Hollis v. The All American Bar on First, Inc.

Background

Ellen Hollis sued The All American Bar on First, Inc., doing business as American Trash; Lava 164 Corp., doing business as Marshall Street; Robert Gerola; Robert O’Rourke; and Claudine O’Rourke. She sought allegedly unpaid minimum and overtime wages and allegedly unlawfully retained tips under the Fair Labor Standards Act and New York Labor Law. Hollis claimed that her unpaid wages and withheld tips totaled $169,791.

The defendants disputed the number of hours Hollis worked and argued that she was a partner in the restaurants, not an employee entitled to minimum-wage and overtime protections. Hollis also treated the two corporate defendants as joint employers or a single integrated enterprise and acknowledged that her potential recovery would be significantly reduced if that position were rejected. Louise DeMarco had not appeared and was not a party to the settlement agreement, although the agreement released claims asserted against her.

Settlement and requested payments

Hollis moved for approval of a $21,000 settlement. The proposed payment consisted of $13,422.67 for Hollis, $866 in litigation costs, and $6,711.33 in attorney’s fees. Hollis agreed to release claims arising under the Fair Labor Standards Act, New York Labor Law, and other federal, state, or local wage laws concerning wage-and-hour matters.

Hollis’s calculation put her best-case recovery at $359,582, including unpaid wages, an equal amount in liquidated damages, and $20,000 in statutory penalties. The court noted that the settlement represented a low percentage of that estimate, but compared it with cases approving settlements involving serious collectability concerns and substantial legal and factual disputes.

Court’s analysis

Federal wage claims generally cannot be privately settled without approval from the district court or the Department of Labor. The court evaluated the settlement under the totality of the circumstances, including the possible recovery, the burdens and costs of continued litigation, the risks of proving the claims, the nature of the negotiations, and the possibility of fraud or collusion.

The court found significant reasons supporting approval. Gerola, described as the owner of the now-closed corporate defendants, was delinquent on mortgage payments and facing foreclosure proceedings. Robert and Claudine O’Rourke had borrowed against a pension to help make the settlement possible, and defense counsel had withdrawn because of unpaid fees. The court also considered the disputes about Hollis’s hours, her status as an employee or partner, and whether the corporate defendants were joint employers. These issues created substantial litigation risks and made collection of a judgment uncertain.

The court further found that the case had settled relatively early, reducing anticipated litigation expenses; that the parties had engaged in extensive, arm’s-length settlement discussions; and that there was no evidence of fraud or collusion. It therefore found the proposed settlement fair and reasonable.

Attorney’s fees and costs

Hollis’s counsel requested $6,711.33, representing one-third of the settlement amount after deducting costs. Counsel submitted billing records showing 42.6 hours of work at $400 per hour, producing a lodestar—the reasonable hourly rate multiplied by the reasonable hours worked—of $17,040. The court found the requested contingency-based fee reasonable and granted the $6,711.33 fee award.

The court also approved $866 in costs, consisting of a $402 filing fee and $464 in service fees.

Disposition

Judge Jennifer H. Rearden approved the parties’ proposed $21,000 settlement and the dismissal of the action with prejudice. The Clerk of Court was directed to terminate the settlement-related motions and close the case.