Zavala Artiega v. Griffin Organics, Inc. et al
Filing
131
OPINION AND ORDER: For the reasons set forth above, the Court finds the proposed settlement to be fair and reasonable, and the individual settlement of Zavala Artiega's FLSA claims, as set forth in the Term Sheet filed at ECF No. 130-1, is h ereby APPROVED. Zavala Artiega's counsel shall receive $5,000 in attorneys' fees and costs. Zavala Artiega shall receive the balance of the settlement payment, $10,000. The Court directs the parties to submit a stipulation, di smissing with prejudice Zavala Artiega's FLSA claims, on or before May 26, 2021, at which point this case can be closed. Because this action was never certified as a collective or class action, and because Zavala Artiega settled this case individually, the Clerk of the Court is directed to amend the case caption as follows: and further set forth in this Order. (Signed by Magistrate Judge Andrew E. Krause on 5/19/2021) (rro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------------X
Mauricio E. Zavala Artiega,
Plaintiff,
-against-
OPINION AND ORDER
16 Civ. 6613 (AEK)
Griffin Organics, Inc., et al.,
Defendants.
-------------------------------------------------------------X
THE HONORABLE ANDREW E. KRAUSE, U.S.M.J. 1
Plaintiff Mauricio E. Zavala Artiega (“Zavala Artiega”) commenced this action on
August 22, 2016, asserting claims against Defendants Griffin Organics, Inc., Griffin’s
Landscaping Corp., Hilltop Nursery and Garden Center, Inc., and Glen Griffin for violations of
the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”) based on the
alleged failure to pay overtime wages and provide proper wage and hour notices and wage
statements. ECF No. 1. 2 Before the Court is the parties’ application for approval of a settlement
agreement in accordance with Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir.
2015). For the reasons that follow, the Court APPROVES the settlement agreement.
1
The parties consented to the jurisdiction of Magistrate Judge Lisa Margaret Smith
pursuant to 28 U.S.C. § 636(c) on May 22, 2017. ECF No. 43. The case was reassigned to the
undersigned on October 15, 2020.
2
The complaint was filed on behalf of Zavala Artiega as well as “FLSA Collective
Plaintiffs, and the Class.” As set forth in greater detail below, no class was ever approved in this
action, and the proposed settlement is only as to Zavala Artiega’s individual FLSA claims.
Accordingly, the Clerk of the Court is directed to amend the caption of this case as set forth
herein. See Warren v. Aba Noub, Ltd., No. 21 Civ. 365 (SHS), 2021 WL 1841685, at *2
(S.D.N.Y. May 7, 2021).
DISCUSSION
1.
Legal Standards
In the Second Circuit, “parties cannot privately settle FLSA claims with a stipulated
dismissal with prejudice under Federal Rule of Civil Procedure 41 absent the approval of the
district court or the [United States] Department of Labor.” Fisher v. SD Prot. Inc., 948 F.3d 593,
599 (2d Cir. 2020). Thus, a district court in this Circuit must review a proposed FLSA
settlement and determine whether it is fair and reasonable. See, e.g., Cronk v. Hudson Valley
Roofing & Sheetmetal, Inc., No. 20 Civ. 7131 (KMK), 2021 WL 38264, at *2 (S.D.N.Y. Jan. 5,
2021). When reviewing a proposed settlement agreement in an FLSA case, district courts
consider the “totality of circumstances,” Wolinsky v. Scholastic, Inc., 900 F. Supp. 2d 332, 335
(S.D.N.Y. 2012), to assess whether the agreement is fair and reasonable, including 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 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 collusion.
Fisher, 948 F.3d at 600 (quoting Wolinsky, 900 F. Supp. 2d at 335). In addition, the following
factors “weigh against approving a settlement”:
(1) the presence of other employees situated similarly to the claimant; (2)
a likelihood that the claimant’s circumstance will recur; (3) a history of
FLSA non-compliance by the same employer or others in the same
industry or geographic region; and (4) the desirability of a mature record
and a pointed determination of the governing factual or legal issue to
further the development of the law either in general or in an industry or in
a workplace.
