Hernandez v. Compass One, LLC

Background

Emmanuel Hernandez alleged that he worked for Compass One, LLC as a manual kitchen worker from approximately 2003 through October 4, 2019. He claimed that he regularly worked about 45 to 60 or more hours per week, was not paid for some hours, was owed overtime wages, and sometimes worked more than 10 hours in a day. He also alleged that he did not receive notices and wage statements required by New York law.

Hernandez calculated that his unpaid wages under the Fair Labor Standards Act (FLSA) and New York Labor Law would total $35,486.72 if he prevailed. He calculated an additional $10,000 for the alleged notice and wage-statement violations. He also claimed that liquidated damages could double the unpaid wages. Compass denied liability and asserted that Hernandez was an exempt employee who would not prevail if the case were litigated.

The parties sought approval of a $52,500 settlement reached through mediation. The proposed allocation provided $34,687 to Hernandez and $17,813 to counsel, consisting of a $17,343 attorney-fee award and $470 in costs. The settlement included a release limited to wage-and-hour claims brought or that could have been brought in the lawsuit. The opinion notes that the settlement was with Flik International Corp. and that the parties explained at the fairness hearing that Flik, rather than Compass One, was Hernandez’s employer and that the case had named the wrong defendant.

Court’s Analysis

The court found that the settlement consideration was fair and reasonable. It noted that the settlement fell within the possible recovery, resulted from arm’s-length bargaining with the assistance of a mediator, and accounted for the parties’ litigation risks, including the risk that Hernandez would be found exempt.

The court separately addressed the attorney-fee allocation. Hernandez’s counsel argued that the contingency-fee provision in the retainer agreement—one-third of the recovery—controlled and that counsel did not need to submit time records. The court rejected that argument. It explained that a retainer agreement does not eliminate the court’s responsibility to ensure that the allocation of settlement proceeds is fair and reasonable to the plaintiff.

The court held that the fee review must consider the work performed and ordinarily requires contemporaneous time records. It explained that a court may use the lodestar method—the reasonable number of attorney hours multiplied by a reasonable hourly rate—as a cross-check on a percentage-based fee. The court also stated that it could not impose an automatic percentage cap on recoverable fees, but that it still had to independently evaluate the reasonableness of the requested amount.

Counsel ultimately submitted records showing 39.25 hours of work. The court found that an hourly rate of $400 was within the range generally awarded to experienced wage-and-hour attorneys in the district and calculated a lodestar of $15,700. It concluded that the records supported the requested $17,343 fee, even assuming some hours might have been excessive or unnecessary.

Disposition

The court approved the settlement. The opinion did not decide whether Hernandez’s underlying wage claims were valid or whether Compass’s exemption defense would succeed. It approved the requested allocation after reviewing the settlement and the reasonableness of counsel’s fees.