United States District Court, Southern District of New York
Appearances: Justin Cilenti Peter H. Cooper Cilenti & Cooper, PLLC Attorneys for Plaintiff
Carolyn D. Richmond Glenn S. Grindlinger James M. Lemonedes Fox Rothschild, LLP Attorneys for Defendants
Lewis A. Kaplan, United Stales District Judge
Plaintiff Raul Camacho was employed as a “baker, porter/cleaner, and occasional delivery person” at Ess-A-Bagel, a kosher delicatessen and bakery, from approximately March 2007 until March 2014. He brings this suit to enforce his alleged rights under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”). Camacho claims principally that defendants failed to pay his requisite minimum and overtime wages and that he did not receive “spread of hours” pay as required by the NYLL.
The Court referred this case to Magistrate Judge Dolinger for pretrial matters,  at which point it was consolidated for pretrial purposes with two other actions, Mohamed v. Ess-a-Bagel, Inc. and Tarfaia v. Ess-a-Bagel, Inc.,  brought by current and former Ess-a-Bagel employees. Camacho and his attorneys now have submitted for court approval a proposed settlement that purports to terminate this litigation. Camacho has not sought to represent collective or class action plaintiffs, and the proposed settlement would only terminate the litigation as between Camacho and defendants in this case.
The proposed settlement would discontinue the case in exchange for $43, 000.Camacho’s counsel, Cilenti & Cooper, PLLC, would retain 35 percent of this figure as its fee, but would not seek reimbursement of out-of-pocket expenses. Plaintiff’s counsel estimates that if Camacho had proceeded to trial, his maximum recovery would have been $53, 000, “exclusive of liquidated damages and statutory attorneys’ fees, ” and that this estimate “would have nearly doubled if liquidated damages were awarded under one but not both of the statutes.” Applying the relevant percentages, Camacho would receive $27, 950 and his counsel would receive $15, 050 under the proposed settlement. Camacho therefore stands to receive approximately 52.7 percent of his stated $53, 000 maximum recovery.
Analysis of the Proposed Settlement
The FLSA places “strict limits on an employee’s ability to waive claims for unpaid wages or overtime under 29 U.S.C. § 216 for fear that employers would coerce employees into settlement and waiver.” However, the Supreme Court has indicated “that employees may waive FLSA claims pursuant to judicially-supervised settlements.”
Some disagreement has arisen among the district courts in this circuit as to whether such settlements do in fact require court approval, or may be consummated as a matter of right under Rule 41. The trend among district courts is nonetheless to continue subjecting FLSA settlements to judicial scrutiny. This Court sees no reason at present to deviate from the traditional practice, particularly as the parties have “have requested judicial approval” in this case.
District courts must evaluate whether a proposed FLSA settlement is “fair and reasonable” and whether any concomitant award of attorneys’ fees is reasonable. Such scrutiny is especially important in light of the recent explosion in FLSA litigation. According to one estimate, FLSA filings have increased some 400 percent nationwide since 2001 and now comprise nearly nine percent of all new civil cases in this district. In such circumstances, courts must remain alert to the risk that the filing and settling of FLSA cases has become a volume-based business and that “the interest of plaintiffs’ counsel in counsel’s own compensation will adversely affect the extent of the relief counsel will procure for the clients.”
In determining whether to approve a proposed FLSA settlement, relevant factors include:
“(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 arm’s-length bargaining between experienced counsel; and (5) the possibility of fraud or collusion.”
Factors that weigh against settlement approval include:
“(1) the presence of other employees situated similarly to the claimant; (2) a likelihood that the claimant’s circumstance will recur; (3) a history of FLSA non-compliance by the same employer or others in the same industry or geographic region; and (4) the desirability of a mature record and a pointed determination of the governing factual or legal issue to ...