Wolinsky, 900 F. Supp. 2d at 336 (quotation marks omitted). “[T]here is a strong presumption in
favor of finding a settlement fair, as the Court is generally not in as good a position as the parties
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to determine the reasonableness of an FLSA settlement.” Fang Xiao v. Grand Sichuan Int’l St.
Marks, Inc., No. 14 Civ. 9063, No. 15 Civ. 6361 (RA), 2016 WL 4074444, at *2 (S.D.N.Y. July
29, 2016) (quotation marks omitted).
2.
Procedural History
This case has a long and complex history, which was summarized in prior decisions and
orders issued by Judge Smith in 2017, 2018, and 2019. See ECF Nos. 71, 90, 103. The Court
assumes the parties’ familiarity with all prior proceedings and will not describe them in detail
here, except as needed to address the instant application.
The settlement terms for which the parties seek approval are embodied in a Term Sheet,
which was agreed to by the parties in connection with a private mediation. See ECF No. 130
(“Cheeks Application”) Ex. A (“Term Sheet”). Most of the provisions in the Term Sheet are not
being presented to this Court for review or approval as part of the Cheeks Application. Indeed,
nearly the entire Term Sheet addresses a contemplated “Class Settlement,” which purportedly
would serve as a resolution of a yet-to-be-filed action in New York State court. This unusual
bifurcated approach to claims was the product of a negotiated resolution by the parties in private
mediation, and disputes about the meaning and enforceability of that Term Sheet have consumed
considerable time and attention as part of this matter. See ECF Nos. 71, 90, and 103. But at
status conferences before this Court on December 11, 2020 and January 5, 2021, as well as in the
Cheeks Application, the parties have made clear that the request for settlement approval here is
narrow: the only issue being presented for review is the settlement of the FLSA claim of
individual plaintiff Zavala Artiega, and the only claims that would be fully released as part of
this proposed settlement are Zavala Artiega’s FLSA claims. See Cheeks Application at 2.
3
3.
FLSA Settlement Terms
The Term Sheet includes only one term, the “Individual Settlement,” specifically devoted
to the settlement of Zavala Artiega’s individual FLSA claims. That term states:
The parties agree that for the case under 16-cv-6613, filed in the Southern
District of New York, only the federal claims will be dismissed with
prejudice. The settlement for Mauricio Zavala’s federal claims, inclusive
of legal fees, will be $15,000 paid by Defendants, jointly and severally.
The parties agree that Plaintiff will have the option of transferring the case
to the magistrate judge, to which Defendants will agree. Payment of the
Individual Settlement Amount shall be paid to the escrow of the
Administrator (Arden Claims Service) by July 1, 2017.[ 3]
Term Sheet at 1. Only the “Individual Settlement” requires the Court’s approval and is the
subject of the Cheeks Application. Although not included in the “Individual Settlement”
provision, the parties have allocated one-third of the total settlement payment to attorneys’ fees
and costs, which is consistent with the separate “Attorneys’ Fees” provision in the Term Sheet
related to the settlement of the future state court class action. See Term Sheet at 2 (“Attorneys’
Fees: 1/3 of Settlement Amount plus expenses. Defendants will not contest the Attorneys’ Fees
and expenses. Attorneys’ Fees and expenses shall be paid out of the Settlement Amount.”). The
parties have thus proposed that Zavala Artiega’s counsel be paid $5,000 of the total $15,000 for
attorneys’ fees and costs.
4.
Analysis
Having reviewed the parties’ submissions in support of the proposed settlement, factored
in the Court’s understanding that the parties engaged in an extended mediation and arbitration
process through which they agreed to resolve the case, and considered the totality of the
3
The Cheeks Application notes that “the settlement has already been fully funded by
Defendants to Plaintiff’s counsel’s escrow account . . ..” Id. at 2. This modification of the
escrow arrangement from the language in the Term Sheet is a procedure expressly agreed to by
the parties on the record during the January 5, 2021 status conference.
4
circumstances, the Court finds that the parties’ proposed settlement of Zavala Artiega’s FLSA
claims is fair and reasonable. The Court’s consideration is limited only to Zavala Artiega’s
FLSA claims, and the Court makes no findings whatsoever regarding those aspects of the Term
Sheet that pertain to any other potential claims involving Zavala Artiega or any other parties.
