Heimann v. Lingua Franca NYC Inc.

Background

Karen Heimann brought claims against Lingua Franca NYC Inc. and Rachelle Hruska a/k/a Rachelle Hruska Macpherson under the Fair Labor Standards Act, a federal wage law, and the New York Labor Law. She alleged that the defendants failed to pay overtime wages and retaliated against her. After the parties reached a settlement, they sought court approval. The court had previously denied approval of an earlier version without prejudice to renewal.

The parties submitted a revised settlement agreement and renewed their request for approval. They said settlement would avoid the uncertainty, expense, and length of continued litigation, including factual disputes about the number of hours Heimann worked and unresolved questions about her employment status.

Court’s analysis

The court explained that a settlement of Fair Labor Standards Act wage claims must be approved by the Department of Labor or a district court. For court approval, the settlement must be fair and reasonable. The court considers factors including the plaintiff’s possible recovery, the burdens and expenses of continued litigation, the litigation risks, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion. The court also examines confidentiality provisions, releases of claims, and any attorney’s-fee request.

The court concluded that the revised settlement satisfied the fairness factors. However, the revised release provision still did not provide Heimann with a release from liability while protecting the defendants. The court stated that it could not approve a non-mutual release that protected only the defendants. The court noted that the earlier no-rehire provision had been removed from the revised agreement, resolving that issue.

The court separately examined counsel’s request for one-third of the settlement proceeds, identified as $5,433.69 in attorney’s fees and $698.92 in costs. The court found that the requested hourly rate of $400 was reasonable based on counsel’s experience. But counsel’s application did not identify the total hours spent litigating the matter consistently: the submission reported a subtotal of 35.6 hours, while the listed time entries added up to 33.3 hours. Because of that discrepancy, the court could not perform the required comparison of the fee request against the hours reasonably worked and hourly rate. It therefore declined to approve the fee request in its current form.

Disposition

The court denied the parties’ motion for settlement approval without prejudice to renewal. The parties could file a revised letter and settlement agreement consistent with the order by August 15, 2023.