Perossio v. Pure Growth Consulting, LLC

Background

The court considered the parties’ joint letter-motion seeking approval of their fully executed Settlement and Release Agreement under the Second Circuit’s requirements for reviewing settlements of Fair Labor Standards Act (FLSA) claims. The agreement resolved Francisco Pablo Perossio’s claims under the FLSA and the New York Labor Law (NYLL).

Perossio alleged that he worked as a driver for the defendants from November 2013 through December 2016, regularly worked 55 to 60 hours per week, and received a flat rate of $1,000 per week without overtime pay. His claims sought unpaid overtime wages, spread-of-hours pay, interest, and liquidated damages.

The defendants maintained that Perossio was not their employee. They said they contracted with Del Sur, Inc., which Perossio and his wife had set up, for his services; paid Del Sur a flat weekly amount documented by a tax form; and left Del Sur responsible for paying Perossio under wage and tax laws. They also argued that Perossio worked fewer hours than he alleged.

Settlement terms and court’s analysis

The defendants agreed to pay $52,500 no later than the close of business on the third business day after court approval. Perossio was to receive $35,000, and his counsel, Lee Nuwesra, Esq., was to receive $17,500 as an attorney’s fee. Counsel did not separately seek costs or expenses.

The settlement represented approximately 63% of Perossio’s alleged unpaid overtime compensation of $83,925 and approximately 20% of his theoretical maximum recovery of $260,000. The court noted that the theoretical maximum included amounts for spread-of-hours pay for which Perossio was not eligible because he was paid more than the minimum wage, as well as liquidated damages and interest.

The court found that the agreement followed arm’s-length bargaining involving experienced employment and labor counsel, an unsuccessful mediation, document discovery, and a judicially supervised settlement conference. The settlement allowed the parties to avoid the expense, delay, and uncertainty of further litigation, including the possibility that Perossio would recover nothing if the defendants established that he was not their employee or would recover substantially less if they established that he worked little overtime.

The agreement included mutual general releases. The court found the nonfinancial terms fair because the agreement contained no rehiring prohibition, confidentiality clause, or other restriction on Perossio’s ability to discuss his employment, the lawsuit, or the settlement. The proposed $17,500 attorney’s fee was one-third of the gross settlement and approximately 53% of counsel’s stated lodestar, meaning the value of the time counsel reported working. The court found the fee reasonable and not excessive.

Ruling

Barbara Moses found that the financial and nonfinancial terms were fair and reasonable. The joint letter-motion was GRANTED, and the proposed settlement was APPROVED. The parties were directed to file their stipulation of dismissal within three business days after the settlement amount was paid. The opinion also states that the parties had stipulated to dismissal of Perossio’s federal and local race-discrimination claims, and that a state-court lawsuit brought against Perossio by Chris Clarke was dismissed in connection with the settlement.