Opinion
Civil Action 22 Civ. 4442 (JLR) (SLC)
12-13-2022
JOSEPH RODRIGUEZ, Plaintiff, v. CLEARBROOK MANAGEMENT INC, Defendant.
TO THE HONORABLE JENNIFER L. ROCHON, United States District Judge:
REPORT AND RECOMMENDATION
SARAH L. CAVE, UNITED STATES MAGISTRATE JUDGE.
I. INTRODUCTION
The parties in this wage-and-hour case under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”) have submitted a joint motion seeking approval of their settlement agreement (ECF No. 16-1 (the “Settlement Agreement”) under Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015). (ECF No. 16 (the “Motion”)). The Honorable Jennifer L. Rochon has referred the Motion for a report and recommendation. (ECF No. 18).
For the reasons set forth below, I respectfully recommend that the Motion be GRANTED and the Settlement Agreement be approved as fair and reasonable.
This Report and Recommendation replaces the Report and Recommendation issued December 12, 2022, which was withdrawn by Order dated December 13, 2022. (ECF Nos. 21; 23).
II. BACKGROUND
A. Factual Background
Plaintiff Joseph Rodriguez (“Rodriguez”) alleged that from April 15, 2017 until March 2, 2022, he was employed as a porter and handyman by Defendant Clearbrook Management, Inc. (“Clearbrook”), a property management company. (ECF No. 1 (the “Complaint”) ¶¶ 1, 8-10, 1415). Rodriguez alleged that he worked for Clearbrook 45 to 54 hours per week, except for two to three weeks per year, for which Clearbrook paid him a regular hourly rate that ranged between $12 to $15. (Id. ¶¶ 16-17). Rodriguez alleged that Clearbrook failed to pay him required overtime wages under the FLSA and New York Labor Law § 650 et seq. (“NYLL”), and failed to provide him with wage statements and wage notices required under the NYLL. (Id. ¶¶ 37-59). Clearbrook denied Rodriguez's allegations and asserted numerous affirmative defenses. (ECF No. 12).
B. Procedural Background
On May 30, 2022, Rodriguez filed the Complaint, and on July 27, 2022, Clearbrook filed the Answer. (ECF Nos. 1; 12). On September 21, 2022, the parties participated in a mediation, at which they reached an agreement in principle to settle this action. (ECF No. 14). On October 21, 2022, the parties filed the Motion, which Judge Rochon referred for a report and recommendation. (ECF Nos. 16; 18).
III. DISCUSSION
A. Legal Standard
Under Federal Rule of Civil Procedure 41(a)(1)(A), parties may voluntarily dismiss an action in federal court, subject to the limitations imposed by “any applicable federal statute[.]” Fed. R. Civ. P. 41(a)(1)(A); see Amhaz v. Booking.com (USA) Inc., No. 17 Civ. 2120 (GBD) (OTW), 2019 WL 9122944, at *2 (S.D.N.Y. Oct. 29, 2019), adopted by, 2020 WL 3498264 (S.D.N.Y. June 29, 2020). The Second Circuit has held that “in light of the unique policy considerations underlying the FLSA,” the statute falls within Rule 41(a)(1)(A), and therefore, “stipulated dismissals settling FLSA claims with prejudice require approval of the district court or the [Department of Labor] to take effect.” Cheeks, 796 F.3d at 206.
Under precedent in this District, courts approve FLSA settlements where they are “fair and reasonable,” an inquiry that “employ[s] the five non-exhaustive factors enumerated in Wolinsky v. Scholastic Inc.[,]” 900 F.Supp.2d 332, 335 (S.D.N.Y. 2012). Amhaz, 2019 WL 9122944, at *2. Those factors are:
(1) the plaintiff's range of possible recovery; (2) the extent to which the settlement will enable the parties to avoid anticipated burdens and expenses in establishing their respective claims and defenses; (3) the seriousness of the litigation risks faced by the parties; (4) whether the settlement agreement is the product of arms'-length bargaining between experienced counsel; and (5) the possibility of fraud or collusion.Wolinsky, 900 F.Supp.2d at 335 (citations omitted).
