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Marquez v. Roberto's Restaurant Corp.

United States District Court, S.D. New York

November 13, 2017

JUAN MARQUEZ, Plaintiff,
ROBERTO'S RESTAURANT CORP., et al., Defendants.


          HENRY PITMAN, United States Magistrate Judge

         Plaintiff commenced this action pursuant to the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. §§ 201 et sea., and the New York Labor Law (the "NYLL") to recover unpaid minimum wages, overtime pay and spread-of-hours pay. Plaintiff also asserted a claim under the NYLL against defendants for misappropriating tips. Plaintiff brought the action as a collective action pursuant to 29 U.S.C. § 216(b) with respect to the FLSA claims, but the parties reached a settlement prior to the matter being conditionally certified. I presided over a settlement conference held among the parties on September 14, 2017, during which the parties came to an agreement concerning the essential terms of a settlement. The matter is currently before me on the parties' joint application to approve a proposed settlement agreement that they have reached (Docket Item ("D.I.") 34). The parties have consented to my exercising plenary jurisdiction pursuant to 28 U.S.C. § 636(c).

         Plaintiff worked at defendants' restaurant beginning on an unspecified date in 2001 through approximately March 8, 2016. Plaintiff was initially a dishwasher, but was promoted to busboy and, in 2009, to waiter. He held this position until his employment with defendants ended in March 2016. Plaintiff alleges that he worked approximately 60 hours per week between March 2010 and December 2013, and that he worked approximately 50 hours per week beginning in January 2014 through the remainder of his employment. Plaintiff claims that from March 2010 through March 2016 defendants never paid him wages or a salary. Rather, plaintiff alleges his only compensation was the tips he received from customers. Plaintiff also claims that he was required to surrender $150.00 of his weekly tips to defendants, based on the defendants' representation that they needed to withhold this sum for taxes. In addition, plaintiff alleges that, on a weekly basis, defendants presented him with, and he signed, checks for approximately $500.00, which defendants would deposit into their own bank account. Although defendants contend that these checks represented plaintiff's wages and that they actually paid plaintiff $500.00 per week in cash because plaintiff did not have a bank account, plaintiff claims that he never received these funds and that the proceeds from these checks went to defendants' personal use. Plaintiff claims that he is entitled to $160, 000.00 in unpaid wages, exclusive of liquidated damages, interest and misappropriated tips.

         Defendants deny plaintiff's claims. Defendants dispute the number of hours plaintiff alleges that he worked; defendants contend that plaintiff worked only approximately 40 hours per week and is not, therefore, entitled to overtime pay. Defendants claim that their employees are prepared to provide testimony that will support their contention regarding the number of hours plaintiff worked. Defendants also argue that plaintiff was properly paid at the appropriate tip credit minimum wage, in cash, at an hourly rate of $5.00 per hour. Defendants admit that they did not keep records of the wages paid to plaintiff.

         The parties agreed to a settlement amount of $117, 500.00 (Letter of Justin Cilenti, Esq., to the undersigned, dated Oct. 10, 2017 (D.I. 34) ("Cilenti Letter"), Ex. 1). The parties also agree that, pursuant to the plaintiffs' retainer agreement, plaintiff's counsel will retain $39, 162.75, of the settlement agreement for attorney's fees (Cilenti Letter, Ex. 1).

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." Id. (citing Lynn's Food Stores, Inc. v. United States, 679 F.2d 1350, 1353 n. 8 (11th Cir. 1982))

Aqudelo 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, 94 8 F.Supp.2d 362, 365 (S.D.N.Y. 2013) (Gorenstein, M.J.) (internal quotation marks omitted). 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 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, under the agreement, plaintiff will recover approximately 66.7% of the total amount of his allegedly unpaid wages and overtime pay, exclusive of liquidated damages, interest and misappropriated tips. Defendants argue that plaintiff is not entitled to overtime pay because he did not work in excess of 40 hours per week, and that plaintiff was lawfully compensated at the tip credit minimum hourly rate of $5.00 per hour because he was subject to the tip credit minimum wage. As discussed in more detail below, given the risks these issues present, plaintiff's settlement amount is reasonable.

         Second, the settlement will entirely avoid the expense and aggravation of litigating this action. One of the critical issues in dispute is whether plaintiff worked more than 40 hours per week and, thus, whether he is entitled to overtime pay. Given the lack of documentary evidence supporting either party's position, both parties will likely need to conduct depositions to further explore this issue. The settlement obviates the necessity and expense of conducting these depositions.

         Third, the settlement will enable plaintiff to avoid the risks of litigation. Plaintiff will have to establish that defendants failed to compensate him and that he is entitled to the overtime pay. Given the lack of documentary evidence and the fact that plaintiff bears the burden of proof, it is uncertain whether, or how much, plaintiff would recover at trial. See Bodon v. Domino's Pizza, LLC, NO. 09-CV-2941 (SLT) 2015 WL 588656 at *6 (E.D.N.Y. Jan. 16, 2015) (Report & Recommendation) ("[T]he question [in assessing the fairness of a class action settlement] is not whether the settlement represents the highest recovery possible . . . but whether it represents a reasonable one in light of the uncertainties the class faces . . . ." (internal quotation marks omitted)), adopted sub nom. by, Bodon v. Domino's Pizza, Inc., 2015 WL 588680 (E.D.N.Y. Feb. 11, 2015); Massiah v. MetroPlus Health Plan, Inc., No. 11-cv-05669 (BMC), 2012 WL 5874655 at *5 (E.D.N.Y. Nov. 20, 2012) ("[W]hen a settlement assures immediate payment of substantial amounts to class members, even if it means sacrificing speculative payment of a hypothetically larger amount years down the road, settlement is reasonable . . . ." (internal quotation marks omitted)).

         Fourth, because I presided over the settlement conference, I know that the settlement is the product of arm's-length bargaining between experienced counsel. Both counsel ...

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