Lesser v. TIAA Bank, FSB

Background

The court considered the parties’ joint request to approve a proposed settlement under the Fair Labor Standards Act (FLSA). The case concerned TIAA’s compensation of retail, non-office mortgage loan officers through a commission-based structure. TIAA classified those employees as outside-sales employees exempt from overtime requirements. The plaintiffs claimed that they worked an average of 65 hours per week, while TIAA contended that a fair average was closer to 45 hours per week. The parties also disputed whether the employees’ job duties qualified for the exemption.

The settlement followed discovery, two full-day mediations, and further negotiations. It covered 54 plaintiffs and claimants who signed the agreement. Forty-nine pursued their misclassification claims in this court, while five had been parties to arbitration agreements and initially filed claims in arbitration. The opinion states that the five arbitration claimants opted into this action to place themselves within the court’s jurisdiction and carry out the settlement. On August 11, 2020, the American Arbitration Association arbitrator found the agreement fair and reasonable and approved it under the FLSA.

Settlement Terms

TIAA agreed to pay $3,500,000. The four named plaintiffs—Lori Lesser, David Gutfeld, Leidiana Llerena, and Richard Martin—would each receive a $2,500 service award. Counsel would receive $1,166,666 in attorneys’ fees and $10,517 for litigation expenses. The remaining $2,312,817 would be distributed among the 54 signatories. Each signatory would receive a $10,000 base payment plus a prorated amount based on employment length within the applicable limitations period and pay rate. The resulting payments ranged from $11,503.34 to $143,460.51, with an average payment of just over $42,000.

The agreement released claims arising from the same factual basis as the lawsuit and arbitration under the FLSA, the New York Labor Law, the New Jersey Wage Law, the Wage Theft Protection Act, and other labor statutes identified in the agreement. It also included a non-disparagement provision. The provision allowed the signatories to make truthful statements about TIAA and truthful statements about their experience litigating the case.

Court’s Analysis

Under Cheeks v. Freeport Pancake House, Inc., a district court or the Department of Labor must approve certain stipulated dismissals settling FLSA claims. The court found the overall settlement fair and reasonable. The net settlement was approximately 25 percent of the signatories’ maximum possible recovery, including liquidated damages, but was roughly equal to the likely recovery if the plaintiffs succeeded on misclassification but TIAA prevailed on the number of hours worked. Approval also avoided the risks, costs, uncertainty, and delay of continued litigation, including the risk that the employees would be found properly classified as exempt and the risk that a class would not be certified.

The court also found the requested attorneys’ fees and expenses reasonable. The fee was one-third of the net settlement amount. Although the implied hourly rate appeared high and the requested fee would represent a lodestar multiplier above one, the court concluded that a multiplier in the stated range was reasonable given counsel’s contingency risk, the size of the group, and the significant result obtained. The court found the four service awards reasonable because the named plaintiffs assisted with the pleadings, provided information, helped prepare for mediation, and assumed the burdens and risks of serving as named plaintiffs. The court also approved the non-disparagement provision because it expressly permitted truthful statements.

Disposition

The court approved the proposed settlement as it related to claims pending in that court. It ordered that the action be dismissed with prejudice and without costs and directed the Clerk of Court to close the case. The order was signed by United States Magistrate Judge Barbara Moses.