Tung v. Banzai Steakhouse Inc.

Background

Tzu-Hsiang Tung sued Banzai Steakhouse Inc. and Karl Shao on behalf of himself and similarly situated employees. He alleged violations of the Fair Labor Standards Act and New York Labor Law arising from his work as a waiter from April 14, 2022, through June 1, 2022. The claims alleged failure to pay the required minimum wage and overtime, deprivation of tips, failure to provide required wage statements and notices, and failure to pay an additional premium for shifts lasting more than 10 hours. Tung sought unpaid wages, overtime, spread-of-hours premiums, tips, damages, liquidated damages, interest, attorneys’ fees, and costs.

The parties reached an agreement in principle and asked the court to approve their settlement. Under the proposed agreement, the defendants would pay $12,000. Tung would retain $7,473, and his counsel would receive $4,000 in fees plus $527 in costs.

Court’s Review of the Settlement

Because the case involved claims under the Fair Labor Standards Act, the court explained that a settlement ending those claims required approval by the court or the Department of Labor. The court therefore had to determine whether the agreement was fair and reasonable. It considered the possible recovery, litigation costs and risks, the negotiation process, possible fraud or collusion, similarly situated employees, the likelihood of recurring harm, the release provision, and the requested attorneys’ fees.

The parties estimated Tung’s maximum recovery at approximately $17,850.20, including liquidated damages. The court calculated that the listed components of his claimed damages totaled $19,330.00, making the proposed recovery just under 66 percent of that calculation. The court stated that this percentage might be acceptable, but held that the parties needed to clarify and substantiate their estimates before the court could evaluate the settlement amount accurately.

The court was satisfied with the parties’ representation that the agreement was negotiated competently, in good faith, and at arm’s length, without fraud or collusion. Tung had notified five potentially similarly situated individuals, but none returned consent forms. The court found that this fact supported approval. Because Tung no longer worked for the defendants, the court also found a low likelihood that the circumstances would recur, which supported approval.

Release Provision

The court rejected the proposed release because it was not limited to the wage-and-hour claims at issue. The release covered all claims arising under the Fair Labor Standards Act, New York Labor Law, or any other statute, regulation, or authority related to claims alleged or that could have been alleged in the complaint. The court concluded that, read literally, the provision could release claims unrelated to the wage-and-hour dispute and could potentially include claims under provisions of the Fair Labor Standards Act that had no connection to this case.

Attorneys’ Fees

The court found the requested attorneys’ fees reasonable. It noted that Tung’s counsel sought $4,000 in fees and $527 in costs, approximately one-third of the total settlement. The court explained that one-third is routinely awarded in Fair Labor Standards Act settlements and concluded that the fee request was reasonable.

Disposition

Judge Kenneth M. Karas denied without prejudice the request to approve the proposed settlement. The parties may reapply for approval of a settlement that complies with the order.