Lopez v. Little Mexico Wholesale Inc.

Background

Lazaro Lopez brought this wage-and-hour case against Little Mexico Wholesale Inc. and other defendants under the Fair Labor Standards Act (FLSA). The parties consented to the jurisdiction of James L. Cott under 28 U.S.C. § 636(c). They submitted a joint fairness letter and a proposed settlement agreement for court approval.

Settlement review

Under the Second Circuit’s decision in Cheeks v. Freeport Pancake House, courts review FLSA settlements for fairness. The court noted that settlements generally receive a strong presumption of fairness because the parties are usually better positioned than the court to assess the reasonableness of their agreement. The court also considered the defendants’ financial situation during the COVID-19 pandemic and the potential difficulty of collecting damages through a judgment.

After reviewing the fairness letter and settlement agreement and participating in a lengthy settlement conference, the court found that all settlement terms appeared fair and reasonable under the circumstances. This included the allocation of attorney’s fees and costs.

Ruling

Judge James L. Cott approved the proposed settlement and directed the clerk to close the case. The court approved the settlement with the understanding, based on the fairness letter, that plaintiff’s counsel would receive no more than one-third of the settlement proceeds. The court stated that its approval of the attorney’s-fee allocation was not approval of counsel’s hourly rate. The court also identified errors in the parties’ submissions, including an incorrect docket number in the settlement agreement and references to more than one plaintiff.