Nash v. Countywide Carting, LTD

Background

The operative pleading was the Second Amended Complaint filed by Lawrence Nash, Anthony Cirello, Matthew Powell, Raymond Clark, Darryl Payne, Lonnie Whatley, and Fritz Michel. The plaintiffs sued Countywide Carting, LTD, doing business as CW Maintenance, Inc., and Morris Jacobowitz. They asserted claims under the Fair Labor Standards Act and New York Labor Law based on alleged failures to pay overtime wages, provide wage notices, and provide accurate wage statements.

The parties asked the court to approve their settlement. In the Second Circuit, a private settlement of Fair Labor Standards Act claims requiring dismissal under Federal Rule of Civil Procedure 41 must be approved by the court or the U.S. Department of Labor. The court therefore reviewed whether the proposed agreement was fair and reasonable under the circumstances.

Settlement Terms and Court’s Analysis

The agreement provided for a total payment of $85,000. Plaintiffs would receive $62,723.39, and plaintiffs’ counsel would receive $22,276.61. The counsel payment consisted of $21,236.81 in attorneys’ fees and $1,039.80 in costs.

The plaintiffs stated that their total potential recovery at trial was $212,736.63, consisting of backpay, statutory penalties including liquidated damages, and interest, less certain payments already made to three plaintiffs for lost overtime. The amount payable to the plaintiffs represented approximately 29 percent of their claimed total trial recovery and approximately 97 percent of their claimed backpay. The court also considered the settlement amounts for each plaintiff and the explanation that Payne and Michel voluntarily contributed part of what otherwise would have been their shares to increase the amounts paid to the other plaintiffs.

The court found that all five factors supporting approval favored settlement: the plaintiffs’ potential recovery, the expenses and burdens of further litigation, the risks at trial, arm’s-length negotiations between experienced counsel, and the absence of evidence of fraud or collusion. The plaintiffs faced uncertainty about the number of hours worked, possible difficulties obtaining and analyzing location-tracking data, a potential defense under the federal Motor Carrier Act, possible limits on liquidated damages and interest, and a risk that the defendants might not be able to pay a judgment. The defendants also faced litigation costs and uncertainty about whether a possible summary-judgment motion would succeed.

The court found no other circumstances weighing against approval. The parties represented that all employees with potentially viable federal claims had been included, and the court was not aware of similarly situated employees or a history of Fair Labor Standards Act noncompliance by Countywide. The agreement’s release was limited to claims concerning unpaid or improperly paid wages. It contained no confidentiality provision, and its non-disparagement clause prohibited false derogatory, disparaging, or defamatory statements while allowing truthful statements.

Attorneys’ Fees and Costs

The plaintiffs’ counsel originally sought a fee based on 25 percent of the $85,000 settlement, but that calculation improperly included costs in the percentage base. After subtracting $1,039.80 in costs, the court calculated a fee of $21,236.81, which was approximately 25.3 percent of the net settlement. The court found that amount reasonable. It also approved the documented $1,039.80 in costs for the filing fee, service of process, mailings to clients, and expert services.

Disposition

The court approved the settlement agreement filed at ECF No. 81-3. It approved the proposed Stipulation and Order of Dismissal with prejudice as to form, but did not sign it because counsel had not yet signed it. The parties were directed to submit a signed version with an updated date line and counsel signatures by March 3, 2022. The Clerk was directed to terminate all pending motions and close the case. The order approved the settlement; it did not decide whether the plaintiffs or defendants would have prevailed on the underlying wage claims at trial.