Hernandez v. Liberty One Bronx LLC

Background

Juan Hernandez brought this action under the Fair Labor Standards Act, a federal law governing certain wage and hour rights. Hernandez and Defendant 922 Southern LLC advised the court that they had agreed in principle to settle the case after participating in the Second Circuit’s mediation and settlement program.

The district court had ordered the parties to explain why the proposed settlement should be approved. Hernandez filed a motion seeking approval under the Second Circuit’s requirements for reviewing Fair Labor Standards Act settlements.

Court’s analysis

The case was then pending on appeal. As a result, the district court no longer had authority to grant the requested relief directly. Federal Rule of Civil Procedure 62.1 nevertheless allowed the court to issue an indicative ruling stating how it would decide a motion if the appeals court remanded the case.

The court reviewed the proposed settlement under the fairness factors described in Wolinsky v. Scholastic, Inc. It found the settlement fair and reasonable in light of the nature and scope of Hernandez’s individual claim, as well as the risks and costs of further litigation. The court also noted that Hernandez no longer worked for the defendant, reducing concerns that the settlement or waiver had been obtained through job-related pressure. The agreement did not require Hernandez to release or waive claims that had not yet arisen.

Hernandez also sought approval of $600 in attorney’s fees, described as one-third of the settlement payment. The court acknowledged that the fee was high compared with the size of the claim and recovery, but found no reason to reduce it because there were no additional opt-in plaintiffs, the case was not a collective action, and the fee was based on an agreement between Hernandez and the attorney. The court also noted that courts in the circuit commonly approve fees of about 30% to 33% of a recovery.

Indicative ruling

The court stated that, if the Second Circuit remanded the case for the purpose of approving the proposed settlement, it would approve the settlement subject to one condition: the court would have to approve any modification of the settlement, even if the agreement purported to allow the parties to modify it without court approval.

The court would also approve the $600 attorney’s-fee request. The parties were directed to promptly notify the Second Circuit Clerk of Court of the indicative ruling under the applicable appellate and civil procedure rules.

Disposition

The court did not directly approve the settlement because the appeal prevented it from granting relief at that time. Instead, Judge Jeannette A. Vargas issued an indicative ruling that she would approve the settlement and the $600 fee request if the Second Circuit remanded the matter, subject to the stated condition.