pitman on 5/23/2018) Copies Transmitted By Chambers. (ras)
USDCS,DNY
DOCUMENT
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
J'.)(..
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JASWANT SINGH, et al.,
16 Civ. 5216 (HBP)
Plaintiffs,
OPINION
AND ORDER
-againstMDB CONSTRUCTION MANAGEMENT,
INC., 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.") 26).
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
MDB Construction Management, Inc.
("MDB"), a construction com-
pany, and Fine Art Construction & Painting Corporation ("Fine
Art"), a sub-contractor of MDB's. 1
1
Plaintiffs bring this action
According to plaintiffs, MDB and Fine Art each controlled
certain aspects of their employment such that both defendants
exercised "formal control." Plaintiffs claim that Fine Art
specifically recruited them to work on a project for MDB and that
they received their salaries from Fine Art, but that MDB had the
power to hire and fire them, supervised their day-to-day work and
set their work schedules.
See generally Goldberg v. Whitaker
House Co-op., Inc., 366 U.S. 28, 32 (1961) (setting forth the
(continued ... )
under the Fair Labor Standards Act (the ''FLSA"), 29 U.S.C. §§ 201
et
.§.Sill.,
and the New York Labor Law (the "NYLL"), and seek to
recover unpaid minimum wage and overtime premium pay.
Plaintiffs
also assert claims based on defendants' alleged breach of an
agreement to pay plaintiffs an hourly rate of $31.25 and defendants' failure to pay plaintiffs on a weekly basis as required
for "manual workers."
See N.Y. Lab. Law§ 191(a).
MDB argues that plaintiffs were employees of Fine Art,
not MDB, and that MDB did not supervise plaintiffs, did not have
the power to hire or fire plaintiffs and did not set their rate
of pay.
MDB has asserted several cross-claims against Fine Art
for breach of contract and seeks $104,530.16 in damages from Fine
Art.
To date, Fine Art has not answered plaintiffs' complaint
and has not participated in this litigation in any way.
Plain-
tiffs intend to move for a default judgment against Fine Art.
I held a lengthy settlement conference on January 26,
2017 that was attended by the parties and their counsel, with the
exception of Fine Art.
Although a settlement was not reached at
the conclusion of the conference, the parties and I engaged in a
protracted discussion of the strengths and weaknesses of the
1
continued)
factors to be considered in determining whether a person is an
"employee" within the meaning of the FLSA).
( •••
2
parties' respective positions, and the parties agreed to continue
negotiations.
On May 19, 2017, I received a letter informing me
that plaintiffs and MOB agreed to resolve the dispute (Letter of
Abdul K. Hassan, Esq., to the undersigned, dated May 19, 2017
(D.I. 25)).
On November 30, 2017, I received the settlement
agreement and the parties' joint application for court approval
of the settlement (Letter of Abdul K. Hassan, Esq., to the
undersigned, dated Nov. 30, 2017
(D.I. 26)
("Hassan Letter")).
The parties agree to resolve the matter for $20,000 -- with
$2,500 being paid to each of the four plaintiffs and the remaining $10,000 being paid to plaintiffs' counsel as attorneys' fees
and costs (Hassan Letter, Ex. 1-4) . 2
I am unable to approve the proposed settlement because
plaintiffs have not explained why it is fair and reasonable for
all four plaintiffs to receive equal shares of the settlement
fund when their claimed damages are vastly different from one
another.
Plaintiff Jaswant Singh claims $27,446.88 in damages,
plaintiff Jatinder Singh claims $28,448.12 in damages, plaintiff
Amrik Singh claims $20,765.62 in damages and plaintiff
Varinderpaul Singh claims $14,484.38 in damages.
2
However, under
The parties provided a separate written settlement
agreement for each of the four plaintiffs attached to the Hassan
Letter as Exhibits 1, 2, 3 and 4, respectively.
However, the
material provisions of each of the agreements are identical.
3
the proposed settlement, each plaintiff would receive an equal
share of $2,500.
This method of distribution does not "bear a
rational relationship to the amount claimed by each plaintiff"
and, because the parties do not explain or provide any information supporting this deviation, I must reject the proposed
settlement. Flores v. Hill Country Chicken, LLC, 16 Civ. 2916
(AT) (HBP), 2017 WL 3448018 at *l (S.D.N.Y. Aug. 11, 2017)
(Pitman, M.J.).
Plaintiffs' counsel's request for almost half of the
settlement amount as attorneys' fees is equally problematic.
While plaintiffs' counsel's request for reimbursement of $520 in
out-of-pocket costs is reasonable, his request for $9,480 in fees
is not.
Counsel's fee proposal would represent 48% of the
settlement after the deduction of costs.
"[C]ourts in this
District have declined to award more than one third of the net
settlement amount as attorney's fees
extraordinary circumstances."
Inc., 15 Civ. 814
2015)
Santos v. EL Tepeyac Butcher Shop
(RA), 2015 WL 9077172 at *3 (S.D.N.Y. Dec. 15,
(Abrams, D.J.), citing Zhang v. Lin Kumo Japanese Rest.
