Preview
FILED: NEW YORK COUNTY CLERK 07/05/2016 12:19 PM INDEX NO. 153719/2015
NYSCEF DOC. NO. 12 RECEIVED NYSCEF: 07/05/2016
NEW YORK STATE SUPREME COURT
COUNTY OF NEW YORK
IMANI FERNANDEZ, on behalf of herself
and others similarly situated,
Plaintiff,
Index No. 153719/2015
-against-
SWEETGREEN, INC and SWEETGREEN
NEW YORK LLC,
Defendants.
MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF’S MOTION FOR FINAL
APPROVAL OF CLASS ACTION SETTLEMENT
Plaintiff Imani Fernandez (“Plaintiff”), on behalf of herself and others similarly situated,
submits this memorandum of law in support of her motion for final approval of the Negotiated
Settlement Agreement and Release dated December 2, 2015 (“Settlement Agreement”) in this
wage and hour class action brought on behalf of certain employees of Defendants Sweetgreen
Inc. and Sweetgreen New York LLC (collectively, “Defendants”).1 Defendants have agreed to
the terms of the Settlement Agreement and do not object to the relief requested herein. On
December 21, 2015, the Court preliminarily approved the proposed settlement and ordered that
the Settlement Notice be sent to all Class Members. As set forth below, Plaintiff respectfully
requests that the Court (1) grant final approval of the class action settlement; (2) certify the
1
With this memorandum of law, Plaintiff submits the July 5, 2016 affirmation of D. Maimon Kirschenbaum,
attaching thereto as Exhibit 1 (“Ex. 1”) a true and correct copy of the Settlement Agreement; as Exhibit 2 (“Ex. 2.”)
a proposed order, as Exhibit 3 (“Ex. 3”) the opt-out requests received in thisaction, with contact information
redacted; and as Exhibit 4 (“Ex. 4”) the settlement notice that was mailed to class members in this case.
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settlement class; (3) award the Plaintiff’s enhancement award; and (4) award Class Counsel
attorneys’ fees and costs.
I. BACKGROUND
A. Procedural History
On April 15, 2015, Plaintiff Imani Fernandez filed this lawsuit against Defendants.
(Kirschenbaum Aff. ¶ 3.) The Complaint asserted that Defendants unlawfully withheld money
placed by patrons of Defendants’ establishments into buckets at the counters conspicuously
labeled “TIPS” (hereafter “tip buckets”). The Complaint alleges that this violated New York
Labor Law § 196-d (“§ 196-d”), which prohibits employers from retaining “any part of a gratuity
or of any charge purported to be a gratuity for an employee.” (Id. at ¶ 4.)
Plaintiff’s allegations were made with regard to four Sweetgreen locations:
Williamsburg, Nomad, Tribeca, and Nolita (“Covered Locations”). (Id. at ¶ 5.) Plaintiff, an
employee of the Tribeca location, alleges that she and other employees who worked at the
Covered Locations did not receive any portion of the money from the tip buckets. (Id. at ¶ 6.)
Under § 196-d, money is a gratuity or a charge purported to be a gratuity where the reasonable
customer would believe it is a gratuity. Samiento v. World Yacht Inc., 10 N.Y.3d 70 (N.Y.
2008). Accordingly, Plaintiff contends that because the tip buckets were labeled “TIPS,” the
reasonable customer would have believed that the money put in those buckets were gratuities.
Therefore, Defendants’ retention of the tip bucket money violated § 196-d. Defendants deny that
they retained the money from the tip buckets in violation of § 196-d. (Kirschenbaum Aff. ¶ 7.)
The Complaint seeks restitution of the tips unlawfully retained, pre-judgment interest, post-
judgment interest, and attorneys’ fees and costs. (Id. at ¶ 8.)
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B. Settlement Negotiations
On May 5, 2015, Defendants’ counsel informed Plaintiff’s counsel that he believed it
would be economical to resolve the case without filing an answer, given the relatively short
tenure of the Defendants’ business and the resulting low level of damages in this case.
(Kirschenbaum Aff. ¶ 10.) Because Defendants did not maintain records of the amount of
money collected in the tip buckets at any of the Covered Locations, the parties agreed to conduct
an experiment in order to estimate the amount of gratuities in question in the lawsuit. (Id. at ¶
11.) Specifically, Defendants would track the amount of gratuities collected at each of the four
locations over the course of one month. (Id.) In order to assure that the experiment would
accurately reflect the pre-lawsuit conditions, Defendants agreed not to change anything about the
tip buckets before the end of the experimental period. (Id. at ¶ 12.) Defendants further agreed to
have an executive sign an affidavit that the experiment was conducted under these
circumstances. (Id.) Finally, after determining the amount of tips collected at each location
during the experimental period, the parties would extrapolate outwards to estimate the amount of
tips at issue in the lawsuit. (Id. at ¶ 13.)
Given the lack of records, this experiment constitutes the best evidence of the amount of
missing gratuities that the Plaintiff and putative class claimed to be owed. See Thomas v. Meyers
Assoc., L.P., 2013 NY Slip Op 50650(U), at *13, 39 Misc. 3d 1217(A) (N.Y. Sup. Ct. 2013)
(“Where an employer has failed to maintain proper records, wage underpayments may be
calculated by reference to the best evidence available”) (internal citations omitted).
Based on the results of the experiment, Plaintiff’s counsel determined that the total
misappropriated tips at issue for all four locations were $37,500. (Kirschenbaum Aff. ¶ 14.)
Plaintiff’s counsel proposed a settlement of $60,000, taking into consideration (a) the possibility
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that the tips from the pre-lawsuit period were greater than those represented in the experimental
period and (b) that Plaintiff and the Class would be entitled to attorney’s fees and costs if they
prevailed. (Id. at ¶ 15.) On August 18, 2015, Defendants accepted the settlement. (Id. at ¶ 16.)
The end of the class period was set as May 4, 2015, and the parties continued to negotiate the
remaining terms of the settlement agreement. (Id. at ¶ 17.) In November 2015, Defendants
requested that the end of the class period be changed to November 11, 2015. Plaintiff said this
was acceptable only if the settlement fund increased to $65,000. Defendants agreed to this, and
the settlement agreement was executed on December 2, 2015. (Id. at ¶ 128) In light of the
circumstances, Plaintiff and Class Counsel believe that the settlement is plainly reasonable.
II. SUMMARY OF THE SETTLEMENT TERMS
A. Settlement Class
The proposed class consists of all employees of the Defendants who performed work as
Team Members or Team Captains, excluding head Coaches or Assistant Head Coaches in any of
the Covered Locations between April 15, 2009 and November 11, 2015. (Ex. 1 ¶ 1.3.)
B. Settlement Consideration and Allocation Formula
The Settlement Agreement provides that Defendants shall pay a gross settlement amount
of Sixty Five Thousand Dollars ($65,000.00) (the “Gross Settlement Fund”). (Id. at ¶ 1.13.) The
Gross Settlement Fund covers attorneys’ fees, litigation costs, an enhancement award for the
Named Plaintiff, and awards to Class Members. (Id.)
The “Net Settlement Fund” shall mean the remainder of the Gross Settlement Fund after
deductions for Court-approved attorneys’ fees, and settlement administration costs and expenses.
(Id. at ¶ 1.14.) The Net Settlement Fund shall be divided into four separate funds, which will be
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allocated separately to Class Members who worked at each of Defendants’ four locations, in
accordance with the following breakdown2:
42.7% of the Net Settlement Fund will be awarded to Qualified Class
Members who worked at Sweetgreen’s location in Williamsburg, Brooklyn
(the “Williamsburg Fund”);
26.93% of the Net Settlement Fund will be awarded to Qualified Class
Members who worked at Sweetgreen’s location in Nomad, Manhattan (the
“Nomad Fund”);
15.19% of the Net Settlement Fund will be awarded to Qualified Class
Members who worked at Sweetgreen’s location in Tribeca, Manhattan (the
“Tribeca Fund”); and
15.62% of the Net Settlement Fund will be awarded to Qualified Class
Members who worked at Sweetgreen’s location in Nolita, Manhattan (the
“Nolita Fund”).
