United States District Court, W.D. New York
ESSENCE TAYLOR AND DANIEL CASHMAN, On behalf of themselves and all employees similarly situated, Plaintiffs,
DELTA-SONIC CAR WASH SYSTEMS, INC, AND RONALD BENDERSON, Defendants.
FINAL ORDER AND JUDGMENT APPROVING RULE 23 CLASS
ACTION SETTLEMENT AND SETTLEMENT AGREEMENTS PURSUANT TO THE
FLSA, AND AWARD OF ATTORNEYS  EXPENSES
JONATHAN W. FELDMAN, United States Magistrate Judge
December 15, 2014, Essence Taylor and Daniel Cashman
("plaintiffs"), former employees of defendant
Delta-Sonic Car Wash Systems, Inc. (hereinafter
"Delta-Sonic") and Ronald Benderson (collectively,
"defendants") filed a complaint alleging that
defendants violated the Fair Labor Standards Act
("FLSA") and the New York Labor Law
("NYLL") . See Complaint (Docket # 1) .
Delta-Sonic operates twenty-nine car wash facilities in New
York, Pennsylvania and Illinois. Plaintiffs' claims
against the defendants concern an employee position known as
Delta Technicians. Although these employees are paid an.
hourly rate that is less than minimum wage) they also are
eligible to earn tips from customers of the car wash.
Delta-Sonic guarantees that, after including tip income,
Delta Technicians will earn an hourly rate equal to or
greater than minimum wage. If weekly tip income is
insufficient to equal minimum wage, Delta-Sonic provides
additional pay to make up the difference.
gist of the complaint is not that the defendants
failed to pay each Delta-Technician an hourly wage equal to
or greater than the allocable minimum wage, but that
Delta-Sonic violated federal and state wage laws by failing
to give notice to employees that they would receive less than
minimum wage and failing to include allowances for tips on a
separate line on employees wage records. The plaintiffs also
alleged that the defendants failed to compensate employees
for uniform maintenance.
Plaintiffs brought their FLSA claims as a collective action
under 29 U.S.C. § 216(b) and their NYLL claims as a
class action under Federal Rule of Civil Procedure 23
("Rule 23") on behalf of themselves and a putative
class of Delta Technicians.
Defendants answered the Complaint (Docket #7) and denied all
of plaintiffs' claims. Thereafter, the parties engaged in
discovery. Discovery included the exchange of documents,
interrogatories and three depositions.. The defendants
deposed the two named plaintiffs and the plaintiffs deposed
the Vice President/Chief Financial Officer of the Delta-Sonic
June 1, 2015, plaintiffs moved to certify a class pursuant to
Rule 23 of the Federal Rules of Civil Procedure. On July 14,
2015, the. defendants responded to the class certification
motion. The defendants also cross-moved for summary judgment
pursuant to Rule 56 of the Federal Rules of Civil Procedure..
The motion for class certification was fully briefed. With
the consent of defense counsel, plaintiffs did not file a
response to the summary judgment motion. Instead, the parties
decided to pursue a negotiated settlement.
October 16, 2016 the parties participated in a one-day
mediation with mediator William G. Bauer, Esq. in which a
complete settlement was reached. Thereafter, the parties
executed a Settlement Agreement that fully and finally
resolved plaintiffs' claims against the defendants.
Without conceding the validity of plaintiffs' claims and
without admitting . liability or any wrongful conduct, the
defendants agreed to create a Settlement Fund of eight
hundred thousand dollars ($800, 000) in order to resolve
plaintiffs' claims. The settlement included the filing of
an amended complaint that alleged state law claims on behalf
of current and former Delta-Sonic employees who worked for
the defendants in Illinois and Pennsylvania. According to
plaintiffs' counsel, the Settlement Agreement
"secured monetary relief for every single one the more
than 13, 000 Class Members, based on length of
employment." See Decl". of Robert L. Mull in
(Docket # 71) at ¶ 26. The final Settlement Agreement
was Dated: January 12, 2016. The amended complaint (Docket #
61) was filed on January 29, 2016.
January 2.9, 2016, plaintiffs filed an unopposed motion
(Docket # 62) asking the Court .to preliminarily approve the
proposed settlement and provisionally certify both a Rule 23
Class and an FLSA Class for settlement purposes. The motion
also sought 'court approval of the notice to class
February 17, 2016, the Court entered an Order (Docket # 63}
preliminarily approving the settlement, certifying a
settlement class, and authorizing the dissemination of
notice. The parties chose a settlement administrator who
provided notice to the class. The "Notice To Class of
Proposed Settlement" (Docket # 62-5} informed class
members of their allocated settlement amount, described their
right to opt out of the action, described the process that
must be followed in order to dispute their allocated
settlement amount, and stated Class Counsel's intent to
seek the payments of "up to $10, 000" to the two
named plaintiffs "for their time and effort in bringing
this lawsuit", "reasonable attorneys fees for
[counsels'] efforts in litigating and settling this
lawsuit" as well as "reasonable expenses in
bringing this lawsuit." Id. The Court scheduled
a final settlement hearing for July 8, 2016.
