United States District Court, S.D. New York
EDWARD MANLEY, on behalf of himself and all others similarly situated, et al., Plaintiffs,
MIDAN REST. INC. d/b/a "Moran's Chelsea, " et al., Defendants.
OPINION AND ORDER
PITMAN UNITED STATES MAGISTRATE JUDGE.
Edward Manley, on behalf of himself and all 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")
§§ 190 et seq. against defendants Midan
Rest. Inc., doing business as Moran's Chelsea
("Moran's"), and Colleen Lydon to recover
unpaid wages, spread-of-hours pay, unlawful deductions and
penalties for failure to provide wage statements and notices.
Manley commenced this action as a collective action pursuant
to 29 U.S.C. § 216(b) with respect to the FLSA claims
and as a class action with respect to the NYLL claims.
Following the filing of the complaint, opt-in plaintiffs
Jennifer Kuehn, Richard Rodriguez, Chris Hodges, Michael
Chang and Benjamin Sperry consented to join the FLSA
parties have consented to my exercising plenary jurisdiction
pursuant to 18 U.S.C. § 636(c).
notices of motion dated August 1, 2016 (Docket Items
("D.I.") 37, 39), plaintiffs have moved for an
order: (1) certifying the final settlement class (the
approving the class action settlement and FLSA settlement and
awarding fees and costs to class counsel, a service award to
plaintiff Manley and fees to the claims administrator
(Memorandum of Law in Support of Plaintiffs' Motion for
Final Approval of Class Action Settlement, dated Aug. 1, 2016
(D.I. 38), at 1; Memorandum of Law in Support of
Plaintiffs' Motion for Approval of Attorneys' Fees,
Reimbursement of Expenses, and Approval of Service Payment,
dated Aug. 1, 2016 (D.I. 40) ("Pl.'s Fee
Mem."), at 1).
reasons set forth below, plaintiffs' motions are granted.
Factual and Procedural History
complaint alleges that members of the FLSA collective and
putative NYLL class are or were employed by defendants as
"waitstaff, " which is defined as "waiters,
runners, busboys, and bartenders" (Complaint, dated Mar.
12, 2014 (D.I. 2) ("Compl.") ¶¶ 13, 25,
Plaintiffs allege that defendants: (1) failed to pay the
minimum wage as a result of the improper application of the
FLSA and the NYLL's tip credit allowance; (2) failed to
pay overtime premium pay; (3) failed to pay spread-of-hours
pay; (4) unlawfully retained portions of the waitstaff's
tips for banquet work; (5) failed to reimburse waitstaff for
the purchases of materials necessary to complete their work
duties and (6) failed to provide waitstaff with wage
statements and notices required by the New York Wage Theft
Prevention Act (Compl. ¶¶ 31-117).
Rule 16 Initial Conference, the parties agreed to exchange
limited discovery to assist in developing their claims and
defenses and in furtherance of class-wide settlement
discussions (Declaration of Louis Pechman, Esq., in Support
of Plaintiffs' Motion for Final Approval of Settlement,
Class Certification, Approval of FLSA Settlement, Approval of
Attorneys' Fees, Reimbursement of Expenses, and Approval
of Service Payment, dated Aug. 1, 2016 (D.I. 41)
("Pechman Decl.") ¶¶ 10, 12). Defendants
produced more than one thousand documents relating to
plaintiffs' claims, including a sample of payroll
summaries for all putative class members, the end-of-year pay
stubs of each putative class member, banquet contracts, tip
records and timekeeping records (Pechman Decl. ¶ 12).
Plaintiffs also produced their own payroll records and
communications relating to Moran's (Pechman Decl. ¶
14). After reviewing defendants' records, plaintiffs'
counsel performed individual damages calculations for each
member of the putative class (Pechman Decl. ¶¶
2015, the parties engaged in an arm's-length negotiation
during a thirteen-hour mediation session with mediator Ruth
Raisfeld, Esq., whom plaintiffs' counsel describes as
"a well-known and experienced mediator in wage and hour
cases" (Pechman Decl. ¶¶ 25, 28, 30). At the
mediation, following a "vigorous exchange regarding
their respective claims and defenses, " the parties
reached an agreement on the settlement amount and other key
terms (Pechman Decl. ¶ 28). The parties thereafter
negotiated the remaining terms of the settlement, which are
memorialized in the Settlement Agreement (Pechman Decl.
