Mariano Guerrero v. Jerome Meat & Produce Corporation

Background

Jesus Mariano Guerrero brought claims against Jerome Meat & Produce Corporation, Jerome Meat & Produce Corporation I, Jerome Meat & Produce Corporation II, H&B Fresh Produce Corp., and Abbas Safa, also identified as Abbas Saffa or Eddie Safa. He alleged violations of the Fair Labor Standards Act (FLSA) and the New York Labor Law, including failure to pay minimum wages and overtime.

The parties reached a proposed settlement and asked the court to approve it. The settlement provided Guerrero with $40,000, inclusive of attorney’s fees and costs. Guerrero stated that his maximum possible recovery was $340,987.03, including unpaid wages, FLSA liquidated damages, and damages under New York law.

Court’s analysis

The court explained that an employer generally cannot settle FLSA wage claims for less than the full statutory damages without approval from the Department of Labor or a federal district court. For court approval, the parties had to show that the settlement was fair and reasonable. The court considered the possible recovery, the burdens and expenses of continued litigation, litigation risks, whether experienced counsel negotiated at arm’s length, and possible fraud or collusion. The court also examined whether the release of claims was appropriately limited and whether any attorney’s-fee award was reasonable.

The court found that the $40,000 payment represented about twelve percent of Guerrero’s best-case recovery and twenty-eight percent of his unpaid wages. After excluding attorney’s fees, Guerrero would receive only about seven percent of his best-case damages and eighteen percent of his unpaid wages. The court found this recovery substantially lower than comparable settlements approved in the district and concluded that the settlement did not satisfy the first factor.

The court also found that Guerrero’s submission did not adequately address the other four settlement factors. Statements about the risks of trial and the value of early settlement were too general to allow the court to evaluate the burdens and expenses of continued litigation, the defendants’ possible defenses, whether the agreement resulted from arm’s-length bargaining, or whether fraud or collusion was involved.

The proposed release was another problem. It covered known and unknown wage-and-hour and retaliation claims under federal, state, and local law arising from Guerrero’s employment through the date he signed the agreement, rather than limiting the release to claims involved in the lawsuit. The court found this language too broad to support a finding that the settlement was fair and reasonable.

Ruling

Judge Analisa Torres denied the parties’ motion for settlement approval without prejudice. The court did not address the proposed attorney’s fees because the calculations could change if counsel revised the agreement and performed additional work. The parties may file a revised letter and settlement agreement consistent with the order by September 13, 2024.

The opinion also states that the court will retain jurisdiction over an approved settlement for only one year and will do so only if the agreement becomes part of the public record. Because the settlement was not approved, that retention condition was not applied at this stage.