(Id. at ¶ 3.4.) The percentage allocated to each Fund reflects the results of the experiment. Each
location’s Fund will be distributed to the Qualified Class Members to who worked at that
location on a pro rata basis according to each Class Member’s hours worked. (Id.)
C. Release
In return for the above consideration, all Class Members who have not opted out of the
Class will release all of their wage and hour claims under New York law -- including related
claims for liquidated damages, interest and attorneys’ fees -- against each and all of the
Defendants and all their related entities. (Id. at ¶ 4.1.)
D. Class Members’ Response To The Settlement
Pursuant to the Court’s December 21, 2015 Order, Class Counsel mailed the Notice to all
656 potential Class Members. (Kirschenbaum Aff. ¶ 19; Ex. 4.) With respect to Notices that
were returned as undeliverable, Class Counsel remailed the Notices to all Class Members for
2
The percentages listed herein add up to 100.44%. As such, Class Counsel have deducted the excess 0.44% – or
$172.34 – from its requested attorneys’ fees so that amount can be distributed to the Class.
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whom new addresses could be identified, with the exception of one Notice that was returned to
Class Counsel well after the close of the opt-out period. (Kirschenbaum Aff. ¶ 20.) The time
has expired for Class Members to opt out and/or object under the Agreement. Only 2 of the 656
eligible Class Members opted out and no individuals objected. (Id. at ¶ 21; Ex. 3.) Thus, there
was clear approval of the settlement.
III. ARGUMENT
A. The Proposed Settlement Warrants Final Approval
i. The settlement is fair, adequate, and reasonable and should be approved
New York has a well-established public policy favoring compromises of litigation,
especially class litigation. See Hallock v. State of N.Y., 64 N.Y.2d 224, 230 (1984) (recognizing
that settlements are favored by the courts and not lightly cast aside); In re New York Cty. Data
Entry Worker Prod. Liab. Litig., 616 N.Y.S.2d 424, 427 (N.Y. Sup. Ct. 1994) (recognizing the
policy favoring settlement is particularly compelling in the context of class actions). Under New
York law, “[a] class action shall not be dismissed, discontinued or compromised without the
approval of the Court.” N.Y. C.P.L.R. 908.
Judicial approval of a class action settlement typically begins with three steps: (1)
preliminary approval, where the court sets forth the procedure for class settlement; (2) judicial
approval of dissemination of notice of the proposed settlement and its terms to the class
members; and (3) the holding of a final approval hearing for arguments regarding the fairness,
adequacy, and reasonableness of the proposed settlement, with an opportunity for class members
to be heard on these issues. See In re Colt Indus. S’holder Litig., 77 N.Y.2d 185, 189-91 (1991).
Once these steps have been completed, the court then looks to the terms of the settlement to
analyze whether the proposed settlement is fair, adequate, and reasonable in the best interests of
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the class, and thus should be finally approved. See Klein v. Robert’s Am. Gourmet Food, Inc.,
808 N.Y.S.2d 766, 772 (N.Y. App. Div. 2d Dep’t 2006); In re Colt Indus., 77 N.Y.2d 185 at 194,
565; Ackerman v. Price Waterhouse, 683 N.Y.S.2d 179, 188 (N.Y. App. Div. 1st Dep’t 1998).
Here, the first two steps toward final approval have been successfully completed. On
December 21, 2015, the Court entered an order granting preliminary approval of the class
settlement and directing that notice be mailed to the class members. As outlined in Part II above,
Class Counsel mailed the Notice and attempted to locate additional residences for the Class
Members whose Notices were returned. In terms of the third step, on July 12, 2016, the Court
will hold a fairness hearing, inviting arguments on the fairness, adequacy, and reasonableness of
the proposed class settlement and allowing Class Members an opportunity to be heard on the
merits of the settlement.
Although N.Y. C.P.L.R. 908 does not set forth specific criteria for evaluating proposed
class action settlements, New York courts agree that determining whether a settlement is fair,
adequate, and reasonable requires an analysis of “the likelihood of success, the extent of support
from the parties, the judgment of counsel, the presence of bargaining in good faith, and the
nature of the issues of law and fact.” See Ryan v. Volume Servs. Am., 2013 N.Y. Misc. LEXIS
932 at *3 (N.Y. Sup. Ct. Mar. 7, 2013) (citing In re Colt Indus. S’holder Litig., 553 N.Y.S.2d at
141); Klurfeld v. Equity Enter., Inc., 436 N.Y.S.2d 303, 308 (2d Dep’t 1981); Michels v. Phoenix
Home Life Mut. Ins., 1997 N.Y. Misc. LEXIS 171 (N.Y. Sup. Ct. Jan. 7, 1997). A court should
also “balance[e] the value of [a proposed] settlement against the present value of the anticipated
recovery following a trial on the merits, discounted for the inherent risks of litigation.” Ryan,
2013 N.Y. Misc. LEXIS 932, at *3 (citing Klein, 28 A.D.3d at 73). Here, all of the factors weigh
in favor of this Court granting final approval of the proposed Settlement Agreement.
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a. Likelihood of success and the nature of the issues of law and fact
Although Plaintiff believes her claims have merit, she recognizes the legal, factual and
procedural obstacles to recovery, as Defendants have and will continue to vigorously contest
Plaintiff’s claims if the action does not settle. Specifically, Defendants assert that there is no
liability because the money placed in the tip buckets was distributed to the employees in the form
of group benefits, such as pizza parties. In addition, as no records were kept of the amount of
money placed in the tip buckets, Plaintiff would face significant challenges in establishing
damages at trial. Accordingly, there are risks in establishing both liability and damages for the
Class, and resolution of this action would hinge on the determination of complex factual and
legal issues.
b. The parties and class members overwhelmingly support the
settlement
Under New York law, support for a proposed settlement from the opposing parties and
class members demonstrates its fairness and reasonableness. See, e.g., Hibbs v. Marvel Enters.,
797 N.Y.S.2d 463, 464 (N.Y. App. Div. 1st Dep’t 2005); Fiala v. Metro. Life Ins. Co., 899
N.Y.S.2d 531, 539 (N.Y. Sup. Ct. 2010) (approving settlement when small fraction of class
members objected or opted out); Michels, 1997 N.Y. Misc. LEXIS 171 at *84 (same). All
parties here have expressed their support for the settlement by signing the Settlement Agreement.
Moreover, Class Members’ response to the Notice indicates their support for the Settlement as
well. As stated above, no Class Members have objected to the settlement, while only 2 Class
Members, representing only 0.3% of the class, filed opt out forms. (Kirschenbaum Aff. ¶ 21.)
Where relatively few class members opt-out or object to the settlement, the lack of opposition
supports court approval of the settlement. In re Sony SXRD Rear Projection Television Class
Action Litig., No. 06-Civ-5173, 2008 U.S. Dist. LEXIS 36093, at *18 (S.D.N.Y. May 1, 2008).
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c. Balance of the value of the settlement against the value of
anticipated recovery
Consideration of the value of the settlement against the present value of anticipated
recovery after trial, discounted for litigation risks, weighs overwhelmingly in favor of approval
of the settlement. “The determination whether a settlement is reasonable does not involve the use
of a mathematical equation yielding a particularized sum. Instead, there is a range of
reasonableness with regard to a settlement – a range which recognizes the uncertainties of law
and fact in any particular case and the concomitant risks and costs necessarily inherent in taking
any litigation to completion.” Frank v. Eastman Kodak Co., 228 F.R.D. 174, 186 (W.D.N.Y.
2005) (internal quotation marks and citations omitted).
Defendants have agreed to settle this case for $65,000. Extrapolating from the results of
the parties’ experiment, the settlement amount represents 173% of the total misappropriated tips
at issue. (Kirschenbaum Aff. ¶ 14.) After deducting attorneys’ fees and costs, Class Members
will stillreceive more than 100% of their § 196-d damages. Thus, the settlement is clearly an
excellent result for the Class.
