Montalvo Candia v. 658-660 Amsterdam Corp.

Background

The parties advised the court that they had reached a settlement in this Fair Labor Standards Act (FLSA) case. Because the parties had not obtained approval from the Department of Labor, the court reviewed the proposed settlement to determine whether it was fair and reasonable. The court had previously found discrepancies between the parties’ first supporting letter and the settlement agreement, and directed them either to submit a revised agreement and explanation or to state that they were abandoning the settlement. The parties submitted a revised agreement and joint supporting letter on April 4, 2022.

Settlement Amount

The agreement provides Plaintiffs with $12,000, inclusive of attorneys’ fees and expenses. Counsel represented that Plaintiffs believed they were entitled to $10,844.78 in back wages and $35,076.56 in total damages. The settlement amount was less than the estimated total recovery but represented more than 100% of the estimated back wages. The parties represented that Defendants vigorously contested Plaintiffs’ allegations, including the number of hours Plaintiffs allegedly worked, and that the settlement resulted from arm’s-length negotiations at a settlement conference before Magistrate Judge James L. Cott. The agreement itself provides for 12 installments of $1,000 each, although the parties’ supporting letter referred to one installment. The court stated that the agreement’s text controlled and found the settlement amount fair and reasonable.

Release

The agreement requires Plaintiffs to release Defendants from wage-and-hour allegations and claims that arose during the period covered by the litigation. The court found that the release was appropriately limited to the claims at issue in the action.

Attorneys’ Fees

Plaintiffs’ counsel reported $13,557.50 in accrued attorneys’ fees and $620 in costs but requested $4,413 in total, representing one-third of the settlement amount plus filing and service-of-process fees. The court noted that courts regularly approve fees equal to one-third of an FLSA settlement. It also considered the work counsel performed, including initial fact-gathering, preparing and filing the complaint, evaluating damages, and preparing for mediation. The court concluded that the requested amount was reasonable and was only a fraction of counsel’s reported lodestar—the standard calculation based on reasonable hourly rates and hours worked.

Ruling

Judge Vernon S. Broderick found the settlement terms, release, and attorneys’ fees fair and reasonable. The court therefore approved the settlement agreement.