Inc., 13 Civ. 6667
31, 2015)
(PAE), 2015 WL 5122530 at *4 (S.D.N.Y. Aug.
(Engelmayer, D.J.); accord Thornhill v. CVS Pharm.,
Inc., 13 Civ. 507
2014)
[in FLSA cases] except in
(JMF), 2014 WL 1100135 at *3 (S.D.N.Y. Mar. 20,
(Furman, D.J.); Rangel v. 639 Grand St. Meat & Produce
4
Corp., No. 13 CV 3234 (LB), 2013 WL 5308277 at *1 (E.D.N.Y. Sept.
19, 2013).
The Court of Appeals for the Second Circuit has
cautioned district courts against approving fee awards of 40%
because of "the potential for abuse in [FLSA] settlements."
Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199, 206 (2d
Cir. 2015)
(rejecting attorneys' fees that amounted to 40% to
43.6% of the overall settlement); see also Seek v. Dipna Rx,
Inc., 16 Civ. 7262 (PKC), 2017 WL 1906887 at *3 (S.D.N.Y. May 8,
2017)
(Castel, D.J.)
(rejecting attorneys' fees that amounted to
52% of the overall settlement); Aguino v. Fort Washington Auto
Body Corp., 16 Civ. 390 (HBP), 2017 WL 1194734 at *3 (S.D.N.Y.
Mar. 31, 2017)
(Pitman, M.J.)
(rejecting attorneys' fees that
amounted to 40% of the overall settlement); Lopez v. Poko-St. Ann
L.P., 176 F. Supp. 3d 340, 342-43 (S.D.N.Y. 2016)
(Moses, M.J.)
(rejecting attorneys' fees that amounted to 40% of the overall
settlement).
Plaintiffs' counsel argues his fee request is reasonable because he has spent more than 40 billable hours on this
case, which would amount to more than $18,000 in fees using his
"lower" hourly rate of $450 and more than $24,000 using his
"higher" hourly rate of $600.
This argument is unpersuasive.
Although I appreciate that the effort required to litigate a case
is, sometimes, not proportional to plaintiffs' claimed damages,
5
plaintiffs' counsel has failed to provide adequate documentation
to demonstrate that litigating this case "required more attention
and effort than usual" sufficient to justify an award above the
normal rate of one-third of the total settlement.
Aguino v. Fort
Washington Auto Body Corp., supra, 2017 WL 1194734 at *3; accord
Cheeks v. Freeport Pancake House, Inc., supra, 796 F.3d at 206;
Lopez v. Poko-St. Ann L.P., supra, 176 F. Supp. 3d at 342-43.
fact, he fails to provide any documentation at all.
In
Plaintiffs'
counsel merely states in his letter that he "has expended more
than 40 hours" in litigating the action without any contemporaneous time records or supporting documentation (Hassan Letter at
2).
Courts routinely reject such requests. 3
See New York State
Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 114748
(2d Cir. 1983)
(mandatory requirement for attorneys seeking
fees to submit contemporaneous time records that document "the
hours expended and the nature of the work done" to justify the
award).
The Second Circuit in Carey established this "hard-and-
fast rule 'from which attorneys may deviate only in the rarest of
3
Plaintiffs' counsel notes in his letter that he will
"submit a formal fee application for additional fees as part of a
motion for default judgment" against Fine Art (Hassan Letter at 2
n.1).
Plaintiffs' counsel is certainly free to do so; however,
that application is not currently pending and counsel cannot
avoid well settled caselaw simply by stating he plans to submit
contemporaneous time records sometime in the future.
6
cases.'"
Long v. HSBC USA INC., 14 Civ. 6233 (HBP), 2016 WL
4764939 at *2 (S.D.N.Y. Sept. 13, 2016)
(Pitman, M.J.), quoting
Scott v. City of New York, 643 F.3d 56, 57
(2d Cir. 2011); see
also Aguino v. Fort Washington Auto Body Corp., supra, 2017 WL
1194734 at *3 (denying a fee request of 40% of the total FLSA
settlement amount without supporting documentation); Lopez v.
Nights of Cabriria, LLC, 96 F. Supp. 3d 170, 181-82 (S.D.N.Y.
2015)
(Kaplan, D. J.)
(denying a fee request where counsel failed
to provide contemporaneous billing records).
Furthermore, courts have noted that "it is difficult to
justify an above-market contingency fee" where, in cases such as
this, the parties settle relatively early in the litigation.
Lopez v. Poko-St. Ann L.P., supra, 176 F. Supp. 3d at 343 (refusing a 40% total award fee where case settled after the first
deposition).
7
Accordingly, within 30 days of this Order, the parties
are to submit a revised settlement agreement that corrects the
foregoing deficiencies.
Dated:
New York, New York
May 23, 2018
SO ORDERED
HE'~
__p1
~
ry
United States Magistrate Judge
Copies transmitted to:
All Counsel
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