Canela v. JMF Restaurant Corp

Background

Lucrecia Canela sued JMF Restaurant Corp., Jose Pablot Tobon-Olguin, Ofelia Reyes, and Cinthis Reyes. She alleged violations of the Fair Labor Standards Act, a federal wage law, and the New York Labor Law. According to the complaint, Defendants employed her as a cook from approximately 2015 until May 2, 2022, when she was injured at work. She alleged that she worked more than 40 hours per week but was not paid the required minimum wage or overtime rates. She also alleged that the Restaurant did not provide wage notices, wage statements, or other documentation of her hours or pay.

After mediation, the parties reported that they had settled and submitted their proposed agreement for court approval. Because the settlement resolved Fair Labor Standards Act claims, the court reviewed it under the Second Circuit's requirement that such settlements be approved by the court or the Department of Labor.

Settlement Review

The court applied factors addressing the plaintiff's possible recovery, the burdens and expenses of continued litigation, the parties' litigation risks, the nature of the negotiations, and the possibility of fraud or collusion.

Canela claimed $77,265 in unpaid minimum and overtime wages. Defendants disputed the hours she claimed and said that the defendants whose liability was not disputed had no assets. The proposed settlement totaled $43,400. The agreement provided that Canela would receive $28,933.66 and her counsel would receive $14,466.34 in attorney fees. Counsel waived reimbursement of costs. The court found the recovery reasonable in light of the risks, including disputes about pay and timekeeping records and Defendants' unstable financial position and inability to pay.

The court also found that the agreement resulted from an extended mediation conducted through the Southern District of New York's mediation program and that the attorneys were experienced in employment litigation. The record contained no indication of fraud or collusion. The agreement did not include confidentiality or non-disparagement provisions, which the court identified as provisions that can be objectionable in Fair Labor Standards Act settlements.

The court found the $14,466.34 attorney-fee award reasonable. It represented approximately 33% of the settlement. Although the fee amount exceeded counsel's recorded fees and costs of $8,861.45, the court considered counsel's time records and the work performed in the case, including filing the complaint, motion practice, and mediation.

Disposition

The court approved the parties' proposed settlement agreement as fair and reasonable. It stated that, if Canela disagreed with the amounts awarded to her or her counsel, she could file a motion for reconsideration by August 8, 2023. The Clerk was directed to close ECF 30 as moot in light of the settlement. The court ordered that the action be dismissed with prejudice without costs.