Colon v. Twenty West Partners, Inc.

Background

Brenda Colon sued Twenty West Partners, Inc., doing business as Wonderland, Kathryn M. Paul, and Christopher A. Ortiz. The complaint alleged that Colon worked as a security guard at Wonderland and was subjected to sexual harassment, discrimination, and retaliation. It also alleged that Wonderland failed to pay all recorded hours, failed to pay overtime at the required premium rate, and failed to provide required wage statements and notices.

The complaint asserted claims under the Fair Labor Standards Act (FLSA), New York Labor Law, Title VII, the New York State Human Rights Law, and the New York City Human Rights Law. After mediation failed, the case proceeded through discovery. At a settlement conference, Colon agreed to settle her claims against Twenty West and Paul. Ortiz had been served but never appeared, and Judge Denise L. Cote had previously dismissed the claims against him with prejudice after Colon did not seek a default judgment or respond to an order to show cause.

Settlement Terms and Review

The proposed settlement provided for a total payment of $40,000. The agreement allocated $16,757.18 to Colon and $23,242.82 to her counsel for fees and costs. The counsel amount included a $16,000 contingency fee and $7,242.82 in costs.

Under Second Circuit precedent, a court must review and approve a settlement that dismisses FLSA claims with prejudice. The court must determine whether the FLSA settlement is a fair and reasonable compromise rather than an improper waiver of statutory rights.

The parties represented that, based on information obtained in discovery, Colon’s maximum possible recovery on her wage-and-hour claims was approximately $19.50 in overtime pay, including liquidated damages and subject to a possible offset. The parties therefore attributed the entire $40,000 settlement to Colon’s non-FLSA discrimination claims. The court credited those representations and concluded that the FLSA claims had minimal value and that their settlement warranted approval in light of the substantial consideration Colon would receive under the overall agreement.

Ruling

Judge Gary Stein approved the proposed settlement only insofar as it resolved Colon’s FLSA claims. The court expressly did not evaluate or approve the settlement as a whole because the court’s settlement-review authority applied only to the FLSA portion, not to the non-FLSA discrimination claims.

The court also declined to determine whether the attorney’s fees and costs were fair and reasonable. The parties had not provided the hours counsel worked, a lodestar calculation, or support for the claimed costs. The court stated that it did not need to make that determination because the fees and costs were attributed entirely to the non-FLSA claims.

The action was dismissed, and the Clerk of Court was directed to close the case. The order did not add a prejudice designation to that dismissal of the action as a whole.