With respect to the “Individual Settlement” of Zavala Artiega’s FLSA claims, all five
Wolinsky factors weigh in favor of approval. First, the settlement agreement provides for a total
settlement payment of $15,000, with $10,000 payable to Zavala Artiega and $5,000 payable to
his counsel as attorneys’ fees and costs. According to Zavala Artiega’s calculations, his best
possible recovery on his claims for overtime wages under the FLSA would be $36,109.00. 4
Cheeks Application Ex. B. Plaintiff’s counsel provided detailed breakdowns of hours (including
overtime hours) worked by Zavala Artiega during seven separate time periods, the salary he
4
Although Zavala Artiega’s complaint sought liquidated damages in connection with his
FLSA claims, his calculations for purposes of the settlement review specifically carve out
potential damages for Zavala Artiega’s “New York Labor Law claims, Wage Theft Prevention
Act statutory penalties, or liquidated damages, as such will be part of the Plaintiff’s to-be-filed
lawsuit in state court.” Cheeks Application at 2 n.1.
Liquidated damages are available under the statutory framework of the FLSA. “The
FLSA provides that an employer who underpays an employee is ‘liable to the employee or
employees affected in the amount of their unpaid minimum wages, or their unpaid overtime
compensation, as the case may be, and in an additional equal amount as liquidated damages.’”
Rana v. Islam, 887 F.3d 118, 122 (2d Cir. 2018) (quoting 29 U.S.C. § 216). Liquidated damages
also are available to plaintiffs who bring suit under the NYLL—indeed, there are “no meaningful
differences” between the liquidated damages provisions of the FLSA and NYLL. Id. at 122-23.
But the Second Circuit has determined that “the NYLL and FLSA [do] not allow[] duplicative
liquidated damages for the same course of conduct.” Id. at 123. Thus, if Zavala Artiega were to
recover liquidated damages under the FLSA, he would be precluded from recovering liquidated
damages under the NYLL for the same alleged violations. Because the Cheeks Application
makes clear that Zavala Artiega is preserving his ability to seek liquidated damages under the
NYLL as part of his forthcoming state court lawsuit, Zavala Artiega cannot also recover
liquidated damages under the FLSA. Therefore, it is appropriate for Plaintiff’s counsel to have
excluded the possibility of FLSA liquidated damages in assessing the total possible FLSA
recovery for Zavala Artiega.
5
earned during each of those periods, and the overtime wages to which he allegedly was entitled.
Id. The settlement amount of $10,000 constitutes approximately 27.7 percent of the total amount
to which Zavala Artiega claims he would have been entitled had he prevailed at trial. This
percentage of recovery is in line with recovery amounts in other FLSA cases in this District
where courts have approved settlement terms. See, e.g., Santos v. YMY Mgmt. Corp., No. 20
Civ. 1992 (JPC), 2021 WL 431451, at *1 (S.D.N.Y. Feb. 8, 2021) (collecting cases). Notably,
according to Defendants’ calculations, Zavala Artiega is entitled to $10,000 in overtime wages,
Cheeks Application Ex. C; if Defendants’ assessment is correct, Zavala Artiega’s settlement
would amount to a 100 percent recovery of his damages.
Second, the settlement will enable the parties to avoid significant additional expenses and
burdens associated with establishing their claims and defenses. Given the extended efforts to
attempt to resolve this case through mediation rather than through litigation, additional discovery
would be necessary if this case were to proceed to trial; the history of this case also makes it
likely that there would be further motion practice prior to any trial; and of course, the trial itself
would present substantial additional burdens and expenses.
