United States District Court, S.D. New York
JEFFREY JORDAN, individually and on behalf of others similarly situated,, Plaintiff,
KRASDALE FOODS, INC., Defendant.
OPINION AND ORDER
Edgardo Ramos, U.S.D.J.
Jordan, on behalf of himself and others similarly situated,
brings the above-captioned action against Krasdale Foods,
Inc., alleging failure to pay overtime wages in violation of
the Fair Labor Standards Act ("FLSA"), as well as
several violations of New York Labor Law. Doc. 4. Currently
before the Court is the parties' joint application for
settlement approval, filed November 15, 2019. Doc. 21. For
the reasons set forth below, the application is denied.
Circuit, parties cannot privately settle FLSA claims with
prejudice absent the approval of the district court or the
Department of Labor. See Cheeks v. Freeport Pancake
House, Inc., 796 F.3d 199, 200 (2d Cir. 2015). The
parties therefore must "satisfy the Court that their
agreement is 'fair and reasonable.'" Beckert
v. Ronirubinov, No. 15 Civ. 1951 (PAE), 2015 WL 8773460,
at *1 (S.D.N.Y. Dec. 14, 2015).
In determining whether the proposed settlement is fair and
reasonable, a court should consider the totality of
circumstances, including but not limited to the following
factors: (1) the plaintiffs 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.
Felix v. Breakroom Burgers & Tacos, No. 15 Civ.
3531 (PAE), 2016 WL 3791149, at *2 (S.D.N.Y. Mar. 8, 2016)
(internal quotation marks omitted) (quoting Wolinsky v.
Scholastic Inc., 900 F.Supp.2d 332, 335 (S.D.N.Y.
Settlement Agreement provides for a total settlement of $95,
000, of which $63, 002.77 will be apportioned to Jordan. Doc.
21, Ex. A ("Settlement Agreement") ¶ 3. The
Court is satisfied that the parties have adequately justified
the dollar amounts constituting the settlement. Jordan
estimates that his maximum recovery is $298, 757.06. Doc. 21
at 4. However, Jordan faced great risk at trial given that
Defendants vociferously contest his allegations. Id.
at 3-4. The Court finds that the explanation of how the
payments have been reduced to account for litigation risks
and potential defenses is reasonable. Additionally, the
arms-length settlement was reached with the assistance of an
experienced mediator. Id. at 5.
the reasonableness of attorneys' fees requested, the
Court looks to "the lodestar-the product of a reasonable
hourly rate and the reasonable number of hours required by
the case-which creates a presumptively reasonable fee."
Zhang v. Lin Kumo Japanese Rest., Inc., No. 13 Civ.
6667 (PAE), 2015 WL 5122530, at *2 (S.D.N.Y. Aug. 31, 2015)
(quoting Stanczyk v. City of New York, 752 F.3d 273,
284 (2d Cir. 2014)). However, the parties have not provided
any documentation to support the reasonableness of the
proposed attorneys' fees. "In this circuit, a proper
fee request 'entails submitting contemporaneous billing
records documenting, for each attorney, the date, the hours
expended, and the nature of the work done.'"
Nights of Cabiria, 96 F.Supp.3d at 181 (quoting
Wolinsky, 900 F.Supp.2d at 336). "While there
is a strong presumption that the 'lodestar'
amount-that is, the number of attorney hours reasonably
expended times a reasonable hourly rate-represents a
reasonable fee, the court may adjust the fee award upward or
downward based on other considerations."
Wolinsky, 900 F.Supp.2d at 336. The present
submission does not include any billing records documenting
the fees. The Court is thus in no position to assess their
reasonableness. See Nights of Cabiria, 96 F.Supp.3d
the Settlement Agreement provides that part of Jordan's
settlement amount is to be reported on an IRS Form 1099, as
opposed to on an IRS Form W-2. Settlement Agreement
¶¶ 3(a)-(b). However, "FLSA settlement
represents an award of back pay and not also liquidated
damages until the plaintiff is compensated for the wages
allegedly owed." Guzman v. Prodelca Corp., No.
16 Civ. 2637 (AJP), 2016 WL 4371631, at *1 (S.D.N.Y. Aug. 16,
2016). Therefore, to the extent the settlement amount for
each claimant is "less than the full amount of alleged
unpaid wages, all of the settlement payments to the plaintiff
(after deduction of attorneys' fees and costs) must be on
a taxable W-2 basis." Id. at *2. This
allocation must be updated accordingly.
the parties reference a separate settlement agreement that
they allege "does not affect any of the claims asserted
by Plaintiff in this matter." Doc. 21 at 2 n.l. Courts
have expressed concern that "absent an opportunity to
review a separate settlement agreement. .., the court has no
way to determine whether the agreement contains other
conditions relating to or otherwise affecting the FLSA claims
that would be impermissible if executed in an FLSA settlement
agreement." Hotaranu v. Star Nissan Inc., No.
16 Civ. 5320 (KAM) (RML), 2018 WL 1136528, at *1 (E.D.N.Y.
Feb. 27, 2018). This could conceivably "effect an
end-run around Cheeks review," and, if such
circumvention became standard practice, it could
"effectively undermin[e] the courts' statutory
obligation to oversee the settlement of FLSA claims."
Id. at *2. The parties are therefore directed to
submit this second agreement to the Court for
review."So long as the non-FLSA
agreement's terms do not affect the FLSA claim, it will
not be subject to a full Cheeks review. Absent its
submission to the court, however, there would be no way for
the court to verify the true scope of the second
foregoing reasons, the Court will not approve the Agreement
as currently written. The parties may proceed in one of the
or before February 5, 2020, file a
revised settlement agreement that amends the consideration
clause; provide documentation to support the reasonableness
of the attorneys' fees; and submit the second agreement
for the Court's review; or
or before February 5, 2020, file a
joint letter that indicates the parties' intention to
abandon settlement and continue to trial, at which point the
Court will reopen the case and set down a date for a
Stipulate to dismissal of the case without
prejudice, which the Court need not approve under current
Second Circuit ...