Galeas v. 1401 Grand Concourse LLC.

Background

Edwin Galeas brought claims under the Fair Labor Standards Act and the New York Labor Law against 1401 Grand Concourse LLC, 1401 Grand Concourse Associates LLC, David Green, and Yona Roth. He alleged minimum-wage violations, failure to pay overtime, and failure to provide wage statements and notices. After the parties reached a settlement, they asked the court to approve it.

The proposed settlement provided Galeas with $17,500, inclusive of attorney’s fees and costs. The parties said the agreement avoided the risks, uncertainty, and expense of continued litigation, resulted from arm’s-length bargaining, and was negotiated by experienced counsel.

Settlement-Approval Standard

The court explained that claims for unpaid wages under the Fair Labor Standards Act cannot be settled without approval from either the Department of Labor or a federal district court. When a district court reviews such an agreement, it must decide whether the settlement is fair and reasonable. Relevant considerations include the plaintiff’s possible recovery, the burdens and costs of continuing the case, litigation risks, the bargaining process, and the possibility of fraud or collusion. Courts also examine confidentiality provisions, releases, attorney’s fees, and costs.

Reasons for Denial

The court could not evaluate whether the $17,500 settlement amount was reasonable. The parties estimated that Galeas’s maximum recovery on his minimum-wage and overtime claims ranged from $4,797 to $29,380, plus liquidated damages, costs, interest, and attorney’s fees. But they did not submit declarations or exhibits supporting the assumptions behind that estimate or explaining why the settlement amount was sufficient.

The court also found that the parties provided only general statements about the risks and uncertainty of continued litigation. They did not state that the negotiations were free of fraud or collusion. As a result, the court could not find that the relevant settlement factors had been satisfied.

The liability release was also too broad. It released numerous entities and individuals beyond the named defendants, including affiliated entities, owners, employees, officers, agents, and others. It also purported to bind people connected to Galeas, such as heirs, legal representatives, successors, and assigns. The agreement did not provide Galeas with any release of liability.

Attorney’s Fees and Costs

Galeas’s counsel requested $3,681 in attorney’s fees, described as one-third of the settlement proceeds after reimbursement of $6,457 in expenses. Counsel submitted contemporaneous billing records showing 39.9 hours of work and a lodestar—the value of the recorded hours at the lawyers’ hourly rates—of $11,602.50. The court found the requested fee reasonable because it was less than the lodestar and represented one-third of the recovery.

Counsel also requested $6,457 in costs, including a $402 filing fee, $355 for a process server, and $5,700 for a private investigator who located Galeas during the litigation. Although the court recognized filing and process-server fees as typical litigation costs, it said that hiring a private investigator to locate one’s own client was not a typical cost ordinarily charged to a client. Without additional legal support showing that expense was reasonable, the court would not approve the reimbursement request.

Disposition

The court denied the parties’ motion for settlement approval without prejudice to renewal. The parties were permitted to file a revised letter and settlement agreement by February 5, 2024. The court also directed the Clerk to vacate the earlier stipulation of dismissal at ECF No. 45. The court explained that the stipulation had been endorsed in error and that the action could not be dismissed with prejudice against any defendant unless the settlement was approved by the court or the Department of Labor.