Gomez v. Midwood Lumber and Millwork, Inc.

          ORDER ADOPTING REPORT AND RECOMMENDATION

          KIYO A. MATSUMOTO, UNITED STATES DISTRICT JUDGE

         On May 22, 2017, plaintiff David Gomez (“plaintiff”) commenced this action by filing a complaint (“Compl.” or the “complaint, ” ECF No. 1) against defendants Midwood Lumber and Millwork, Inc. and Pine Sash, Door & Lumber Co., Inc. (collectively, “defendants”), pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq., the New York Labor Law, and title 12 of the New York Codes, Rules and Regulations. (Compl. ¶ 1.) On September 14, 2017, the parties submitted a letter motion (“Mot.” or the “approval motion, ” ECF No. 17) seeking approval of the parties' settlement agreement (“Settlement Agreement”) resolving this action. (See Mot. at 1; see also Settlement Agreement, ECF No. 17-1.)

         Presently before the court is a report and recommendation (“R&R” or the “Report and Recommendation, ”) issued on September 20, 2017 by the Honorable James Orenstein, United States Magistrate Judge, recommending that the court approve the Settlement Agreement.^[1] For the reasons set forth herein, the court adopts and supplements Judge Orenstein's Report and Recommendation and approves the Settlement Agreement.

         Background

         In the complaint, plaintiff alleges, inter alia, that defendants, both of which are “engaged in the building material and supply distribution business” (Compl. ¶¶ 8-9), employed him as a truck driver “from approximately July 2016 through February 2017.” (Id. ¶ 7.) Plaintiff further alleges that from May 2011 onward, defendants “engaged in a policy and practice of requiring [plaintiff] and putative class members to regularly work in excess of forty (40) hours per week, without providing overtime compensation” as required under applicable law.^[2] (Id. ¶ 2.)

         According to the complaint, plaintiff “typically worked a total of approximately 54.5 hours per week.” (Id. ¶ 25.) Plaintiff's “regular rate of pay was approximately $20.00 per hour, ” although plaintiff alleges that defendants structured his payments “in an effort to avoid paying . . . overtime at time and one half of [plaintiff's] regular rate of pay and to avoid certain withholdings.” (Id. ¶ 26.) Specifically, plaintiff asserts that defendants paid him “approximately $9.00 per hour for the first forty (40) hours he worked in a week by check, with the remaining balance of $11.00 per hour in cash, and $20.00 per hour for all hours worked over forty (40) in cash.” (Id.) Plaintiff alleges that he “never received overtime pay at time and one-half of his regular rate of pay.” (Id.)

         Defendants answered plaintiff's complaint on June 5, 2017 (see generally Answer, ECF No. 8), and the parties subsequently engaged in settlement negotiations. (See Letter Requesting Adjournment of Deadlines, ECF No. 14.) On August 15, 2017, the parties informed the court that they had reached a settlement in principle. (See Letter Regarding Settlement, ECF No. 16.)

         On September 14, 2017, plaintiff filed the approval motion, which attached the Settlement Agreement as an exhibit. In support of the approval motion, on September 15, 2017, plaintiff filed a letter supplementing the approval motion (“Supp.” or the “supplement, ” ECF No. 19), which attached as an exhibit an invoice setting forth contemporaneous time and billing records from the law firm that represented plaintiff. (“Inv.” or the “invoice, ” ECF No. 19-1.) The approval motion asserts that plaintiff's “possible recovery is, at the very most, approximately $14, 826.43 for alleged overtime violations and violations of the notice requirements of [the New York Labor Law].” (Mot. at 2.) The approval motion does not set forth the basis for this assertion.

         The Settlement Agreement provides, in relevant part, that the parties will settle the action for a total sum of $19, 000, of which $6, 270 is payable to plaintiff's counsel. (Settlement Agreement § 1.) The remaining $12, 730 is payable to plaintiff. (Id.) Both the approval motion and the supplement indicate that the amount payable to plaintiff's counsel represents attorneys' fees and expenses. (Mot. at 1; Supp. at 1.) Although neither the approval motion nor the supplement set forth a dollar amount specifically attributable to fees and a separate dollar amount attributable to expenses, the invoice indicates that plaintiff's counsel incurred expenses of $541.60, consisting of a $400 filing fee, a $140 fee for service of process, and $1.60 in PACER fees. (Inv. at 2-3.)

         In addition to its monetary provisions, the Settlement Agreement includes a non-disparagement clause that prohibits plaintiff from making “comments that will disparage [defendants] or any of [their] past or present employees, ” which “may include comments concerning the working conditions at the [defendants] or any other communications which might otherwise impair the reputation of [defendants].” (Settlement Agreement § 7.) The Settlement Agreement also states that “[n]othing contained herein is intended to limit [plaintiff's] communication rights under the FLSA.” (Id.) The Settlement Agreement's release provision applies only to “wage and hour claims . . . based upon any conduct occurring up to and including the date of [p]laintiff's execution of th[e] [Settlement] Agreement, ” and expressly carves out “any claims arising out of alleged acts occurring after the effective date of th[e] [Settlement] Agreement.” (Settlement Agreement § 3.)

         On June 12, 2017, Judge Orenstein issued the Report and Recommendation in which he “conclude[d] that [the Settlement Agreement] is fair and reasonable, ” and recommended “that the court grant the motion and approve the settlement.” (R&R.) The Report and Recommendation directed that any objections be made no later than October 4, 2017. (Id.) No. objections were filed.

         Legal Standard

         I. Review of R&R

         A district judge may designate a magistrate judge to hear and determine issues arising before trial. 28 U.S.C. § 636. In reviewing a magistrate judge's report and recommendation, the district court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C). Where no objection to a report and recommendation has been filed, the district court “need only satisfy itself that that there is no clear error on the face of the record.” Urena v. New York, 160 F.Supp.2d 606, 609-10 (S.D.N.Y. 2001) (quoting Nelson v. Smith, 618 F.Supp. 1186, 1189 (S.D.N.Y. 1985)).

         II. Cheeks Review

         Federal Rule of Civil Procedure (“Rule”) 41, in relevant part, that:

         Subject to Rules 23(e), 23.1(c), 23.2, and 66 and any applicable federal statute, the plaintiff may dismiss an action without a court order by filing:

(i) a notice of dismissal before the opposing party serves either an answer or a motion ...