Chen v. A & L of NY Corp

Background

Angus Chen sued A & L of NY Corp., doing business as Izakaya Toribar, and Scott Lee, Frank Ahn, and John Doe Ahn. The complaint asserted a proposed collective action under the Fair Labor Standards Act (FLSA), the federal wage-and-hour statute, and proposed class claims under the New York Labor Law. Chen alleged that the restaurant engaged in wage theft by withholding between 20% and 30% of service employees’ hourly wages and tips, among other alleged violations.

Initial Settlement Proposal

The parties informed the court that they had reached a settlement. Their initial proposal required the defendants to pay $24,000. The materials stated that Chen would receive $10,000 and that $14,000 would go to his counsel, consisting of $11,398 in attorneys’ fees and $2,602 in litigation costs.

The court denied approval of that proposal on December 5, 2022. It found that the parties had not provided enough information to evaluate Chen’s possible recovery and questioned the requested attorneys’ fees under both the lodestar method and the percentage-of-the-fund method. The requested attorneys’ fees, after deducting costs, represented 48% of the settlement fund, while Chen’s retainer agreement provided for 33%.

Revised Proposal and Court’s Analysis

The parties submitted a revised request. They provided additional information about Chen’s possible recovery on several claims, allowing the court to evaluate whether a genuine dispute existed. Counsel also reduced the requested attorneys’ fees to $8,000, while continuing to request $2,602 in litigation costs. The $8,000 fee represented one-third of the $24,000 settlement fund.

The court found the fee reasonable under the percentage method because courts in the district regularly approve attorneys’ fees of up to one-third of an FLSA settlement. The court also found the fee reasonable under the lodestar method, which multiplies a reasonable hourly rate by the reasonable number of hours worked. Counsel submitted records for 48.2 hours. Using the lowest hourly rate proposed by counsel—$300—the court calculated a lodestar of $14,460, excluding costs. The $8,000 fee therefore produced a lodestar multiplier of 0.55, which the court found reasonable. The court separately approved $2,602 in litigation costs, including a $402 filing fee and $2,200 spent distributing notice to proposed collective members.

Disposition

The court approved the $24,000 settlement as fair and reasonable, with $8,000 allocated to attorneys’ fees and $2,602 allocated to litigation costs. Judge Mary Kay Vyskocil ordered that the case be dismissed with prejudice, directed the Clerk of Court to terminate pending motions and adjourn remaining dates, and directed that the case be closed.