United States District Court, S.D. New York
MANUEL LIZONDRO-GARCIA, LUIS CRUZ, JORGE GARCIA, JERALDO GONZALEZ, ALEKSANDER VELIC, JAVIER TOLEDO, OSCAR RAMIREZ, MOISES JIMENEZ, MARCO REAL, on behalf of themselves and others similarly situated, Plaintiffs,
KEFI LLC, doing business as KEFI RESTAURANT and KOSTANTINOS DAMANIOS, Defendants.
OPINION AND ORDER
HENRY PITMAN, Magistrate Judge.
Manuel Lizondro-Garcia, Luis Cruz, Jorge Garcia, Jeraldo Gonzalez, Aleksander Velic, Javier Toledo, Oscar Ramirez, Moises Jimenez and Marco Real ("plaintiffs"), on behalf of themselves and others similarly situated, commenced this action pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., and New York Labor Law ("NYLL") Sections 191 et seq. to recover unpaid overtime and spread-of-hours compensation, improperly withheld tips and statutory damages. Plaintiffs commenced this action as a collective action under 29 U.S.C. § 216(b) and as a putative class action under Fed.R.Civ.P. 23 with respect to the Labor Law claims.
All parties have consented to my exercising plenary jurisdiction in this matter pursuant to 18 U.S.C. § 636(c).
By notice of motion dated August 29, 2014 (Docket Item 59), plaintiffs move for final approval of a class action settlement ("Motion for Final Approval"). Specifically, plaintiffs seek an Order (1) certifying the final settlement class (the "Settlement Class"), (2) approving the settlement agreement and (3) awarding fees and costs to class counsel, service awards to the named plaintiffs and fees to the claims administrator (Plaintiffs' Memorandum of Law in Support of Motion for Final Approval of Class Action Settlement, dated Aug. 29, 2014, (Docket Item 60) ("Pls.' Mem. for Final Approval") at 13, 23).
For the reasons set forth below, plaintiffs' motion is granted in part and denied in part.
II. Factual and Procedural Background
The complaint alleges that plaintiffs, and members of the FLSA collective and putative NYLL class,  are or were employed by defendants as servers, bartenders, baristas, barbacks, bussers or runners (Compl. ¶¶ 13-21). Plaintiffs allege that defendants failed to pay them the premium overtime rate for hours they worked in excess of 40 hours and spread-of-hours pay for days they worked in excess of 10 hours (Compl. ¶¶ 36-37, 45-46; Declaration of Josef Nussbaum, Esq., dated Aug. 29, 2014, (Docket Item 61) ("Nussbaum Decl."), ¶ 5). Plaintiffs also allege that defendants improperly forced plaintiffs to share their tips with "managers and party planners" (Compl. ¶¶ 43-44; Nussbaum Decl., ¶¶ 5-6).
In May 2012, the parties agreed to promptly exchange limited discovery in order to facilitate the prompt settlement of this matter. Defendants produced tip sheets, payroll records and clock-in reports for several of defendants' employees covering a sixteen-week period (Nussbaum Decl., ¶¶ 7-8). After reviewing defendants' records, plaintiffs estimated the total damages owed to the FLSA collective and the putative NYLL class (Nussbaum Decl., ¶ 8).
On May 30, 2013, I conducted a settlement conference that was attended by counsel and the parties. The parties were unable to resolve the case at that time.
After further fact discovery, counsel for plaintiffs reduced their estimate of plaintiffs' aggregate actual damages to approximately $280, 000.00 (Nussbaum Decl., ¶ 11). Thereafter, the parties arrived at a settlement (Nussbaum Decl., ¶ 11 and Ex. 1 annexed thereto).
The settlement agreement provides that defendants, without conceding the validity of plaintiffs' claims and without admitting liability, agree to establish a common fund of $315, 000.00 (Nussbaum Decl., Ex. 1 at ¶¶ 1.28, 3.1, 4.2). From the fund, the nine named plaintiffs will each receive service awards of $1, 000.00, the claims administrator will receive an estimated $15, 239.11 to set up and distribute monies from the fund and counsel for plaintiffs will receive attorneys' fees and costs, subject to the Court's approval, and not to exceed $105, 000.00 (Nussbaum Decl., Ex. 1 at ¶¶ 1.27, 3.2-3.3).
