Brown v. City of New York

Background

In 2017, 320 current and former employees of the New York City Department of Homeless Services sued the City under the Fair Labor Standards Act (FLSA), a federal wage-and-hour law. The plaintiffs worked as Peace Officers and Peace Sergeants from November 2014 to the present, according to the opinion. They alleged that the City violated the FLSA by failing to include certain differentials and allowances when calculating their regular pay rate, failing to pay overtime properly, and failing to pay overtime compensation on time.

After extensive discovery, the parties reported that they had reached a settlement. The proposed agreement required the City to pay $176,859.84 in total. Plaintiffs would receive $25,896.48 in backpay and $58,963.36 in liquidated damages, meaning additional damages available under the FLSA. The remaining $92,000 covered attorneys’ fees and expenses.

The settlement divided the backpay and liquidated damages using individual timekeeping and payroll data supplied by the City. The plaintiffs’ counsel used City records through June 2018 and extrapolated data through February 2019 for plaintiffs who were still working for the Department. Each plaintiff was told how the calculation worked and had opportunities to challenge both their own recovery and other plaintiffs’ recovery. The plaintiffs also received notice of the requested fees and expenses.

Settlement analysis

The court explained that FLSA settlements must be approved by a court or the Department of Labor and must be fair and reasonable. It considered the plaintiffs’ possible recovery, the costs and burdens avoided by settlement, the risks of continued litigation, whether the agreement resulted from negotiations between experienced counsel, and whether fraud or collusion appeared.

The plaintiffs estimated that their full recovery could be $108,712.35. The settlement provided approximately $85,000 for the plaintiffs. The parties disputed whether the City had violated the FLSA and whether any violations were willful. The court noted that the City’s good-faith defense could eliminate liquidated damages and reduce the limitations period from three years to two years. The court also noted that continued litigation would involve further briefing, possible summary-judgment motions, and a trial on damages.

The court concluded that the settlement was a fair compromise of genuine disputes. It also found no evidence undermining the parties’ representation that the negotiations were conducted in good faith and at arm’s length, and no indication of fraud or collusion.

Attorneys’ fees and costs

The City agreed to pay $92,000 to plaintiffs’ two law firms, Steele Elkin LLP and Spivak Lipton LLP. That amount included $7,691.61 in expenses. The court reviewed detailed billing records and applied the lodestar method as a cross-check. The lodestar is a presumptively reasonable fee calculated by multiplying a reasonable hourly rate by a reasonable number of hours worked.

Counsel calculated a lodestar of $160,230. The court found the attorneys’ hourly rates and hours reasonable, including because of the case’s complexity, the lawyers’ experience, and their work analyzing extensive payroll data. The $84,308.39 fee portion of the settlement represented a 48% reduction from the proposed lodestar. The court also found the requested costs reasonable.

Disposition

Judge Alison J. Nathan approved the settlement agreement in full, including the attorneys’ fees and costs. The court directed the Clerk of Court to enter judgment and close the case.