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Surdu v. Madison Global, LLC

United States District Court, S.D. New York

September 1, 2017

ALEXANDRU SURDU, DINO TITO, ANASTASIA MAYFAT, CIPRIAN GROSU and LUIS LOPEZ, on behalf of themselves and those similarly situated, et al., Plaintiffs,
v.
MADISON GLOBAL, LLC, d/b/a NELLO, NELLO BALAN and THOMAS MAKKOS, Defendants.

          OPINION AND ORDER

          HENRY PITMAN UNITED STATES MAGISTRATE JUDGE.

         I. Introduction

         Plaintiffs Alexandru Surdu, Dino Tito, Anastasia Mayfat, Ciprian Grosu and Luis Lopez, on behalf of themselves and all others similarly situated, commenced this action pursuant to the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. §§ 201 et seq., and the New York Labor Law (the "NYLL") §§ 190 et. seq. against defendants Madison Global, LLC d/b/a Nello ("Nello"), Nello Balan and Thomas Makkos to recover unpaid minimum wages, misappropriated gratuities, uniform purchase and maintenance costs and penalties for failure to provide wage statements and notices. Plaintiffs brought the 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 Gulnaz Badakshanova, Constantine Haralabopolous, Bilguun Ganhuyag, Francesco Desideri, Gian Maria Montoro, Stefano Naia, Adnan Dibra, Susanna De Martino, Luca Federico and Juan Carlos Rios consented to join the FLSA collective action.

         By letter to the Honorable Paul G. Gardephe, United States District Judge, dated September 30, 2016, the parties informed the Court that they had reached a settlement of the FLSA collective action and the NYLL class action (Letter from Noel P. Tripp, Esq., to Judge Gardephe, dated Sept. 30, 2016 (Docket Item ("D.I.") 49)). The parties subsequently memorialized their agreement in a written settlement agreement (the "Settlement Agreement").

         Plaintiffs now move for preliminary approval of the Settlement Agreement and other related relief. Specifically, plaintiffs seek an order (1) conditionally certifying a NYLL class pursuant to Rule 23(a) and (b)(3); (2) appointing the Klein Law Group, P.C. as class counsel; (3) preliminarily approving the Settlement Agreement; (4) approving plaintiffs' proposed Notice of Class Action Settlement (the "Proposed Notice") and (5) scheduling a Fairness Hearing to consider the parties' motion for final approval of the settlement, attorneys' fees and costs and a service award to Surdu, Tito, Mayfat, Grosu and Lopez (Notice of Plaintiffs' Renewed Motion for Preliminary Approval of Class Action Settlement, dated July 28, 2017 (D.I. 66); Memorandum of Law in Support of Plaintiffs' Renewed Motion for Preliminary Approval of Settlement, dated July 28, 2017 (D.I. 67) ("Pl.'s Mem."), at 1). The parties have consented to my exercising plenary jurisdiction pursuant to 28 U.S.C. § 636(c).

         For the reasons set forth below, plaintiffs' motion is granted.

         II. Facts

         A. Relevant Factual and Procedural Background

         Surdu, Tito, Mayfat, Grosu and Lopez commenced this action on August 19, 2015. The complaint alleges that the members of the FLSA collective and the putative NYLL class are or were employed by defendants as tipped "food service workers, " which the complaint defines as "servers, bussers, runners, and bartenders" (Class and Collective Action Complaint, dated Aug. 11, 2015 (D.I. 1) ("Compl.") ¶¶ 1, 18).[1]The complaint further alleges that defendants (1) failed to pay the minimum wage by improperly applying the FLSA and NYLL's tip credit allowance; (2) unlawfully retained portions of the food service workers' tips and distributed them to non-tip-eligible employees; (5) failed to reimburse food service workers for uniform purchase and maintenance costs and (6) failed to provide food service workers with wage statements and notices as required by the NYLL (Compl. ¶¶ 31-98). Plaintiffs filed an amended complaint on May 10, 2016, adding retaliation claims on behalf of Surdu and Tito (Stipulation Regarding Plaintiffs' Proposed Amendment of Complaint, dated May 9, 2016 (D.I. 38), Ex. A ("Amended Compl.") ¶¶ 75-88, 113-33) .

         The parties engaged in extensive discovery to develop their claims and defenses. Plaintiffs produced approximately 1, 500 pages of documents, including tip sheets, pay stubs, schedules, employee handbooks, dry cleaning receipts, disciplinary write-ups and tax forms (Declaration of Darren P.B. Rumack, Esq., dated July 28, 2017 (D.I. 68) ("Rumack Decl.") ¶ 15). Defendants produced approximately 2, 000 pages of documents, including pay stubs, schedules and personnel files for the named and opt-in plaintiffs (Rumack Decl. ¶ 16). According to plaintiffs' calculations, plaintiffs and the putative class members are owed approximately $375, 000.00 in misappropriated tips (Rumack Decl. ¶ 22). Plaintiffs have not submitted any estimate of the class's other elements of damages.

