Baten Ramirez v. AAM Restaurant LLC

Background

The parties informed the court that they had reached an amended settlement in this Fair Labor Standards Act (FLSA) case. The plaintiffs alleged that they worked as cooks, dishwashers, delivery workers, and busboys at the defendants’ now-closed Italian restaurant. They alleged violations involving minimum wage, overtime, required notices and records, spread-of-hours pay, and deductions from tips and wages under the FLSA and New York Labor Law.

The defendants denied that the plaintiffs worked spread-of-hours shifts, argued that the claimed overtime damages were exaggerated, and denied willful FLSA violations. The parties exchanged paper discovery, negotiated, and participated in a court-ordered mediation. The court required a supplemental filing after finding a discrepancy between the settlement amount in the parties’ first letter and the amount in their agreement. The parties then filed a supplemental letter and amended agreement clarifying the settlement amount.

Settlement-approval standard

Because the parties sought to settle FLSA claims privately, the court was required to approve the agreement or the Department of Labor had to approve it. The court therefore evaluated whether the agreement was fair and reasonable under the totality of the circumstances. The relevant considerations included the plaintiffs’ possible recovery, the burdens and costs avoided through settlement, the litigation risks, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion.

The court also reviewed the reasonableness of the attorney’s fees and expenses included in the agreement. When evaluating a fee request, the court considered the supporting billing records and costs, as well as whether the requested fee was reasonable in light of the work performed and the settlement.

Discussion

The agreement provided for a total settlement of $200,000 and a distribution of $134,000 to the plaintiffs, excluding attorney’s fees and expenses. The plaintiffs represented that they believed they were collectively owed $481,732.25 in back wages and could recover $1,115,284.51 if they prevailed fully on their claims, excluding attorney’s fees and costs. The court recognized that the settlement was only a fraction of those claimed amounts but found the settlement reasonable because of the risks and costs of continued litigation, including difficulties collecting from a closed restaurant, additional discovery and motion practice, trial expenses, and delays in any recovery.

The court also found no basis to believe that fraud or collusion affected the agreement. It concluded that the settlement resulted from negotiations between counsel experienced in wage-and-hour matters and reflected the strengths and weaknesses of the parties’ positions.

Attorney’s fees

The settlement provided $66,000 in attorney’s fees, or 33 percent of the $200,000 settlement. Counsel submitted billing records showing 55.84 hours of work, hourly rates of $450 for Managing Partner Michael Faillace and $350 for associate Clela A. Errington, and $499 in filing and service costs. The court calculated the lodestar—the hours worked multiplied by the applicable hourly rates and related costs—as $16,406.50. Although the requested fee was approximately four times that amount, the court noted that courts regularly approve one-third fee requests in FLSA settlements and found the requested fee fair and reasonable.

Disposition

Judge Vernon S. Broderick approved the parties’ settlement agreement. The Clerk of Court was directed to close the case.