B. Application
1. Range of Recovery, Burdens, and Litigation Risks
The first three Wolinsky factors are interrelated and may be considered together. See, e.g., Flores v. Dynamic Wireless NYC, LLC, No. 21 Civ. 6160 (OTW), 2022 WL 3363584, at *2 (S.D.N.Y. July 1, 2022); Amhaz, 2019 WL 9122944, at *2. Under the Settlement Agreement, the total amount Clearbrook is to pay within 37 days of Court approval is $25,000 (the “Settlement Amount”). (ECF No. 16-1 at 1). Rodriguez himself will receive $16,349. (ECF Nos. 16 at 2; 16-1 at 1-2). Rodriguez estimates that, were he to succeed on his claims for unpaid wages, under the NYLL limitations period he would recover approximately $30,157, an amount that would be doubled if liquidated damages were awarded. (ECF No. 16 at 1-2). See Xochimitl v. Pita Grill of Hell's Kitchen, Inc., No. 14 Civ. 10234 (JGK) (JLC), 2016 WL 4704917, at *15 (S.D.N.Y. Sept. 8, 2016) (explaining that “a plaintiff who demonstrates that he was improperly denied either minimum or overtime wages may recover, in addition to reimbursement of these unpaid wages, an ‘additional equal amount as liquidated damages'”) (quoting 29 U.S.C. § 216(b)), adopted by 2016 WL 6879258 (S.D.N.Y. Nov. 21, 2016). In addition, Rodriguez could recover as much as $10,000 for the wage statement and notice claims, for a total potential recovery of $70,314.00. (ECF No. 1 ¶¶ 50-52). See NYLL §§ 195(1), (3), 198(1-b), (1-d). Rodriguez's recovery under the Settlement Agreement therefore represents over 23% of his potential recovery at trial, which within the range that other courts in this District have deemed fair and reasonable. See, e.g., Amhaz, 2019 WL 9122944, at *2 (approving settlement percentages between 9.4% and 26% of plaintiffs' estimated total recoveries); Beckert v. Ronirubinov, No. 15 Civ. 1951 (PAE), 2015 WL 8773460, at *2 (S.D.N.Y. Dec. 14, 2015) (approving settlement that resulted in plaintiffs' receipt of 25% of estimated damages).
Rodriguez acknowledges that, were the litigation to go forward, Clearbrook would continue to deny all liability and argue that he “was properly compensated for all hours worked and dispute the work hours” he alleges. (ECF No. 16 at 2). Rodriguez also acknowledges that Clearbrook may be able to avoid liquidated damages by proving the good-faith affirmative defense. (Id.; see generally ECF No. 12 at 7-11). With these defenses, there is a not insignificant possibility that Rodriguez could have received nothing, or substantially less than he alleges, at trial on his FLSA and NYLL claims.
In addition, Rodriguez has expressed concern about Clearbrook's ability to pay a higher settlement amount, as evidenced by the installment payments in the Settlement Agreement. (ECF Nos. 16 at 3; 16-1 at 1-2). See Flores, 2022 WL 3363584, at *2 (finding that defendants' assertions of inability to pay, combined with “long payment plan” supported approval of settlement); Lliguichuzcha v. Cinema 60, LLC, 948 F.Supp.2d 362, 365 (S.D.N.Y. 2013) (noting that collectability concerns, manifest in a payment schedule, “militate[d] in favor of finding a settlement reasonable”); see also Hart v. RCI Hosp. Holdings, Inc., No. 09 Civ. 3043 (PAE), 2015 WL 5577713, at *10 (S.D.N.Y. Sept. 22, 2015) (finding that significant “risk that plaintiffs would not be able to collect, or fully collect, on a judgment” supported approval of settlement agreement).
Rodriguez's substantial recovery pursuant to the Settlement Agreement, combined with the risks he faced in the litigation and concerns about collectability of a judgment support the finding that the Settlement Agreement is fair and reasonable.