Between February 17, 2016 and July 8, 2016, neither
plaintiffs nor defendants filed any additional support for
approval of the settlement or for any other relief, including
attorney fees. The only document the Court received prior to
the final settlement hearing was a wholly inadequate one page
letter from plaintiffs' counsel requesting final approval
of the settlement and the award of $320, 000 or forty percent
of the settlement fund in attorney fees. Plaintiffs'
letter request was never docketed. See July 8, 2016
Transcript of Proceedings (Docket # 72) (hereinafter
"Transcript") at 3.
July 8, 2016, all counsel appeared for the final settlement
hearing. The Court denied approval of the settlement for
various reasons set forth on the record. (The Transcript of
the July 8, 2016 proceedings is hereby incorporated by
reference into this Decision and Order.) Suffice it to say
the un-docketed "letter request" for final approval
of the settlement and an award of attorney fees was grossly
deficient in several respects. First, as the Court reminded
counsel at the hearing, this Court acts as a fiduciary to the
proposed class in evaluating the settlement. Therefore, it
was incumbent on counsel to make sure that the Court was
provided with sufficient information to find that the
settlement was both substantively and procedurally fair and
in the best interests of the class. See City of Detroit
v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974).
Although the Court gave preliminary approval to the proposed
settlement, as plaintiffs' counsel acknowledged in their
brief in support of that approval, "a court's review
of a proposed class settlement is a two-step process"
and the standard for final approval is far more rigorous than
simply whether the proposed settlement is "within the
range of possible approval." See Pis.'s
Mem. of Law in Support of Preliminary Approval (Docket #
62-2) at 1'3 (internal quotations and citations omitted).
Counsel here made absolutely no attempt to address whether
the proposed settlement satisfied the Grinnell
I stated during the July 8, 2016 hearing, the plaintiffs'
"letter request" for the Court to simply
rubberstamp their application to designate forty percent of
the settlement fund to attorney fees was particularly
troubling. See Transcript at 6. In their motion for
preliminary approval of the settlement, plaintiffs'
counsel represented to the Court that they would submit a
"request for reasonable attorney fees" in their
motion for final approval. See Docket # 62-2 at 6.
Nothing was ever filed explaining or justifying an award of
attorney fees. The failure of plaintiffs' counsel to
submit any contemporaneously kept time records was especially
frustrating considering well-established attorney fee
application requirements in the Second Circuit. See New
York State Ass'n for Retarded Children, Inc. v.
Carey, 711 F.2d 113 6, 1154 (2d Cir. 1983) ("All
applications for attorney's fees, whether submitted by
profit-making or non-profit lawyers, for any work done after
the date of this opinion should normally be disallowed unless
accompanied by contemporaneous time records indicating, for
each attorney, the date, the hours expended, and the nature
of the work done."); see also Scott v. City of New
York, 626 F.3d 130, 133 (2d Cir. 2010} (Except in the
"rarest of cases" lawyers "are required to
submit contemporaneous record's with their fee
application."); see also Camacho v. Ess-A-Bagel,
Inc., NO, 14-CV-2592, 2014 WL 6985633, at *5 (S.D.N.Y.
2014) (denying attorneys' fee application in FLSA case
where counsel failed to submit time records).
Other deficiencies in the application for final approval were
identified by the Court during the July 8, 2016 hearing. For
example, counsel sought over $5 00 0.0 0 for costs, but no
costs were identified or justified by plaintiffs'
counsel. The proposed settlement sought to pay. a settlement
administrator $70, 000, but the only documentation from Rust
Company, the proposed administrator, estimates their costs to
be $59, 794, twenty percent less than what plaintiffs are
seeking. Finally, although promised in plaintiffs' motion
for preliminary motion for settlement approval,
plaintiffs' counsel presented no. factual or legal
justification for a "service award" request of $10,
000 to each of the two named plaintiffs in this action.
See Transcript at 8"-.9.
Despite the obvious deficiencies in the joint motion to
approve the settlement, the Court denied the motion without
prejudice, allowing counsel to file an actual motion for
final approval of the proposed settlement. On July 19, 2016,
plaintiffs' counsel filed a motion for Final Settlement
Approval and Class Certification (Docket # 67} and a Motion
for Attorney Fees (Docket # 70) . These two motions are
currently pending before this Court.
Settlement Agreement proposes to establish three settlement
New York Tip Allowance Class: The agreement defines
this class as "[a]ny Delta-Sonic current or former
employee who work(ed) at one of Delta-Sonic's car wash
centers in New York between December 15, 2008 and October 16,
2015, and, not accounting for the cash tips he or she
received in a pay period, was paid a' gross (pre-tax)
amount less than the applicable minimum wage rate multiplied
by the number of regular ...