Grullon v. Justin Pharmacy Inc.

Background

Adriano J. Grullon sued his former employers, Justin Pharmacy Inc. and Binu Baby, the Pharmacy’s owner. He brought claims under the Fair Labor Standards Act (FLSA), New York Labor Law (NYLL), and 26 U.S.C. § 7434(a), which concerns fraudulent filing of information returns.

Grullon alleged that he worked more than 40 hours per week but was not paid the required minimum wage or overtime rates. He also alleged that the Pharmacy did not provide required wage notices or wage statements, denied him sick and vacation days, and improperly reported his income and withholdings on tax forms. The opinion states that Defendants employed him as a laborer from approximately October 2013 until his termination in April 2018.

Grullon filed the complaint on August 5, 2020. The parties later participated in a court-ordered mediation on November 2, 2020, and submitted their proposed settlement for court approval.

Settlement Review

Because the settlement resolved FLSA claims, the court reviewed it under the standard requiring court approval of certain FLSA settlements. The court considered whether the agreement was fair and reasonable, including:

- Grullon’s possible recovery; - the burdens and costs the settlement would avoid; - the risks faced by both sides; - whether the agreement resulted from arm’s-length negotiations between experienced counsel; and - whether fraud or collusion was possible.

Grullon estimated his maximum FLSA recovery at approximately $22,000, while Defendants estimated that he was owed approximately $6,500. The proposed settlement totaled $22,500. Grullon would receive $14,475, and his counsel would receive $8,025 for fees and costs. The court described Grullon’s payment as approximately 64.3% of his alleged maximum recovery and found the amount reasonable in light of the litigation risks.

The court noted factual disputes about Defendants’ pay and timekeeping records. Defendants faced risks concerning those records, while Grullon faced the possibility of a lower recovery based on Defendants’ records or a delayed or no recovery if litigation continued.

The parties represented that the agreement resulted from an extended mediation conducted through the Southern District of New York’s mediation program. The court found no evidence contradicting their representation and found nothing suggesting fraud or collusion.

Release and Attorney Fees

The agreement contained a general mutual release, which the court said was not standard in the District. The court nevertheless approved it because Grullon was a former employee, the release was mutual, and it applied only between Grullon and Defendants. The court also noted that the agreement contained no confidentiality or non-disparagement provision and had been filed publicly.

The court found the $8,025 attorney-fee and cost award reasonable. It represented approximately 35.6% of the total settlement and was less than counsel’s recorded fees and costs of $10,650. The court also found the $300 hourly rate charged by counsel appropriate.

The court struck Section H of the settlement agreement because that section stated that the parties were responsible for their own attorney fees and costs, which conflicted with the $8,025 fee award.

Disposition

The court approved the parties’ proposed settlement as fair and reasonable and struck Section H. The Clerk of Court was directed to close the settlement-approval filing. The court ordered that the action be dismissed with prejudice without costs.

Judge

The opinion was written and signed by Ona T. Wang, United States Magistrate Judge, with the parties’ consent to her jurisdiction.