Pascual v. Three Diamond Diner Corp.

Background

Francisco Pascual, Eneldina Pascual, Jose Luis Pascual, Marcelo Pascual, Sergio Pascual, Elvis Vanegas, Marta Mansilla, Gustavo Guerra, and Edgar Fernando Duarte sued Three Diamond Diner Corp. doing business as Mount Kisco Diner; Photios Georgiou also known as Frank Georgiou; Charalambos Georgiou also known as Harry Georgiou; and Panayiota Georgiou also known as Yiota Georgiou. The plaintiffs were former waiters, bussers, and dishwashers at the diner.

The plaintiffs asserted claims under the Fair Labor Standards Act and New York Labor Law. They alleged that the defendants failed to pay the required minimum wage, overtime, and daily premiums for shifts longer than 10 hours; failed to provide required wage statements and notices; made improper pay deductions; and failed to reimburse uniform costs and maintenance. Some plaintiffs also alleged retaliation, untimely pay, and discrimination under federal and New York law. They sought unpaid wages and other damages, liquidated damages, interest, and attorneys’ fees and costs.

The parties reached a settlement after the case had proceeded through pleadings, case management, mediation efforts, discovery disputes, and the production of more than 5,400 pages of records. They submitted the proposed agreement for court approval.

Court’s Review of the Settlement

Because the settlement resolved claims under the Fair Labor Standards Act, the court reviewed whether the agreement was fair and reasonable. The court considered the plaintiffs’ possible recovery, the burdens and expenses of continued litigation, litigation risks, the parties’ negotiations, and the possibility of fraud or collusion.

The agreement required the defendants to pay $856,250. The listed payments to the plaintiffs totaled $835,836.30, and the agreement allocated $20,413.70 to plaintiffs’ counsel for fees and costs. The plaintiffs estimated approximately $2,860,378.81 in potential damages. Their net settlement represented about 29% of that estimate. The court found the amount reasonable because the plaintiffs faced risks concerning their retaliation and discrimination claims, and the defendants’ records undermined the plaintiffs’ wage-and-hour and overtime theories.

The court found that the agreement was negotiated competently, in good faith, and at arm’s length, with no fraud or collusion. It also noted that the plaintiffs were family members of a plaintiff in a recently settled prior litigation against the diner, but that neither the court nor the parties knew of similarly situated plaintiffs at that time.

Release and Non-Disparagement Provisions

The agreement released claims arising from or relating to any matter of the plaintiffs’ employment through the effective date. The court recognized that this language was broader than a release limited only to wage-and-hour claims. It nevertheless approved the release because the settlement also addressed employment-related non-wage claims, including uniform-maintenance, racial-discrimination, and retaliation claims, and the released conduct arose from the same factual basis as the settled claims.

The court also approved the mutual non-disparagement provision. The provision included exceptions for truthful testimony to a court or government agency, responses to subpoenas, and truthful statements about the case, settlement, and the parties’ litigation experiences.

Attorneys’ Fees

The agreement allocated $20,413.70 to plaintiffs’ counsel, approximately 2% of the total settlement. Although counsel did not provide contemporaneous time records, counsel represented that the requested amount was below the estimated $70,000 lodestar value of the work. A lodestar is a fee calculation based on a reasonable hourly rate multiplied by reasonable hours worked. The court found counsel’s representation credible after reviewing the docket and settlement agreement and approved the fee because the requested amount was unusually low.

Disposition

Judge Kenneth M. Karas granted the parties’ request for approval of the proposed settlement agreement. The court directed the Clerk of Court to close the case.