         In September 2016, the parties engaged in an arm's-length negotiation during an hours-long mediation session with mediator Ralph S. Berger, whom plaintiffs' counsel describes as an "experienced and well-known mediator" in wage and hour cases (Rumack Decl. ¶¶ 17-19). At the mediation, following "several hours of negotiations, " the parties reached an agreement on the settlement amount (Rumack Decl. ¶ 19). The parties thereafter negotiated the remaining terms of the settlement, which are memorialized in the Settlement Agreement (Rumack Decl. ¶ 23; Letter from Darren Rumack, Esq., to the undersigned, dated Aug. 25, 2017 (D.I. 72) ("Rumack Letter"), Ex. A).

         B. The Settlement Agreement

         The Settlement Agreement provides that defendants, without conceding the validity of plaintiffs' claims or admitting liability, agree to create a common settlement fund of $342, 500.-00 (Rumack Letter, Ex. A § 3.1(A)). From the settlement fund, Surdu, Tito, Mayfat, Grosu and Lopez will each receive an $8, 500.00.00 service award, a settlement claims administrator will receive a fee[2] to administer the settlement and counsel for plaintiffs will receive no more than $114, 166.66, or one-third of the total settlement amount, in attorneys' fees and costs, subject to the Court's approval (Rumack Letter, Ex. A §§ 1.10, 2.2(B), 3.3(A), 3.4(A)).

         The Settlement Agreement provides that the claims administrator will allocate the remainder of the settlement proceeds to those class members who validly file a claim form ("Authorized Claimants") as follows:

(2) All Class Members will receive one point for each week worked for Nello between August 19, 2009 and the date [the] Agreement is signed[.]
(3) The Net Settlement Fund will be divided by the aggregate number of points accrued by all of the Class Members during the period of August 19, 2009 through the date this Agreement is signed. ("Point Value").
(4) Each Authorized Claimant's total points will be multiplied by the Point Value to determine his or her Individual Settlement Amount.
(5) No Authorized Claimant shall receive less than $100.00. If any Authorized Claimant's Individual Settlement Amount under this formula is less than $100.00, that Authorized Claimant's Individual Settlement Amount will be increased to $100. O[O], with the difference subtracted from the Net Settlement Fund, and all other Authorized Claimants' Individual Settlement Amounts recalculated according to the formula set forth above to account for the difference.

(Rumack Letter, Ex. A §§ 1.2, 3.5(A)). Any portion of the net settlement amount not claimed by class members will revert to defendants (Rumack Letter, Ex. A § 3.5(B)). For tax purposes, settlement checks paid to class members will be allocated 33% to W-2 wage payments and 67% to 1099 non-wage payments for interest, liquidated damages and statutory penalties (Rumack Letter, Ex. A § 3.6(A)).

         Additionally, the Settlement Agreement provides that upon final approval of the Settlement Agreement, each individual who does not opt out of the class, including those who do not submit a claim form, will release defendants from all wage and hour claims that were brought, or could have been brought, in this action through the date of this Order (Rumack Letter, Ex. A §§ 1.28, 4.1(A)).

         The Settlement Agreement also provides that neither side shall make any statement to the media about the settlement, other than "' [t]he matter has been resolved'" (Rumack Letter, Ex. A § 4.2 (B)) .

         Finally, the Settlement Agreement provides that either party has the right to terminate the Settlement Agreement if I decline to preliminarily or finally approve the Settlement Agreement, except if the denial is solely due to attorneys' fees (Rumack Letter, Ex. A § 2.8(A)). Additionally, defendants have the right to terminate the Settlement Agreement if ten percent or more of the putative class members opt out (Rumack Letter, Ex. A § 2.8(B)).