Moreover, further litigation without settlement would necessarily result in additional
expense and delay, including engaging in full blown fact discovery and class certification motion
practice. A complicated trial would be necessary featuring testimony by Defendants, Plaintiff,
and Class Members. Preparing and putting on evidence on the complex factual and legal issues
at such a trial would consume tremendous amounts of time and resources for both sides, as well
as require substantial judicial resources to adjudicate the parties’ disputes. Any judgment would
likely be appealed, thereby extending the duration of the litigation and depleting any possible
recovery. Finally, if Defendants were successful in proving that the money in the tip buckets
was not a gratuity, Class Members would receive nothing.
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Accordingly, the Settlement provides the significant benefit of a guaranteed and full
payment to Class Members, rather than “speculative payment of a hypothetically larger amount
years down the road.” Teachers Ret. Sys. v. A.C.L.N. Ltd.,No. 01 Civ. 11814 (MP), 2004 U.S.
Dist. LEXIS 8608 at *16 (S.D.N.Y. May 14, 2004). Therefore, the settlement amount of
$65,000 is fair and reasonable.
d. Plaintiff’s and Defendants’ counsel are experienced litigators of
class actions and support the settlement
New York courts grant significant weight to the judgment of experienced counsel in
determining the fairness of a class action settlement. See In re Colt Indus., 553 N.Y.S.2d at 141;
Fiala, 899 N.Y.S.2d at 538. The settlement presented here is the product of negotiations
between two experienced law firms. As set forth more specifically in the Kirschenbaum
Declaration, Plaintiff’s counsel have many years of experience litigating and settling wage and
hour class actions, and in their view, the settlement represents a fair value. See, e.g., Ramirez v.
Lovin' Oven Catering Suffolk, Inc., 2012 U.S. Dist. LEXIS 25060, at *10 (S.D.N.Y. Feb. 24,
2012) (noting that the Joseph & Kirschenbaum LLP “have significant experience prosecuting
and settling wage and hour class actions, and are well-versed in both wage and hour and class
action law”); Capsolas v. Pasta Res., Inc., No. 10 Civ. 5595 (RLE), 2012 U.S. Dist. LEXIS
144651, at *21 (S.D.N.Y. Oct. 5, 2012) (“Class Counsel [JK] are experienced employment
lawyers with good reputations among the employment law bar.”). (See also Kirschenbaum Aff.
¶¶ 24-45.)
Defendants were represented in this case by Andrew Marks, an experienced employment
litigator with Littler Mendelson P.C.
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e. The settlement is the result of good faith, arm’s length negotiations
between the parties
A class settlement’s fairness, adequacy, and reasonableness are presumed when “a class
settlement is reached in arm’s-length negotiations between experienced, capable counsel after
meaningful discovery.” Fiala, 899 N.Y.S.2d at 538 (citing Wal-Mart Stores, Inc. v. Visa U.S.A.,
Inc., 396 F.3d 96, 116 (2d Cir. 2005)). The duration, rigor, and well-informed nature of the
parties’ negotiations demonstrate that the arrived compromise was conducted at an arm’s length
and in good faith. See Michels, 1997 N.Y. Misc. LEXIS 171, at *86 (finding “no evidence that
suggests collusion or lack of arm’s-length bargaining” when parties negotiated settlement over
nine months and experienced counsel weighed strengths and weaknesses of the case).
In sum, the Settlement Agreement readily meets all of the relevant factors weighed by
courts in determining whether it is fair, adequate, and reasonable, and therefore should be
approved by this Court.
B. The Settlement Class Should Be Certified
The benefits of the proposed Settlement Agreement can be realized only through
certification of the Class. The U.S. Supreme Court has held that certification of a settlement class
is appropriate. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997). Having already
provisionally certified the Class for settlement purposes, Plaintiff now respectfully requests that
the Court finally certify the following class for settlement purposes: Named Plaintiff and current
or former employees of the Defendants, who performed work as Team Members or Team
Captains, excluding head Coaches or Assistant Head Coaches in any of the Covered Locations
during the period April 15, 2009 through November 11, 2015.
The decision to certify a class rests in the sound discretion of the trial court, see, e.g.,
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Jacobs v. Macy’s E., Inc., 792 N.Y.S.2d 574, 576 (N.Y. App. Div. 2d Dep’t 2005), and class
certification should be granted even in the closest cases. See Brown v. State, 681 N.Y.S.2d 170,
174 (N.Y. App. Div. 3d Dep’t 1998).
Class certification is routinely granted in wage and hour actions in the State of New
York. See generally Dabrowski v. Abax Incorporated, 84 A.D.3d 633, 635 (N.Y. App. Div. 1st
Dep’t 2011) (class action “is superior to the prosecution of individualized claims” in an action to
recover unpaid wages); Nawrocki v. Proto Construction and Development Corp., 82 A.D.3d 534,
536 (N.Y. App. Div. 1st Dep’t 2011) (“class action is the superior vehicle for resolving this wage
dispute”); Jacobs v. Bloomingdale's Inc., 2003 N.Y. Misc. LEXIS 2062, at *4 (N.Y. Sup. Ct.
2003) (“There is ample precedent for certifying a case involving a wage dispute as a class
action”); Pesantez v. Boyle Environmental Services, Inc., 251 A.D.2d 11, 12 (N.Y. App. Div. 1st
Dep’t 1998) (class action is the “best method of adjudicating” wage and hour disputes).
More specifically, class actions are routinely granted in Labor Law § 196-d cases such as
this one seeking payment of unpaid alleged gratuities. See, e.g., Krebs v. Canyon Club, 880
N.Y.S.2d 873 (N.Y. Sup. Ct. Westchester. Co. 2009) (certifying class of service employees at
defendants’ catering facilities where plaintiffs alleged defendants imposed a service charge
which to the reasonable customer purported to be a gratuity and defendants did not remit the
service charge to the service employees); Ramirez v. Mansions Catering, Inc., 2009 N.Y. Misc.
LEXIS 5661 (N.Y. Sup. Ct. N.Y. Co. Apr. 27, 2009), aff’d 74 A.D.3d 490 (1st Dep’t 2010);
Ryan, 2013 N.Y. Misc. LEXIS 932 (approving a class action settlement and certifying a class of
service employees who alleged that defendants failed to distribute portions of a service charge
that defendants charged their customers). In gratuity cases, courts have found that all requisites
of N.Y. C.P.L.R. §§ 901 and 902 have been met by workers seeking payment of gratuities that
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were improperly withheld by their employers. As the claims of this case are similar to those
previously mentioned, certification of the settlement class is proper.
This Court, in preliminarily approving the Settlement Class, has already found that the
Class meets the requirements of N.Y. C.P.L.R. §§ 901 and 902. For the reasons set forth herein
and in Plaintiff’s preliminary approval papers and applied by the Court in conditionally
certifying the Class, the Class should be finally certified for settlement purposes.
C. An Enhancement Award Should Be Awarded To The Named Plaintiff.
Under the proposed Settlement Agreement, and subject to the Court’s approval, an
enhancement award of $3,000 is to be awarded to Plaintiff Imani Fernandez. (Ex. 1 ¶ 3.3.)
A court may grant enhancement awards in a class action. Such awards “reward[] the
named plaintiffs for the effort and inconvenience of consulting with counsel over the many years
[a] case was active and for participating in discovery, including depositions.” Cox v. Microsoft
Corp., No. 105193/2000, 2007 N.Y. Misc. LEXIS 9126, at *11 (Sup. Ct. N.Y. County Feb. 2,
2007); see also Mark Fabrics Inc. v. GMAC Commercial Credit LLC, No. 604631/02, 2005 N.Y.
Misc. LEXIS 3566 (Sup. Ct. N.Y. County Dec. 22, 2005) (granting enhancement award).
Enhancement awards “are particularly appropriate in the employment context. .. . [where] the
plaintiff is often a former or current employee of the defendant, and thus . . . he has, for the
benefit of the class as a whole, undertaken the risks of adverse actions by the employer or co-
workers.” Frank, 228 F.R.D. at 187.
Fernandez expended considerable time and effort to assist Class Counsel with the case.
She initiated this lawsuit, explained relevant and necessary factual information to Class Counsel,
and participated in settlement discussions. (Kirschenbaum Decl. ¶¶ 22-23.)
