Martinez v. Chestnut Holdings of New York, Inc.

Background

Jesus Martinez sued Chestnut Holdings of New York, Inc., 219 LLC, and Prana Real Estate Equity Funds, LLC under the Fair Labor Standards Act, the Family and Medical Leave Act, the New York Labor Law, and the New York City Human Rights Law. He alleged unpaid overtime, failure to pay minimum wage, failure to provide wage statements, retaliation, interference with protected leave rights, and disability discrimination.

Martinez alleged that he was hired in 2007 as a residential superintendent and lived with his family in a basement apartment in the building as a condition of his employment. He claimed that he worked seven days a week and about 67 hours per week while receiving a flat weekly wage that increased from $375 to $426.50. After the building was sold to Chestnut in 2016, he received disciplinary warnings concerning his occupancy of the basement apartment. He later injured his knee while checking the building’s boiler, requested time off after receiving a doctor’s note, and was terminated soon afterward. The opinion states that he was not given a reason for the termination and that Chestnut sought to evict him about two weeks later.

Martinez previously settled with Prana in January 2019. That settlement was approved by Judge Gregory H. Woods. The proposed settlement considered in this opinion was between Martinez and the remaining parties.

Settlement-review standard

Because the claims included claims under the Fair Labor Standards Act, the court reviewed the proposed settlement under the Second Circuit’s requirement that certain FLSA settlements receive approval from a court or the Department of Labor. The court applied factors addressing the possible recovery, the litigation burdens and expenses avoided by settlement, the parties’ litigation risks, whether the agreement resulted from arm’s-length negotiations, and possible fraud or collusion.

Court’s analysis

Martinez alleged a maximum FLSA recovery of approximately $40,484, consisting of $20,242 in unpaid wages and $20,242 in additional damages. The proposed settlement totaled $31,483.72. Martinez would receive $25,000, and his attorneys would receive $6,483.72 in fees and costs. The court found Martinez’s payment reasonable because it represented about 61 percent of his alleged maximum damages and exceeded the alleged unpaid-wage amount.

The parties identified significant factual disputes. Martinez alleged that he worked about 67 hours per week, while the defendants stated that they would present witnesses and payroll records supporting a lower number of hours. Settlement also avoided anticipated attorney time, interpreter expenses, deposition costs, and trial costs.

The parties represented that they engaged in extensive negotiations, including mediation, and the court found no evidence of fraud or collusion. The court also found that the release was appropriately limited to employment-related claims through the date the agreement was executed and did not extend beyond wage-and-hour issues. The agreement contained no confidentiality or non-disparagement provision.

The court found the requested $6,483.72 in attorney fees and costs reasonable. The amount was approximately 21 percent of the total settlement and was below the total fees and costs documented by counsel. The court questioned some of the billing rates but did not need to resolve that issue because the requested amount remained below the potential lodestar calculation.

Disposition

The court approved the parties’ proposed settlement as fair and reasonable. It ordered that the action be dismissed with prejudice and without costs. It also ordered that pending motions be terminated as moot and canceled all conferences. The opinion approved the settlement rather than deciding the underlying wage, retaliation, leave, or discrimination claims on their merits.