         III. Analysis

         A. Conditional Certification of the NYLL Rule 23 Class

         Plaintiffs request that the Court conditionally certify, for the purpose of settlement only, a class pursuant to Rule 23 consisting of individuals who worked as servers, runners, bussers and bartenders and who received tips at Nello from August 19, 2009 through the date of this Order.[3]

         "Before certification is proper for any purpose --settlement, litigation, or otherwise -- a court must ensure that the requirements of Rule 23(a) and (b) have been met." Penney v. Deutsche Bank AG, 443 F.3d 253, 270 (2d Cir. 2006); accord Manley v. Midan Rest. Inc., 14 Civ. 1693 (HBP), 2016 WL 1274577 at *3 (S.D.N.Y. Mar. 30, 2016) (Pitman, M.J.); Long v. HSBC USA Inc., 14 Civ. 6233 (HBP), 2015 WL 5444651 at *5 (S.D.N.Y. Sept. 11, 2015) (Pitman, M.J.); Cohen v. J.P. Morgan Chase & Co., 262 F.R.D. 153, 157-58 (E.D.N.Y. 2009). Class certification under Rule 23(a) requires that

(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims . . . of the representative parties are typical of the claims . - . of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

         "If each of these four threshold requirements are met, class certification is appropriate if the action also satisfies one of the three alternative criteria set forth in Rule 23(b)." Long v. HSBC USA Inc., supra, 2015 WL 5444651 at *5; accord Manley v. Midan Rest. Inc., supra, 2016 WL 1274577 at *3; Lizondro-Garcia v. Kefi LLC, 300 F.R.D. 169, 174 (S.D.N.Y. 2014) (Pitman, M.J.). Here, plaintiffs argue that class certification is proper under Rule 23(b)(3), which provides that a class action may be maintained where

the questions of law or fact common to class members predominate over any questions affecting only individual members, and ... a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

         The party seeking class certification bears the burden of establishing each of these elements by a "preponderance of the evidence." Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc., 546 F.3d 196, 202 (2d Cir. 2008); see Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997); Fedotov v. Peter T. Roach & Assocs., P.C., 354 F.Supp.2d 471, 478 (S.D.N.-Y. 2005) (Haight, D.J.). Although the Second Circuit has "directed district courts to apply Rule 23 according to a liberal rather than a restrictive interpretation, " In re NASDAQ Market-Makers Antitrust Litiq., 169 F.R.D. 493, 504 (S.D.N.Y. 1996) (Sweet, D.J.), citing, inter alia, Korn v. Franchard Corp., 456 F.2d 1206, 1208-09 (2d Cir. 1972), class certification should not be granted unless, after a "'rigorous analysis, '" the court is satisfied that Rule 23's requirements have been met. Spaqnola v. Chubb Corp., 264 F.R.D. 76, 92 (S.D.N.Y. 2010) (Baer, D.J.), quoting In re Initial Pub. Offerings Sec. Litiq., 471 F.3d 24, 33 (2d Cir. 2006). Any doubts concerning the propriety of class certification should be resolved in favor of class certification. Long v. HSBC USA Inc., supra, 2015 WL 5444651 at *6, citing Levitt v. J.P. Morgan Sec, Inc., 710 F.3d 454, 464 (2d Cir. 2013).

         1. Rule 23(a)'s Requirements

         a. Numerosity

         Rule 23(a) requires that the members of the proposed class be "so numerous that joinder of all members is impracticable." Here, plaintiffs' counsel represents that it has identified more than 82 members of the putative class (Rumack Decl. ¶ 20). This clearly meets the numerosity requirement. Alcantara v. CNA Mgmt., Inc., 264 F.R.D. 61, 64 (S.D.N.Y. 2009) (Jones, D.J.) ("[N]umerosity is generally presumed when the prospective class consists of 40 members or more."), citing Iglesias-Mendoza v. La Belle Farm, Inc., 239 F.R.D. 363, 370 (S.D.N.Y. 2007) (McMahon, D.J.); accord Consolidated Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995); Lizondro-Garcia v. Kefi LLC, supra, 300 F.R.D. at 174.

         b. Commonality

         Rule 23 (a) also requires the existence of questions of law or fact common to the class. The Supreme Court has emphasized that "[c]ommonality requires the plaintiff to demonstrate that the class members 'have suffered the same injury.'" Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349-50 (2011), quoting General Tel. Co. v. Falcon, 457 U.S. 147, 157 (1982). "[S]ince [a]ny competently crafted class complaint literally raises common questions, " I must assess whether the common questions are capable of "generat[ing] common answers apt to drive the resolution of the litigation." Wal-Mart Stores, Inc. v. Dukes, supra, 564 U.S. at 349-50 (emphasis and second alteration in original; internal quotation marks omitted); accord Lizondro-Garcia v. Kefi LLC, supra, 300 F.R.D. at 175. "[P]laintiffs may meet the commonality requirement where the individual circumstances of class members differ, but 'their injuries derive from a unitary course of conduct by a single system.'" Fox v. Cheminova, Inc., 213 F.R.D. 113, 126 (E.D.N.Y. 2003), quoting Marisol A. ...


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