Del Rio v. 257 SG Pizza Corp.

Background

Carlos Del Rio sued 257 SG Pizza Corp. doing business as Ciao Bella Restaurant Pizzeria, Giuseppe Graci, and Francisco “Doe” under the Fair Labor Standards Act (FLSA) and New York Labor Law. He alleged that the defendants failed to pay minimum wages, overtime wages, and spread-of-hours pay; failed to provide a wage notice when he was hired; and failed to provide paystubs.

Del Rio stated that he worked as a delivery driver from June 1, 2017, through March 20, 2019. He alleged that he worked between 59 and 75 hours per week without receiving overtime pay for hours over 40 per week. He also alleged that the defendants mischaracterized his duties in payroll records to avoid paying the required minimum wage and to pay him at a lower tip-credit rate. These facts were allegations, not findings that the court made after a trial.

The parties reached a settlement in principle on January 13, 2022, after good-faith settlement discussions and discovery. They asked the court to approve the agreement. The parties had consented to Magistrate Judge Wang’s authority to decide the motion.

Settlement review

Under the Second Circuit’s decision in Cheeks v. Freeport Pancake House, Inc., courts must approve stipulated dismissals settling FLSA claims with prejudice. Judge Wang applied the factors identified in Wolinsky v. Scholastic Inc., including the possible recovery, the burdens and expenses of continued litigation, the risks of the parties’ claims and defenses, the parties’ negotiations, and the possibility of fraud or collusion.

Del Rio alleged that his maximum recovery was $28,717.15, excluding attorneys’ fees and costs and liquidated damages. The proposed settlement was $8,500. Del Rio would receive $4,533.15, which the opinion described as approximately 16% of his claimed back wages, excluding liquidated damages and penalties. The court found the amount reasonable in light of the risks and potential damages.

The court also found that settlement would allow the parties to avoid the burden and expense of preparing for trial. The filings showed significant disputes and risks, including risks concerning proof of damages. The parties represented that the agreement resulted from extensive, arm’s-length negotiations, and the record contained no indication of fraud or collusion.

Judge Wang found the release appropriately limited to employment-related wage-and-hour claims through the date the agreement was executed. The agreement contained no confidentiality or non-disparagement provision and had already been filed publicly. The opinion states that plaintiff’s counsel would receive $3,966.85 from the settlement. It further states that $2,266.57 was allocated to attorneys’ fees and $1,700.28 to costs, and that the attorneys’ fee amount was reasonable.

Disposition

The court approved the parties’ proposed settlement agreement as fair and reasonable. Del Rio was to receive $4,533.15. Plaintiff’s counsel was to receive $3,966.85, consisting of $2,266.57 in attorneys’ fees and $1,700.28 in costs. The action was dismissed with prejudice, and the Clerk of Court was directed to close the case.