Guajardo v. Titan Construction Services LLC

Background

Fourteen plaintiffs brought claims against Titan Construction Services LLC, Eric Mercado, Jose Garcia, Abimael Garcia, and Vivi NY Corporation under the Fair Labor Standards Act (FLSA) and New York Labor Law. The plaintiffs alleged that they worked 45 or more hours per week at various times from May 2018 through August 2018 but were not properly paid overtime, unpaid wages, or minimum wages. They also alleged failures involving required wage notices, recordkeeping, and wage statements.

The plaintiffs filed their original complaint on February 19, 2019, and an amended complaint on April 16, 2019. Although the amended complaint indicated an intention to seek collective-action treatment, the parties settled before the plaintiffs filed a motion for conditional certification.

Settlement-Approval Standard

Because the proposed agreement settled FLSA claims, the court reviewed it under the requirement that such settlements receive court or Department of Labor approval. The court applied the factors identified in Wolinsky v. Scholastic Inc., including the plaintiffs’ possible recovery, the burdens and expenses avoided through settlement, litigation risks, whether the negotiations were conducted at arm’s length, and the possibility of fraud or collusion.

Court’s Analysis

The plaintiffs estimated their potential recovery under the FLSA and New York Labor Law at approximately $267,000. The proposed settlement totaled $90,000. The plaintiffs would receive $59,286, and their counsel would receive $30,714 in fees and costs. The court described the plaintiffs’ recovery as approximately 22% of their alleged damages and found the amount reasonable in light of the litigation risks.

The defendants disputed liability. Titan argued that, as the general contractor, it was not the plaintiffs’ employer under the law. Vivi argued that the plaintiffs had been properly compensated and that records showed some plaintiffs had not worked for Vivi. Vivi also alleged that Titan was the plaintiffs’ actual employer. The court concluded that settlement would avoid the burdens and expense of litigating these disputes and preparing for trial.

The parties represented that the agreement resulted from extensive negotiations, including mediation through the court-annexed mediation program. The court found no evidence of fraud or collusion. It also found the release appropriately limited to employment-related wage-and-hour claims through the date the agreement was executed.

The agreement did not include a confidentiality or non-disparagement provision. The court found the $30,714 award for attorneys’ fees and costs reasonable. That amount included $1,070 in expenses and one-third of the settlement amount remaining after expenses.

Disposition

Judge Ona T. Wang approved the parties’ proposed settlement agreement as fair and reasonable. The court ordered that the action be dismissed with prejudice and directed the Clerk to close the case.