Grullon v. Justin Pharmacy Inc. et al
OPINION & ORDER re: 15 JOINT LETTER MOTION for Conference Cheeks FLSA Settlement Approval addressed to Magistrate Judge Ona T. Wang from Robert Salaman dated 11/13/2020. filed by Adriano J. Grullon. For the foregoing reasons, the Co urt approves the parties' proposed settlement agreement (ECF 15-1) as fair and reasonable and strikes Section H. The Clerk of Court is directed to close ECF 15. It is HEREBY ORDERED that the action is dismissed with prejudice without costs. (Signed by Magistrate Judge Ona T. Wang on 1/8/2021) (rro)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
US MARTINEZ, ADRIANO J. GRULLON,
, j JUSTIN PHARMACY INC., et al.
OPINION & ORDER
ONA T. WANG, United States Magistrate Judge:
Plaintiff Adriano J. Grullon brings this action against his former employers Defendants
Justin Pharmacy Inc. (the “Pharmacy”) and Binu Baby, the owner of the Pharmacy. Plaintiff
alleges Fair Labor Standard Act (“FLSA”) and New York Labor Law (“NYLL”) claims as well as a
claim for fraudulent filing of information returns under 26 U.S.C. 7434(a) against Defendants.
Compl. ¶¶ 49-78. Plaintiff alleges that Defendants failed to pay him overtime, despite working
over 40 hours a week, and failed to provide him with a statutory wage notice. The parties
submit their proposed settlement agreement to the Court for approval under Cheeks v.
Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015). (ECF 15-1). All parties have consented
to my jurisdiction in accordance with 28 U.S.C. § 636(c). (ECF 14). For the reasons below, the
Court APPROVES the settlement (ECF 15-1).
Defendants employed Plaintiff as a laborer from approximately October 2013 to his
termination in April 2018. Compl. ¶¶ 21-23, 31. Plaintiff’s responsibilities included “cleaning the
pharmacy, operating the lotto machine, assisting the pharmacists, working in the compound
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lab, deliveries and pickups, organizing storage and placing orders.” Compl. ¶ 24. Plaintiff alleges
that he worked in excess of forty hours per week, but Defendants did not pay him the required
minimum wage rate nor overtime rates. Comp. ¶¶ 28, 34, 35. Plaintiff further alleges that the
Pharmacy never provided him with “wage notice or wage statements upon his hire or at any
point during his employment” and denied him sick and vacation days. Compl. ¶¶ 33, 36.
Defendants did not properly report Plaintiff’s income and withholdings on Plaintiff’s tax forms.
Compl. ¶ 44.
Plaintiff filed his complaint on August 5, 2020. (ECF 1). Judge Failla referred the parties
to mediation on September 2, 2020, and the parties appeared for a court-ordered mediation on
November 2, 2020. (ECF 9).
Fed. R. Civ. P. 41(a)(1)(A) permits the voluntary dismissal of an action brought in federal
court, but subjects that grant of permission to the limitations imposed by “any applicable
federal statute.” The Second Circuit has held that “in light of the unique policy considerations
underlying the FLSA,” this statute falls within that exception, and that “stipulated dismissals
settling FLSA claims with prejudice require the approval of the district court or the [Department
of Labor] to take effect.” Cheeks, 796 F.3d at 206. This Court will approve such a settlement if it
finds it to be fair and reasonable, employing the five non-exhaustive factors enumerated in
Wolinsky v. Scholastic Inc.:
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(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 respective 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
900 F. Supp. 2d 332, 335 (S.D.N.Y. 2012) (internal quotations omitted).
a. Range of Recovery
Plaintiff alleges a maximum recovery under the FLSA to be approximately $22,000. (ECF
15 at 4). Defendants believe that Plaintiff is owed approximately $6,500. (ECF 15 at 4). The
proposed settlement amount is $22,500. (ECF 15 at 4). Of the total settlement amount, Plaintiff
would receive $14,475 and Plaintiffs’ counsel would receive $8,025 for attorneys’ fees and
costs.1 (ECF 15 at 4, ECF 15-1 at 2). Plaintiff’s settlement amount thus represents approximately
64.3% of Plaintiff’s alleged maximum.2 Given the risks of litigation as noted below, the Court
finds this amount reasonable.
b. Burden and Risks of Litigation
Settlement enables the parties to avoid the burden and expense of preparing for trial.
The parties acknowledge that the factual disputes present in this case present them with risks
were they to proceed with litigation. (ECF 15 at 2). Defendants face risk because of the factual
issues regarding their pay and timekeeping records of Plaintiff. (ECF 15 at 2). Plaintiff faces risk
The sums on page 2 of the settlement agreement indicate that Akin Law will receive $8,025, not $8,225. See ECF
15-2 at A.2 (two checks to Akin Law for $2,275 and $5,750).
When examining the proportion of recovery, courts often look at what Plaintiff would receive rather than the
total settlement amount. See, e.g., Rosario v. Structural Preservation Systems, LLC, No. 18-CV-83 (HBP), 2019 WL
1383642, at *2 (S.D.N.Y. Mar. 27, 2019); Rojas v. Bronx Moon LLC, No. 17-CV-5825 (KMK), 2018 WL 4931540, at *3
(S.D.N.Y. Oct. 10, 2018); Felix v. Breakroom Burgers & Tacos, No. 15-CV-3531 (PAE), 2016 WL 3791149, at *2
(S.D.N.Y. Mar. 8, 2016); Beckert v. Ronirubinov, No. 15-CV-1951 (PAE), 2015 WL 8773460, at *1 (S.D.N.Y. Dec. 14,
2015). Because one of the primary purposes of a Cheeks approval is to protect the employee, I concur with this
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because Defendants’ time and pay records indicate a lower recovery, and with a settlement, he
can obtain immediate recovery versus a delayed recovery or none at all. (ECF 15 at 2).
c. Arm’s Length Negotiation
The parties represent that the settlement was a product of an arm’s-length, extended
mediation session by a mediator assigned by the Southern District of New York’s mediation
program. (ECF 15 at 2). Parties’ counsel are experienced in employment litigation. (ECF 15 at 4).
