Sanchez v. DPC N.Y. Inc.
381 F. Supp. 3d 245
S.D. Ill.2019Background
- Three plaintiffs (Sanchez, Galarza, Luna) sued DP Consulting and related defendants under the FLSA and NYLL for unpaid minimum wage, overtime, and spread-of-hours pay.
- The case proceeded through mediation and pretrial conferences; Sanchez and Galarza initially sought to settle in 2017 but later changed course; mediation in May 2018 was unsuccessful.
- At the May 2018 mediation, plaintiffs contend their counsel (Faillace) refused to allow Sanchez and Galarza to settle; affidavits and an in-court colloquy confirmed they wanted to settle earlier for stated amounts.
- On January 24, 2019 the court accepted settlements for Sanchez and Galarza (approx. $24k–$25k each) and for Luna ($75k), and the parties executed a written Settlement Agreement in May 2019, with attorneys’ fees to be determined separately.
- Plaintiffs’ counsel (Faillace Firm) sought $12,500 in fees (billing records claimed $12,688 for 38.33 hours); the court reviewed contemporaneous time records, hourly rates, and the litigation record to determine a reasonable lodestar fee.
- The magistrate approved the settlement as fair and reasonable (19% of maximum recovery) and awarded reduced attorneys’ fees and costs of $8,123.50, explaining reductions for excessive rates, unnecessary hours, and counsel misconduct at mediation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FLSA settlement is fair and should be approved | Settlement resolves bona fide disputes and is reasonable given litigation risk | Agreed to settlement; joint filing seeking approval | Approved: settlement is a reasonable compromise despite being ~19% of max recovery |
| Proper method to calculate attorneys' fees where fee determination is separate from plaintiffs’ recovery | Faillace Firm: lodestar supports fee request ($12,688); court should award $12,500 agreed between parties | Defendants accepted $12,500 on top of plaintiffs' recovery; court must independently review reasonableness | Use lodestar (parties agreed to separate determination); court conducted independent lodestar analysis |
| Reasonableness of hourly rates claimed ($450 for Faillace, $350 for others) | Firm billed prevailing rates in its records/letter | Opposing counsel did not dispute amount but court must assess market rates | Reduced rates: Faillace to $400/hr; Santos and Hershan to $200/hr (Faillace’s $450 and Hershan’s $350 found excessive) |
| Reasonableness of hours billed and effect of counsel’s conduct at mediation | Firm billed 38.33 hours; sought full compensation | Court found many entries excessive/redundant; Faillace prevented earlier settlement causing unnecessary work | Excluded mediation hours (2.4 hrs for Faillace), internal redundancies, post-settlement unnecessary time; reduced hours to Faillace 10.7, Santos 11.1, Hershan 4.6; final fee $7,420 + costs $703.50 = $8,123.50 |
Key Cases Cited
- Millea v. Metro-North R.R. Co., 658 F.3d 154 (2d Cir. 2011) (endorsing lodestar as presumptively reasonable method)
- Hensley v. Eckerhart, 461 U.S. 424 (1983) (hours that are excessive, redundant, or unnecessary must be excluded from fee awards)
- Errant Gene Therapeutics, LLC v. Sloan-Kettering Inst. for Cancer Research, 286 F. Supp. 3d 585 (S.D.N.Y. 2018) (guidance on lodestar calculation and reasonableness review)
- Lliguichuzhca v. Cinema 60, LLC, 948 F. Supp. 2d 362 (S.D.N.Y. 2013) (strong presumption in favor of FLSA settlements being fair)
- Scott v. City of New York, 626 F.3d 130 (2d Cir. 2010) (fee applications must be supported by contemporaneous time records)