Bernal v. Tres Amigos Corp.

Background

Camilo Bernal sued Tres Amigos Corp., doing business as La Pulperia; Tres Mosqueteros Corp., doing business as La Pulperia; and Carlos Barroz, Victor Medina, and Anthony Mea, Jr., individually. He asserted claims under the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL). The pending request concerned a settlement agreement between Bernal and Mea only.

Bernal stated that he was owed more than $50,000 in unpaid minimum wages and overtime for work performed from September 2015 through May 2018. The litigation continued against the other defendants. Mea asserted that he was a passive investor who did not supervise or control Bernal’s work and therefore might not qualify as an employer liable under the FLSA and NYLL.

Settlement-Approval Standard

The court explained that, in the Second Circuit, parties generally cannot privately settle FLSA claims with prejudice without approval from a federal court or the Department of Labor. The court therefore evaluated whether the proposed settlement was fair and reasonable under the circumstances. Relevant considerations included Bernal’s possible recovery, the burdens and expenses of continued litigation, the parties’ litigation risks, whether the agreement resulted from arm’s-length bargaining between experienced counsel, and whether fraud or collusion was possible.

The court also considered whether the agreement contained provisions that would prevent approval, such as an overly broad release of unrelated claims, restrictions on truthful statements about wage claims, or a ban on future employment with the defendant. The opinion concluded that the agreement otherwise represented a fair and reasonable settlement.

Settlement Amount

Under the agreement, Bernal would receive $2,000, and his counsel would receive $1,000 in attorney’s fees and litigation costs. The court recognized that the settlement amount was a relatively small portion of Bernal’s claimed damages, but found the payment reasonable because the case remained at an early procedural stage despite having been filed nearly three years earlier. The settlement gave Bernal immediate cash and avoided the risks and delays of continuing toward trial, including the risk that Mea would prevail on his asserted defense.

The court also found no evidence of fraud or collusion and determined that the agreement appeared to result from arm’s-length bargaining. The continuing claims against the other defendants also allowed Bernal to continue seeking recovery from them.

Attorney’s Fees

The court independently reviewed the $1,000 fee award. It noted that the award represented 33.3% of the total settlement amount, although Bernal’s submissions did not identify how much of the $1,000 was allocated to litigation costs. As a result, the court could not determine the precise percentage represented by attorney’s fees after subtracting costs. The court nevertheless found that the fee award was reasonable.

The court used the lodestar method as a cross-check. A lodestar is calculated by multiplying a reasonable hourly rate by the reasonable number of hours worked. Bernal’s counsel reported working 45 hours but did not separate the hours by defendant or provide an hourly rate. Even assuming that only one-tenth of those hours were billed at $250 per hour, the resulting lodestar would be $1,125, making the proposed fee award less than that amount before subtracting litigation costs. The court concluded that the award was fair and reasonable.

Disposition

The court GRANTED the request for approval of the settlement agreement between Bernal and Mea. It directed the Clerk of Court to terminate Mea from the case. The opinion did not resolve Bernal’s claims against the remaining defendants.