Salas v. Leo's Bagels Hanover Square LLC

Background

Carlos Salas sued Leo’s Bagels Hanover Square LLC and other defendants under the Fair Labor Standards Act (FLSA) and New York Labor Law. He alleged that he worked as a delivery worker from approximately October 2019 until about February 11, 2021, but spent substantial time performing non-tipped tasks such as preparing food, washing dishes, cleaning, and taking out the trash. He alleged that Defendants failed to pay the required minimum and overtime wages, failed to keep accurate records, appropriated tips, made unlawful deductions, and failed to provide required wage statements and notices.

The parties submitted a proposed settlement for court approval. Because the settlement resolved FLSA claims, the court reviewed it under the standard requiring a settlement to be fair and reasonable. The court considered the possible recovery, the burdens and expenses of continued litigation, the risks of trial, whether the agreement resulted from arm’s-length negotiations, and the possibility of fraud or collusion.

Settlement Review

The proposed agreement required Defendants to pay $16,000. It initially allocated $9,600 to Salas and $6,400 to his counsel. The court found no indication of fraud or collusion and found that the agreement did not contain provisions that courts have rejected in other FLSA settlements.

Salas estimated that his potential recovery after trial was $52,221.78. The court noted that the proposed payment to Salas represented about 22 percent of that potential recovery but nearly 77 percent of his claimed unpaid wages and overtime. The court accepted the settlement because Salas acknowledged that the parties sharply disputed the facts and law, including the number of hours he worked, and because the settlement avoided further litigation.

Attorneys’ Fees and Costs

The court rejected the proposed $6,400 payment to counsel. It reduced several hourly rates in the firm’s billing records, including reducing the rate for Mr. Faillace from $450 to $400, Mr. Johnson’s rate from $400 to $350, and Mr. LaRusso’s rate from $400 to $350. Based on the reasonable hours and rates, the court calculated $4,052.50 in attorneys’ fees and added $630 in costs, for a total award of $4,682.50.

The court noted that the case settled nine months after the complaint was filed, counsel recorded 16.70 hours, and the parties exchanged initial disclosures, interrogatories, and damages charts but did not take depositions, conduct further discovery, or brief motions to dismiss or for summary judgment. The court concluded that the effort and expense were modest enough to require a reduction in the fees and costs.

Ruling

Judge Ona T. Wang approved the $16,000 Settlement Agreement, subject to the reduction in attorneys’ fees and costs. The order awarded $4,682.50 to counsel and directed that $11,317.50 be disbursed to Salas. The opinion approved the settlement rather than deciding whether Salas or Defendants would prevail on the underlying wage claims.