Calixto v. Prime Square Restaurant Corp.

Background

Eduardo Calixto sued Prime Square Restaurant Corp., Ferit (Frank) Kodza, and Bekim (Benny) Koxha under the Fair Labor Standards Act and the New York Labor Law. Calixto, who worked as a bartender at defendants’ restaurant, alleged that defendants took a tip credit to which they were not entitled, paid less than the required minimum and overtime wages, failed to pay for all hours worked, improperly took tips through an unlawful tip pool, failed to pay spread-of-hours premiums, and failed to provide required wage notices and wage statements.

Defendants denied liability. They argued, among other things, that Calixto overstated his hours, particularly during COVID lockdown periods, and that the tip pool properly included the restaurant’s head waiter. The parties reached their agreement during a court-supervised settlement conference on October 24, 2022. The opinion also states that Jorge Gregorio, who initially filed claims in the action, voluntarily dismissed those claims without prejudice after he had been incorrectly identified in the caption as Jorge Rodriguez, leaving Calixto as the only settling plaintiff.

Settlement terms and analysis

The agreement required the defendants collectively to pay $29,000 to Calixto within 60 days after dismissal of the claims under the agreement. Calixto would receive $19,334. The remaining $9,666 would consist of $9,077.75 in attorneys’ fees and $588.25 in reimbursed costs.

The court found that the settlement represented approximately 77% of Calixto’s estimated maximum recovery of $37,533.96. That estimate included unpaid minimum and overtime wages, spread-of-hours pay, liquidated damages, and New York statutory penalties. The court concluded that the settlement reasonably accounted for the risks and uncertainty of continued litigation, including the possibility that Calixto could recover nothing or substantially less if defendants proved their defenses.

The agreement included mutual releases of claims arising from Calixto’s employment relationship with defendants. The court noted that the agreement contained no rehiring prohibition, confidentiality clause, or other restriction on Calixto’s ability to discuss his employment, the lawsuit, or the settlement. The court also found the proposed fee and cost amounts reasonable. The fee was less than one-third of the gross settlement and approximately 63% of counsel’s stated lodestar, meaning the value calculated from counsel’s recorded time and rates.

Ruling

Judge Moses found the financial and nonfinancial terms fair and reasonable as required by the Second Circuit’s decision in Cheeks v. Freeport Pancake House, Inc. The joint letter-motion was GRANTED, the proposed settlement was APPROVED, and the action was DISMISSED with prejudice and without costs. The court retained jurisdiction for enforcement purposes only and directed the Clerk of Court to close the case.