Third, the parties would have faced significant litigation risks if this case had proceeded
to trial. Defendants generally deny Zavala Artiega’s claims and contest the periods of time
during which he worked, the number of hours that he worked, and the hourly rates he was paid,
and suggest that the maximum possible recovery for Zavala Artiega’s unpaid overtime wages
would be $10,000. Compare Cheeks Application Ex. B with Cheeks Application Ex. C. As
explained in the Cheeks Application, “[i]n connection with mediation, Defendants provided
detailed records of Plaintiff’s timecards demonstrating the number of hours worked and payroll
records stating the hourly rates paid to Plaintiff, which at times include payment of overtime
6
hours at an overtime rate. Based on Defendants’ records, Plaintiff’s backwages [sic] equal
approximately $10,000.00.” Id. at 2. Although Zavala Artiega “contests the validity of
Defendants’ records,” he acknowledges that there is a risk that Defendants will be “able to
convince a jury that Plaintiff worked less time, hours or that he was paid a proper overtime rate
and was paid for all hours worked . . ..” Id. Because of the anticipated risks and costs involved
in pursuing this matter through discovery and trial, settlement is an effective means of resolving
the litigation for all parties.
Fourth, given the mediation process in which the parties engaged, with each side
represented by competent wage and hour counsel, there is no question that the proposed
settlement, as set forth in the Term Sheet, is the product of arm’s-length bargaining between
experienced counsel.
Fifth, the Court has no reason to believe that the proposed settlement is the product of
fraud or collusion.
Moreover, the factors set forth in Wolinsky that weigh against approving a settlement do
not counsel against settlement approval here. Although Zavala Artiega originally filed this case
as a proposed collective and class action, Zavala Artiega never completed the process of seeking
certification of the complaint as a collective action pursuant to 29 U.S.C. § 216(b) or Rule 23 of
the Federal Rules of Civil Procedure, and instead proposes to settle this case individually. See
Gomez v. Midwood Lumber and Millwork, Inc., No. 17 Civ. 3064 (KAM) (JO), 2018 WL
3019877, at *1 n.2, *6 (approving individual settlement of FLSA claim originally filed as a
proposed class action); Warren, 2021 WL 1841685, at *2 (same). While there may be other
individuals with similar potential claims against these defendants, the settlement and dismissal of
Zavala Artiega’s FLSA claims will not adversely impact other similarly situated employees,
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whose claims are not being released as part of this settlement. Moreover, the Term Sheet
envisions the filing of a state court class action that would potentially safeguard the rights of
other employees, provide them with a potential financial recovery in connection with the
contemplated settlement of that action, and address broader allegations of non-compliance with
wage and hour laws by Defendants. In addition, given that the employment relationship between
Zavala Artiega and Defendants has ended, there is no likelihood that the circumstances that gave
rise to this lawsuit will recur. Further, the Court is not aware of a history of FLSA noncompliance by these employers beyond that which is set forth in this lawsuit. And finally, the
complaint in this matter does not appear to raise novel factual or legal issues that would further
the development of law in this area.
The Term Sheet also does not contain any problematic provisions that would preclude
court approval. There are no confidentiality or non-disparagement clauses. See Cortes v. New
Creators, Inc., No. 15 Civ. 5680 (PAE), 2016 WL 3455383, at *4 (S.D.N.Y. June 20, 2016)
(“The Agreement does not contain a confidentiality provision that would undermine the broad
remedial purposes of the FLSA, and plaintiffs are not precluded from discussing the settlement
of their FLSA and NYLL claims.”); see also Cheeks Application at 2 (highlighting the fact that
the proposed settlement does not include any provision regarding “confidentiality of settlement
terms”). Nor is there an overbroad or otherwise inappropriate release provision associated with
the release of Zavala Artiega’s FLSA claims. 5 As the Cheeks Application states, “the only
claims being released by this settlement are Plaintiff’s FLSA claims,” id. at 2; this type of narrow
5
The Term Sheet does include a provision defining “Released Claims,” but the context of
the Term Sheet makes clear that those contemplated releases would be part of the anticipated
settlement of the future state court class action, and are not meant to be construed as releases in
exchange for the individual settlement of Zavala Artiega’s FLSA claims.
8
release is appropriate, see, e.g., Illescas v. Four Green Fields LLC, No. 20 Civ. 9426 (RA), 2021
WL 1254252, at *1 (S.D.N.Y. Apr. 5, 2021) (“Here, Plaintiff has agreed to release Defendants
from claims for unpaid wages and related damages arising under the FLSA, the NYLL, and
related regulations. . . . This release of claims is limited to the wage-and-hour issues asserted in
this action or related claims that could have been asserted. Similar releases are routinely
approved.”).
