Araus v. Primos Live Poultry Inc.

Background

Ludin Araus sued Primos Live Poultry Inc., Primos Live Poultry 1 Inc., Pedro Enriques Rodriguez, Abdunaser Salem, Adel Salem, and Primos Poultry Corp. The complaint asserted claims under the Fair Labor Standards Act, a federal wage law, and the New York Labor Law.

Araus reached a settlement with Primos Live Poultry Inc., Primos Live Poultry 1 Inc., and Pedro Enriques Rodriguez. The settlement did not include Abdunaser Salem, Adel Salem, or Primos Poultry Corp. The settlement was reached with assistance from the court’s mediation program.

Court’s Review

Because the complaint included Fair Labor Standards Act claims, the court was required to review the settlement. The court directed Araus and the three settling defendants to submit a joint letter explaining why the settlement was fair and reasonable, the settlement agreement, and materials supporting the request for attorneys’ fees and costs.

The court considered the factors required under Fair Labor Standards Act law, including Araus’s possible recovery, the burdens and expenses the parties could avoid by settling, the seriousness of the litigation risks, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion.

The court concluded that the settlement was fair and reasonable. Araus would receive a significant settlement sum, although he might receive a small additional amount if the case went to trial. The court found that the parties faced serious litigation risks and that using an experienced mediator supported the conclusion that the settlement resulted from arm’s-length bargaining rather than fraud or collusion.

Attorneys’ Fees and Disposition

The court separately reviewed the requested attorneys’ fees. The proposed fees were approximately one-third of the total settlement amount after costs were deducted. The court noted that courts in the circuit commonly approve one-third contingency fees and that the lodestar amount—the fees calculated from counsel’s time and rates—exceeded the requested contingency fee.

Judge Mary Kay Vyskocil approved the proposed settlement between Araus and the settling defendants and approved the requested attorneys’ fees and costs. The Clerk of Court was requested to terminate the case as to Primos Live Poultry Inc., Primos Live Poultry 1 Inc., and Pedro Enriques Rodriguez only.