Calderon Lara v. Knollwood Road Delicatessen Inc.

Background

Sergio Calderon Lara, Bernando Segura-Lara, and Jorge Granados sued Knollwood Road Delicatessen Inc. The plaintiffs alleged that they worked more than 40 hours per week without receiving required minimum wages, overtime pay, or spread-of-hours compensation under the Fair Labor Standards Act, the New York Minimum Wage Act, and New York wage regulations. They also alleged violations of New York’s requirements for annual wage notices and wage statements.

The opinion describes Calderon Lara as working approximately 69 to 70 hours per week, sometimes working beyond his scheduled shift without pay, receiving no breaks, and not receiving required information about his pay. Segura-Lara alleged that his breaks were interrupted at one location and that he received no breaks at another. Granados alleged that his pay did not change when he worked longer and that his breaks were interrupted. The plaintiffs also alleged that they were not required to track their hours and did not know whether the defendants used an accurate timekeeping system.

The parties submitted a negotiated settlement for court approval. The plaintiffs consented to Magistrate Judge Wang’s jurisdiction. Because the case included claims under the Fair Labor Standards Act, the court reviewed the settlement under the Second Circuit’s requirement that certain settlements of those claims receive approval from the court or the Labor Department.

Settlement Amounts and Possible Recovery

The plaintiffs estimated their collective potential recovery for unpaid minimum wages and overtime, excluding liquidated damages, penalties, and interest, at $80,929.04. Their estimated maximum collective recovery including those additional amounts was $278,140.06.

The proposed settlement totaled $80,000. The plaintiffs would receive $53,600, allocated as follows:

- Bernando Segura-Lara: $26,775.05 - Jorge Granados: $13,387.47 - Sergio Calderon Lara: $13,387.47

Plaintiffs’ counsel would receive $26,400. The opinion states that counsel’s billing records showed a lodestar—a calculation based on hours worked multiplied by billing rates—of $12,748.50. Because counsel did not provide supporting documentation for costs, the entire $26,400 award was allocated to attorney’s fees.

Court’s Analysis

The court considered the settlement’s possible recovery, the burdens and expenses of continuing the case, the litigation risks, whether the agreement resulted from arm’s-length negotiations, and whether fraud or collusion was possible. The court found that each factor supported approval.

The defendants denied that the plaintiffs worked more than 40 hours per week without proper compensation and maintained that the plaintiffs were paid on time. The plaintiffs disputed those positions. The court found that the case involved uncertainty, had been pending for nearly three years, and had not yet proceeded to discovery. The plaintiffs preferred to settle rather than incur additional litigation and discovery expenses.

The parties represented that the settlement resulted from court-appointed mediation, which the court treated as evidence of arm’s-length bargaining. The court found nothing in the record suggesting fraud or collusion. It also found that the release was appropriately limited to employment-related claims through the date the agreement was signed and did not exceed the wage-and-hour issues in the case.

The agreement did not contain a confidentiality or non-disparagement provision. The court also found the $26,400 attorney-fee award reasonable because it was approximately one-third of the $80,000 settlement, a percentage courts commonly approve in these cases, even though it exceeded the lodestar.

Disposition

The court approved the settlement as fair and reasonable. It approved the listed payments to Bernando Segura-Lara, Jorge Granados, and Sergio Calderon Lara, as well as the $26,400 attorney-fee award. The Clerk of Court was directed to close the case.