Cercado v. Friedland Properties Inc.

Background

Gregorio Cercado filed the action on September 14, 2023, alleging that Friedland Properties Inc., Larstrand Corporation, Amaury Lopez, and Anthony Torres violated the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL). Cercado later moved for approval of the parties’ proposed settlement.

Settlement approval standard

The court explained that parties generally cannot privately settle FLSA claims with prejudice without approval from the district court or the Department of Labor. The court therefore evaluated whether the agreement was fair and reasonable under the totality of the circumstances. Relevant considerations included the possible recovery, the burdens and expenses of continued litigation, litigation risks, whether the agreement resulted from arm’s-length negotiations by experienced counsel, and the possibility of fraud or collusion.

The court also stated that it could reject a settlement if the parties did not explain the recovery amount, failed to support the requested attorney fees, or included improper provisions such as restrictive confidentiality terms or overly broad releases.

Recovery and litigation risks

The agreement provided for a total recovery of $40,000. Cercado would receive $26,398.66, while his counsel would receive approximately 34% of the total, or $13,601.34, in fees and costs. Cercado estimated that his best possible recovery at trial would be approximately $130,000, making his portion of the settlement about 20.3% of that estimate.

The court found the settlement amount fair and reasonable. It noted factual disputes concerning the number of hours Cercado worked each week and the amounts he was paid. The parties also disputed how to calculate potential overtime and penalties for allegedly late wage payments. The court concluded that the agreement reasonably compensated Cercado while avoiding the risks and delays of continued litigation and resulted from arm’s-length negotiations by experienced labor and employment attorneys.

Attorney fees and costs

The court separately found the requested fees and costs reasonable. The requested $13,199.34 in attorney fees represented approximately one-third of the settlement after litigation costs, and the total requested amount, including costs, was $13,601.34.

As a cross-check, the court used the lodestar method, which multiplies reasonable hourly rates by the reasonable number of hours worked. The billing records covered three attorneys and bilingual paralegal services: Roman Avshalumov at $425 per hour, James O’Donnell at $250 per hour, Katelyn M. Schillaci at $175 per hour, and paralegal services at $75 per hour. The records reflected 45.1 total billable hours and a lodestar of $13,102.50. Compared with the requested attorney-fee amount, this produced a multiplier of approximately 1.01. The court accepted that multiplier and found the total fees and costs reasonable. The court also noted that counsel’s submitted lodestar figure of $12,140 appeared to omit $962.50 attributable to Schillaci, but stated that even the lower figure would produce a reasonable multiplier.

Other settlement provisions

The court found no objectionable release, non-disparagement provision, or confidentiality provision. The release covered only claims and causes of action based on the facts alleged in the complaint, specifically including the FLSA and NYLL claims. The court found that limitation appropriate and not overly broad.

Disposition

Judge Edgardo Ramos granted the motion for settlement approval. The Clerk of Court was directed to terminate the motion and close the case.