Macuku v. Mill-Run Tours, Inc.

Background

Lindita Macuku brought claims under the Fair Labor Standards Act (FLSA) and New York Labor Law. She alleged that the defendants employed her as a travel agent at Mill-Run Tours and failed to pay required minimum and overtime wages. She also alleged that the defendants failed to provide wage statements and notices, failed to keep accurate records of her hours, and maintained a policy of not paying minimum wages and overtime premiums.

The parties submitted a proposed FLSA settlement for court review. The opinion states that FLSA settlements requiring dismissal with prejudice must be approved by the court or the Department of Labor. The parties later consented to the magistrate judge’s authority to conduct all proceedings.

Settlement Terms and Disputes

The proposed settlement required the defendants to pay $55,000. Macuku would receive $36,253.35, and her counsel would receive $18,746.65, consisting of $18,126.65 in attorneys’ fees and $620 in costs. Macuku calculated her possible recovery after trial at $120,983.62, including unpaid wages, overtime, wage-statement damages, liquidated damages, and interest.

The parties disputed whether Macuku worked overtime. The defendants maintained that she was a part-time employee who worked from 10:00 a.m. to 5:00 p.m. with a 45-minute lunch break. The parties also disputed the defendants’ financial condition. The settlement followed document exchanges, two mediation sessions through the Southern District of New York Mediation Program, and negotiations over the remaining terms.

Court’s Analysis

The court evaluated the settlement under the factors used for FLSA settlements, including the possible recovery, the burdens and expenses of continued litigation, litigation risks, arm’s-length bargaining, and the possibility of fraud or collusion. The court determined that the settlement amount was reasonable in light of the disputed facts and litigation risks. Macuku’s payment represented about 30% of her claimed total recovery and about 67% of her claimed unpaid wages, overtime, and wage-statement damages.

The agreement released wage-and-hour claims arising before Macuku signed it. It did not contain a confidentiality provision. It did contain a mutual non-disparagement provision, but it allowed the parties to make truthful statements about their experiences concerning the litigation. The court found that provision reasonable and consistent with public policy.

The court also found the attorneys’ fees and costs reasonable. The award was about 34% of the total settlement, below the stated lodestar amount of $23,026.90, and counsel reported spending 75.6 hours on the case. The court noted the moderate discovery, mediation, counsel’s standard billing rates, and the fact that the fees and costs were below the lodestar amount.

Disposition

The court found the parties’ proposed settlement agreement fair and reasonable. The opinion does not separately state in its conclusion that the agreement was “approved,” but it makes the required fairness determination and ends with “SO ORDERED.” Judge Ona T. Wang signed the opinion on June 3, 2022.