Settlement Agreement provides that defendants, without
conceding the validity of plaintiffs' claims or admitting
liability, agree to create a common settlement fund of $912,
500.-00 (Pechman Decl., Ex. 1 §§ 3.1, 4.2(A)). From
the settlement fund, Manley will receive a $15, 000.00
service award, the settlement claims administrator will
receive an estimated $15, 500.00 to set up and make
distributions from the fund and counsel for plaintiffs will
receive out-of-pocket costs and attorneys' fees, not to
exceed 33 1/3 percent of the total settlement amount, subject
to the Court's approval (Pechman Decl., Ex. 1
§§ 3.1, 3.2, 3.3(A) & Ex. 2 ¶
Settlement Agreement provides that the claims administrator
will allocate the remainder of the settlement proceeds on a
pro rata basis as follows:
(i) compute the total calculated damages for each
Participating Class Member from March 12, 2008 through June
30, 2014 based on Plaintiff's analysis of Defendants'
records; (ii) divide the total calculated damages for each
Participating Class Member by the total calculated damages of
all Participating Class Members; (iii) multiply the amount
derived in (ii) by the amount of the Net Settlement Fund to
compute the Participating Class Member's total settlement
Decl., Ex. 1 § 3.3(B)(1)(b)). Class counsel estimates
that even after taking into account attorneys' fees,
service awards and costs, class members will still recover
approximately 85% of their back wages (Pechman Decl. ¶
33). Forty percent of the amounts paid to class members will
be reported to the Internal Revenue Service as W-2 wages and
the remainder will be reported on a Form 1099 as non-wage
payments for interest, liquidated damages and statutory
penalties (Pechman Decl., Ex. 1 § 3.4(A)). The agreement
further provides that if any class member fails to cash his
or her settlement check, the check will revert to the
defendants (Pechman Decl., Ex. 1 § 3.1(E)). In return
for the settlement payments, each individual who does not opt
out of the settlement will release defendants from all wage
and hour claims that were brought or could have been brought
in this action (Pechman Decl., Ex. 1 § 4.1).
March 30, 2016, I conditionally certified the NYLL class,
appointed Pechman Law Group PLLC as class counsel,
preliminarily approved the Settlement Agreement and
authorized the notice of settlement (with modifications) to
all putative class and collective members (Opinion and Order,
dated Mar. 30, 2016 (D.I. 36) ("Preliminary Approval
Order"), at 32).
to the Preliminary Approval Order, the claims administrator
sent the approved notice to all putative 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 a service award of $15, 000.00 to
Manley; (4) the claims administrator's fees and (5) the
manner in which the remainder of the fund would be
distributed (Pechman Decl. ¶ 38 & Ex. A to Ex. 1).
No putative class members objected to the settlement, and
only one member opted out (Pechman Decl., Ex. 2 ¶¶
August 1, 2016, plaintiffs filed the pending motion for final
approval. Defendants took no position with respect to the
motion. I held a fairness hearing on August 15, 2016; no
putative class member appeared at the hearing or made a
written submission concerning the settlement.
Final Certification of the Settlement Class
Preliminary Approval Order, familiarity with which is
assumed, 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 worked for defendants as 'tipped
employees, ' including 'servers, busser-s, and
bartenders, ' between March 12, 2008 and June 30,
2014" (Preliminary Approval Order, at 9-19).
date, no facts have been presented to me to indicate that my
preliminary determination was incorrect nor has any party
claimed that my preliminary determination was erroneous.
Thus, for the reasons stated in the Preliminary Approval
Order, I conclude that final certification of the Settlement
Class is proper.
Approval of Settlement Agreement
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) ("A
court determines a settlement's fairness by looking at
both the settlement's terms and the negotiating process
leading to settlement."), citing D'Amato v.
Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001).
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)
(alteration in original), quoting Wal-Mart Stores, Inc.
v. Visa U.S.A., Inc., supra, 396 F.3d at 116.
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)
the parties engaged in responsible, arm's-length
negotiations before and during a thirteen-hour mediation
session to reach an early settlement. The parties exchanged
information and documents that enabled both sides to assess
plaintiffs' claims and calculate potential damages
(Pechman Decl. ¶¶ 12-21). During the mediation, the
parties engaged in vigorous discussions regarding their
respective claims and defenses (Pechman Decl. ¶ 28). At
the mediation, the parties reached an agreement on the
settlement amount and several other key terms (Pechman Decl.
