Arango v. The Scotts Company, LLC

Background

Andres Arango sued The Scotts Company, LLC and EG Systems, Inc. under the Fair Labor Standards Act (FLSA), the New York Labor Law, and New York wage regulations. Arango alleged that he worked as a lawn care technician and was a non-exempt employee. He claimed that the defendants improperly used the “fluctuating work week” method to calculate overtime and failed to pay him one and one-half times his regular rate for all hours worked over 40 in a week. He also alleged that he was not paid additional wages required by New York’s spread-of-hours rules when he worked more than 10 hours in a day.

Earlier Settlement Submissions

The court denied an earlier settlement submission without prejudice on January 7, 2019, because the parties had not provided enough information to evaluate the settlement’s fairness, had included a confidentiality provision, had proposed an overly broad release, and had not provided enough information to evaluate the requested attorneys’ fees.

The court denied a second settlement submission without prejudice on December 18, 2019, because the information supporting the settlement remained insufficient, the covenant not to sue was broader than the revised release, and Arango’s counsel had not provided billing records supporting the fee request. Arango then filed the motion addressed in this order and submitted a revised settlement agreement, a damages spreadsheet, an explanation of the damages calculations, and time records for counsel’s work.

Settlement Approval

Because the FLSA is a federal statute requiring court approval of stipulated dismissals settling FLSA claims with prejudice, the court evaluated whether the parties’ agreement was fair and reasonable. The court considered the settlement’s relationship to Arango’s possible recovery, the burdens and expenses the parties would avoid, litigation risks, the parties’ negotiations, and the possibility of fraud or collusion.

The court found that the agreement was negotiated in good faith and at arm’s length, with no fraud or collusion. It also found that the settlement would allow the parties to avoid the burdens, costs, and risks of continued litigation, including extensive discovery involving time and pay records, motion practice, and potential appeals.

Arango was to receive $28,366.06, excluding attorneys’ fees and costs. The court stated that this represented 67% of his owed wages under the New York Labor Law and approximately 34% of his total possible recovery when liquidated damages were included. The court found this amount fair and reasonable in light of the litigation risks, the parties’ representations, and the supporting damages spreadsheet.

The revised release covered claims pleaded in the action or reasonably related to those claims, including wage, overtime, minimum-wage, wage-notice, wage-statement, pay-frequency, and spread-of-hours claims. The court found that the release did not improperly waive unrelated claims. The revised covenant not to sue used matching limitations and was also sufficiently narrow.

Attorneys’ Fees and Costs

The settlement provided for $11,200 in attorneys’ fees and costs from a total settlement amount of $39,566.06, or approximately 28% of the total recovery. Counsel submitted time records supporting the request. Based on a billing rate of $375 per hour, the records reflected a lodestar amount of $21,393.75, meaning the reasonable hours multiplied by the hourly rate. The requested $11,200 was slightly more than half that amount and below the one-third percentage commonly awarded in FLSA settlements. The court therefore approved the requested attorneys’ fees and costs.

Disposition

The court granted Arango’s motion for approval of the proposed settlement and directed the Clerk of Court to close the case. The order approved the settlement; it did not decide whether the defendants actually violated the FLSA or New York law.