United States District Court, S.D. New York
OPINION AND ORDER
PITMAN United States Magistrate Judge.
matter is before me on the parties' joint application to
approve the parties' settlement (Docket Item
("D.I.") 55). All parties have consented to my
exercising plenary jurisdiction pursuant to 28 U.S.C. §
an action brought by three individuals who formerly made
deliveries at a small Chinese restaurant in Manhattan and
seeks allegedly unpaid wages, overtime premium pay and
spread-of-hours pay. The action is brought under the Fair
Labor Standards Act (the "FLSA"), 29 U.S.C.
§§ 201 et seq., and the New York Labor
Law. Plaintiffs also assert claims based on defendants'
alleged failure to maintain certain payroll records, to
provide certain notices as required by the Labor Law and to
reimburse plaintiffs for the cost of bicycles that plaintiffs
used to make deliveries.
parties reached their proposed settlement prior to the
settlement conference that I had scheduled in this matter,
and therefore, my knowledge of the underlying facts and the
justification for the settlement is limited to counsels'
representations in the letters submitted in support of the
settlement. Plaintiffs advise that when they were employed by
defendants, they received a fixed weekly wage, regardless of
the hours they actually worked. They further claim that this
fixed weekly wage was less than the minimum wage and overtime
premium required by law. Defendants claim that they
maintained wage and hour documents, including time cards and
pay records. Defendants also claim that they provided
plaintiffs with proper notice of the tip credit and were,
therefore, entitled to pay a reduced hourly rate. Finally,
defendants also claim that plaintiffs' allegations
concerning the number of hours they worked are inflated.
parties have agreed to a total settlement of $24, 000.00. The
parties have also agreed that $3, 000.00 of the settlement
figure will be allocated to reimburse plaintiffs' counsel
for their out-of-pocket costs, $7, 000 (or one-third) of the
remaining $21, 000.00 will be paid to plaintiffs' counsel
as fees and the remaining $14, 000.00 will be divided among
plain- tiffs. The amounts claimed by each of the
and the net amount that will be received by each plaintiff
after deduction for legal fees and costs are as follows:
Net Allocable Share
Bao Cheng Fu
Guang Li Zhang
Zhong Qi Lin
previously refused to approve the settlement agreement
because the parties did not provide sufficient information to
enable me to determine whether the proposed settlement was
fair and reasonable (D.I. 60). Specifically, the parties
failed to state the damages claimed by each plaintiff, and
the basis for each claimed amount, and an explanation of the
allocation of the settlement amount.
parties have submitted a renewed application for settlement
approval (Letter from Jian Hang, Esq., to the undersigned,
dated Dec. 22, 2016 (D.I. 61) ("Hang Letter")). In
accordance with my previous Opinion and Order, counsel has
provided each plaintiff's amount of allegedly unpaid
wages, dates worked and weekly pay (and the fact that it was
in cash), the number of hours Fu worked each week and an
explanation for the allocation of the settlement amount.
However, upon further review of the proposed settlement,
several significant problems remain.
again the parties have not provided me sufficient information
to allow me to determine whether the proposed settlement is
fair and reasonable. Counsel failed to provide the number of
hours Lin claims to have worked each week. Thus, I have no way to
assess the basis for his claim for unpaid wages.
the allocation of the settlement proceeds is unsatisfactory.
As an explanation for the allocation, counsel states that Lin
and Zhang settled their claims privately, without the
involvement of counsel. Additionally, Fu will also be
receiving $6, 256.00 as part of a settlement with defendant
Chen in a different FLSA action with nearly identical
allegations, Mao v. Mee Chi Corp., 15 Civ. 1799
(S.D.N.Y.). Finally, counsel claims that there are issues
with respect to defendants' liquid- ity and ability to
pay a larger amount (Hang Letter, at 2). However, a
settlement in a different matter involving a different
employer has no bearing on the settlement here. If an
individual has two employers, both of whom failed to pay the
minimum wage, a generous settlement from one employer cannot
justify a meager settlement from the other. Moreover, even if
the two settlements are combined, Fu's total recovery
would be $8, 756.00, or 45% of his claim. Zhang, on the other
hand, is receiving approximately 83% of his claimed unpaid
wages. Although I recognize that Zhang is receiving $8,
000.00 only because of private negotiations and that there
may be issues with defendants' liquidity, this
unjustified, disparate allocation to Fu is not acceptable
under Cheeks v. Freeoort Pancake House, Inc., 796
F.3d 199 (2d Cir. 2015), cert, denied, 136
S.Ct. 824 (2016).
the settlement agreement contains a provision prohibiting
plaintiffs from cooperating in any action or proceeding
against defendants. Specifically, it provides that plaintiffs
shall not, in any way, voluntarily assist any individual or
entity in commencing or prosecuting any action or proceeding
against Defendants . . . or in any way voluntarily
participate or cooperate in any such action or proceeding.
This prohibition applies to every stage of any action or
proceeding, including any trial, hearing, pretrial or
prehearing preparation, pre-liti-gation investigation or fact
gathering, administrative agency procedure or arbitral
procedure, and bars Plain- tiffs from voluntarily testifying,
providing documents or information, advising, counseling or
providing any other form of voluntary assistance to any
person or entity who wishes to make or is making any claim
from Marisol Santos, Esq., to the undersigned, dated July 20,
2016 (D.I. 55) ("Santos Letter"), Ex. 1 ¶ 4).
Such a provision in an FLSA settlement is contrary to the
remedial purposes of the statute. See Zapata v.
Bedova, No. 14-CV-4114 (SIL), 2016 WL 4991594 at *2
(E.D.N.Y. Sept. 13, 2016); Lopez v. Ploy Dee, Inc.,
15 Civ. 647 (AJN), 2016 WL 1626631 at *3 (S.D.N.Y. Apr. 21,
2016) (Nathan, D.J.); Alvarez v. Michael Anthony George
Constr. Corp., No. 11 CV 1012 (DRH)(AKT), 2015 WL
3646663 at *1 (E.D.N.Y. June 10, 2015); Lopez v. Nights
of Cabiria, LLC, 9 6 F.Supp.3d 170, 178 (S.D.N.Y. 2015)
the settlement agreement contains a broad, mutual
non-disparagement clause. A non-disparagement clause in an
FLSA settlement "must include a carve-out for truthful
statements about plaintiffs' experience litigating their
case." Lopez v. Nights of Cabiria, LLC,
supra, 96 F.Supp.3d at 180 n.65; accord Wena v.
T&W Rest., Inc., 15 Civ. 8167 (PAE)(BCM), 2016 WL
3566849 at *4 ...