¶ 28). During the next few months, the parties
negotiated the remaining terms of the settlement, which was
executed on September 10, 2015 (Pechman Decl. ¶¶
conclude that the settlement is procedurally fair pursuant to
assessing whether a settlement is substantively fair, the
district court must consider the nine Grinnell
(1) the complexity, expense and likely duration of the
litigation; (2) the reaction of the class to the settlement;
(3) the stage of the proceedings and the amount of discovery
completed; (4) the risks of establishing liability; (5) the
risks of establishing damages; (6) the risks of maintaining
the class action through the trial; (7) the ability of the
defendants to withstand a greater judgment; (8) the range of
reasonableness of the settlement fund in light of the best
possible recovery; (9) the range of reasonableness of the
settlement fund to a possible recovery in light of all the
attendant risks of litigation.
McReynolds v. Richards-Cantave, supra, 588
F.3d at 804, quoting City of Detroit v. Grinnell
Corp., 495 F.2d 448, 463 (2d Cir.1974), abrogated on
other grounds, Goldberger v. Integrated Res.,
Inc., 209 F.3d 43 (2d Cir. 2000); accord Charron
v. Wiener, 731 F.3d 241, 247 (2d Cir. 2013). All the
Grinnell factors weigh in favor of final approval.
first Grinnell factor supports final approval
because litigation through trial would be complex, expensive
and long. Additional discovery would be required, including
depositions of more plaintiffs, defendant Lydon and members
of the Moran's management team (Pechman Decl. ¶ 76).
"[P]reparation for trial would . . . seriously prolong
the outcome of this suit in addition to consuming tremendous
amounts of time, expenses and judicial resources."
Sewell v. Bovis Lend Lease, Inc., 09 Civ. 6548
(RLE), 2012 WL 1320124 at *7 (S.D.N.Y. Apr. 16, 2012) (Ellis,
M.J.). Moreover, "[l]itigating the claims of hundreds of
putative class members would undoubtedly yield expensive
litigation costs that can be curbed by settling the
action." Sewell v. Bovis Lend Lease, Inc.,
supra, 2012 WL 1320124 at *7.
second Grinnell factor weighs in favor of final
approval because the class's reaction to the settlement
was very positive. The notice informed class members of their
rights under the settlement and all the material terms of the
settlement. No class member objected to the settlement and
only one opted out; this positive response to the settlement
is evidence of its fairness. See Wright v. Stern,
553 F.Supp.2d 337, 345 (S.D.N.Y. 2008) (Chin, then D.J., now
Cir. J.) ("The fact that the vast majority of class
members neither objected nor opted out is a strong indication
that the proposed settlement is fair, reasonable, and
adequate."); see also Flores v. Anjost Corp.,
11 Civ. 1531 (AT), 2014 WL 321831 at *5 (S.D.N.Y. Jan. 29,
2014) (Torres, D.J.) (approving settlement where no class
member objected or opted out); Beckman v. KeyBank,
N.A., supra, 293 F.R.D. at 475 (concluding
class reaction was positive where none objected and eight of
1, 735 members opted out); Guaman v. Ajna-Bar NYC,
12 Civ. 2987 (DF), 2013 WL 445896 at *5 (S.D.N.Y. Feb. 5,
2013) (Freeman, M.J.) (finding fairness where there were no
objections or requests for exclusion).
third Grinnell factor also weighs in favor of final
approval. When evaluating the level of discovery completed,
"[t]he pertinent question is 'whether counsel had an
adequate appreciation of the merits of the case before
negotiating.'" Prasker v. Asia Five Eight
LLC, 08 Civ. 5811 (MGC), 2010 WL 476009 at *5 (S.D.N.Y.
Jan. 6, 2010) (Cedarbaum, D.J.), quoting In re Warfarin
Sodium Antitrust Litig., 391 F.3d 516, 537 (3d Cir.
2004). Defendants produced more than one thousand documents
relating to the claims, including samples of payroll
summaries for all class members, the end-of-year pay stubs
for each class member, banquet contracts, tip records and
timekeeping records (Pechman Decl. ¶ 12). Plaintiffs
produced their own payroll records and their communications
regarding Moran's (Pechman Decl. ¶ 14).
Plaintiffs' counsel conducted an extensive investigation
of the claims to determine potential damages, including
discussions with plaintiffs, reviewing and analyzing
defendants' production and researching Moran's
(Pechman Decl. ¶¶ 15-17). Moreover, the ...