Gomez v. 38th Street Cafe LLC

Background

Altagracia Gomez sued 38th Street Cafe LLC, doing business as Delectica, and Sagi Ohayon. The complaint alleged violations of the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL), including claims involving unpaid wages, overtime, wage notices, and recordkeeping. The parties jointly moved for approval of a settlement agreement.

Because the Department of Labor had not approved the settlement, the court reviewed whether it was fair and reasonable. The court considered the possible recovery, the burdens and expenses of continued litigation, the parties’ litigation risks, whether experienced counsel negotiated at arm’s length, and whether fraud or collusion was present. The court also reviewed the requested attorneys’ fees and costs.

Settlement Amount

The settlement amount was $15,000. Gomez stated that her possible recovery on the FLSA claims could include $15,850 in unpaid wages doubled under the FLSA, up to $10,000 in NYLL notice and recordkeeping damages, and $701.15 in prejudgment interest. The court therefore treated $42,401.15 as the apparent total possible recovery for comparison purposes. The settlement provided Gomez with $15,000 less $5,570 in attorneys’ fees and costs, resulting in an actual recovery of $9,430, or 22.2 percent of the possible recovery.

The court found that recovery reasonable, particularly because the defendants disputed that any underpayment occurred or asserted that any underpayment was minimal. The parties’ mediation had produced documents supporting the existence of a genuine dispute. The court also noted uncertainty about recovering the NYLL notice and recordkeeping damages because the complaint did not specifically allege concrete harm from those violations, as required by relevant standing decisions.

Release and Other Terms

The release covered claims under the FLSA and NYLL, and related regulations, concerning unpaid wages, recordkeeping violations, and failures to provide proper wage notices or wage statements. It applied only to claims arising before the settlement agreement was executed. Because the release was limited to the wage-and-hour claims at issue, the court found it fair and reasonable. The court also found no objectionable release, non-disparagement provision, or confidentiality provision in the remaining terms.

Attorneys’ Fees and Costs

The settlement allocated $5,570 to plaintiff’s counsel for fees and costs, including $5,000 in attorneys’ fees. Counsel’s billing records showed a $350 hourly rate and 26.8 hours worked, which would have produced a lodestar—the reasonable hourly rate multiplied by the reasonable hours—of $9,380. The court found the hourly rate and hours reasonable and concluded that the $5,000 fee was a discount from the lodestar amount.

The court noted a $3 discrepancy in the cost calculation: the stated $402 filing fee and $165 service costs totaled $567, which would make the total fees and costs $5,567 rather than $5,570. The court found that discrepancy insufficient reason to delay approval or Gomez’s compensation.

Ruling

The court found the settlement agreement fair and reasonable and APPROVED it. The parties’ joint motion seeking approval was GRANTED. The action was DISMISSED with prejudice under Federal Rule of Civil Procedure 41(a), and the court retained jurisdiction solely to enforce the settlement agreement.