Thomas v. Arts in Common LLC
- Sarah Cave
- 1:21-cv-06948
- U.S. District Court · Southern District of New York
- 2
In Thomas v. Arts in Common LLC, Judge Cave denied without prejudice approval of the parties’ settlement because its payment and fee figures conflicted.
Daria Thomas, Arts in Common LLC, Rafael Baccus, and Thomas’s counsel were affected: the proposed settlement was not approved, and the parties were directed to submit a corrected agreement.
What happened
In Thomas v. Arts in Common LLC, Daria Thomas and Arts in Common LLC and Rafael Baccus asked the court to approve a $12,000 settlement of Thomas’s wage-and-hour claims under the Fair Labor Standards Act. The parties submitted a joint letter and a settlement agreement for review.
The court found conflicting figures in the submissions. The joint letter said Thomas would receive $7,045.15, but the settlement agreement listed payments totaling $6,567.20. The agreement also listed $5,432.80 for her lawyer’s fees and costs, which appeared to include a $4,000 fee that exceeded the one-third fee arrangement described in the parties’ materials.
Judge Cave denied the request for settlement approval without prejudice. She directed the parties to correct the settlement agreement’s defects and submit a revised agreement by May 20, 2022.
The detailed version
- Thomas v. Arts in Common LLC · No. 1:21-cv-06948
- Sarah Cave
- May 2, 2022
Background
Daria Thomas brought this wage-and-hour case under the Fair Labor Standards Act (FLSA) on behalf of herself and others in a proposed collective action. The parties consented to Magistrate Judge Sarah L. Cave’s authority to review their proposed settlement. They submitted a joint letter and Settlement Agreement seeking approval under the standard established in Cheeks v. Freeport Pancake House, Inc. for reviewing FLSA settlements.
The proposed settlement amount was $12,000. Thomas’s counsel stated in the joint letter that Thomas would receive $7,045.15 and that counsel’s costs were $1,432.80. Counsel explained that, under Thomas’s one-third contingency-fee agreement, costs would be deducted first and the remaining amount would be divided between Thomas and counsel.
Court’s Analysis
The court identified inconsistencies between the joint letter and the Settlement Agreement. The agreement listed payments to Thomas of $1,280.00 and $5,287.20, totaling $6,567.20—$477.95 less than the $7,045.15 stated in the joint letter.
The agreement also listed $5,432.80 for counsel’s fees and costs. The court concluded that this appeared to represent $4,000 in attorney’s fees plus $1,432.80 in costs. The court noted that a $4,000 fee would exceed the one-third contingency fee described in the retainer agreement. The court cited the general practice in the district of declining, absent unusual circumstances, to award more than one-third of an FLSA settlement as attorney’s fees.
The court stated that, after deducting $1,432.80 in costs from the $12,000 settlement, Thomas should receive $7,045.15. It stated that counsel should receive $4,954.85, consisting of $3,522.05 in attorney’s fees and $1,432.80 in costs.
Disposition
Judge Cave denied without prejudice the parties’ request for approval of the Settlement Agreement. The parties were instructed to correct the defects identified in the order and submit a revised Settlement Agreement for approval by May 20, 2022. The order stated that the court had no objection to dividing Thomas’s payment into two payments, one reported on an Internal Revenue Service Form W-2 and one reported on Form 1099.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.