Fisher v. SD Protection Inc., 948 F.3d 593

Background

Plaintiff Michael Fisher sued former employer SD Protection Inc. and Sandra Dominguez Mercado under the FLSA and NYLL for unpaid overtime, statutory penalties, liquidated damages, and attorneys’ fees and costs.
After discovery and a settlement conference the parties executed a $25,000 global settlement (covering federal and state claims) payable to plaintiff’s counsel, Lee Litigation Group (LLG); LLG’s pre-submission letter allocated $23,000 to counsel (including $5,140.39 in costs) and $2,000 to Fisher.
LLG submitted a Cheeks fairness submission with time records, costs, and a lodestar claim of over $50,000; the district court approved the $25,000 total but reallocated funds: awarded Fisher $15,055, reduced counsel’s fees to $8,250 (33% of settlement), and reduced costs to $1,695.
The district court calculated Fisher’s maximum recoverable damages at $11,170 (including unpaid overtime, liquidated damages, and NYLL notice/statement penalties) but nonetheless increased Fisher’s share beyond that amount by reallocating funds from counsel.
LLG appealed, arguing the district court abused its discretion by (1) rewriting the parties’ agreed allocation rather than rejecting or permitting revision of the settlement, (2) imposing a de facto 33% cap/proportionality rule on attorneys’ fees, and (3) miscalculating and improperly reducing documented costs.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
May a district court rewrite the parties’ agreed allocation in a Cheeks-approved FLSA settlement?	Fisher: Court may not impose new terms; if settlement (or part) is unreasonable, court must reject it or let parties revise.	Defendants: no meaningful opposition on appeal / silent in district court.	Vacated and remanded: court abused discretion by rewriting the agreement; it must reject or permit revision rather than impose terms.
May a court apply a proportionality limit (generally 33%) to attorneys’ fees in FLSA settlements?	Fisher: Proportionality cap is improper; statute permits a "reasonable" fee not tied to plaintiff’s recovery.	District court: applied 33% as a typical maximum and reduced fees accordingly.	Error of law: court may not impose a general proportionality/33% cap; proportionality cannot be the dispositive reason to reduce fees.
Did the district court properly calculate and reduce counsel’s claimed costs?	LLG: District court misread/overlooked receipts; submitted costs total approximately $4,733.60.	District court: found documentation supported only $1,695 in costs.	Clear error: appellate court found court miscalculated; remand for reconsideration of costs.
Should fees incorporated into a settlement be evaluated as a standalone fee application?	Fisher: Fees embedded in a settlement must be reviewed for reasonableness but not treated as a separate fee application permitting unilateral rewrite.	District court: evaluated fees as if deciding a fee application and reduced them.	Abused discretion: treating the settlement-fee allocation as a separate fee application and rewriting the agreement was improper; on remand court must reassess reasonableness (without proportionality cap) or reject and afford the parties revision.

Key Cases Cited

Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015) (district courts must review FLSA settlements for fairness)
Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000) (factors to evaluate reasonableness of attorney’s fees)
Kassim v. City of Schenectady, 415 F.3d 246 (2d Cir. 2005) (fee may not be reduced solely because it is disproportionate to recovery)
City of Riverside v. Rivera, 477 U.S. 561 (U.S. 1986) (proportionality rule would impede access to counsel for small-claims plaintiffs)
Evans v. Jeff D., 475 U.S. 717 (U.S. 1986) (court may not require parties to accept settlement terms they did not agree to)
Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728 (U.S. 1981) (FLSA rights cannot be waived by contract)