Rosario v. Big City Management Inc.

Background

Juan Rosario sued Big City Management, Inc., and other defendants under the Fair Labor Standards Act (FLSA) and New York Labor Law. Rosario alleged that, while working as a building superintendent and living in an apartment provided by his employer, he was owed $34,170 in unpaid overtime, $34,170 in liquidated damages, and $5,000 under New York Labor Law § 195.

The parties submitted a joint request for approval of a fully executed settlement agreement. The agreement required the defendants collectively to pay $37,500 to Rosario within 30 days after court approval. The payment would increase to $47,500 if Rosario’s adult son and the son’s roommate vacated the defendants’ apartment within the specified period and signed surrender agreements. After deducting $810.30 in costs, Rosario’s lawyer would receive one-third of the net settlement, and Rosario would receive the remaining two-thirds.

Court’s Analysis

The agreement contained mutual general releases. Rosario would release the defendants from all claims he had or might have against them, while the defendants would release Rosario from their claims against him. If the apartment conditions were satisfied, the defendants would also release claims concerning the apartment against the individuals identified in the agreement. The court noted that the agreement had no prohibition on rehiring, confidentiality clause, or other restriction on Rosario’s ability to discuss his employment, the lawsuit, or the settlement terms.

The parties negotiated the material terms during a court-supervised settlement conference. The court found the financial terms fair and reasonable. Depending on the apartment issue, Rosario’s net payment would represent 71% or 91% of his alleged unpaid overtime wages. Although the settlement was substantially less than Rosario’s maximum potential recovery, the court noted that recovery at trial was not assured and that the defendants had presented evidence that Rosario worked fewer hours than he originally claimed.

The court also found the nonfinancial terms fair. It concluded that mutual general releases could be appropriate in a non-class FLSA settlement where the plaintiff no longer works for the defendants and the defendants had identifiable claims to waive. The proposed attorney-fee award—one-third of the net settlement—was equivalent to either 1.3 or 1.7 times counsel’s stated lodestar, depending on the payment amount, and the court found it was not excessive given the success obtained.

Disposition

Magistrate Judge Barbara Moses found that the settlement complied with the fairness requirement identified in Cheeks v. Freeport Pancake House, Inc. The court approved the proposed settlement. It ordered that the action be dismissed with prejudice and without costs, and directed the Clerk of Court to close the case.