Martinez v. Parkash 2125 LLC

Background

Rolando Lopez Martinez sued Parkash 2125 LLC, Anurag Parkash, and Ved Parkash. He alleged that, while employed as a live-in building superintendent, he was not paid the lawful minimum wage or overtime compensation and was not given proper wage and notice statements. He asserted claims under the Fair Labor Standards Act (FLSA), the New York Labor Law, and the Wage Theft Prevention Act.

The defendants answered and asserted counterclaims under the faithless-servant doctrine, alleging that Lopez Martinez engaged in disloyal conduct from approximately January 2020 until his termination on January 29, 2024. The defendants also filed an eviction action against him in Bronx County Civil Court. The parties initially prepared for a jury trial, later agreed to proceed to binding arbitration, and ultimately reported that they had reached a settlement in principle before arbitration occurred.

Settlement Approval Standard

The court explained that, in the Second Circuit, parties generally cannot privately settle FLSA claims with prejudice without approval from a federal district court or the Department of Labor. The court therefore had to determine whether the agreement was fair and reasonable. It considered the possible recovery, the burdens and expenses avoided through settlement, the risks of litigation, whether the agreement resulted from arm’s-length negotiations by experienced counsel, and the possibility of fraud or collusion.

Settlement Amount

The agreement provides for a total recovery of $40,000. Lopez Martinez’s counsel will receive $11,967.53 in attorney fees and costs, leaving $28,032.47 for Lopez Martinez. The opinion states that Lopez Martinez did not identify the maximum amount he might have recovered for unpaid wages, but he and the defendants viewed the settlement as reasonable because of the case’s uncertainty, the defendants’ counterclaims, and the risks, delays, and expenses of arbitration or trial.

The defendants must pay the first $30,000 within two weeks after the agreement is executed. They must pay the remaining $10,000 on December 31, 2025, provided that Lopez Martinez vacates the residence where he lived and worked by that date. The defendants may deduct from that final payment the costs of removing, transporting, or disposing of personal property Lopez Martinez leaves behind.

The court found that the settlement resolved genuine disputes, reflected a reasonable compromise, fairly compensated Lopez Martinez, and resulted from negotiations in which both sides were represented by experienced wage-and-hour attorneys.

Attorney Fees and Costs

The court approved $11,967.53 in attorney fees and costs. It found that the approximately one-third share of the settlement was reasonable in FLSA cases. As an additional check, the court used the lodestar method, which multiplies a reasonable hourly rate by the reasonable hours worked. The court accepted hourly rates of $500 for Michael Samuel and $400 for Andrew D. Beresin. Their work produced a lodestar of $20,430, making the requested payment approximately 0.59 times the lodestar. The court found the resulting fees and costs reasonable under the circumstances.

Other Settlement Terms

The agreement releases wage-related claims against the defendants, including claims under the FLSA and New York wage laws and unpaid-wage claims connected to the landlord-tenant action. The court found this release sufficiently limited because it concerned wage-and-hour matters rather than unrelated claims.

The agreement contains no confidentiality provision. It includes a mutual non-disparagement provision addressing false derogatory, disparaging, or defamatory statements. The provision also allows Lopez Martinez to make truthful statements about his experience litigating the case. The court found these terms fair and reasonable.

Disposition

Judge Edgardo Ramos granted the motion for settlement approval. The clerk was directed to terminate the motion, Doc. 54, and close the case.