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Fernandez also assumed significant risks in prosecuting this action. In the employment
context, where workers are often blacklisted if they are considered “trouble makers,” class
representatives are particularly vulnerable to retaliation. E.g., Silberblatt v. Morgan Stanley, 524
F. Supp. 2d 425, 435 (S.D.N.Y. 2007) (“A class representative who has been exposed to a
demonstrable risk of employer retaliation or whose future employability has been impaired may
be worthy of receiving an additional payment, less other be dissuaded.”). Even where there is
not a record of actual retaliation, service fees are appropriate in recognition of the risk of
retaliation assumed by lead plaintiffs for the benefit of absent class members. Frank, 228 F.R.D.
at 187-88 (“Although this Court has no reason to believe that Kodak has or will take retaliatory
action towards either Frank or any of the plaintiffs in this case, the fear of adverse consequences
or lost opportunities cannot be dismissed as insincere or unfounded.”).
The $3,000 enhancement award requested is modest in comparison with those approved
by other courts. E.g., Mancia v. HSBC Secs. (USA) Inc., No. 9400/2015, 2016 N.Y. Misc.
LEXIS 496 (N.Y. Sup. Ct., Kings County Feb. 19, 2016) (granting $15,000 service award to
class representative); Milton v. Bells Nurses Registry & Employment Agency, Inc., No.
502303/2015, 2015 N.Y. Misc. LEXIS 4604 (N.Y. Sup. Ct., Kings County Dec. 21, 2015)
(granting $8,000 service award to class representative); Mark Fabrics Inc., 2005 N.Y. Misc.
LEXIS 3566, at *5 (granting $25,000 enhancement award to named plaintiff); Reyes v. Buddha
Bar-NYC, No. 08 Civ. 2494, 2009 U.S. Dist. LEXIS 45277 (S.D.N.Y. May 28, 2009) (awarding
payments of $7,500 to each of three named plaintiffs from $710,000 fund). Because of
Plaintiff’s time, assistance, and development of the case, all of which could have subjected her to
potential retaliation, the enhancement award to Plaintiff is appropriate and justified as part of the
overall Settlement.
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D. Class Counsel’s Attorneys’ Fees And Costs Should Be Approved.
Class Counsels’ unopposed motion for Final Approval includes a request for attorneys’
fees of $21,494.33, which is one-third of the settlement amount less the excess 0.44% of the Net
Settlement Fund allocated to Class Members, and reimbursement of $1,165.21 of litigation costs
and out of pocket expenses incurred by Class Counsel in prosecuting and successfully resolving
this matter. (See Kirschenbaum Decl. ¶ 40 for a breakdown of the costs for which Class Counsel
seek reimbursement). The Settlement Agreement provides that “Class Counsel will petition the
Court for an award of attorneys’ fees of no more than one-third (1/3) of the Gross Settlement
Amount, and for the reimbursement of the actual litigation expenses and costs[.]” (Ex. 1 ¶ 3.2.)
The CPLR authorizes a court to grant attorneys’ fees to class counsel who obtain a
judgment on behalf of a class: “If a judgment in an action maintained as a class action is
rendered in favor of the class, the court in its discretion may award attorneys’ fees to the
representatives of the class and/or to any other person that the court finds has acted to benefit the
class based on the reasonable value of legal services rendered[.]” N.Y. C.P.L.R. § 909.
It is also well established that “attorneys who create a common fund to be shared by a
class are entitled to an award of fees and expenses from that fund as compensation for their
work.” In re Telik, Inc. Sec. Litig., 576 F. Supp. 2d 570, 585 (S.D.N.Y. 2008) (internal quotation
omitted). “Fees and expenses are paid from the common fund so that all class members
contribute equally towards the costs associated with litigation pursued on their behalf.” Id. The
award of attorneys’ fees has the three-fold benefit of: (1) “providing just compensation,” (2)
“encourag[ing] skilled counsel to represent those who seek redress for damages inflicted on
entire classes of persons,” and (3) “discourag[ing] future misconduct of a similar nature.” Id.
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Although there are two ways to compensate attorneys for successful prosecution of class
actions (the lodestar method or the percentage of the recovery method), courts generally prefer to
award fees as a percentage of the common fund. Ryan, 2013 N.Y. Misc. LEXIS 932, at **11-12,
Fiala, 899 N.Y.S.2d at 540; Strougo v. Bassini, 258 F. Supp. 2d 254, 261-62 (S.D.N.Y. 2003)
(collecting cases); In re NASDAQ Market-Makers Antitrust Litig., 187 F.R.D. 465, 483-85
(S.D.N.Y. 1998) (collecting cases). Where a settlement establishes a common fund, the
percentage method is often preferable because “[t]he lodestar method has the potential to lead to
inefficiency and resistance to expeditious settlement because it gives attorneys an incentive to
raise their fees by billing more hours.” Cox v. Microsoft Corp., No. 105193/2000, 26 Misc.3d
1220(A), at *3 (Sup. Ct. N.Y. County Feb. 2, 2007); see also Peck, Peck v. AT&T Corp., No.
601587/2000, 2002 N.Y. Misc. LEXIS 2026, at *26 (Sup. Ct. N.Y. County July 26, 2002) (“The
percentage of the recovery approach determines the reasonableness of the fee.”). Similarly in
federal court—where most wage and hour litigation takes place, “[t]he trend in [the Second]
Circuit is toward the percentage method,… which directly aligns the interests of the class and its
counsel and provides a powerful incentive for the efficient prosecution and early resolution of
the litigation.” Wal-Mart Stores, Inc., 396 F.3d at 121 (internal quotation marks omitted);
Strougo v. Bassini, 258 F. Supp. 2d 254, 261-62 (S.D.N.Y. 2003) (collecting cases); In re
NASDAQ Market-Makers Antitrust Litig., 187 F.R.D. 465, 483-85 (S.D.N.Y. 1998) (collecting
cases).
Further, “public policy favors a common fund attorneys’ fee award in wage and hour
class actions.” Ryan, 2013 N.Y. Misc. LEXIS 932 at **11-12; see also Johnson v. Brennan, No.
10 Civ. 4712 (CM), 2011 U.S. Dist. LEXIS 105775, at **39-44 (S.D.N.Y. Sept. 16, 2011)
(collecting cases). “If not, wage and hour abuses would go without remedy because attorneys
16
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would be unwilling to take on the risk.” Id.; see also Sand v. Greenberg, No. 08 Civ. 7840, 2011
U.S. Dist. LEXIS 1120 at *9 (S.D.N.Y. Mar. 22, 2011) (“But for the separate provision of legal
fees, many violations of the Fair Labor Standards Act would continue unabated and
uncorrected.”). “Where relatively small claims can only be prosecuted through aggregate
litigation, and the law relies on prosecution by ‘private attorneys general,’ attorneys who fill [that
role] must be adequately compensated for their efforts. Reyes v. Altamarea Grp. LLC, No. 10
Civ. 6451(RLE), 2011 U.S. Dist. LEXIS 115984, at *19 (S.D.N.Y. Aug. 16, 2011); see also
Sand, 2011 U.S. Dist. LEXIS 1120, at *9 (statutory attorneys’ fees are meant to “encourage
members of the bar to provide legal services to those whose wage claims might otherwise be too
small to justify the retention of able, legal counsel”).
“Common fund recoveries are contingent on a successful litigation outcome.” Ryan, 2013
N.Y. Misc. LEXIS 932, at *13 (citing Guaman v. Anja-Bar NYC, No. 12 Civ. 2987 (DF), 2013
U.S. Dist. LEXIS 16206, at *91(S.D.N.Y. Feb. 5, 2013). Such “contingency fees provide access
to counsel for individuals who would otherwise have difficulty obtaining representation ... and
transfer a significant portion of the risk of loss to the attorneys taking a case. Access to the
courts would be difficult to achieve without compensating attorneys for that risk.” Ryan, 2013
N.Y. Misc. LEXIS 932, at *13 (citing deMunecas v. Bold Food LLC, No. 09 Civ. 0440 (DAB),
U.S. Dist. LEXIS 87644, at *21 (S.D.N.Y. Apr. 19, 2010)) (internal quotation marks omitted).
