Almazo Vidal v. The Draft House LLC

Background

The court considered the parties’ revised proposed settlement in this Fair Labor Standards Act (FLSA) case. The court had rejected an earlier proposed agreement because it contained an overbroad release. The revised agreement limited the released claims to those at issue in the action. It also provided that the plaintiff would not sue over FLSA violations that accrued before the agreement was executed.

The court explained that parties cannot privately settle FLSA claims with prejudice without approval from the court or the Department of Labor. Because there was no Department of Labor approval, the court reviewed whether the settlement was fair and reasonable.

Settlement Amount

The agreement provided for a total settlement of $15,000. Of that amount, $5,000 was allocated to attorney’s fees and costs, leaving a total distribution of $10,000 to the plaintiffs. Counsel represented that the maximum recovery claimed in the case was $30,061.59.

The parties argued that the lower settlement amount was fair because the defendant disputed the allegations, including the hours worked, pay received, and whether proper notices and statements had been provided. The court noted that success on those defenses could have resulted in no compensation for the claims. The court also found that the agreement appeared to result from arm’s-length negotiations, that the case settled before substantial discovery, and that settlement avoided the costs of discovery, motion practice, and trial. The court found no basis to believe that fraud or collusion was involved.

Attorney’s Fees and Costs

The requested attorney’s fees and costs totaled $5,000, including $613 in costs. Plaintiffs’ counsel submitted billing records showing $4,488 in fees and costs and represented that the plaintiffs had agreed to a 40% contingency fee at the beginning of the litigation.

The court found that a fee equal to one-third of the settlement was reasonable. It considered counsel’s work investigating and researching the claims, beginning the process of seeking default judgments after defendants failed to appear on time, and negotiating and completing the settlement. The court also noted that the requested amount represented a lodestar multiplier of 0.90 based on 11.05 hours of work: 6.5 hours by attorney Michael Faillace at $450 per hour, 3.3 hours by attorney Haleigh Amant at $250 per hour, and 1.25 hours by a paralegal at $100 per hour.

Ruling

Judge Vernon S. Broderick found the settlement agreement, including the release and the attorney’s fees, fair and reasonable. The court approved the parties’ settlement agreement and directed the Clerk of Court to close the case.