Melendez v. Pronto Gas Heating Supplies, Inc.

Background

Angel Melendez sued Pronto Gas Heating Supplies Inc. and Tito Demarinis under the Fair Labor Standards Act (FLSA) and New York Labor Law. He alleged that the defendants failed to pay overtime and retaliated against him. Melendez said he worked for the defendants in various capacities, including dispatcher and store manager, from March 2013 through August 3, 2020. The case was filed on December 4, 2020.

After a settlement conference conducted by Magistrate Judge Kevin Fox on September 14, 2021, the parties reached a settlement. They asked the court to approve the agreement. The parties had consented to Magistrate Judge Wang’s jurisdiction to decide the motion.

Court’s analysis

Under Second Circuit precedent, a settlement resolving FLSA claims requires approval by a district court or the Department of Labor. The court reviewed the proposed agreement for fairness and reasonableness using factors including the possible recovery, the burdens and risks of continued litigation, whether the agreement resulted from arm’s-length negotiations, and whether fraud or collusion was involved.

The total settlement was $72,500.00. Melendez would receive $48,333.33, while his counsel would receive $24,166.67 in fees and costs. Melendez estimated that he was owed approximately $44,200.00 in back wages. The court noted that his settlement payment represented 109% of the estimated back wages, without counting liquidated damages or penalties, and that he would also receive $4,100.00 in liquidated damages.

The court found that settlement avoided the expense and burden of preparing for trial and that the case presented significant litigation risks. The parties represented that they had engaged in extensive negotiations, and the record contained no indication of fraud or collusion. The release was limited to employment-related claims through the date the agreement was executed. The agreement also contained no confidentiality or non-disparagement provision.

The court found the attorneys’ fee and costs award reasonable. It represented approximately one-third of the total settlement, a level the court stated is generally approved in FLSA settlements.

Disposition

Judge Ona T. Wang approved the parties’ proposed settlement agreement as fair and reasonable. Under the approved agreement, Melendez would receive $48,333.33 and his counsel would receive $24,166.67 in attorneys’ fees and costs. The opinion approved the settlement; it did not decide the underlying overtime or retaliation allegations.