Feldheim v. iControl Systems USA, LLC

Background

Tova Feldheim brought claims against iControl Systems USA, LLC, Matt Gutmuth, and Jennifer Skinner. She alleged discrimination and retaliation based on gender, maternity, and caregiver status. The opinion identifies claims under Title VII of the Civil Rights Act of 1964, the New York State Human Rights Law, the New York City Human Rights Law, the Equal Pay Act (EPA), and the New York Labor Law.

The parties reached an agreement settling the EPA claims and a separate agreement settling the non-EPA claims. They jointly moved for approval of the EPA settlement. The proposed EPA agreement provided Feldheim with $10,000 and released only her EPA claims. The parties stated that the separate non-EPA agreement was confidential, included a general release of non-EPA claims and confidentiality provisions, and did not prevent Feldheim from discussing her EPA claims with third parties.

Court’s analysis

The court explained that, in the Second Circuit, private settlements of Fair Labor Standards Act claims generally require approval by the court or the Department of Labor when the claims are settled with prejudice. Because the EPA is part of the Fair Labor Standards Act, the court applied the requirement that the settlement be fair and reasonable.

The court found the parties’ explanation of Feldheim’s possible recovery inadequate. The parties said Feldheim had identified four male employees as comparators, earned more than three of them, and earned approximately $30,000 less annually than the fourth. They asserted that, because Feldheim had been employed for only one year, a jury could conclude that her actual EPA damages were $10,000. The court held that these statements did not provide enough information about the full range of Feldheim’s possible recovery and directed the parties to provide an estimate and explanation of that range.

The court also found it unclear whether attorney fees and costs were included in the $10,000 settlement amount. The parties described Feldheim as receiving $10,000 “inclusive of attorney’s fees and costs,” while the agreement stated that the parties would not seek an award of fees or costs from the court in connection with the EPA agreement. The court directed the parties to clarify whether Feldheim’s counsel was seeking fees and costs from the settlement or whether Feldheim would receive the entire $10,000.

The court found no objectionable release, non-disparagement, or confidentiality provisions in the EPA agreement. It also held that the parties could settle the non-EPA claims separately without submitting that confidential agreement for court review, based on the court’s reading of related Second Circuit district court decisions and the parties’ representation about the agreement’s contents.

Disposition

Judge Edgardo Ramos denied the motion for settlement approval without prejudice. The parties were directed by July 17, 2024, to do one of three things: submit a revised approval motion and proposed agreement addressing the court’s concerns; submit a joint letter stating that they intended to abandon settlement and continue to trial; or stipulate to dismissal of the EPA claims without prejudice. The clerk was directed to terminate the settlement-approval motion.