Castillo Carbajal v. K&P Facilities Maintenance Inc.

Background

Julio Cesar Castillo Carbajal, Jennifer Alicia Argueta Morales, and Cenia Moran brought this wage-and-hour case for themselves and other similarly situated individuals. They asserted claims under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL), alleging that K&P Facilities Maintenance Inc., Jimenez Facility Maintenance LLC, and Carlos Espinoza failed to pay overtime wages, failed to pay wages weekly, and failed to provide wage notices or accurate wage statements.

The parties asked the court to approve their settlement under the Second Circuit’s requirement that district courts review FLSA settlements for fairness and reasonableness. The court considered the settlement’s total circumstances, including the plaintiffs’ possible recovery, the costs and burdens of continuing the case, the litigation risks, the arm’s-length mediation process, and whether fraud or collusion was involved.

Settlement Terms and Fairness Review

The settlement provided for a total payment of $35,000. Plaintiffs were to receive $23,018.67, allocated as follows:

- $8,897.10 to Castillo Carbajal; - $9,879.25 to Argueta Morales; and - $4,242.32 to Moran.

Plaintiffs’ counsel was to receive $11,981.33 for fees and costs, consisting of $11,509.33 in attorneys’ fees and $472 in costs. The plaintiffs had calculated their maximum possible recovery at $77,052.07. The court found that the individual settlement amounts represented about 30 percent of each plaintiff’s maximum potential recovery and more than 90 percent of each plaintiff’s alleged unpaid wages if the plaintiffs had fully prevailed at trial.

The court found that continuing the case would require additional depositions, document discovery, possible electronic-discovery work, possible summary-judgment motions, and potentially a trial. The parties also faced disputed factual and legal issues, including the hours worked, the authenticity of records produced by Jimenez, and whether the defendants were joint employers. Jimenez asserted that Argueta Morales and Moran were properly paid and that it never employed Castillo Carbajal. K&P and Espinoza maintained that they were not the plaintiffs’ employers or joint employers. The plaintiffs disputed those positions.

The settlement followed a day-long mediation with a court-appointed mediator, and the court found no reason to believe it resulted from fraud or collusion. The court considered two other wage-and-hour lawsuits involving K&P and Espinoza but concluded that those cases did not outweigh the reasons supporting approval. The court also found that the settlement affected only the three plaintiffs and did not impair possible claims by other individuals.

Release, Non-Disparagement, Fees, and Costs

The settlement contained no confidentiality provision. It included a mutual non-disparagement provision with an exception allowing the plaintiffs to make truthful statements about their litigation experience, claims, alleged work experience with the defendants, and the resolution of the case. The release provisions were limited to the wage-and-hour claims asserted or that could have been asserted in this action. The court specifically interpreted potentially broad language concerning unknown or unsuspected claims as covering only the wage-and-hour claims addressed in the agreement.

The court found the attorneys’ fee request reasonable. Counsel’s requested $11,509.33 fee was exactly one-third of the settlement amount after subtracting costs. Counsel had documented 82.9 hours of work, producing a lodestar amount—a calculation based on reasonable hours multiplied by billing rates—of $27,292.50. The requested fee was approximately 42 percent of that amount. The court found the $402 filing fee sufficiently supported by the docket, while noting that counsel had not provided separate documentation for the $70 process-service fee. Nevertheless, the court found the total requested award of $11,981.33 fair and reasonable because it remained well below the lodestar amount.

Ruling

The court approved the settlement agreement filed at ECF No. 34-1. It directed that plaintiffs’ counsel receive $11,981.33 for attorneys’ fees and costs and that the plaintiffs receive the remaining $23,018.67 according to the agreement. The court dismissed the case with prejudice under the parties’ stipulation and directed the Clerk of Court to close the case. The court did not decide whether the defendants actually violated the FLSA or NYLL; it approved the parties’ resolution of those disputed claims.