Chavez v. The Fifth Labor, LLC

Background

Juanita Paulina Chavez brought claims against The Fifth Labor, LLC and Anthony Rhodes alleging that they failed to pay her overtime wages in violation of the Fair Labor Standards Act and the New York Labor Law. Chavez also asserted claims under the Wage Theft Prevention Act and the Spread of Hours Wage Order. She brought the case individually and on behalf of others similarly situated.

The parties first asked the court to approve their settlement on March 29, 2023. The court declined to approve that application without prejudice because the parties had not provided an estimate of Chavez’s hours worked, her hourly wage, clear information about her estimated recovery and its components, or billing records supporting the requested attorney fees. The parties then filed a revised settlement motion.

Settlement Amount and Release

The revised agreement provided for a total recovery of $25,000, inclusive of legal fees. Chavez’s counsel would receive $8,330, described as one-third of the settlement award, leaving Chavez with $16,670. Counsel agreed to waive costs.

Chavez estimated that her maximum recovery on all claims was $38,635, including $21,660 in unpaid overtime, $10,000 in statutory penalties under the Wage Theft Prevention Act, and $6,975 on her New York Labor Law claims. The settlement therefore represented approximately 43% of her estimated maximum recovery rather than full payment of all claims.

The agreement released claims and rights connected with Chavez’s alleged employment by the defendants, including wage-and-hour claims under the federal and New York statutes identified in the agreement. The court found that the settlement resolved genuine disputes, reflected a reasonable compromise in light of litigation risks and delays, and resulted from arm’s-length negotiations involving experienced labor and employment attorneys.

Attorney Fees

The court also reviewed the requested $8,330 in attorney fees. As a cross-check, the court used the lodestar method, which multiplies a reasonable hourly rate by a reasonable number of hours worked. It found reasonable rates of $500 per hour for Nolan Klein, $325 per hour for Laura Adame, and $150 per hour for Melanie Delgado’s paralegal work. The court calculated a total lodestar of $8,962.50 based on 12.7 hours for Klein, 7 hours for Adame, and 2.25 hours for Delgado.

The requested $8,330 fee resulted in a lodestar multiplier of approximately 0.93. The court accepted that multiplier and found the requested fees reasonable under the circumstances.

Ruling

Judge Edgardo Ramos held that the revised settlement complied with the required review standard for Fair Labor Standards Act settlements and approved the agreement. The court directed the clerk to terminate the motion and close the case.