Many individual litigants, including the class members here, “cannot afford to retain counsel at
fixed hourly rates ...yet they are willing to pay a portion of any recovery they may receive in
return for successful representation.” Id.
In determining an award of reasonable attorneys’ fees, a court should consider the
following factors:
17
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[T]he risks of the litigation, whether counsel had the benefit of a prior judgment,
standing at bar of counsel for the plaintiffs and defendants,
Preview
FILED: NEW YORK COUNTY CLERK 07/05/2016 12:19 PM INDEX NO. 153719/2015 NYSCEF DOC. NO. 12 RECEIVED NYSCEF: 07/05/2016 NEW YORK STATE SUPREME COURT COUNTY OF NEW YORK IMANI FERNANDEZ, on behalf of herself and others similarly situated, Plaintiff, Index No. 153719/2015 -against- SWEETGREEN, INC and SWEETGREEN NEW YORK LLC, Defendants. MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF’S MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT Plaintiff Imani Fernandez (“Plaintiff”), on behalf of herself and others similarly situated, submits this memorandum of law in support of her motion for final approval of the Negotiated Settlement Agreement and Release dated December 2, 2015 (“Settlement Agreement”) in this wage and hour class action brought on behalf of certain employees of Defendants Sweetgreen Inc. and Sweetgreen New York LLC (collectively, “Defendants”).1 Defendants have agreed to the terms of the Settlement Agreement and do not object to the relief requested herein. On December 21, 2015, the Court preliminarily approved the proposed settlement and ordered that the Settlement Notice be sent to all Class Members. As set forth below, Plaintiff respectfully requests that the Court (1) grant final approval of the class action settlement; (2) certify the 1 With this memorandum of law, Plaintiff submits the July 5, 2016 affirmation of D. Maimon Kirschenbaum, attaching thereto as Exhibit 1 (“Ex. 1”) a true and correct copy of the Settlement Agreement; as Exhibit 2 (“Ex. 2.”) a proposed order, as Exhibit 3 (“Ex. 3”) the opt-out requests received in thisaction, with contact information redacted; and as Exhibit 4 (“Ex. 4”) the settlement notice that was mailed to class members in this case. 1 1 of 23 settlement class; (3) award the Plaintiff’s enhancement award; and (4) award Class Counsel attorneys’ fees and costs. I. BACKGROUND A. Procedural History On April 15, 2015, Plaintiff Imani Fernandez filed this lawsuit against Defendants. (Kirschenbaum Aff. ¶ 3.) The Complaint asserted that Defendants unlawfully withheld money placed by patrons of Defendants’ establishments into buckets at the counters conspicuously labeled “TIPS” (hereafter “tip buckets”). The Complaint alleges that this violated New York Labor Law § 196-d (“§ 196-d”), which prohibits employers from retaining “any part of a gratuity or of any charge purported to be a gratuity for an employee.” (Id. at ¶ 4.) Plaintiff’s allegations were made with regard to four Sweetgreen locations: Williamsburg, Nomad, Tribeca, and Nolita (“Covered Locations”). (Id. at ¶ 5.) Plaintiff, an employee of the Tribeca location, alleges that she and other employees who worked at the Covered Locations did not receive any portion of the money from the tip buckets. (Id. at ¶ 6.) Under § 196-d, money is a gratuity or a charge purported to be a gratuity where the reasonable customer would believe it is a gratuity. Samiento v. World Yacht Inc., 10 N.Y.3d 70 (N.Y. 2008). Accordingly, Plaintiff contends that because the tip buckets were labeled “TIPS,” the reasonable customer would have believed that the money put in those buckets were gratuities. Therefore, Defendants’ retention of the tip bucket money violated § 196-d. Defendants deny that they retained the money from the tip buckets in violation of § 196-d. (Kirschenbaum Aff. ¶ 7.) The Complaint seeks restitution of the tips unlawfully retained, pre-judgment interest, post- judgment interest, and attorneys’ fees and costs. (Id. at ¶ 8.) 2 2 of 23 B. Settlement Negotiations On May 5, 2015, Defendants’ counsel informed Plaintiff’s counsel that he believed it would be economical to resolve the case without filing an answer, given the relatively short tenure of the Defendants’ business and the resulting low level of damages in this case. (Kirschenbaum Aff. ¶ 10.) Because Defendants did not maintain records of the amount of money collected in the tip buckets at any of the Covered Locations, the parties agreed to conduct an experiment in order to estimate the amount of gratuities in question in the lawsuit. (Id. at ¶ 11.) Specifically, Defendants would track the amount of gratuities collected at each of the four locations over the course of one month. (Id.) In order to assure that the experiment would accurately reflect the pre-lawsuit conditions, Defendants agreed not to change anything about the tip buckets before the end of the experimental period. (Id. at ¶ 12.) Defendants further agreed to have an executive sign an affidavit that the experiment was conducted under these circumstances. (Id.) Finally, after determining the amount of tips collected at each location during the experimental period, the parties would extrapolate outwards to estimate the amount of tips at issue in the lawsuit. (Id. at ¶ 13.) Given the lack of records, this experiment constitutes the best evidence of the amount of missing gratuities that the Plaintiff and putative class claimed to be owed. See Thomas v. Meyers Assoc., L.P., 2013 NY Slip Op 50650(U), at *13, 39 Misc. 3d 1217(A) (N.Y. Sup. Ct. 2013) (“Where an employer has failed to maintain proper records, wage underpayments may be calculated by reference to the best evidence available”) (internal citations omitted). Based on the results of the experiment, Plaintiff’s counsel determined that the total misappropriated tips at issue for all four locations were $37,500. (Kirschenbaum Aff. ¶ 14.) Plaintiff’s counsel proposed a settlement of $60,000, taking into consideration (a) the possibility 3 3 of 23 that the tips from the pre-lawsuit period were greater than those represented in the experimental period and (b) that Plaintiff and the Class would be entitled to attorney’s fees and costs if they prevailed. (Id. at ¶ 15.) On August 18, 2015, Defendants accepted the settlement. (Id. at ¶ 16.) The end of the class period was set as May 4, 2015, and the parties continued to negotiate the remaining terms of the settlement agreement. (Id. at ¶ 17.) In November 2015, Defendants requested that the end of the class period be changed to November 11, 2015. Plaintiff said this was acceptable only if the settlement fund increased to $65,000. Defendants agreed to this, and the settlement agreement was executed on December 2, 2015. (Id. at ¶ 128) In light of the circumstances, Plaintiff and Class Counsel believe that the settlement is plainly reasonable. II. SUMMARY OF THE SETTLEMENT TERMS A. Settlement Class The proposed class consists of all employees of the Defendants who performed work as Team Members or Team Captains, excluding head Coaches or Assistant Head Coaches in any of the Covered Locations between April 15, 2009 and November 11, 2015. (Ex. 1 ¶ 1.3.) B. Settlement Consideration and Allocation Formula The Settlement Agreement provides that Defendants shall pay a gross settlement amount of Sixty Five Thousand Dollars ($65,000.00) (the “Gross Settlement Fund”). (Id. at ¶ 1.13.) The Gross Settlement Fund covers attorneys’ fees, litigation costs, an enhancement award for the Named Plaintiff, and awards to Class Members. (Id.) The “Net Settlement Fund” shall mean the remainder of the Gross Settlement Fund after deductions for Court-approved attorneys’ fees, and settlement administration costs and expenses. (Id. at ¶ 1.14.) The Net Settlement Fund shall be divided into four separate funds, which will be 4 4 of 23 allocated separately to Class Members who worked at each of Defendants’ four locations, in accordance with the following breakdown2: 42.7% of the Net Settlement Fund will be awarded to Qualified Class Members who worked at Sweetgreen’s location in Williamsburg, Brooklyn (the “Williamsburg Fund”); 26.93% of the Net Settlement Fund will be awarded to Qualified Class Members who worked at Sweetgreen’s location in Nomad, Manhattan (the “Nomad Fund”); 15.19% of the Net Settlement Fund will be awarded to Qualified Class Members