Montero v. Primo Home Services Installation Inc.

Background

On May 10, 2024, the parties filed a joint motion asking the court to approve their settlement of Plaintiffs’ claims. The agreement concerned claims under the Fair Labor Standards Act (FLSA), the federal law governing minimum wages and overtime pay. The parties submitted an executed settlement agreement with their motion.

In the Second Circuit, parties cannot privately settle FLSA claims through a stipulated dismissal with prejudice under Federal Rule of Civil Procedure 41 unless the district court or the Department of Labor approves the settlement. Courts reviewing these settlements consider whether the proposed agreement and any attorneys’ fees are fair and reasonable, including the possible recovery, litigation risks, and likely expenses.

Settlement Terms and Court’s Concerns

The proposed settlement payment totaled $20,000. The agreement allocated $7,062, or 35.31% of the total, to Plaintiffs’ counsel for attorneys’ fees and costs. The remaining $12,938 was to be divided evenly among three Plaintiffs, with each receiving $4,312.67.

The court could not determine what percentage of each Plaintiff’s unpaid wages or possible total recovery those payments represented. The parties stated only that Plaintiffs were paid a flat daily salary of $125 regardless of their overtime hours, but they did not state how many days per week Plaintiffs received that pay. Without that information, the court could not determine the Plaintiffs’ possible recovery.

The complaint alleged that Plaintiffs Bryan Montero and Damiand Villa sought damages exceeding $100,000. The court stated that, if Montero and Villa were receiving less than 9% of their demanded recovery, the parties had not provided enough information to assess whether the litigation risks justified that percentage. The court also noted that the parties’ calculations in their motion differed from the amounts in the signed settlement agreement. The agreement listed four checks totaling $7,062 for attorneys’ fees and costs.

Ruling

Judge Dale E. Ho denied the parties’ motion for approval of the settlement, without prejudice to renewal. The court ordered the parties to file any renewed motion by May 31, 2024, and to provide enough information for the court to conduct the required fairness analysis. The court also directed the parties to review the settlement-fund breakdown in their motion to ensure that it matched the settlement agreement.

A footnote states that the electronic docket listed only Bryan Montero and Damiand Villa as Plaintiffs, while the parties’ motion referred to potential opt-in Plaintiff Nicholas Torres and the complaint included allegations concerning him. The opinion does not resolve that discrepancy.