Heredia v. Americare, Inc.
- Robert Lehrburger
- 1:17-cv-06219
- U.S. District Court · Southern District of New York
- 3
In Heredia v. Americare, Judge Lehrburger declined to approve a wage settlement because plaintiffs’ counsel would receive 64% of it.
The plaintiffs, plaintiffs’ counsel, and defendants in the proposed Fair Labor Standards Act settlement were affected. The court did not approve the settlement as structured and required a lower attorney-fee percentage for approval of a revised agreement.
What happened
Heredia v. Americare, Inc. is a wage-and-hour case under the Fair Labor Standards Act. The parties proposed settling the case for $75,000, with $48,000—or 64%—going to the plaintiffs’ lawyers as fees.
The court said that fee percentage was much higher than the usual one-third share in similar cases and found no extraordinary circumstances justifying it. The court also explained that a decision allowing fees larger than a plaintiff’s recovery from a defendant did not control the separate question of how settlement money should be divided between clients and their lawyers.
Judge Robert W. Lehrburger did not approve the settlement as structured. He stated that the court would approve a revised agreement if attorney fees, excluding costs, were reduced to one-third of the amount paid by defendants, and directed the parties to file any revised agreement by November 27, 2019.
The detailed version
- Heredia v. Americare, Inc. · No. 1:17-cv-06219
- Robert Lehrburger
- Nov. 13, 2019
Background
The opinion concerns a proposed settlement in a collective wage-and-hour action under the Fair Labor Standards Act. The parties submitted a settlement agreement for court review. The agreement provided for a total payment of $75,000. Of that amount, $48,000, or 64%, would be paid to plaintiffs’ counsel as attorney fees. The opinion states that, after fees and costs were deducted, the plaintiffs would receive approximately 62% of the overtime wages in dispute.
Court’s analysis
The court explained that it must review an FLSA settlement to determine whether it is fair and reasonable. It cited decisions from the Southern District of New York generally declining to approve attorney-fee awards greater than one-third of the total settlement in ordinary cases. The court found that counsel sought nearly twice the usual percentage and that the case was not extraordinary.
The court also rejected plaintiffs’ counsel’s reliance on a Second Circuit decision that approved attorney fees exceeding the plaintiff’s financial recovery after trial. According to the court, that decision concerned the amount of fees a plaintiff could recover from a defendant, not the separate financial arrangement between a plaintiff and the plaintiff’s counsel in a settlement. The court acknowledged that the proposed $48,000 fee was below the lodestar amount calculated by counsel, but said that this did not justify an imbalance between the attorneys’ payment and the clients’ payment.
Disposition
The court did not approve the proposed settlement agreement in its current form. It stated that it would approve a revised agreement if attorney fees, not including costs, were reduced to one-third of the overall amount paid by defendants. The parties were directed to file any revised agreement by November 27, 2019. Judge Robert W. Lehrburger entered the order on November 13, 2019.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.