Morales v. AHDS Bagel LLC

Background

The parties submitted a proposed settlement agreement in this action under the federal Fair Labor Standards Act (FLSA) and New York Labor Law. The court explained that parties cannot privately settle FLSA claims with prejudice without approval from a district court or the Department of Labor. The court therefore reviewed whether the agreement was fair and reasonable and separately reviewed the reasonableness of the proposed attorney fees.

Settlement Terms and Court’s Analysis

The court found that the agreement did not contain a confidentiality provision that would undermine the FLSA’s remedial purposes. Although the release used broad language concerning known claims, it was limited to claims in the litigation that occurred by the agreement’s effective date.

The total settlement amount was $60,000. The defendants would pay $20,718 to CSM Legal, P.C. for attorney fees and costs. After subtracting $1,538.50 in costs, the attorneys would receive $19,179.50 from a remaining settlement sum of $58,461.50. The court stated that this fee was approximately 32% of the total settlement value and within the percentage range commonly accepted in the district.

The court also performed a lodestar cross-check, comparing the percentage-based fee with the fees calculated from counsel’s hours and rates. Counsel’s lodestar was $8,390, producing a multiplier of approximately 2.4. The court accepted plaintiffs’ counsel’s hours and fees as reasonable and found the multiplier within the range generally allowed in the district.

Disposition

The court approved the settlement agreement. The Clerk of Court was directed to close the case. The order was signed by Judge Paul A. Engelmayer.