The settlement agreement states that the remainder will be divided up and awarded as follows: 25% to individuals who opt in to the FLSA collective and 75% to individuals who remain in the NYLL class (Nussbaum Decl., ¶¶ 12-13). Each member of the FLSA collective will be paid a pro rata share of the 25%, calculated by dividing the number of hours each member of the collective worked for defendants by the aggregate number of hours worked by the collective (Nussbaum Decl., Ex. 1 at ¶ 3.4(B)(4)). Each member of the putative NYLL class will be awarded a pro rata share of the 75% calculated on the same basis (Nussbaum Decl., Ex. 1 at ¶ 3.4(B)(3), (5)-(6)). No class member will receive an award of less than $100.00 (Nussbaum Decl., Ex. 1 at ¶ 3.4(B)(2)). Any unclaimed funds will revert to defendants (Nussbaum Decl., Ex. 1 at ¶¶ 3.1(I), 3.4(B)(8)). In return, each individual who opts into the collective and remains in the class will release defendants from all wage and hour claims that were brought or that could have been brought in this action (Nussbaum Decl., Ex. 1 at ¶¶ 2.9(B), 4.1). Defendants will not be released from the FLSA claims of FLSA collective members who do not endorse their settlement checks (Nussbaum Decl., Ex. 1 at ¶ 2.9(B)).
On May 29, 2014, I preliminarily approved the settlement on behalf of the FLSA collective and NYLL class, conditionally certified the NYLL class, appointed Joseph & Kirschenbaum LLP as class counsel and authorized the mailing of the notice of settlement (with minor modifications) to all class and collective members (Opinion and Order, dated May 29, 2014, (Docket Item 57) ("Preliminary Approval Order") at 28-31).
Also on May 29, 2014, the approved notice (the "Notice") was sent to all 235 potential class members, informing them of (1) their rights under the settlement (including the right to opt out of or object to the settlement); (2) class counsel's intention to seek one-third of the settlement fund for attorneys' fees and costs; (3) the request for service awards of $1, 000.00 for each named plaintiff and (4) the claims administrator's fees (Nussbaum Decl., ¶¶ 14, 19 and Ex. 3 annexed thereto). No class members objected to the settlement, and only one class member opted out (Nussbaum Decl., ¶ 15).
On August 29, 2014, Plaintiffs filed the pending motion for final approval. Defendants took no position with respect to the motion. I held a fairness hearing on September 12, 2014. No class member appeared at the hearing or submitted anything to me concerning the settlement.
A. Final Certification of the Settlement Class
On May 29, 2014, I issued an Opinion and Order, familiarity with which is assumed, in which I concluded that the Settlement Class satisfied the requirements of numerosity, commonality, typicality, adequacy, ascertainability and maintainability under Rule 23(a) and (b)(3), and preliminarily granted conditional certification of the Settlement Class, "consisting of all individuals who work or worked for defendants as servers, bartenders, baristas, barbacks, bussers and runners from December 1, 2008 to June 30, 2013" (Preliminary Approval Order at 6-18, 29-30).
To date, no facts have been presented to me to indicate that my preliminary determination was incorrect. Thus, for the reasons stated in my May 29, 2014 Opinion and Order, I conclude that final certification of the Settlement Class is proper.
B. Approval of Settlement Agreement
Pursuant to Fed.R.Civ.P. 23(e), the settlement of a class action is not effective until judicially approved. Although there is a general policy favoring settlements, the court may approve a class action settlement only if it "is fair, adequate, and reasonable, and not a product of collusion." Joel A. v. Giuliani, 218 F.3d 132, 138 (2d Cir. 2000). This requires consideration of both procedural and substantive fairness. Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir. 2005), citing D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001) ("A court determines a settlement's fairness by looking at both the settlement's terms and the negotiating process leading to settlement.").
1. Procedural Fairness
In assessing procedural fairness, there is "a presumption of fairness, reasonableness, and adequacy as to the settlement where a class settlement [is] reached in arm's-length negotiations between experienced, capable counsel after meaningful discovery.'" McReynolds v. Richards-Cantave, 588 F.3d 790, 803 (2d Cir. 2009) (brackets in original), quoting Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., supra, 396 F.3d at 116.
"In addition, courts encourage early settlement of class actions, when warranted, because early settlement allows class members to recover without unnecessary delay and allows the judicial system to focus resources elsewhere." Beckman v. KeyBank, N.A., 293 F.R.D. 467, 474 (S.D.N.Y. 2013) (Ellis, D.J.), citing Hernandez v. Merrill Lynch & Co., Inc., 11 Civ. 8472 (KBF)(DCF), 2012 WL 5862749 at *2 (S.D.N.Y. Nov. 15, 2012) (Freeman, M.J.); Castagna v. Madison Square Garden, L.P., 09 Civ. 10211 (LTS)(HBP), 2011 WL 2208614 at *6 (S.D.N.Y. June ...