Penafiel v. Babad Management Co., LLC et al

Filing 33

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)

USDCSDNY
DOCUME!'ii

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

. . ELEClT.ON!CALLY FTLED
DOC#:

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

DATE FILED:

LILY PENAFIEL,

::xii/it

=

17 Civ. 4629 (HBP)

Plaintiff,

OPINION
AND ORDER

-againstBABAD MANAGEMENT CO., LLC, et al.,
Defendants.

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

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

§§

201

et~.,

and

the New York Labor Law (the "NYLL'') to recover unpaid straight
time and overtime premium pay.

Plaintiff also asserted claims

that defendants failed to keep certain records and to provide
certain notices under the NYLL.

Plaintiff 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 cur-

rently 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 C.K. Lee,
Esq., to the undersigned, dated Feb. 1, 2018
("Lee Letter")).

(Docket Item 32)

Because the parties reached a settlement before

a settlement conference was held, my knowledge of the underlying
facts and the justification for the settlement is limited to the
Complaint and counsel's representations in the letter submitted
in support of the settlement.

The parties have consented to my

exercising plenary jurisdiction pursuant to 28 U.S.C.

§

636(c).

Plaintiff worked at defendants' residential building
management company from approximately October 2012 until August
14, 2016.

Plaintiff alleges that she was compensated at a base

hourly rate of $11.00 per hour from approximately October 2012
through approximately July 2015, $11.75 per hour from approximately August 2015 through approximately April 2016 and $12.75
from approximately May 2016 until the end of her employment on
August 14, 2016.

Plaintiff claims that throughout her employment

defendants would regularly engage in "time-shaving",

i_.~.,

requiring her to work off the clock for 40 minutes per day
without compensation.

Plaintiff also claims that she worked, on

average, approximately 43.33 hours per week, but that defendants
did not compensate her at all for the overtime hours.

In addi-

tion, plaintiff alleges that defendants' wage and hour statements
were fraudulent because they did not accurately reflect the
number of hours plaintiff worked each week.

2

Plaintiff claims

that she is entitled to $31,894.64 1 in total damages, exclusive
of pre-judgment interest.
Defendants deny plaintiff's claims.

Defendants appear

to contend that plaintiff was not authorized to work more than 40
hours per week and, thus, is not entitled to any overtime premium
pay.

Defendants argue that plaintiff was paid properly and

received all compensation owed to her.
The parties agreed to a settlement in the amount of
$7,500.00 (Proposed Settlement Agreement

~

2).

The parties also

agree that plaintiff's counsel will retain $500.00 for out of
pocket costs and $2,333.33, or one-third of the remainder, as a
fee

(Proposed Settlement Agreement

~

2; Lee Letter at 2).

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.)

1

(alterations in original).

This includes plaintiff's approximation of $10,947.32 in
unpaid wages and overtime premium pay, $10,947.32 in liquidated
damages and $10,000.00 in statutory penalties.
3

"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,

2 d 3 6 2 , 3 6 5 ( S . D . N . Y . 2 0 13 )
tion marks omitted).

( Goren stein , M. J . )

948 F. Supp.

( intern a 1 quot a -

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:
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 fallowing 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, although the settlement fund after deduction of
fees and costs represents approximately 15% of plaintiff's total
alleged damages, exclusive of interest, that fact does not render
the proposed settlement deficient.

As an initial matter, the net

settlement amount that plaintiff will receive is approximately

4

43% of her alleged unpaid wages and overtime premium pay.

In

addition, defendants apparently possess documentary evidence that
supports their assertions, and refutes plaintiff's claims,
concerning the number of hours plaintiff worked and the compensations she received.

As discussed in greater detail below, given

the risks in litigating plaintiff's claims, the settlement amount
is reasonable.
Second, the proposed settlement will entirely avoid the
burden, expense and aggravation of litigation.
dispute the number of hours plaintiff worked.

Defendants
Defendants further

argue that even if plaintiff did work the hours she now alleges,
she did not have authority to do so.

Trial preparation would

potentially require additional discovery, including depositions,
to explore these issues.

The settlement avoids the necessity of

conducting costly discovery.
Third, the settlement will enable plaintiff to avoid
the risk of litigation.

At a trial, plaintiff will have to

establish that defendants failed to compensate her and that she
is entitled to overtime pay.

Given plaintiff's lack of documen-

tary evidence, the fact that she bears the burden of proof and
the documentary evidence rebutting plaintiff's allegations, 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
5

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 omitted)), 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. ll-cv-05669
2 0 12 WL 5 8 7 4 6 5 5 at * 5 ( E . D. N . Y . Nov . 2 0 , 2 0 12 )

(BMC),

( " [ W] hen a sett 1 e -

ment 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.

6

The proposed settlement agreement also contains a
release (Proposed Settlement Agreement

~

2).

It provides, in

pertinent part, that plaintiff "irrevocably and forever releases
and discharges [defendants], with respect to herself only, from
federal and New York State wage and hour claims, which [plaintiff] has or may have against [defendants], whether asserted in
this action or not"

(Proposed Settlement Agreement

~

2).

This

release is permissible because it is limited to wage and hour
claims.

See

~.g.,

Yunda v. SAFI-G, Inc., 15 Civ. 8861 (HBP),

2017 WL 1608898 at *3 (S.D.N.Y. April 28, 2017)

(Pitman, M.J.);

Santos v. Yellowstone Props., Inc., 15 Civ. 3986 (PAE), 2016 WL
2757427 at *l, *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, 14 Civ. 8706 (AJN), 2016 WL 1222347 at *3-*4
Mar. 24, 2016)

(Nathan, D.J.)

(S.D.N.Y.

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

(rejecting release of all claims "wheth7

er 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) ) .
The proposed settlement agreement also contains a
It states, in pertinent part,

mutual non-disparagement clause.

that the parties mutually agree to "not disparage each other and
[that they] will say or do nothing to bring discredit upon the
other"

(Proposed Settlement Agreement

~

3).

That provision

further states that nothing therein shall be interpreted "to
prevent either party from making truthful statements concerning
the claims and defenses asserted in this action"
Settlement Agreement

~

3).

(Proposed

Where, as here, a mutual non-dispar-

agement clause includes a carve out for truthful statements about
the litigation, it is permissible.

See Chowdhury v. Brioni

America Inc., 16 Civ. 344 (HBP), 2017 WL 5953171 at *6 (S.D.N.Y.
Nov. 29, 2017)

(Pitman, M.J.)

(collecting cases).

Finally, the settlement agreement provides that
$2,333.33 will be paid to plaintiff's counsel as contingency fees
(Proposed Settlement Agreement

2).

~

This amount is equal to

approximately 33.3% of the settlement fund, exclusive of out-ofpocket costs.

Contingency fees of one-third in FLSA cases are

routinely approved in this Circuit.
8

Santos v. EL Tepeyac Butcher

Shop Inc., 15 Civ. 814
15, 2015)

(RA), 2015 WL 9077172 at *3

(Abrams, D.J.)

(S.D.N.Y. Dec.

(" [C]ourts in this District have de-

clined 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 WL 5122530 at *4

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

and Thornhill v. CVS Pharm.,
1100135 at *3

Inc., 13 Civ. 507

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

(Engelmayer, D.J.)
(JMF), 2014 WL

(Furman, D.J.); Rangel v.

639 Grand St. Meat & Produce Corp., No. 13 CV 3234
5308277 at *l (E.D.N.Y. Sept. 19, 2013)

(PAE),

(LB), 2013 WL

(approving attorney's

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, 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.).

9

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
April 18, 2018
SO ORDERED

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

10