who worked at Sweetgreen’s location in Tribeca, Manhattan (the “Tribeca Fund”); and 15.62% of the Net Settlement Fund will be awarded to Qualified Class Members who worked at Sweetgreen’s location in Nolita, Manhattan (the “Nolita Fund”). (Id. at ¶ 3.4.) The percentage allocated to each Fund reflects the results of the experiment. Each location’s Fund will be distributed to the Qualified Class Members to who worked at that location on a pro rata basis according to each Class Member’s hours worked. (Id.) C. Release In return for the above consideration, all Class Members who have not opted out of the Class will release all of their wage and hour claims under New York law -- including related claims for liquidated damages, interest and attorneys’ fees -- against each and all of the Defendants and all their related entities. (Id. at ¶ 4.1.) D. Class Members’ Response To The Settlement Pursuant to the Court’s December 21, 2015 Order, Class Counsel mailed the Notice to all 656 potential Class Members. (Kirschenbaum Aff. ¶ 19; Ex. 4.) With respect to Notices that were returned as undeliverable, Class Counsel remailed the Notices to all Class Members for 2 The percentages listed herein add up to 100.44%. As such, Class Counsel have deducted the excess 0.44% – or $172.34 – from its requested attorneys’ fees so that amount can be distributed to the Class. 5 5 of 23 whom new addresses could be identified, with the exception of one Notice that was returned to Class Counsel well after the close of the opt-out period. (Kirschenbaum Aff. ¶ 20.) The time has expired for Class Members to opt out and/or object under the Agreement. Only 2 of the 656 eligible Class Members opted out and no individuals objected. (Id. at ¶ 21; Ex. 3.) Thus, there was clear approval of the settlement. III. ARGUMENT A. The Proposed Settlement Warrants Final Approval i. The settlement is fair, adequate, and reasonable and should be approved New York has a well-established public policy favoring compromises of litigation, especially class litigation. See Hallock v. State of N.Y., 64 N.Y.2d 224, 230 (1984) (recognizing that settlements are favored by the courts and not lightly cast aside); In re New York Cty. Data Entry Worker Prod. Liab. Litig., 616 N.Y.S.2d 424, 427 (N.Y. Sup. Ct. 1994) (recognizing the policy favoring settlement is particularly compelling in the context of class actions). Under New York law, “[a] class action shall not be dismissed, discontinued or compromised without the approval of the Court.” N.Y. C.P.L.R. 908. Judicial approval of a class action settlement typically begins with three steps: (1) preliminary approval, where the court sets forth the procedure for class settlement; (2) judicial approval of dissemination of notice of the proposed settlement and its terms to the class members; and (3) the holding of a final approval hearing for arguments regarding the fairness, adequacy, and reasonableness of the proposed settlement, with an opportunity for class members to be heard on these issues. See In re Colt Indus. S’holder Litig., 77 N.Y.2d 185, 189-91 (1991). Once these steps have been completed, the court then looks to the terms of the settlement to analyze whether the proposed settlement is fair, adequate, and reasonable in the best interests of 6 6 of 23 the class, and thus should be finally approved. See Klein v. Robert’s Am. Gourmet Food, Inc., 808 N.Y.S.2d 766, 772 (N.Y. App. Div. 2d Dep’t 2006); In re Colt Indus., 77 N.Y.2d 185 at 194, 565; Ackerman v. Price Waterhouse, 683 N.Y.S.2d 179, 188 (N.Y. App. Div. 1st Dep’t 1998). Here, the first two steps toward final approval have been successfully completed. On December 21, 2015, the Court entered an order granting preliminary approval of the class settlement and directing that notice be mailed to the class members. As outlined in Part II above, Class Counsel mailed the Notice and attempted to locate additional residences for the Class Members whose Notices were returned. In terms of the third step, on July 12, 2016, the Court will hold a fairness hearing, inviting arguments on the fairness, adequacy, and reasonableness of the proposed class settlement and allowing Class Members an opportunity to be heard on the merits of the settlement. Although N.Y. C.P.L.R. 908 does not set forth specific criteria for evaluating proposed class action settlements, New York courts agree that determining whether a settlement is fair, adequate, and reasonable requires an analysis of “the likelihood of success, the extent of support from the parties, the judgment of counsel, the presence of bargaining in good faith, and the nature of the issues of law and fact.” See Ryan v. Volume Servs. Am., 2013 N.Y. Misc. LEXIS 932 at *3 (N.Y. Sup. Ct. Mar. 7, 2013) (citing In re Colt Indus. S’holder Litig., 553 N.Y.S.2d at 141); Klurfeld v. Equity Enter., Inc., 436 N.Y.S.2d 303, 308 (2d Dep’t 1981); Michels v. Phoenix Home Life Mut. Ins., 1997 N.Y. Misc. LEXIS 171 (N.Y. Sup. Ct. Jan. 7, 1997). A court should also “balance[e] the value of [a proposed] settlement against the present value of the anticipated recovery following a trial on the merits, discounted for the inherent risks of litigation.” Ryan, 2013 N.Y. Misc. LEXIS 932, at *3 (citing Klein, 28 A.D.3d at 73). Here, all of the factors weigh in favor of this Court granting final approval of the proposed Settlement Agreement. 7 7 of 23 a. Likelihood of success and the nature of the issues of law and fact Although Plaintiff believes her claims have merit, she recognizes the legal, factual and procedural obstacles to recovery, as Defendants have and will continue to vigorously contest Plaintiff’s claims if the action does not settle. Specifically, Defendants assert that there is no liability because the money placed in the tip buckets was distributed to the employees in the form of group benefits, such as pizza parties. In addition, as no records were kept of the amount of money placed in the tip buckets, Plaintiff would face significant challenges in establishing damages at trial. Accordingly, there are risks in establishing both liability and damages for the Class, and resolution of this action would hinge on the determination of complex factual and legal issues. b. The parties and class members overwhelmingly support the settlement Under New York law, support for a proposed settlement from the opposing parties and class members demonstrates its fairness and reasonableness. See, e.g., Hibbs v. Marvel Enters., 797 N.Y.S.2d 463, 464 (N.Y. App. Div. 1st Dep’t 2005); Fiala v. Metro. Life Ins. Co., 899 N.Y.S.2d 531, 539 (N.Y. Sup. Ct. 2010) (approving settlement when small fraction of class members objected or opted out); Michels, 1997 N.Y. Misc. LEXIS 171 at *84 (same). All parties here have expressed their support for the settlement by signing the Settlement Agreement. Moreover, Class Members’ response to the Notice indicates their support for the Settlement as well. As stated above, no Class Members have objected to the settlement, while only 2 Class Members, representing only 0.3% of the class, filed opt out forms. (Kirschenbaum Aff. ¶ 21.) Where relatively few class members opt-out or object to the settlement, the lack of opposition supports court approval of the settlement. In re Sony SXRD Rear Projection Television Class Action Litig., No. 06-Civ-5173, 2008 U.S. Dist. LEXIS 36093, at *18 (S.D.N.Y. May 1, 2008). 