Aquino Flores v. CGI Inc.

Background

Fernando Aquino Flores and Ricardo Isidro Reyes brought a class and collective action against CGI Inc., doing business as Bus Stop Diner, and other defendants. The plaintiffs alleged violations of the Fair Labor Standards Act and New York Labor Law. Their allegations included failure to pay overtime because of time-shaving and improper tip credits, failure to pay spread-of-hours premiums, improper tip notices and tracking, and failures involving New York wage statements and notices. The defendants answered, disputed the material allegations, and denied liability.

The parties reached a settlement after a settlement conference with a private mediator. The court had preliminarily approved the proposed settlement and authorized notice. After a fairness hearing on October 20, 2022, the court considered the settlement’s procedural and substantive fairness, as well as the requested fees and other payments.

Settlement Class and Terms

For settlement purposes, the court certified a class consisting of the named plaintiffs and all current and former non-exempt front-of-house or back-of-house employees employed by the defendants at Bus Stop Diner and Malibu Diner from January 13, 2006, through April 15, 2022, who did not opt out. The court found that the class met the requirements for certification under Federal Rule of Civil Procedure 23, including sufficient size, common questions, typical claims, adequate representation, predominance of common issues, and superiority of a class action for settlement purposes.

The gross settlement fund is $435,000. This is not a claims-made settlement: class members do not have to submit claim forms to receive payments, although they must return a valid tax form required by the settlement administrator. After approved deductions, individual payments will be calculated based on the number of weeks each class member worked during the relevant period. Class members who do not opt out will release New York wage-and-hour claims through April 15, 2022. A class member who cashes the settlement check will also release Fair Labor Standards Act claims through that date. Uncashed checks revert to the defendants after 120 days, but class members who do not cash their checks do not release their Fair Labor Standards Act claims.

The notice process reached 71% of the class by mail, and the diners also posted notices. The court noted that there were no objections and two opt-outs. It found the notice adequate and reasonable.

Fairness Findings

The court found that the settlement resulted from arm’s-length negotiations involving experienced counsel, investigation, discovery, and mediation. Discovery included payroll records and information that contradicted or weakened some of the plaintiffs’ initial allegations, including allegations concerning wage notices, spread-of-hours premiums, and overtime payments. The court also considered the costs and delays of continued litigation, the risks of proving liability and damages, the possibility of difficulty maintaining certification through trial, and concerns about the defendants’ ability to pay a larger judgment.

The court found the $435,000 settlement reasonable in light of the litigation risks. It stated that the settlement represented approximately 57% to 78% of the total damages sought, depending on which claims ultimately succeeded. The highest individual allocation was $4,441.08, and the average settlement payment was expected to be $1,096.54. The court also approved the Fair Labor Standards Act settlement, finding that it resolved genuine factual disputes through contested litigation and arm’s-length negotiations.

Fees, Costs, and Awards

The court approved $145,000 in attorney fees, equal to one-third of the gross settlement fund. Applying the percentage-of-the-fund method and considering the relevant factors, including counsel’s work, the complexity and risks of the case, the quality of representation, and the fee’s relationship to the recovery, the court found the fee request fair and reasonable.

The court also approved $6,579.70 in litigation costs, including filing, service, notice, mailing, and mediation expenses. It approved service awards totaling $15,000: $10,000 for Fernando Aquino Flores and $5,000 for Ricardo Isidro Reyes. The court found the awards reasonable based on the plaintiffs’ assistance with the litigation and the risks and effort associated with serving as representatives. It also approved $25,000 in administration fees for Advanced Litigation Strategies LLC.

Disposition

Judge Katharine H. Parker granted the plaintiffs’ motion for final approval. The court certified the class and collective for settlement purposes and approved the settlement terms, subject to the defendants fully satisfying their payment obligations. The court granted the requests for the $15,000 in service awards, $25,000 administration payment, $145,000 in attorney fees, and $6,579.70 in costs. The approved awards total $191,579.70 and will be deducted from the $435,000 gross settlement fund. The court retained jurisdiction, and the case will be dismissed when plaintiffs’ counsel confirms that the defendants have satisfied their payment obligations. The approval did not decide whether the defendants actually violated the wage laws.