Zhicay v. Salas Corporation Corp.
- Andrew Carter
- 1:21-cv-03795
- U.S. District Court · Southern District of New York
- 3
In Zhicay v. Salas Corporation Corp, Judge Carter denied without prejudice approval of a proposed settlement because counsel did not document the requested attorneys’ fees.
The proposed settlement affected Luis Zhicay, the defendants, and plaintiff’s counsel. The court did not approve the settlement in its current form, and counsel was required to provide documentation supporting the requested $12,500 fee before the parties could seek approval again.
What happened
In Zhicay v. Salas Corporation Corp, the court reviewed the parties’ proposed settlement agreement and accompanying request for approval. The court said it had to independently assess whether the requested attorneys’ fees were reasonable.
The proposed agreement provided $37,500 total: $25,000 for Luis Zhicay and $12,500 in attorneys’ fees. Counsel described the fees as fair and reasonable and said the one-third fee was agreed to in a retainer agreement, but did not provide billing records or other supporting documents.
The court denied without prejudice the request to approve the proposed settlement and ordered the parties to submit a revised fairness letter and agreement with adequate documentation by December 20, 2021. Judge Andrew L. Carter, Jr. also directed the Clerk to correct the docketed defendant name from “Ariesto Lopez” to Aristeo Lozada.
The detailed version
- Zhicay v. Salas Corporation Corp. · No. 1:21-cv-03795
- Andrew Carter
- Dec. 10, 2021
Background
The court received the parties’ proposed settlement agreement and accompanying fairness motion, filed November 2, 2021. The court reviewed the materials under the requirement that courts examine proposed settlements of Fair Labor Standards Act claims for fairness, including the reasonableness of any attorneys’ fee award.
The proposed settlement totaled $37,500. Under the agreement, Luis Zhicay would receive $25,000 and his attorneys would receive $12,500, representing one-third of the total settlement. Counsel stated that the fee was fair and reasonable and that the 33.33% rate had been agreed to in a retainer agreement.
Court’s analysis
The court explained that a fee amount equal to or below one-third of the settlement is often approved in the district, but that courts must independently determine whether the fee is reasonable. The court also explained that adequate documentation is required, including contemporaneous billing records showing, for each attorney, the date, hours worked, and nature of the work. A contingency-fee agreement does not eliminate this review; courts may use the lodestar method, which evaluates the fee based on reasonable hours multiplied by reasonable hourly rates, as a cross-check.
Counsel provided no supporting documentation for the requested $12,500 fee. Because the court could not assess the fee’s reasonableness without that documentation, it declined to approve the settlement in its current form.
Order and disposition
The court DENIES without prejudice the request to approve the proposed settlement. It ordered the parties to submit a revised fairness letter and proposed settlement agreement with adequate documentation by December 20, 2021, to correct the identified deficiency.
The parties also informed the court that Aristeo Lozada was the correct name of the defendant listed on the docket as Ariesto Lopez. Judge Andrew L. Carter, Jr. directed the Clerk of Court to update the docket accordingly.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.