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Romero v. ABCZ Corp.

United States District Court, S.D. New York

June 12, 2017

SHELDON ROMERO, individually and on behalf of all others similarly situated, Plaintiff,
ABCZ CORP., et al., Defendants.


          HENRY PITMAN, United States Magistrate Judge

         This matter is before me on the parties' joint application to approve their settlement (Docket Item ("D.I.") 144). All parties have consented to my exercising plenary jurisdiction pursuant to 28 U.S.C. § 636(c).

         Plaintiff formerly worked for defendants and seeks, by this action, to recover allegedly unpaid wages. The action is brought under the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. §§ 201 et seq., and the New York Labor Law (the "NYLL"). Plaintiff also asserts claims based on defendants' alleged failure to maintain certain records and to provide certain notices as required by the Wage Theft Prevention Act. The action was commenced as a collective action with respect to the FLSA claim and was conditionally certified as such. Although 26 individuals initially opted in to the collective action, they subsequently opted out of it (Opt-Out Statement, filed July 23, 2015 (D.I. 70); Opt-Out Statement, dated Dec. 16, 2016 (D.I. 121)).[1]Thus, the only parties to the settlement are the named plaintiff and the named defendants.

         Plaintiff alleges he was employed as a disc jockey at defendants' strip club from approximately January 26, 2008 to April 22, 2014. Plaintiff claims that during this period, he never received any wages from defendants; instead, plaintiff was only compensated by tips from the dancers who worked there. Plaintiff claims he is owed $51, 518.19 in unpaid minimum wage and $47, 999.09 in liquidated damages, interest and statutory damages for alleged violations of the Wage Theft Prevention Act.

         Defendants deny plaintiff's allegations. They dispute the number of hours plaintiff claims to have worked. Defendants also contend that plaintiff was an independent contractor after December 2012, as evidenced by a disc jockey agreement that classified plaintiff as an independent contractor. In support of this argument, defendants assert that plaintiff was directed and controlled not by defendants, but by the dancers.

         I held a lengthy settlement conference on April 26, 2017 that was attended by the parties and their counsel. There was a protracted discussion of the strengths and weaknesses of the parties' respective positions. Although the parties did not settle their dispute at the settlement conference, they subsequently reached an agreement after some of the defendants disclosed their financial records.

         The parties have agreed to a total settlement of $100, 000.00. The parties have also agreed that $3, 727.25 of the settlement figure will be allocated to reimburse plaintiff's counsel for their out-of-pocket costs, $32, 090.88 (or one-third) of the remaining $96, 272.75 will be paid to plaintiff's counsel as fees and the remaining $64, 181.87 will be paid to plaintiff.

Court approval of an FLSA settlement is appropriate
"when [the settlement] [is] reached as a result of contested litigation to resolve bona fide disputes." Johnson v. Brennan, No. 10 Civ. 4712, 2011 WL 4357376, at *12 (S.D.N.Y. Sept. 16, 2011). "If the proposed settlement reflects a reasonable compromise over contested issues, the court should approve the settlement." Td. (citing Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 n.8 (11th Cir. 1982)).

Agudelo v. E & D LLC, 12 Civ. 960 (HB), 2013 WL 1401887 at *1 (S.D.N.Y. Apr. 4, 2013) (Baer, D.J.) (alterations in original). "Generally, there is a strong presumption in favor of finding a settlement fair, [because] the Court is generally not in as good a position as the parties to determine the reasonableness of an FLSA settlement." Lliquichuzhca v. Cinema 60, LLC, 948 F.Supp.2d 362, 365 (S.D.N.Y. 2013) (Gorenstein, M.J.) (internal quotation marks omitted). "Typically, courts regard the adversarial nature of a litigated FLSA case to be an adequate indicator of the fairness of the settlement." Beckman v. KeyBank, N.A., 293 F.R.D. 467, 476 (S.D.N.Y. 2013) (Ellis, M.J.), citing Lynn's Food Stores, Inc. v. United States, supra, 679 F.2d at 1353-54. The presumption of fairness in this case is bolstered by the caliber of the parties' attorneys. Based upon their pre-conference submissions and their performance at the settlement conference, it is clear to me that all parties are represented by counsel who are extremely knowledgeable regarding all issues in the case and who are well suited to assess the risks of litigation and the benefits of the proposed settlement.

         In Wolinsky v. Scholastic Inc., 900 F.Supp.2d 332, 335 (S.D.N.Y. 2012), the Honorable Jesse M. Furman, United States District Judge, identified five factors that are relevant to an assessment of the fairness of an FLSA settlement:

In determining whether [a] proposed [FLSA] settlement is fair and reasonable, a court should consider the totality of circumstances, including but not limited to the following factors: (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.

(Internal quotation marks omitted). The settlement here satisfies these criteria.

         First, after deduction of attorneys' fees and costs, the net settlement represents approximately 64.5% of plaintiff's total damages, j.e., actual, liquidated and statutory damages and interest. Thus, the net settlement ...

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