United States District Court, S.D. New York
ERROLL O. BAILEY-THOMAS, Plaintiff,
U.S. SECURITY ASSOCIATES, INC., U.S. SECURITY ASSOCIATES AVIATION SERVICES, INC., BILL BUBENJECK, MARIA RIVERA, and BILLFLORES, Defendants.
OPINION AND ORDER
EDGARDO RAMOS, U.S.D.J.
February 7, 2017, the parties filed under seal an application
for the Court to approve their agreement settling claims
brought under the Fair Labor Standards Act
(“FLSA”) and the New York Labor Law and to
dismiss the case with prejudice. On February 14, the Court
denied their application and directed the parties to file the
settlement agreement on the public docket. (Doc. 17). On
February 28, the parties submitted a revised settlement
agreement (Doc. 19), which the Court denied, directing the
parties to indicate how the settlement funds would be
allocated between Plaintiff and his counsel and to clarify
provisions in the non-disparagement clause. (Doc. 20) On
March 13, 2017, the parties submitted another revised
settlement agreement (“Revised Agreement”). (Doc.
21) The Revised Agreement provides that the settlement is for
$12, 000 total, with $7, 000 payable to Plaintiff, and $5,
000 payable to Plaintiff's counsel for attorneys'
fees and costs. Agreement § 3.
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).
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 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.” Felix
v. Breakroom Burgers & Tacos, No. 15 Civ. 3531
(PAE), 2016 WL 3791149, at *2 (S.D.N.Y. Mar. 8, 2016)
(quoting Wolinsky v. Scholastic Inc., 900 F.Supp.2d
332, 335 (S.D.N.Y. 2012)).
parties have adequately justified the dollar amounts
constituting the settlement here: Plaintiff worked for
Defendant for approximately six months. Though he claimed
that Defendant had failed to pay him at least minimum wage
for the hours he worked during the duration of his
employment, during negotiations Plaintiff conceded that he
was paid at least minimum wage at all times and that
“he might have been owed overtime for two or three
days, if any.” See Letter (Doc. 19, Ex. B).
The parties further claim that Plaintiff might be entitled to
the statutory amount of $5, 000 for alleged violations of the
New York's Wage Theft Prevention Act and assert that
Plaintiff's total liability and attorney's fees would
amount to approximately $6, 000 or $7, 000. Thus,
Plaintiff's direct recovery of $7, 000 is fair and
reasonable. The record also demonstrates that counsel have
engaged in good faith and arm's length negotiations to
arrive at this settlement, and there is no sign of fraud of
collusion. See Docs. 16, 18, 19, 21. The time sheets
submitted by Plaintiff's counsel, totaling over $17, 000
in billed hours, renders the $5, 000 in attorneys' fees
here a reasonable fee. (Doc. 19, Ex. B).
although the parties have cured the Court's prior
concerns regarding the allocation of attorneys' fees and
the non-disparagement clause, the Revised Agreement still
contains an improper release. See Revised Agreement
§ 8 (“Plaintiff agrees and covenants not to file
any suit, complaint, charge, claim, grievance, or demand . .
. with regard to any claim . . . with respect to any maters
that were or could have been alleged in the Complaint,
arising out of the Plaintiff's employment or
otherwise.”). “Courts in this District routinely
reject release provisions that ‘waive practically any
possible claim against the defendants, including unknown
claims and claims that have no relationship whatsoever to
wage-and-hour issues.'” Martinez v. Gulluoglu
LLC, No. 15 Civ. 2727 (PAE), 2016 WL 206474, at *2
(S.D.N.Y. Jan. 15, 2016) (quoting Lopez v. Nights of
Cabiria, LLC, 96 F.Supp.3d 170, 181 (S.D.N.Y. 2015));
see also Garcia v. Jambox, Inc., No. 14 Civ. 3504
(MHD), 2015 WL 2359502, at *3-4 (S.D.N.Y. Apr. 27, 2015).
Though the parties do include a release provision limited to
wage-and-hour claims, see Revised Agreement §
4, the additional release provision in paragraph 8 is
excessively broad and bears no relation to the actual claims
at issue, and is thus not “fair and reasonable.”
The Court will not approve an agreement that contains a
release provision extending beyond the claims at issue.
See Martinez, 2016 WL 206474, at *2;
Lazaro-Garcia v. Sengupta Food Servs., No. 15 Civ.
4259 (RA), 2015 WL 9162701, at *32 (S.D.N.Y. Dec. 15, 2015).
the parties' request for approval of the proposed
settlement is DENIED without prejudice. The parties may
proceed in one of the following ways:
1. File a revised settlement agreement on or before March
22, 2017 that includes a provision concerning how the
funds will be allocated between Plaintiff and his counsel and
further explains the relationship between the provisions in
the non-disparagement section; or
2. File a joint letter on or before March 22, 2017
that indicates the parties' intention to abandon
settlement and continue to trial, at which point the Court
will reopen the case and ...