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Galindo v. East County Louth Inc.

United States District Court, S.D. New York

November 9, 2017

HECTOR GALINDO, Plaintiff,
v.
EAST COUNTY LOUTH INC. d/b/a THE PENNY FARTHING, EAST PUB INC. d/b/a PHEBES, DEREK KIERANS, RYAN BIRKENHEAD, DERMOT DELANEY, and MARK CANNAN, Defendants.

          OPINION AND ORDER

          KATHERINE POLK FAILLA UNITED STATES DISTRICT JUDGE

         The parties request that the Court approve a settlement agreement and dismiss this action, originally brought by Plaintiff Hector Galindo on behalf of himself and similarly situated employees for violations of the Fair Labor Standards Act, as amended, 29 U.S.C. §§ 201-219 (the “FLSA”), and the New York Labor Law (the “NYLL”). At this stage in the litigation, Plaintiff has elected to proceed individually. Having reviewed the settlement materials, the Court denies without prejudice the parties' request for approval. The Court finds that the attorneys' fees are neither fair nor reasonable on this record and that the non-disparagement clause is impermissibly broad. The Court encourages the parties to revise the terms of their settlement and submit an updated agreement for the Court's review.

         BACKGROUND

         On November 23, 2016, Plaintiff Hector Galindo filed a Class and Collective Action Complaint against Defendants East County Louth Inc., doing business as The Penny Farthing; East Pub Inc., doing business as Phebes; and individual defendants Derek Kierans, Ryan Birkenhead, Dermot Delaney, and Mark Cannan. (Dkt. #1). Plaintiff alleged that, from September 1, 2016, to October 21, 2016, he was employed by Defendants as a food runner at The Penny Farthing. (Id.). However, despite the brief period of employment at only one of the restaurants, Plaintiff sought to certify a wide-ranging collective action under the FLSA, and corresponding class action under the NYLL, for two restaurants. He alleged that Defendants had failed to: (i) pay him and similarly situated workers overtime for hours worked in excess of 40 hours per week; (ii) pay him and other employees on an hourly basis; pay him and other employees spread-of-hour premiums; and (iii) provide proper wage statements and wage-and-hour notices. (Id.). Plaintiff claimed that he and other employees were entitled to recover unpaid minimum wages, unpaid overtime compensation, unpaid spread-of-hours premiums, statutory penalties, liquidated damages, and attorneys' fees pursuant to the FLSA and the NYLL. (Id.).

         An initial pretrial conference in the matter was held on March 3, 2017. One month later, Plaintiff filed a motion for conditional certification of a class under § 216(b) of the FLSA (the “Certification Motion”). (See Dkt. #30-32, 39-45 (parties' submissions)). However, the factual support for his claims was slight to the point of being insufficient, and in a telephonic conference held on June 6, 2017, the Court denied the motion. (Dkt. #55). In relevant part, the Court found:

In reviewing both the complainant the Galindo declaration in light of these decisions, I find that Mr. Galindo simply has not met his burden. His allegations regarding whether the two corporate defendants operate as a single integrated enterprise and whether there was a common policy that violated the FLSA are textbook examples of the [conclusory] assertions that district courts in this circuit have repeatedly found to be insufficient[. That] . . . dearth of detail may be attributable to the brevity of his employment at The Penny Farthing; but, regardless, Mr. Galindo has not met even the low threshold that I articulated above.

(Id. at 14).

         On September 5, 2017, the parties submitted a stipulation of voluntary dismissal pursuant to Rule 41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure. (Dkt. #61). By endorsement that same day, the Court sought additional information concerning the parties' contemplated settlement. (Id.).[1]

         On October 10, 2017, the parties submitted for the Court's approval a proposed agreement under which Defendants would pay a settlement amount of $35, 000 - of which $5, 292 would be allocated to Plaintiff and the remaining $29, 708 allocated to Plaintiff's counsel. (Dkt. #66). In a letter to the Court, Plaintiff's counsel stated that the $5, 292 due to the Plaintiff would cover all back wages, liquidated damages, and statutory penalties. (Id.). In exchange, per the terms of the proposed agreement, Plaintiff would release all “wage and hour claims, which [Plaintiff] has or may have against [Defendants], whether asserted in this action or not.” (Id.).

         In support of their claim for $29, 708 in attorneys' fees, Plaintiff's counsel submitted a log detailing the time spent on this case and the hourly rates for each member of counsel's team. According to that log, C.K. Lee, Partner at Lee Litigation Group, PLLC, billed at a rate of $550 per hour and worked on this case for 10.7 hours, of which 3.2 hours were spent on the Certification Motion (Dkt. #30); Senior Counsel Anne Seelig billed at a rate of $350 per hour and worked on the case for 46.6 hours, of which 20.3 hours were spent on the Certification Motion; Associate Angela Kwon billed at a rate of $250 per hour and worked on the case for 24.7 hours, of which 0.3 hours were spent on the Certification Motion; and Legal Assistant Luis Arnaud billed at a rate of $125 per hour and worked on the case for 12.4 hours, of which approximately 0.3 hours were spent on the Certification Motion.

         The proposed settlement agreement does not include a confidentiality clause. By contrast, it does include a non-disparagement clause, according to which the parties “mutually agree that they will not disparage each other and will say or do nothing to bring discredit upon the other.” (Dkt. #66).

         DISCUSSION

         A. Applicable Law

         Stipulated dismissals settling FLSA claims with prejudice “require the approval of the district court or the [Department of Labor] to take effect.” Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199, 206 (2d Cir. 2015). In reviewing any such dismissal, the district court must evaluate “whether [the] proposed FLSA settlement is ‘fair and reasonable' and whether any proposed award of attorneys' fees is reasonable.” Lopez v. Nights of ...


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