8 8 of 23 c. Balance of the value of the settlement against the value of anticipated recovery Consideration of the value of the settlement against the present value of anticipated recovery after trial, discounted for litigation risks, weighs overwhelmingly in favor of approval of the settlement. “The determination whether a settlement is reasonable does not involve the use of a mathematical equation yielding a particularized sum. Instead, there is a range of reasonableness with regard to a settlement – a range which recognizes the uncertainties of law and fact in any particular case and the concomitant risks and costs necessarily inherent in taking any litigation to completion.” Frank v. Eastman Kodak Co., 228 F.R.D. 174, 186 (W.D.N.Y. 2005) (internal quotation marks and citations omitted). Defendants have agreed to settle this case for $65,000. Extrapolating from the results of the parties’ experiment, the settlement amount represents 173% of the total misappropriated tips at issue. (Kirschenbaum Aff. ¶ 14.) After deducting attorneys’ fees and costs, Class Members will stillreceive more than 100% of their § 196-d damages. Thus, the settlement is clearly an excellent result for the Class. Moreover, further litigation without settlement would necessarily result in additional expense and delay, including engaging in full blown fact discovery and class certification motion practice. A complicated trial would be necessary featuring testimony by Defendants, Plaintiff, and Class Members. Preparing and putting on evidence on the complex factual and legal issues at such a trial would consume tremendous amounts of time and resources for both sides, as well as require substantial judicial resources to adjudicate the parties’ disputes. Any judgment would likely be appealed, thereby extending the duration of the litigation and depleting any possible recovery. Finally, if Defendants were successful in proving that the money in the tip buckets was not a gratuity, Class Members would receive nothing. 9 9 of 23 Accordingly, the Settlement provides the significant benefit of a guaranteed and full payment to Class Members, rather than “speculative payment of a hypothetically larger amount years down the road.” Teachers Ret. Sys. v. A.C.L.N. Ltd.,No. 01 Civ. 11814 (MP), 2004 U.S. Dist. LEXIS 8608 at *16 (S.D.N.Y. May 14, 2004). Therefore, the settlement amount of $65,000 is fair and reasonable. d. Plaintiff’s and Defendants’ counsel are experienced litigators of class actions and support the settlement New York courts grant significant weight to the judgment of experienced counsel in determining the fairness of a class action settlement. See In re Colt Indus., 553 N.Y.S.2d at 141; Fiala, 899 N.Y.S.2d at 538. The settlement presented here is the product of negotiations between two experienced law firms. As set forth more specifically in the Kirschenbaum Declaration, Plaintiff’s counsel have many years of experience litigating and settling wage and hour class actions, and in their view, the settlement represents a fair value. See, e.g., Ramirez v. Lovin' Oven Catering Suffolk, Inc., 2012 U.S. Dist. LEXIS 25060, at *10 (S.D.N.Y. Feb. 24, 2012) (noting that the Joseph & Kirschenbaum LLP “have significant experience prosecuting and settling wage and hour class actions, and are well-versed in both wage and hour and class action law”); Capsolas v. Pasta Res., Inc., No. 10 Civ. 5595 (RLE), 2012 U.S. Dist. LEXIS 144651, at *21 (S.D.N.Y. Oct. 5, 2012) (“Class Counsel [JK] are experienced employment lawyers with good reputations among the employment law bar.”). (See also Kirschenbaum Aff. ¶¶ 24-45.) Defendants were represented in this case by Andrew Marks, an experienced employment litigator with Littler Mendelson P.C. 10 10 of 23 e. The settlement is the result of good faith, arm’s length negotiations between the parties A class settlement’s fairness, adequacy, and reasonableness are presumed when “a class settlement is reached in arm’s-length negotiations between experienced, capable counsel after meaningful discovery.” Fiala, 899 N.Y.S.2d at 538 (citing Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir. 2005)). The duration, rigor, and well-informed nature of the parties’ negotiations demonstrate that the arrived compromise was conducted at an arm’s length and in good faith. See Michels, 1997 N.Y. Misc. LEXIS 171, at *86 (finding “no evidence that suggests collusion or lack of arm’s-length bargaining” when parties negotiated settlement over nine months and experienced counsel weighed strengths and weaknesses of the case). In sum, the Settlement Agreement readily meets all of the relevant factors weighed by courts in determining whether it is fair, adequate, and reasonable, and therefore should be approved by this Court. B. The Settlement Class Should Be Certified The benefits of the proposed Settlement Agreement can be realized only through certification of the Class. The U.S. Supreme Court has held that certification of a settlement class is appropriate. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997). Having already provisionally certified the Class for settlement purposes, Plaintiff now respectfully requests that the Court finally certify the following class for settlement purposes: Named Plaintiff and current or former employees of the Defendants, who performed work as Team Members or Team Captains, excluding head Coaches or Assistant Head Coaches in any of the Covered Locations during the period April 15, 2009 through November 11, 2015. The decision to certify a class rests in the sound discretion of the trial court, see, e.g., 11 11 of 23 Jacobs v. Macy’s E., Inc., 792 N.Y.S.2d 574, 576 (N.Y. App. Div. 2d Dep’t 2005), and class certification should be granted even in the closest cases. See Brown v. State, 681 N.Y.S.2d 170, 174 (N.Y. App. Div. 3d Dep’t 1998). Class certification is routinely granted in wage and hour actions in the State of New York. See generally Dabrowski v. Abax Incorporated, 84 A.D.3d 633, 635 (N.Y. App. Div. 1st Dep’t 2011) (class action “is superior to the prosecution of individualized claims” in an action to recover unpaid wages); Nawrocki v. Proto Construction and Development Corp., 82 A.D.3d 534, 536 (N.Y. App. Div. 1st Dep’t 2011) (“class action is the superior vehicle for resolving this wage dispute”); Jacobs v. Bloomingdale's Inc., 2003 N.Y. Misc. LEXIS 2062, at *4 (N.Y. Sup. Ct. 2003) (“There is ample precedent for certifying a case involving a wage dispute as a class action”); Pesantez v. Boyle Environmental Services, Inc., 251 A.D.2d 11, 12 (N.Y. App. Div. 1st Dep’t 1998) (class action is the “best method of adjudicating” wage and hour disputes). More specifically, class actions are routinely granted in Labor Law § 196-d cases such as this one seeking payment of unpaid alleged gratuities. See, e.g., Krebs v. Canyon Club, 880 N.Y.S.2d 873 (N.Y. Sup. Ct. Westchester. Co. 2009) (certifying class of service employees at defendants’ catering facilities where plaintiffs alleged defendants imposed a service charge which to the reasonable customer purported to be a gratuity and defendants did not remit the service charge to the service employees); Ramirez v. Mansions Catering, Inc., 2009 N.Y. Misc. LEXIS 5661 (N.Y. Sup. Ct. N.Y. Co. Apr. 27, 2009), aff’d 74 A.D.3d 490 (1st Dep’t 2010); Ryan, 2013 N.Y. Misc. LEXIS 932 (approving a class action settlement and certifying a class of service employees who alleged that defendants failed to distribute portions of a service charge that defendants charged their customers). In gratuity cases, courts have found that all requisites of N.Y. C.P.L.R. §§ 901 and 902 have been met by workers seeking payment of gratuities that 12 12 of 23 were improperly withheld by their employers. As the claims of this case are similar to those previously mentioned, certification of the settlement class is proper. This Court, in preliminarily approving the Settlement Class, has already found that the Class meets the requirements of N.Y. C.P.L.R. §§ 901 and 902. For the reasons set forth herein and in Plaintiff’s preliminary approval papers and applied by the Court in conditionally certifying the Class, the Class should be finally certified for settlement purposes. C. An Enhancement Award Should Be Awarded To The Named Plaintiff. Under the proposed Settlement Agreement, and subject to the Court’s approval, an enhancement award of $3,000 is to be awarded to Plaintiff Imani Fernandez. (Ex. 1 ¶ 3.3.) A court may grant enhancement awards in a class action. Such awards “reward[] the named plaintiffs for the effort and inconvenience of consulting with counsel over the many years [a] case was active and for participating in discovery, including depositions.” Cox v. Microsoft Corp., No. 105193/2000, 2007 N.Y. Misc. LEXIS 9126, at *11 (Sup. Ct. N.Y. County Feb. 2, 2007); see also Mark Fabrics Inc. v. GMAC Commercial Credit LLC, No. 604631/02, 2005 N.Y. Misc. LEXIS 3566 (Sup. Ct. N.Y. County Dec. 22, 2005) (granting enhancement award). Enhancement awards “are particularly appropriate in the employment context. .. . [where] the plaintiff is often a former or current employee of the defendant, and thus . . . he has, for the benefit of the class as a whole, undertaken the risks of adverse actions by the employer or co- workers.” Frank, 228 F.R.D. at 187. Fernandez expended considerable time and effort to assist Class Counsel with the case. She initiated this lawsuit, explained relevant and necessary factual information to Class Counsel, and participated in settlement discussions. (Kirschenbaum Decl. ¶¶ 22-23.) 