Ortega v. Lee Salon 25 Corp.

Background

Rosa Bueno Ortega brought claims under the Fair Labor Standards Act (FLSA), the federal wage law, and the New York Labor Law. She alleged that Lee Salon 25 Corp., Connie Lee, and Sang Lee failed to pay the required minimum wage, overtime compensation, and New York spread-of-hours compensation. She also alleged that the defendants failed to provide required wage notices and complete and accurate earnings statements.

Ortega alleged that she worked as a nail technician at Lee Salon 25 from about February 2012 through about March 6, 2018. The opinion states that some earlier punch-card records were unavailable, while records from December 17, 2015, through March 6, 2018, showed that she regularly worked more than 40 hours per week and worked days exceeding 10 hours. The opinion also states that she was paid a daily rate of $65 in 2015 and $7.50 per hour in 2016, and that the defendants had not provided notice or documents concerning a tip credit or allowance.

Settlement-approval standard

Because the settlement would resolve FLSA claims, the court reviewed it under the requirement that a court or the Department of Labor approve a stipulated dismissal settling those claims. The court considered whether the settlement was fair and reasonable, including: Ortega’s possible recovery; the parties’ ability to avoid the costs and burdens of continued litigation; the litigation risks; whether experienced counsel negotiated at arm’s length; and whether fraud or collusion was possible.

Court’s analysis

The parties estimated Ortega’s possible recovery at between $0 and $66,641.38. The proposed settlement totaled $30,000, which the opinion describes as approximately half of her estimated best-case damages and as including wages, liquidated damages, interest, penalties, attorney fees, and costs. The parties represented that both faced substantial risks and that continued litigation could take months or years and cause additional financial and emotional burdens.

The court found that the settlement resulted from legitimate bargaining between experienced counsel. It found no indication of fraud or collusion. The court also noted that the agreement did not contain confidentiality or non-disparagement provisions that other courts have rejected in FLSA settlements.

The agreement allocated $13,093.07 to Ortega’s counsel: $10,000 in attorney fees and $3,093.07 in reimbursement of costs. The court found that allocation reasonable. The opinion states in its discussion that Ortega would receive the remainder, $16,096.93, but the total and the conclusion state that she would receive $16,906.93. The opinion does not explain this discrepancy.

Disposition

The settlement was approved as fair and reasonable. The order states that Ortega will receive $16,906.93 and her counsel will receive $13,093.07, with the latter amount divided between attorney fees and costs. The Clerk was directed to close ECF 51. The order also states that it superseded ECF 58 and directed the Clerk to strike ECF 58 from the docket.