Dakey v. Dahlia, Inc.

Background

Ama Dakey brought the action against Dahlia, Inc. doing business as Dahlia Flowers and Dahlia Flower Shop, John Ackell, and Greg Ackell. She alleged, among other things, that Defendants failed to pay minimum and overtime wages required by the Fair Labor Standards Act and the New York Labor Law. After reaching a settlement, the parties asked the court to approve their agreement.

Settlement Terms and Fairness Review

The proposed settlement provided a total recovery of $44,000: $28,776 for Dakey, $14,666 in attorney’s fees, and $558 in expenses. Dakey’s counsel reviewed more than five years of her pay records and estimated her possible maximum wage recovery at approximately $55,345, excluding attorney’s fees and costs. Defendants disputed Dakey’s allegations and denied liability, and the parties stated that Dakey’s recovery could otherwise have been only a nominal amount. They also represented that they negotiated at arm’s length and that there was no fraud or collusion.

The court found that the agreement satisfied the factors used to assess whether an FLSA settlement is fair and reasonable. The release was limited to FLSA and New York wage claims that Dakey asserted or could have asserted in this action. The agreement had no confidentiality provision. Although it included a mutual non-disparagement provision, it expressly allowed Dakey to truthfully discuss her experience litigating the wage claims.

The court separately reviewed the requested attorney’s fees and expenses. The fee request was one-third of the settlement proceeds. Counsel’s lodestar calculation—the attorney-hours multiplied by the hourly rates—was $16,240 in fees and $558 in costs. Robert Lash and Scott Hur, the two attorneys representing Dakey, billed 40.6 hours at $400 per hour. Because the requested $14,666 fee was approximately 0.9 times the lodestar and represented about one-third of the recovery, the court found the fees and costs reasonable.

Request for Further Settlement Discussions

After the agreement was fully executed, Defendants told the court that the COVID-19 pandemic made it impossible for them, as a flower shop, to comply with the agreement’s financial terms. They asked the court to refer the case to a magistrate judge for a settlement conference or to the district’s mediation program to help renegotiate the agreement. Dakey opposed the request, arguing that the parties had already entered a reasonable settlement and that the case concerned wages that should have been paid years earlier.

The court acknowledged the financial disruption caused by the COVID-19 crisis but stated that it could not suggest that a fully negotiated and executed agreement was not binding on the parties.

Disposition

Judge Analisa Torres granted the parties’ motion for settlement approval. She denied Defendants’ request to refer the matter to a magistrate judge or the court’s mediation program. The clerk was directed to terminate the motion at ECF No. 28 and close the case.