Mangahas v. Eight Oranges Inc. d/b/a The Bao

Background

Jessy Mangahas and Pithchaya Wohlfahrt, along with other workers, sued Eight Oranges Inc. doing business as The Bao, Chibaola, Inc. doing business as Uluh, Joanne Hong Bao, and Richard Lam. They alleged violations of the Fair Labor Standards Act of 1938 (FLSA) and the New York Labor Law, including failure to pay minimum wages and overtime, improper tip-credit notices and tip pooling, unlawful deductions, excessive non-tipped work, and defective wage notices and statements. Mangahas and Wohlfahrt also asserted retaliation claims.

The court had previously certified a class of tipped workers at The Bao and Uluh and conditionally certified a group under the FLSA. In October 2024, the court granted in part and denied in part the plaintiffs’ motion for summary judgment. It ruled for the plaintiffs on several liability issues, including that certain defendants were employers, that the restaurants operated as one integrated enterprise, and that defendants violated state-law rules concerning tips and uniform expenses. The court left damages, some claims against Hong Bao, and wage-notice and wage-statement issues unresolved. The parties later reached a settlement while preparing for trial.

Settlement Terms

The settlement required defendants to pay a gross amount of $1,750,000. The fund would cover payments to class members and plaintiffs, attorneys’ fees and litigation costs, service awards, and claims-administration expenses. Eligible class members would receive payments without submitting claim forms. The allocation would generally be based on hours worked at the tip-credit rate between October 15, 2015, and October 1, 2023. FLSA opt-in plaintiffs would receive 1.25 points for each qualifying hour, while other class members would receive one point.

The agreement allowed counsel to seek up to $583,333.33 in attorneys’ fees, up to $40,000 in litigation expenses, and up to $35,000 for the Claims Administrator. It also provided service awards to named plaintiffs and certain opt-in plaintiffs. Notices were mailed in English and Mandarin to 187 class members, with additional publication and restaurant postings. Six mailed notices remained undeliverable, no objections were filed, and two class members opted out.

Class Certification and Settlement Approval

The court confirmed certification of the settlement class under Federal Rule of Civil Procedure 23. It found that the class was sufficiently numerous, that common questions concerned the restaurants’ wage practices, that Mangahas and Wohlfahrt’s claims were typical, and that they and class counsel adequately represented the class. The court also found that common issues predominated and that a class action was the best method for resolving the dispute.

Applying Rule 23’s requirements and the Second Circuit’s settlement-fairness factors, the court found the settlement fair, reasonable, and adequate. The court emphasized the extensive litigation and discovery, the parties’ arm’s-length negotiations with assistance from Magistrate Judge Tarnofsky, the lack of objections, the risks concerning damages and the wage-notice claims, and defendants’ asserted financial limitations. The court also found that the distribution method treated class members equitably, including the modest increase for FLSA opt-in plaintiffs in recognition of their additional litigation burdens.

Because the agreement also resolved FLSA claims, the court separately reviewed it under the standard requiring a fair and reasonable compromise rather than a waiver of statutory rights. The court found that the settlement met that standard and was not the product of inadequate representation or improper conduct.

The court approved the settlement except for the provision stating that unclaimed funds would return to defendants. It rejected that provision because reversion could weaken the settlement’s deterrent purpose and create the appearance of a conflict of interest. The court instead directed that remaining funds go to a labor-law-related charity chosen by the parties and approved by the court. The court also approved additional notice and reminder procedures intended to increase the number of cashed settlement checks.

Fees, Expenses, and Service Awards

The court approved class counsel’s request for one-third of the settlement fund in attorneys’ fees, using a lodestar calculation as a reasonableness check. Counsel reported 1,036.4 hours of work and a lodestar of approximately $396,657. The court found the requested $583,333.33 fee reasonable in light of the time spent, the complexity and risks of the case, counsel’s quality of representation, the contingency arrangement, and the results obtained.

The court also approved $39,455.13 in litigation expenses as reasonable and necessary, and approved claims-administration fees estimated not to exceed $35,000. It approved service awards totaling $100,000 for Mangahas, Wohlfahrt, and specified opt-in plaintiffs based on their participation, discovery obligations, risks, and contributions to the litigation.

Disposition

Judge Lewis J. Liman granted the plaintiffs’ motion for certification of the settlement class and final approval of the settlement under Rule 23 and the FLSA, except that the court did not approve the reversion of unclaimed funds to defendants. The court granted class counsel’s motion for fees, costs, and administrative expenses, and granted the motion for service awards. The clerk was directed to close the motion docket entry and enter judgment.