Bondi v. DeFalco

Background

Plaintiffs Anastasia Bondi, Maria Caporale, Jasmin Hernandez, Jessica Sarfafy, Monique Mazzei, Matt Cam, Noel Pugliesk, and others similarly situated sued New Rochelle Hotel Associates doing business as Noma Social, Michael DeFalco, Colby Brock Gualano, and Peter Brock. The opinion states that the case began in 2017 and that four additional named plaintiffs were added through amended complaints.

The plaintiffs alleged that the defendants improperly used a tip credit because tipped food-service workers did not receive legally required notice of the tip credit. They also alleged that the defendants failed to pay a New York spread-of-hours premium for workdays longer than 10 hours and failed to provide required wage notices. The plaintiffs sought the difference between the applicable minimum wage and the wage paid, spread-of-hours pay, liquidated damages, attorneys’ fees, and statutory penalties under the Fair Labor Standards Act and the New York Labor Law.

The plaintiffs previously sought certification of a federal wage collective and a New York class. A magistrate judge recommended denying that request without prejudice, and the district court adopted that recommendation on February 6, 2019. The parties then negotiated a Joint Stipulation of Settlement and Release.

Proposed settlement

The settlement would resolve the participating class members’ claims under the Fair Labor Standards Act and all claims under the New York Labor Law in this litigation. The proposed class included the named plaintiffs, people who timely submitted a claim form during the acceptance period, and individuals who worked as tipped food-service employees at the defendants’ restaurant from July 26, 2011, through the order’s issuance date.

The agreement created a settlement fund of up to $193,000. Attorneys’ fees, claims-administration fees, and any applicable service awards would be paid from the fund before distributions to class members. New Rochelle Hotel Associates would pay the employer’s share of payroll taxes associated with wage payments and would be responsible for certain administration fees if the court did not grant final approval.

Under the allocation formula, a participating class member’s share would be based on hours worked during the relevant periods and the amount of tip credit applied during those periods. The agreement also provided a minimum allocation for participating class members who did not work during weeks before August 2017.

Court’s analysis and ruling

Preliminary approval is an initial review of a proposed class settlement. It allows notice to be sent to class members and gives them an opportunity to submit claims, object, or opt out before the court conducts a final fairness review. The court stated that preliminary approval requires a finding that the settlement appears to fall within the possible range of final approval.

Judge Kenneth M. Karas found that the proposed settlement and allocation formula were within that range. He also found that the agreement resulted from extensive, arm’s-length negotiations by counsel experienced in wage-and-hour class and collective actions. The court therefore granted preliminary approval of the settlement.

The court also approved the proposed notice for settlement purposes and directed that it be distributed to class members. It found that the notice complied with due-process requirements and Federal Rule of Civil Procedure 23 because it described the case, the settlement, class-member rights, the ability to object or opt out, and the planned final-approval hearing.

Settlement procedure ordered

New Rochelle Hotel Associates was directed to provide the claims administrator with available class-member information within 15 calendar days after the order. The claims administrator was then directed to mail the approved notice and claim form within 15 calendar days after receiving that information.

Class members would have 60 days after the notices were mailed to submit a settlement claim, opt out, or object. The court directed that a final fairness hearing occur no sooner than 100 days after the order, although the opinion’s reproduced hearing-date fields appear blank or unclear. The parties were required to file a motion for final approval before that hearing.

The order stated that, if the court later granted final approval, it would issue a final order and judgment for dismissal. The present order itself granted preliminary approval and approved the notice; it did not grant final approval.