Finally, with respect to attorneys’ fees and costs, the proposed settlement provides for
Zavala Artiega’s counsel to receive $5,000, one-third of the total settlement amount. “Courts in
this District routinely award one third of a settlement fund as a reasonable fee in FLSA cases.”
Santos, 2021 WL 431451, at *2 (quotation marks and brackets omitted). Ordinarily, “even when
the proposed fees do not exceed one third of the total settlement amount, courts in this Circuit
use the lodestar method as a cross check to ensure the reasonableness of attorneys’ fees.” Id.
(quotation marks omitted). Zavala Artiega’s counsel has not submitted contemporaneous time
records and hourly rate information that the Court would need to make a lodestar calculation.
Typically, the Court would require counsel to submit such documentation in support of an
attorneys’ fee award. However, this case—now almost five years old—has had a lengthy and
unusual history with which the Court is fully familiar. It has involved, among other things, two
mediations, the filing of a motion for conditional class certification (for which briefing was
completed by Plaintiff’s counsel, even though the motion was never fully briefed or decided),
five court conferences, a motion to enforce the settlement and/or compel arbitration, two
arbitration hearings, and a motion to confirm an arbitration award and for sanctions. See
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generally Docket Sheet; see also Cheeks Application at 4. 6 Under the particular circumstances
of this case, there is no question that in matters immediately before this Court alone, Plaintiff’s
counsel has expended time and effort that would lead to attorneys’ fees well in excess of the
$5,000 in fees that are proposed as part of this settlement, and it is clear that the fee award
represents a small fraction of the lodestar figure that counsel would submit. Accordingly, the fee
award here—which represents one-third of the total settlement amount—is fair and reasonable.
CONCLUSION
For the reasons set forth above, the Court finds the proposed settlement to be fair and
reasonable, and the individual settlement of Zavala Artiega’s FLSA claims, as set forth in the
Term Sheet filed at ECF No. 130-1, is hereby APPROVED.
Zavala Artiega’s counsel shall receive $5,000 in attorneys’ fees and costs. Zavala
Artiega shall receive the balance of the settlement payment, $10,000.
6
Consistent with the Court’s understanding, Zavala Artiega’s counsel describes their
“more than four (4) years of work on this matter” as including
interviewing the Plaintiff, investigating the identity of Defendants,
preparing a Complaint, preparing damages calculations, preparing
discovery requests, analyzing Defendants’ document production,
preparing a pre-motion letter regarding motion for conditional collective
certification, preparing submission [sic] for the first mediation, preparing
for and attending the first mediation, preparing and filing a motion for
conditional collective certification, negotiating with Defendants’ counsel,
correspondence with Defendants’ counsel, correspondence with the Court,
preparing submission [sic] for the second mediation, preparing for and
attending the second mediation, preparing a settlement agreement, motion
practice, hearings and conferences in connection with enforcement of the
term sheet, arbitration proceedings, and preparing this submission.
Cheeks Application at 4.
10
The Court directs the parties to submit a stipulation, dismissing with prejudice Zavala
Artiega’s FLSA claims, on or before May 26, 2021, at which point this case can be closed. 7
Because this action was never certified as a collective or class action, and because Zavala
Artiega settled this case individually, the Clerk of the Court is directed to amend the case caption
as follows:
Mauricio E. Zavala Artiega,
Plaintiff,
-againstGriffin Organics, Inc., et al.,
Defendants.
Dated: May 19, 2021
White Plains, New York
SO ORDERED.
___________________________________
ANDREW E. KRAUSE
United States Magistrate Judge
7
The proposed stipulation submitted by the parties at ECF No. 130-4 is not sufficient for
these purposes for two reasons: (1) the stipulation does not include a dismissal with prejudice of
Zavala Artiega’s FLSA claims; and (2) in accordance with the amended caption, Plaintiff’s
counsel should be signing this stipulation only on behalf of Zavala Artiega, and not on behalf of
“Plaintiff, FLSA Collective Plaintiffs, and the Class.” If the parties also intend to dismiss Zavala
Artiega’s NYLL claims without prejudice, as contemplated by ECF No. 130-4, that dismissal
may also be included in the same document dismissing Zavala Artiega’s FLSA claims with
prejudice.
11
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