There is no evidence to the contrary.
d. Risk of Fraud or Collusion
There is nothing in the record to suggest that fraud or collusion played a role in the
settlement. Further, Plaintiff is no longer an employee of the Pharmacy, diminishing potential
concern that Plaintiff may have been coerced into the settlement by his employer. (See ECF 15).
e. Additional Factors
The release is a general mutual release, which is non-standard in this District. (ECF 15-1
at 3-5). Courts in this District have rejected such broad releases. See, e.g., Arango v. Scotts Co.,
No. 17-CV-7174 (KMK), 2019 WL 117466, at *4 (S.D.N.Y. Jan. 7, 2019) (“The case law is clear
that ‘any release provision must be limited to the claims at issue in this action’”) (quoting
Lazaro-Garcia v. Sengupta Food Servs., 2015 WL 9162701, at *2 (S.D.N.Y. Dec. 15, 2015));
Heiloov. Fruitco Corp., No. 18-CV-1917 (JPO), 2019 WL 5485205, at *2 (S.D.N.Y. Oct. 25, 2019)
(“The Court's ‘obligation to police unequal bargaining power between employees and
employers’ points against the approval of this particular [general] release.’”) (quoting Lopez v.
Nights of Cabiria, LLC, 96 F. Supp. 3d 170, 181 (S.D.N.Y. 2015)).
However, when the plaintiff is a former employee with no ongoing relationship with the
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employer, courts in this District have approved a general release, if the release is mutual. See,
e.g., Strauss v. Little Fish Corp., No. 19-CV-10158 (LJL), 2020 WL 4041511, at *5-6 (S.D.N.Y. July
17, 2020) (“Such a broad mutual general release operates as a walk away provision: it permits
each side to terminate their relationship entirely free from fear that the other will re-engage in
the form of a lawsuit.”) (citing cases). Here, the general release is mutual, and given that
release is solely between Plaintiff and Defendants, there is no danger of the settlement binding
absent class members who had no power to negotiate the settlement.
This agreement also lacks certain objectionable provisions that courts have found fatal
in other proposed FLSA settlements. The proposed settlement agreement contains no
confidentiality provision and has already been filed in the public record. See Thallapaka v.
Sheridan Hotel Associates LLC, No. 15-CV-1321 (WHP), 2015 WL 5148867, at *1 (S.D.N.Y. Aug.
17, 2015) (finding “overwhelming majority” of courts reject confidentiality provisions in FLSA
settlements). Nor does the agreement contain a non-disparagement provision. See Martinez v.
Gulluoglu LLC, No. 15-CV-2727 (PAE), 2016 WL 206474, at *1 (S.D.N.Y. Jan. 15, 2016) (finding
non-disparagement provisions generally contravene the FLSA’s purpose).
The attorneys’ fees and costs award of $8,025 is reasonable, and represents
approximately 35.6% of the total award.3 Although there is not a proportionality requirement,
attorney fees settlements generally amount to a third of the settlement award. See Fisher v. SD
Protection, Inc., 948 F.3d 593, 603 (2d Cir. 2020) (holding that the FLSA “simply provides for a
‘reasonable attorney’s fee to be paid by the defendant”); Singh v. MDB Construction Mgmt.,
Inc., No. 16-CV-5216 (HBP), 2018 WL 2332071, at *2 (S.D.N.Y. May 23, 2018) (noting that one-
Plaintiff is represented by Leopold Raic and Robert D. Salaman from Akin Law Group PPLC.
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third of settlement is “normal rate”); Rodriguez-Hernandez v. K Bread & Co., No. 15-CV-6848
(KBF), 2017 WL 2266874, at *5 (S.D.N.Y. May 23, 2017) (“In this Circuit, courts typically approve
attorneys' fees that range between 30 and 33 1/3 %.”). In this case, Plaintiff’s counsels’ fees are
reasonable. They began representing Plaintiff in March 2020 and the settlement agreement
was negotiated in November 2020. In that period, counsel drafted and filed the complaint and
participated in mediation. (ECF 15-2). The proposed amount of $8,025 is less than the total
recorded fees and costs submitted by Plaintiff’s counsel, which total $10,650.4 (ECF 15 at 4).
The Court notes that the award of fees conflicts with Section H of the proposed
settlement agreement, which states that the parties “are responsible for their own attorneys’
fees and costs in connection with this matter.” Accordingly, the Court strikes Section H.
Plaintiff has submitted attorney time records. (ECF 15-2). The Court finds the $300 per hour rate charged by
Mr. Raic and Mr. Salaman appropriate.
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For the foregoing reasons, the Court approves the parties’ proposed settlement
agreement (ECF 15-1) as fair and reasonable and strikes Section H. The Clerk of Court is directed
to close ECF 15. It is HEREBY ORDERED that the action is dismissed with prejudice without
s/ Ona T. Wang
Ona T. Wang
United States Magistrate Judge
Dated: January 8, 2021
New York, New York
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