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, a federal wage-and-hour law. The plaintiffs worked as Peace Officers and Peace Sergeants from November 2014 through the time described in the complaint. They alleged that the City violated the law by failing to include certain differentials and allowances when calculating their regular pay rate, failing to pay overtime correctly, and failing to pay overtime compensation on time.

After about two years and extensive discovery, the parties reported that they had reached a settlement. The proposed agreement covered the plaintiffs’ recovery under a 2.5-year limitations period. The opinion also noted a related case with similar, but not identical, claims; this case did not include claims for unpaid pre-shift, post-shift, or meal-period overtime work.

Settlement Terms

The City agreed to pay $176,859.84, including attorneys’ fees and costs. The plaintiffs would receive $25,896.48 in backpay and $58,963.36 in liquidated damages, for a total recovery of $84,859.84. The payments would be divided using each plaintiff’s timekeeping and payroll information. Plaintiffs’ counsel informed each plaintiff how the amount was calculated, and plaintiffs could dispute their own or other plaintiffs’ recovery amounts.

The plaintiffs stated that their potential full recovery was $108,712.35. The settlement provided full backpay for the regular-rate and compensatory-time claims under the 2.5-year limitations period, full liquidated damages for the late-payment claim, and 75% liquidated damages on the backpay claims.

The City denied the plaintiffs’ allegations. The parties disputed, among other things, whether the City’s conduct was willful. The court explained that if the City succeeded on its good-faith defense, the plaintiffs could lose liquidated damages and face a shorter limitations period. Continuing the case would also require additional litigation, including summary-judgment briefing and a trial on damages.

Court’s Analysis

Under the Fair Labor Standards Act, a court or the Department of Labor must approve a settlement in an FLSA case. The court must determine that the agreement is fair and reasonable and reflects a reasonable compromise of disputed issues rather than an employer’s improper waiver of workers’ rights.

Judge Nathan considered the plaintiffs’ possible recovery, the costs and burdens of continued litigation, the risks faced by both sides, the parties’ negotiations, and whether fraud or collusion was involved. The court found that the settlement gave the plaintiffs a substantial portion of their possible recovery, addressed genuine disputes, avoided lengthy and expensive further litigation, and resulted from good-faith negotiations. Nothing in the record suggested fraud or collusion.

Attorneys’ Fees and Costs

The City also agreed to pay $92,000 to the two law firms representing the plaintiffs, Steele Elkin LLP and Spivak Lipton LLP. That amount included $7,691.61 in expenses. The court reviewed detailed billing records and used the lodestar method as a cross-check. The lodestar is an estimated reasonable fee based on a reasonable hourly rate multiplied by a reasonable number of hours.

The plaintiffs’ counsel calculated a lodestar of $160,230. The proposed fee portion of the settlement was $84,308.39, representing a 48% reduction from that lodestar. Judge Nathan found the lawyers’ hourly rates and hours reasonable, found no repetitive or excessive billing, and considered the case’s complexity, the lawyers’ work analyzing payroll data, the quality of representation, and the risks counsel accepted. The court also found the proposed costs reasonable.

Disposition

The court approved the settlement agreement in full as fair and reasonable. The Clerk of Court was directed to enter judgment and close the case. The opinion does not state that the court decided the City’s underlying liability after a trial.