2. Arm's-Length Negotiations
The Settlement Agreement is the result of good faith negotiations between the parties during a mediation with the Court-annexed mediation program. (ECF No. 16 at 3). The Settlement Agreement is therefore the result of arm's-length negotiations. See Flores, 2022 WL 3363584, at *2 (finding that settlement resulting from court-appointed mediation evidenced arm's-length negotiations); Amhaz, 2019 WL 9122944, at *3 (finding that settlement resulting from private mediation demonstrated arm's-length negotiations).
3. Risk of Fraud or Collusion
There is nothing in the record indicating that fraud or collusion played a role in the Settlement Agreement. See Flores, 2022 WL 3363584, at *2; Amhaz, 2019 WL 9122944, at *3. In addition, Rodriguez no longer worked for Clearbrook, (ECF No. 1 ¶ 14), “diminishing potential concern that [he] may have been coerced into the [S]ettlement by [his] employer.” Amhaz, 2019 WL 9122944, at *3.
4. Settlement Agreement Provisions
The Settlement Agreement does not contain provisions that courts have found objectionable and thus prevented approval of other proposed FLSA settlements. For example, the Settlement Agreement does not contain a confidentiality provision and has been filed on the docket. See Amhaz, 2019 WL 9122944, at *3; Thallapaka v. Sheridan Hotel Assocs. LLC, No. 15 Civ. 1321 (WHP), 2015 WL 5148867, at *1 (S.D.N.Y. Aug. 17, 2015) (noting that an “overwhelming majority” of courts reject confidentiality provisions in FLSA settlements). Nor does it contain a non-disparagement clause. See Amhaz, 2019 WL 9122944, at *3; Martinez v. Gulluoglu LLC, No. 15Civ. 2727 (PAE), 2016 WL 206474, at *1 (S.D.N.Y. Jan. 15, 2016) (noting that nondisparagement provisions can contravene the purpose of FLSA). Finally, the release in the Settlement Agreement is limited to employment-related claims that have been or could have been asserted in the Complaint. (ECF No. 16-1 at 2). The absence of objectionable provisions supports the finding that the Settlement is fair and reasonable.
5. Attorneys' Fees and Costs
The Settlement Agreement allocates $8,651.00 to Rodriguez's counsel for attorneys' fees and costs. (ECF Nos. 16 at 2-3; 16-1 at 1-2). The costs total $477.00, consisting of filing and service of process fees. (ECF No. 16 at 3). Thus, the proposed amount of attorneys' fees, $8,174.00, represents 33.3% of the Settlement Amount after costs are deducted, which is consistent with the retainer agreement that Rodriguez signed. (ECF No. 16-2 at 2-3).
The Court observes that the Settlement Agreement appears to contain typographical errors in paragraphs 2(c) and 2(f), which incorrectly describe the amounts of the checks to be delivered to “Abdul Hassan Law Group, PLLC” as “Ten Thousand Seven Hundred Seventy-Two Dollars and Zero Cents,” when the amounts, in fact, are $5,190.60 (or “Five Thousand One Hundred Ninety-Two Dollars and Sixty Cents,” and $3,460.40 (or “Three Thousand Four Hundred Sixty Dollars and Forty Cents,” respectively. (ECF No. 16-1 at 1-2 ¶¶ 2(c), (f).
“Where, as here, the proposed attorney's fees award is based on an amount other than the charged fees, the Court must still employ the lodestar method to determine reasonableness.” Amhaz, 2019 WL 9122944, at *3 (citing Hernandez v. Boucherie LLC, No. 18 Civ. 7887 (VEC), 2019 WL 3765750, at *4 (S.D.N.Y. Aug. 8, 2019)). “The lodestar method compares the proposed fees with the lodestar amount, [which is] a reasonable hourly rate multiplied by the reasonable number hours needed to be spent on the case.” Id.
