Gomes v. I&H Construction LLC

Background

Manuel Virgilio Gomes brought claims against I&H Construction, LLC; Arch Builders New York LLC doing business as Arch Builders LLC; Uke Hulaj; and Jeffrey Simpson. He alleged violations of the Fair Labor Standards Act and the New York Labor Law, including claims for unpaid minimum and overtime wages. After reaching a settlement, the parties asked the court to approve their agreement.

Court’s analysis

Federal law requires approval by the Labor Department or a federal district court before an employer can settle certain Fair Labor Standards Act wage claims. The court must determine whether the settlement is fair and reasonable by considering the total circumstances, including the possible recovery, the burdens and expenses of continuing the case, litigation risks, whether the agreement resulted from arm’s-length negotiations by experienced counsel, and possible fraud or collusion.

The settlement provided Gomes with $45,000, including attorney’s fees and costs. The parties stated that his maximum possible recovery was $77,689, but they did not explain the specific litigation risks or their seriousness. Without that information, the court could not determine whether the settlement was fair and reasonable.

The court also found the liability release overbroad in three respects. It released numerous people and entities beyond the named defendants, including people and businesses only potentially or loosely connected to the defendants. It also purported to bind Gomes’s heirs, representatives, agents, successors, and assigns. Finally, it released a broad range of wage-related claims under the Fair Labor Standards Act, the New York Labor Law, and other wage laws, rather than limiting the release to the claims in the action or claims closely related to them.

The court separately reviewed the requested attorney’s fees and costs. Gomes’s counsel requested $14,697 in fees, approximately one-third of the settlement, and $909 in costs. The court noted that counsel had submitted contemporaneous time records showing a lodestar—the value of the recorded attorney work at the stated hourly rates—of $34,202.50, plus the $909 in costs. The court found the hourly rates, requested fees, and requested costs reasonable.

Disposition

Judge Analisa Torres denied the parties’ motion for settlement approval without prejudice to renewal. The parties were permitted to file a revised letter and settlement agreement by September 29, 2023.