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Tapia v. Benny's Burritos, Inc.

United States District Court, S.D. New York

April 3, 2018

ANDRES FUENTES TAPIA et al., Plaintiffs,
BENNY'S BURRITOS, INC., Defendants. Plaintiff Length of Employment Amount Claimed Net Settlement Amount


          PITMAN, United States Magistrate Judge:

         This matter is before me on the parties' joint application to approve their settlement (Docket Item ("D.I.") 37). All parties have consented to my exercising plenary jurisdiction pursuant to 28 U.S.C. § 636(c).

         Plaintiffs allege that they were employed as dishwashers, cooks, porters and delivery workers at several Blockheads and Benny's Burritos restaurants that were owned and operated by defendants Benny's Burritos, Inc., Egg White, Inc., 954 Second Corp. and Kiosk 50 Corp. (collectively "Defendants"). Plaintiffs further allege that they worked in excess of 20% of their workday performing non-tipped work and should, therefore, not have been compensated as "tipped employees." Plaintiffs bring this action under the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. §§ 201 et seq., and the New York Labor Law (the "NYLL"), and seek to recover unpaid full minimum wage and overtime premium pay. Plaintiffs also assert claims based on the Defendants' alleged failure to provide certain wage notices and statements as required by the KYLL. Plaintiffs estimate they are owed $73, 515.00 in unpaid wages and could potentially collect $182, 030 in total damages.[1] Plaintiffs commenced this action as a collective action, but reached a settlement before conditional certification.

         Defendants provided thousands of detailed time records and payroll records which reflected the hours plaintiffs worked. There is no dispute between the parties about the number of hours worked by each plaintiff. Rather, Defendants contend that plaintiffs were compensated at the proper hourly rate because they were in fact "tipped employees." According to Defendants' damages calculations, plaintiffs would only be able to recover a maximum of $86, 255.19 at trial if plaintiffs were to prevail on every claim they assert.

         I held a lengthy settlement conference on May 10, 2017 that was attended by the parties and their counsel. After a protracted discussion of the strengths and weaknesses of the parties' respective positions, the parties agreed to resolve the dispute for a total settlement of $110, 000 (Clark Letter at 2). This $110, 000 is to be paid over a period of three installments (Settlement Agreement and General Release, annexed to Clark Letter (D.I. 37-1) ("Agreement"} ¶ 7A). The Agreement also provides that plaintiffs' counsel will receive $36, 666.67 -- one third of the overall settlement -- for attorneys' fees and costs (Agreement, Ex. A). The amount claimed by each plaintiff[2] and the net amount that will be received by each plaintiff after deduction of legal fees and costs are as follows:

Length of Employment
Amount Claimed
Net Settlement Amount
Cesar Granados
8 9 weeks
$30, 544.85
$7, 772.58
Jaime Guadarrama De Jesus
172 weeks
$27, 416.10
$7, 907.31
Ruben Perez
139 weeks
$25, 781.66
$13, 898.42
Javier Flores Segundo
256 weeks
$52, 608.56
$28, 825.96
Jose Sontay
204 weeks
$33, 032.36
$11, 611.22
Andres Fuentes Tapia
50 weeks
$12, 646.50
$3, 317.84
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)).

Aaudelo 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). 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 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, plaintiffs' net settlement - $73, 333.33 after attorneys' fees and costs - represents approximately 40% of their total alleged damages and is only $12, 921.86 less than Defendants' estimate of what plaintiffs could recover after trial if they were to prevail on every claim. This percentage is reasonable. See, Redwood v. Casswav Contracting Corp., 16 Civ. 3502 (HBP), 2017 WL 4764486 at *2 (S.D.N.Y. Oct. 18, 2017) (Pitman, M.J.) (net settlement of 29.1% of FLSA plaintiffs' maximum recovery is reasonable); Chowdhury v. Brioni America, Inc., 16 Civ. 344 (HBP), 2017 WL 5953171 at *2 (S.D.N.Y. Nov. 29, 2017) (Pitman, M.J.) (net settlement of 40% of FLSA plaintiffs' maximum recovery is reasonable); Larrea v. 'FPC Coffees Realty Co., 15 Civ. 1515 (RA), 2017 WL 1857246 at *2 (S.D.N.Y. May 5, 2017) (Abrams, D.J.) (net settlement of 43% of FLSA plaintiffs' maximum recovery is reasonable); Felix v. Breakroom Burgers & Tacos, 15 Civ. 3531 (PAE), 2016 WL 3791149 at *2 (S.D.N.Y. Mar. 8, 2016} (Engelmayer, D.J.) (net settlement of 25% of FLSA plaintiff's maximum recovery is reasonable). Moreover, I suggested the overall settlement amount of $110, 000 to the parties during the May 10, 2017 settlement conference as the amount I felt was a just and fair settlement.

         Second, the settlement will entirely avoid the expense and aggravation of litigation. The main factual dispute is whether or not the plaintiffs were tipped employees. Discovery on this issue would have led to protracted and costly litigation likely involving the depositions of all six plaintiffs and their direct supervisors. The settlement avoids the necessity of conducting these depositions.

         Third, the settlement will enable plaintiffs to avoid the risk of litigation. If the action had not settled, plaintiffs would have had to have established not only what hours they worked and the amount they were paid by the Defendants, but also that they worked in excess of 20% of their workday performing non-tipped work in order to be entitled to full minimum wage pay. Defendants produced thousands of detailed time records that they contend rebuts this claim. Given the documentary evidence and the fact that plaintiffs bear the burden of proof, it is uncertain whether, or how much, plaintiffs 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., Bodon v. Domino's Pizza, Inc., 2015 WL 588680 (E.D.N.Y. Feb. 11, 2015); Massiah v. MetroPlus Health Plan, Inc., No. ll-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 that immediately preceded plaintiffs' acceptance of the settlement, I know that the settlement is the product of arm's-length bargaining between experienced counsel. Both ...

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