”Courts in this district have determined that [hourly rates] ranging from $250 to $450 [are] appropriate for experienced litigators in wage and hour cases.” Silva v. Legend Upper West LLC, 590 F.Supp.3d 657, 664 (S.D.N.Y. 2022) (awarding $450 per hour for managing member of firm with decade of employment litigation experience); see Pastor v. Alice Cleaners, Inc., No. 16 Civ. 7264 (JLC), 2017 WL 5625556, at *7 (S.D.N.Y. Nov. 21, 2017) (noting hourly rates between $250 and $450 for experienced litigators in wage-and-hour cases in this district). Rodriguez's counsel, Abdul Hassan, Esq., “has been practicing law since 2001 [] and has litigated over 400 employment and wage cases in federal court[, including] a number of significant employment cases before the Second Circuit.” Almond v. PJ Far Rockaway, Inc., No. 15-CV-6792 (FB) (JO), 018 WL 922184, at *1 (E.D.N.Y. Feb. 15, 2018). 2Hassan's requested hourly rate of $500 is slightly above what courts in this district have approved for experienced wage-and-hour associates, and the Court reduces his hourly rate to $450 for purposes of the lodestar analysis. See Animucka v. Singer, No. 20 Civ. 7867 (ER), 2022 WL 16908279, at *2 (S.D.N.Y. Oct. 21, 2022) (finding $450 hourly rate reasonable for experienced wage-and-hour partner).
Hassan recorded 21.80 hours to Rodriguez's matter, resulting in a lodestar amount of $9,180 (21.8*$450). (ECF No. 20-1). The amount of fees under the Settlement Agreement, therefore, is slightly (about eleven percent) less than the lodestar amount ($8,174/$9,180). The amount Hassan is to receive under the Settlement Agreement equates to one-third of the Settlement Amount, a percentage that courts in this district have generally deemed reasonable. See Amhaz, 2019 WL 9122944, at *4 (finding that fees representing 32% of the net settlement amount was reasonable); Martinez, 2016 WL 206474, at *2 (“Barring unusual circumstances not present here, courts in this District have declined to award fees constituting more than one-third of the total settlement amount in an FLSA action.”). Therefore, the Court finds that the attorneys' fees to be paid pursuant to the Settlement Agreement are reasonable.
In addition, the Court finds that Plaintiff's costs in the amount of $477.00, which are substantiated by contemporaneous receipts for the court filing fee and service of process (ECF No. 22-1), reflect the “reasonable out-of-pocket expenses incurred by attorneys and ordinarily charged to their clients.” Leblanc-Sternberg v. Fletcher, 143 F.3d 748, 763 (2d Cir. 1998) (internal citation omitted); see Imbeault v. Rick's Cabaret Int'l Inc., No. 08 Civ. 5458, 2009 WL 2482134, at *1 (S.D.N.Y. Aug. 13, 2009) (“Both the FLSA and the NYLL provide that a prevailing plaintiff may seek an award of reasonable attorneys' fees and costs, to be paid by the defendants.”) (citing 29 U.S.C. § 216(b); NYLL §§198, 663(1)); see also Antonio v. SipSak Inc., No. 21 Civ. 1871 (LGS) (SLC), 2022 WL 4796956, at *15 (S.D.N.Y. July 28, 2022), adopted by, 2022 WL 4787739 (S.D.N.Y. Oct. 3, 2022); Perez v. Rossy's Bakery & Coffee Shop, Inc., No. 19 Civ. 8683 (SLC), 2021 WL 1199414, at *11 (S.D.N.Y. Mar. 30, 2021) (awarding costs for transcripts, service, translator, and filing fee); Amhaz, 2019 WL 9122944, at *4 (finding costs reasonable after plaintiffs' counsel supplemented submission with declaration attesting to costs).
IV. CONCLUSION
For the reasons set forth above, I respectfully recommend that the Motion be GRANTED and the Settlement Agreement be approved as fair and reasonable.
* * *
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D) or (F)). A party may respond to another party's objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Rochon.
FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).