Perez v. Pearl River Pastry, LLC

Background

Mercy Perez sued Pearl River Pastry, LLC, Joseph Koffman, and Martin Koffman under the Fair Labor Standards Act (FLSA) and New York Labor Law. She alleged that the defendants failed to pay overtime wages, failed to pay her weekly, and failed to provide a required wage notice. The parties submitted a settlement for court approval under the Second Circuit’s requirement that FLSA settlements receive approval from the court or the U.S. Department of Labor.

The settlement addressed Perez’s FLSA claims. The opinion states that the parties separately settled her non-FLSA claims, but it does not give the terms of that separate agreement.

Court’s Analysis

The court reviewed the proposed agreement under the totality of the circumstances, including Perez’s possible recovery, the costs and burdens the settlement would avoid, the risks of proceeding to trial, whether the agreement resulted from arm’s-length negotiations between experienced counsel, and whether fraud or collusion might be involved.

The agreement provided a total payment of $5,000, consisting of $3,333.33 for Perez and $1,666.67 in attorneys’ fees. Perez stated that her best possible trial recovery on her FLSA claim would be $2,036 in unpaid wages and $2,036 in liquidated damages. The court found that her settlement payment represented approximately 82 percent of that claimed total recovery and more than 100 percent of her claimed unpaid FLSA overtime damages.

The court also noted that the parties had not conducted discovery, so settlement would avoid discovery, motion practice, and trial expenses. The defendants generally denied Perez’s claims and asserted that their time and pay records showed she had been properly paid overtime. They also stated that a U.S. Department of Labor audit had ended without the Department asserting that FLSA wages were owed. The court concluded that Perez faced a significant risk of recovering nothing at trial.

The court found no indication of fraud or collusion and determined that the agreement was reached through arm’s-length bargaining. It also found no identified similarly situated employees, no likelihood that the circumstances would recur because the employment relationship had ended, no known history of FLSA noncompliance by the employer, and no novel legal or factual issues requiring further development of the law.

The agreement contained no confidentiality provision. Its mutual promise not to disparage included exceptions for truthful statements about the litigation, the FLSA claims, and the case’s resolution. The release was limited to the FLSA claims asserted or that could have been asserted in this action.

The proposed attorneys’ fee was one-third of the settlement, or $1,666.67. Counsel submitted time records and hourly-rate information. The lawyers and paralegal recorded 20.6 hours, producing a lodestar amount—the standard calculation based on reasonable hours multiplied by hourly rates—of $6,240. The court found the requested fee, approximately 27 percent of that lodestar amount, fair and reasonable.

Ruling

The court approved the settlement agreement as fair and reasonable. It ordered that Perez receive $3,333.33 and her counsel receive $1,666.67 in attorneys’ fees. The court dismissed the case with prejudice under the parties’ stipulation, directed the Clerk of Court to terminate all pending motions, and closed the case. Judge Andrew E. Krause signed the order.