13 13 of 23 Fernandez also assumed significant risks in prosecuting this action. In the employment context, where workers are often blacklisted if they are considered “trouble makers,” class representatives are particularly vulnerable to retaliation. E.g., Silberblatt v. Morgan Stanley, 524 F. Supp. 2d 425, 435 (S.D.N.Y. 2007) (“A class representative who has been exposed to a demonstrable risk of employer retaliation or whose future employability has been impaired may be worthy of receiving an additional payment, less other be dissuaded.”). Even where there is not a record of actual retaliation, service fees are appropriate in recognition of the risk of retaliation assumed by lead plaintiffs for the benefit of absent class members. Frank, 228 F.R.D. at 187-88 (“Although this Court has no reason to believe that Kodak has or will take retaliatory action towards either Frank or any of the plaintiffs in this case, the fear of adverse consequences or lost opportunities cannot be dismissed as insincere or unfounded.”). The $3,000 enhancement award requested is modest in comparison with those approved by other courts. E.g., Mancia v. HSBC Secs. (USA) Inc., No. 9400/2015, 2016 N.Y. Misc. LEXIS 496 (N.Y. Sup. Ct., Kings County Feb. 19, 2016) (granting $15,000 service award to class representative); Milton v. Bells Nurses Registry & Employment Agency, Inc., No. 502303/2015, 2015 N.Y. Misc. LEXIS 4604 (N.Y. Sup. Ct., Kings County Dec. 21, 2015) (granting $8,000 service award to class representative); Mark Fabrics Inc., 2005 N.Y. Misc. LEXIS 3566, at *5 (granting $25,000 enhancement award to named plaintiff); Reyes v. Buddha Bar-NYC, No. 08 Civ. 2494, 2009 U.S. Dist. LEXIS 45277 (S.D.N.Y. May 28, 2009) (awarding payments of $7,500 to each of three named plaintiffs from $710,000 fund). Because of Plaintiff’s time, assistance, and development of the case, all of which could have subjected her to potential retaliation, the enhancement award to Plaintiff is appropriate and justified as part of the overall Settlement. 14 14 of 23 D. Class Counsel’s Attorneys’ Fees And Costs Should Be Approved. Class Counsels’ unopposed motion for Final Approval includes a request for attorneys’ fees of $21,494.33, which is one-third of the settlement amount less the excess 0.44% of the Net Settlement Fund allocated to Class Members, and reimbursement of $1,165.21 of litigation costs and out of pocket expenses incurred by Class Counsel in prosecuting and successfully resolving this matter. (See Kirschenbaum Decl. ¶ 40 for a breakdown of the costs for which Class Counsel seek reimbursement). The Settlement Agreement provides that “Class Counsel will petition the Court for an award of attorneys’ fees of no more than one-third (1/3) of the Gross Settlement Amount, and for the reimbursement of the actual litigation expenses and costs[.]” (Ex. 1 ¶ 3.2.) The CPLR authorizes a court to grant attorneys’ fees to class counsel who obtain a judgment on behalf of a class: “If a judgment in an action maintained as a class action is rendered in favor of the class, the court in its discretion may award attorneys’ fees to the representatives of the class and/or to any other person that the court finds has acted to benefit the class based on the reasonable value of legal services rendered[.]” N.Y. C.P.L.R. § 909. It is also well established that “attorneys who create a common fund to be shared by a class are entitled to an award of fees and expenses from that fund as compensation for their work.” In re Telik, Inc. Sec. Litig., 576 F. Supp. 2d 570, 585 (S.D.N.Y. 2008) (internal quotation omitted). “Fees and expenses are paid from the common fund so that all class members contribute equally towards the costs associated with litigation pursued on their behalf.” Id. The award of attorneys’ fees has the three-fold benefit of: (1) “providing just compensation,” (2) “encourag[ing] skilled counsel to represent those who seek redress for damages inflicted on entire classes of persons,” and (3) “discourag[ing] future misconduct of a similar nature.” Id. 15 15 of 23 Although there are two ways to compensate attorneys for successful prosecution of class actions (the lodestar method or the percentage of the recovery method), courts generally prefer to award fees as a percentage of the common fund. Ryan, 2013 N.Y. Misc. LEXIS 932, at **11-12, Fiala, 899 N.Y.S.2d at 540; Strougo v. Bassini, 258 F. Supp. 2d 254, 261-62 (S.D.N.Y. 2003) (collecting cases); In re NASDAQ Market-Makers Antitrust Litig., 187 F.R.D. 465, 483-85 (S.D.N.Y. 1998) (collecting cases). Where a settlement establishes a common fund, the percentage method is often preferable because “[t]he lodestar method has the potential to lead to inefficiency and resistance to expeditious settlement because it gives attorneys an incentive to raise their fees by billing more hours.” Cox v. Microsoft Corp., No. 105193/2000, 26 Misc.3d 1220(A), at *3 (Sup. Ct. N.Y. County Feb. 2, 2007); see also Peck, Peck v. AT&T Corp., No. 601587/2000, 2002 N.Y. Misc. LEXIS 2026, at *26 (Sup. Ct. N.Y. County July 26, 2002) (“The percentage of the recovery approach determines the reasonableness of the fee.”). Similarly in federal court—where most wage and hour litigation takes place, “[t]he trend in [the Second] Circuit is toward the percentage method,… which directly aligns the interests of the class and its counsel and provides a powerful incentive for the efficient prosecution and early resolution of the litigation.” Wal-Mart Stores, Inc., 396 F.3d at 121 (internal quotation marks omitted); Strougo v. Bassini, 258 F. Supp. 2d 254, 261-62 (S.D.N.Y. 2003) (collecting cases); In re NASDAQ Market-Makers Antitrust Litig., 187 F.R.D. 465, 483-85 (S.D.N.Y. 1998) (collecting cases). Further, “public policy favors a common fund attorneys’ fee award in wage and hour class actions.” Ryan, 2013 N.Y. Misc. LEXIS 932 at **11-12; see also Johnson v. Brennan, No. 10 Civ. 4712 (CM), 2011 U.S. Dist. LEXIS 105775, at **39-44 (S.D.N.Y. Sept. 16, 2011) (collecting cases). “If not, wage and hour abuses would go without remedy because attorneys 16 16 of 23 would be unwilling to take on the risk.” Id.; see also Sand v. Greenberg, No. 08 Civ. 7840, 2011 U.S. Dist. LEXIS 1120 at *9 (S.D.N.Y. Mar. 22, 2011) (“But for the separate provision of legal fees, many violations of the Fair Labor Standards Act would continue unabated and uncorrected.”). “Where relatively small claims can only be prosecuted through aggregate litigation, and the law relies on prosecution by ‘private attorneys general,’ attorneys who fill [that role] must be adequately compensated for their efforts. Reyes v. Altamarea Grp. LLC, No. 10 Civ. 6451(RLE), 2011 U.S. Dist. LEXIS 115984, at *19 (S.D.N.Y. Aug. 16, 2011); see also Sand, 2011 U.S. Dist. LEXIS 1120, at *9 (statutory attorneys’ fees are meant to “encourage members of the bar to provide legal services to those whose wage claims might otherwise be too small to justify the retention of able, legal counsel”). “Common fund recoveries are contingent on a successful litigation outcome.” Ryan, 2013 N.Y. Misc. LEXIS 932, at *13 (citing Guaman v. Anja-Bar NYC, No. 12 Civ. 2987 (DF), 2013 U.S. Dist. LEXIS 16206, at *91(S.D.N.Y. Feb. 5, 2013). Such “contingency fees provide access to counsel for individuals who would otherwise have difficulty obtaining representation ... and transfer a significant portion of the risk of loss to the attorneys taking a case. Access to the courts would be difficult to achieve without compensating attorneys for that risk.” Ryan, 2013 N.Y. Misc. LEXIS 932, at *13 (citing deMunecas v. Bold Food LLC, No. 09 Civ. 0440 (DAB), U.S. Dist. LEXIS 87644, at *21 (S.D.N.Y. Apr. 19, 2010)) (internal quotation marks omitted). Many individual litigants, including the class members here, “cannot afford to retain counsel at fixed hourly rates ...yet they are willing to pay a portion of any recovery they may receive in return for successful representation.” Id. In determining an award of reasonable attorneys’ fees, a court should consider the following factors: 17 17 of 23 [T]he risks of the litigation, whether counsel had the benefit of a prior judgment, standing at bar of counsel for the plaintiffs and defendants,