United States District Court, S.D. New York
OPINION & ORDER
A. ENGELMAYER UNITED STATES DISTRICT JUDGE.
December 9, 2016, the parties to this Fair Labor Standards
Act ("FLSA") action applied for approval of a
proposed settlement agreement. They filed the proposed
settlement agreement, Dkt. 28, Ex. 1 ("Agreement");
a joint motion seeking approval and dismissal of plaintiff
Steven Rivera's claims with prejudice, Dkt. 28
("Motion"); a declaration in support of plaintiffs
fee application, Dkt. 30; and a stipulation of dismissal with
prejudice signed by plaintiffs counsel and defense counsel,
Dkt. 28 at 21. Under the Settlement Agreement, Rivera would
receive $45, 000; his attorney would receive $15, 000; and
the parties would agree to a general release of claims
against each other. Agreement ¶ 1.
the Agreement is legally satisfactory, and the Court would be
prepared to approve the overall settlement sum as
substantively reasonable and achieved through procedurally
fair means. However, the Court declines to approve the
Agreement in its present form because it contains an
overbroad general release.
relevant provision, entitled "Release of All Claims by
Plaintiff, " requires Rivera to waive basically any
claim of any kind he might ever have had against defendant as
of the date of the settlement agreement. Id. ¶
2. In FLSA cases, 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." 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. April 27, 2015) (provision releasing
defendants "from any and all charges, complaints,
claims, and liabilities of any kind whatsoever" was
"not 'fair and reasonable' because it
encompasse[d] far too broad a range of possible
releases "highlight the potential for abuse in [FLSA]
settlements, and underscore why judicial approval in the
FLSA setting is necessary." Cheeks v. Freeport
Pancake House, Inc., 796 F.3d 199, 206 (2d Cir. 2015).
"In the context of an FLSA case in which the Court has
an obligation to police unequal bargaining power between
employees and employers, such broad releases are doubly
problematic." Camacho v. Ess-A-Bagel, Inc., No.
14 Civ. 2592 (LAK), 2014 WL 6985633, at *4 (S.D.N.Y. Dec. 11,
release provision here is similarly overly broad, requiring
Rivera to "release and forever discharge Defendants . .
. from any and all claims, known and unknown, asserted or
unasserted, which [Rivera] may have ... as of the date of
execution of this Agreement." Agreement ¶ 2. The
Agreement then recites a lengthy, expressly nonexclusive list
of statutes and claims from which Rivera is releasing
defendants, including under the Employee Retirement Income
Safety Act of 1974 ("ERISA"), the Civil Rights Acts
of 1964, and the Immigration Reform and Control Act, among
others. Id. Also released are claims regarding any
alleged violation of "[a]ny other federal, state or
local compensation-related, civil, human rights, bias,
whistleblower, discrimination, retaliation, compensation,
manufacturing, employment, wage, labor or other local, state
or federal law, regulation or ordinance such that no claim of
any kind shall survive or not be settled or waived by this
agreement." Id. Such a release is "too
sweeping to be 'fair and reasonable' and so must be
rejected." Lazaro-Garcia v. Sengupta
FoodServs., 15 Civ. 4259 (RA), 2015 WL 9162701, at *2
(S.D.N.Y. Dec. 15, 2015) (internal quotation marks and
citation omitted). Consistent with the case authority in this
area, "[t]he Court will not It approve a release
provision that extends beyond the claims at issue in this
action." Martinez v. Gulluoglu LLC, No. 15 Civ.
2727 (PAE), 2016 WL 206474, at *2 (S.D.N.Y. Jan. 15, 2016)
(citing Lazaro-Garcia, 2015 WL 9162701, at *2).
sure, defendants agree to "release and forever discharge
[Rivera] . . . from any and all claims, known and unknown,
asserted or unasserted, which Defendants have or may have
against [Rivera] with regard to employment related claims as
of the date of the execution of this Agreement."
Agreement ¶ 2. Rivera's release of defendants is,
thus, to a limited extent, mutual. However, for two
independent reasons, the existence of a release of Rivera
does not salvage the Agreement.
the Agreement is not wholly symmetrical: Defendants enjoy a
broader release than does Rivera. Thus, the release would
fail to satisfy even those courts that have approved
settlement agreements with fully mutual general releases.
See Souza v. 65 St. Marks Bistro, 15 Civ. 327 (JLC),
2015 WL 7271747, at *5-7 (S.D.N.Y. Nov. 6, 2015) (rejecting a
general release provision unless the parties amended it to
make it mutual "in all respects, " so as to enable
the parties to "walk away from their relationship . .
. without the potential for any further disputes" and
requiring an acknowledgement from plaintiffs regarding any
other claims they would be releasing in the settlement);
Lola v. Skadden, Arps, Meagher, Slate & Flom
LLP, 13 Civ. 5008 (RJS), 2016 WL 922223, at *2 (S.D.N.Y.
Feb. 3, 2016) (permitting a settlement agreement with a
mutual general release provision, for the same reasons as in
Souza); Cionca v. Interactive Realty, LLC, 15 Civ.
5123 (BCM), 2016 WL 3440554, at *3-4 (S.D.N.Y. June 10, 2016)
as this Court has previously explained, it is not prepared to
accept even a fully mutual broad general release by an FLSA
plaintiff as part of a settlement agreement, "absent a
sound explanation for how this broad release benefits the
plaintiff employee." Gurung v. White Way Threading
LLC, No. 16 Civ. 1795 (PAE), 2016 WL 7177510, at *2
(S.D.N.Y. Dec. 8, 2016). The Court finds persuasive Judge
Nathan's decision in Flores-Mendieta v. Bite food
Ltd., rejecting a mutual general release because
"the Court cannot 'countenance employers using FLSA
settlements to erase all liability whatsoever in exchange for
. . . payment of wages allegedly required by
statute.'" No. 15 Civ. 4997 (AJN), 2016 WL 1626630,
at *2 (S.D.N.Y. April, 21, 2016) (quoting Nights of
Cabiria, 96 F.Supp.3d at 181). The Court's reason
for hesitating to approve such an unexplained broad release
is this: Although a mutual general release may be reciprocal
as a matter of form, as a matter of practical reality, its
effect may be to confer a benefit disproportionately on the
employer defendant, who in practice is less likely than the
employee plaintiff to have claims to bring against its
adversary. See Gurung, 2016 WL 7177510, at *2.
Agreement here appears to present that risk. It does not
identify any particular claim that defendants might have
against Rivera, or any other benefit to Rivera from forgoing
all potential claims against defendants. The mutual release
thus "appears an empty gesture-the equivalent of giving
away ice in the winter-such that the release, while mutual in
form, appears one-sided as a matter of economic
substance." Id. Without either a "narrower
release consistent with the standards above" or a
"concrete and persuasive explanation of the practical
benefit [Rivera] stands to realize in exchange for broadly
releasing all claims against" defendants, the Court
cannot approve this settlement agreement. Id.
for the foregoing reasons, the Court declines to approve the
Agreement at this time. The parties may proceed in one of the
following three ways.
parties may file a revised agreement by April 28, 2017, that
does not include a general release provision that extends
beyond the claims at issue in this action. If the parties
file a revised agreement, the Court will, at that time,
assess the fairness and reasonableness of the proposed
parties may file a joint letter by April 28, 2017, that
indicates their intention to abandon settlement and to
continue to litigate this matter. If they do so, the Court
will set a next conference in this matter, which will serve