Kim v. DKCOSMETICS

Background

Ga Ho Kim and Aeri Moon brought claims against DKCOSMETICS, Club Clio Corp., Club Clio NYC Corp., and John JK Lee under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). They alleged that they worked more than 40 hours in a workweek without receiving overtime pay and worked more than 10 hours in a day without receiving required spread-of-hours premiums. Kim alleged that he worked first in the defendants’ New York retail stores and later at their New Jersey warehouse. Moon opted into the FLSA collective and alleged that she was similarly situated to Kim regarding work performed in New York.

The parties engaged in mediation, completed discovery, and litigated motions, including plaintiffs’ motion for summary judgment and defendants’ motion to dismiss claims against DKCOS CORP. They later reached a settlement and asked the court to approve it. The parties consented to Magistrate Judge Wang’s jurisdiction to decide the approval request.

Settlement approval

Under the Second Circuit’s decision in Cheeks v. Freeport Pancake House, Inc., FLSA settlements that dismiss claims with prejudice require approval by the court or the Department of Labor. Judge Wang applied the fairness factors from Wolinsky v. Scholastic Inc., including the plaintiffs’ possible recovery, the burdens and risks of continued litigation, the parties’ negotiations, and the possibility of fraud or collusion.

Kim estimated his potential damages at approximately $101,285.26, and Moon estimated hers at approximately $62,249.50. The settlement allocated $100,000 to Kim’s claims and $50,000 to Moon’s claims. After fees and costs, Kim would receive $64,756.87 and Moon would receive $32,378.44.

The court found that the settlement avoided the expense of trial and addressed significant litigation risks. Those risks included disputes over the records of plaintiffs’ work hours, whether plaintiffs could prove entitlement to statutory damages and meal breaks, the hours Kim spent driving for defendants rather than commuting, and defendants’ asserted financial difficulties and collection concerns. The court also found that the settlement resulted from lengthy, adversarial, arm’s-length negotiations and that the record contained no indication of fraud or collusion.

The releases were limited to employment-related claims through the date the agreements were signed. The agreements contained no confidentiality or non-disparagement provisions. Judge Wang found the attorney’s fee award of $48,567.66 reasonable, along with $4,297.04 in costs.

Disposition

Judge Ona T. Wang approved the parties’ proposed $150,000 settlement as fair and reasonable. Plaintiffs were to receive $97,135.31: $64,756.87 for Kim and $32,378.44 for Moon. Plaintiffs’ counsel was to receive $52,864.70, consisting of $48,567.66 in attorney’s fees and $4,297.04 in costs. The court ordered that the action be dismissed with prejudice and directed the Clerk of Court to close the case.