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Himrod v. Cygnus Medical, LLC

United States District Court, S.D. New York

January 2, 2020

SCOTT HIMROD, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
CYGNUS MEDICAL, LLC, MADISON POLYMERIC ENGINEERING, INC., SHAUN SWEENEY and WALTER L. MAGUIRE, JR., Jointly and Severally, Defendants.

          ORDER

          ANALISA TORRES, District Judge

         Plaintiff, a former surgical instrumental specialist at Defendants' medical products manufacturing and repair company, filed this action alleging violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and the New York Labor Law (“NYLL”). The parties have settled, and by joint letter, sought Court approval of their settlement agreement and an award of attorney's fees to Plaintiff's counsel. Letter, ECF No. 30. The Court directed the parties to submit a revised settlement agreement that made the release of claims mutual. ECF No. 32. The parties now move for approval of their revised settlement agreement (“the Settlement”). ECF No. 33. For the reasons stated below, the motion to approve the Settlement is GRANTED.

         DISCUSSION

         I. Legal Standard

         The FLSA was enacted “to correct and as rapidly as practicable to eliminate” certain “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” 29 U.S.C. § 202. Significantly, “[r]ecognizing that there are often great inequalities in bargaining power between employers and employees, Congress made the FLSA's provisions mandatory; thus, the provisions are not subject to negotiation or bargaining between employers and employees.” Lynn's Food Stores, Inc. v. U.S. Dep't of Labor, 679 F.2d 1350, 1352 (11th Cir. 1982) (citing Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 706 (1945)).

         In accord with the FLSA's mandatory provisions, an employer cannot settle claims of unfair wages without approval of the Department of Labor or a United States district court. See Wolinsky v. Scholastic Inc., 900 F.Supp.2d 332, 335 (S.D.N.Y. 2012). Where, as here, the parties seek approval from the district court, they must establish that the settlement is “fair and reasonable.” Persaud v. D & H Ladies Apparel LLC, No. 16 Civ. 5994, 2017 WL 1944154, at *1 (S.D.N.Y. May 8, 2017). To determine whether a settlement is fair and reasonable, courts 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 respective 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.

Wolinsky, 900 F.Supp.2d at 335 (quoting Medley v. Am. Cancer Soc'y, No. 10 Civ. 3214, 2010 WL 3000028, at *1 (S.D.N.Y. July 23, 2010)). In addition, courts should not approve agreements that contain “highly restrictive confidentiality provisions” and “overbroad” releases of claims. Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199, 206 (2d Cir. 2015).

         Where the proposed settlement provides for payment of attorneys' fees, the Court must separately assess the reasonableness of the fee award. Lliguichuzhca v. Cinema 60, LLC, 948 F.Supp.2d 362, 366 (S.D.N.Y. 2013). “In an individual FLSA action where the parties settled on the fee through negotiation, there is ‘a greater range of reasonableness for approving attorney's fees.'” Wolinsky, 900 F.Supp.2d at 336 (quoting Misiewicz v. D'Onofrio Gen. Contractors Corp., No. 08 Civ. 4377, 2010 WL 2545439, at *5 (S.D.N.Y. May 17, 2010)). Still, “counsel must submit evidence providing a factual basis for the award, ” including “contemporaneous billing records documenting, for each attorney, the date, the hours expended, and the nature of the work done.” Id. (citation omitted).

         II. Analysis

         The Settlement provides for Defendants to pay a total of $132, 500, with Plaintiff to receive $87, 032.50, and Plaintiff's counsel to receive approximately one-third of the settlement in fees: $45, 467.50. Settlement ¶ 1(a), ECF No. 33-1. The parties' initial letter motion identifies Plaintiff's total possible recovery, if he were to succeed on all of his claims, to be $485, 955.15. Letter at 5. However, the parties note there were “significant litigation risks, ” id., that Plaintiff's claims were “fact-intensive, ” id. at 4, and that “[a]lthough there is a possibility that Plaintiff could recover higher damages if the case proceeded to trial, there is also the possibility that he could receive much lower damages, or nothing at all, ” id. at 5. Moreover, the Settlement is the product of bargaining between experienced counsel. Id. at 8. The Court, therefore, concludes that the Settlement satisfies each of the Wolinsky factors.

         In addition, the release provision in the Settlement is not overly broad, as it releases Defendants from claims “relating to any and all federal, state or local wage and hour claims that were alleged or could have been alleged in this Action, ” and mutually releases Plaintiff from “any and all claims . . ., which Defendants at any time have, had or claimed to have against Plaintiff specifically relating to the claims that were alleged or could have been alleged in this Action.” Settlement ¶ 2. The Settlement does not contain any provisions (1) requiring confidentiality, or (2) restricting Plaintiff's future employment opportunities. See generally Settlement. The mutual non-disparagement clause contains a carve-out for truthful statements about the litigation and settlement, which satisfies the remedial goals of the FLSA. Settlement ¶ 6; Lazaro-Garcia v. Sengupta Food Servs., No. 15 Civ. 4259, 2015 WL 9162701, at *3 (S.D.N.Y. Dec. 15, 2015). The Court is, therefore, satisfied that the Settlement is fair and reasonable.

         Turning to attorney's fees, Plaintiff's counsel seeks to recover $45, 467.50 in fees and costs, reflecting about one-third of the total value of the Settlement. Settlement ¶ 1(a). The Second Circuit favors the percentage of the fund approach of calculating attorney's fees because it “directly aligns the interests of [Plaintiff] and [her] counsel.” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 121 (2d Cir. 2005) (internal quotation marks and citation omitted). As a check on the reasonableness of attorney's fees, however, courts still calculate the total cost of attorney's hours billed, previously known as the lodestar method. In re AOL Time Warner S'holder Derivative Litig., No. 02 Civ. 6302, 2010 WL 363113, at *5-6 (S.D.N.Y. Feb. 1, 2010).

         Plaintiffs counsel's lodestar calculation is $22, 530.56 in costs and attorney's fees for work done by Pelton Graham LLC; at $45, 467.50, the bargained-for attorney's fees in the settlement is approximately 2.23 times the lodestar calculation. Letter at 7. A multiplier near 2 reflects sufficient compensation for the risk associated with contingent fees in FLSA cases. Fujiwara v. Sushi Yasuda Ltd.,58 F.Supp.3d 424, 439 (S.D.N.Y. 2014) (approving a multiplier of 2.28). The Court concludes, moreover, that the billing rates are reasonable. The billing records reflect time spent drafting the complaint, preparing for and attending a mediation, and reaching settlement. ECF No. 30-2 at 6-19. Brent Pelton, a founder of Pelton Graham LLC, billed at a rate of $450 an hour, Taylor Graham, a partner, at $350 an hour, Kristen Boysen, an associate, at $250 an hour, and Adriana Sandoval, a paralegal, billed at a rate of $125 an hour. Id. ¶¶ 6-9. Mr. Pelton has been in practice for 16 years and has extensive experience in employment litigation. Id. ¶ 6. Mr. Graham, who graduated from law school in 2011, has federal wage-and-hour litigation experience at the trial and appellate levels. Id. ¶ 7. Ms. Boysen graduated law school in 2014. Id. ¶ 8. Although the Court observes that counsel's rates are on the higher end, [1] a reduction is not necessary in light of counsel's effective representation of Plaintiff here. See Letter at 8 (noting that the “Settlement at this stage of ...


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