Melchor Gomez v. Wei Ling Chinese Restaurant LLC

Background

The parties advised the court that they had settled this Fair Labor Standards Act (FLSA) case. The plaintiff alleged that, while employed by the defendants, he received a fixed weekly salary that did not account for overtime hours and was below the applicable minimum wage. He also contended that he spent more than 20 percent of his time performing non-tipped duties, which he argued prevented the defendants from paying him the tip-credit minimum wage.

The parties submitted a settlement agreement and supporting materials. Counsel represented that the plaintiff’s maximum possible recovery was $84,752.78, including $29,466 in back wages. The agreement provided for a total settlement of $40,000, with $13,333.33 allocated to attorney’s fees and $26,666.67 paid to the plaintiff.

Settlement Approval

Because the parties had not obtained approval from the Department of Labor, the court reviewed whether the settlement was fair and reasonable. The court considered the plaintiff’s possible recovery, the burdens and expenses of further litigation, the risks of trial, whether the negotiations were conducted at arm’s length by experienced counsel, and whether fraud or collusion appeared likely.

The court found the settlement amount reasonable. The plaintiff had no records of the hours he worked and would have had to rely on his own recollection and testimony, creating uncertainty about the result at trial. Continuing the case would also require additional time and expense for discovery, motions, and trial, and any recovery could be delayed. The court noted that the settlement amount remaining after attorney’s fees came close to the wages the plaintiff believed he was owed. It also found that the agreement resulted from arm’s-length negotiations after extensive discovery, including depositions, and found no basis to believe that fraud or collusion was involved.

Attorney’s Fees

The settlement allocated $13,333 in attorney’s fees, approximately one-third of the total settlement. Plaintiff’s counsel submitted billing records and costs and represented that the plaintiff’s retainer agreement provided for a 40 percent contingency fee, which was greater than the percentage requested in the settlement.

Counsel reported spending 15.35 hours on the case, including document discovery, mediation, and issues arising when defendants’ counsel left during settlement discussions. The court calculated that the requested fee represented a 3.3 multiplier of counsel’s lodestar, meaning the fee calculated from counsel’s time and hourly rates. Although the multiplier was toward the higher end of the range the court considered reasonable, the court emphasized the degree of success obtained and found the fee reasonable because the plaintiff recovered almost all of the back wages he claimed while avoiding the costs and uncertainty of trial.

Disposition

Judge Vernon S. Broderick found the proposed settlement fair and reasonable and approved the parties’ settlement agreement. The court directed the Clerk of Court to close the case.