Ali v. High-Steppers Corp. d/b/a City Lights
- Sidney Stein
- 1:24-cv-03938
- U.S. District Court · Southern District of New York
- 6
In Ali v. High-Steppers Corp., Judge Gary Stein denied approval of the revised wage-settlement agreement, with leave to amend its release terms.
The order directly affects plaintiffs Sheena Ali and Yajaira Badillo and defendants High-Steppers Corp. d/b/a City Lights, John Migillico, and Victor A. Rodrigues by requiring changes to their proposed settlement or continuation of the litigation.
What happened
Ali v. High-Steppers Corp. d/b/a City Lights concerns a proposed settlement of Sheena Ali and Yajaira Badillo’s claims under the Fair Labor Standards Act and New York Labor Law. The court had previously found the settlement’s payment and attorney-fee terms fair and reasonable, and those economic terms did not change in the revised agreement.
The revised agreement fixed the earlier problem with its non-disparagement clause by allowing truthful statements about the lawsuit, the parties’ positions, the plaintiffs’ experiences, and the settlement. But its release clause still broadly waived claims related to the plaintiffs’ working relationship or employment, rather than limiting the release to wage-and-hour claims, and it protected only the defendants.
Judge Gary Stein denied approval of the revised agreement with leave to amend. He directed the parties to submit a second revised agreement changing the release provisions by April 30, 2025, or to file a joint letter saying they intended to continue litigating the case.
The detailed version
- Ali v. High-Steppers Corp. d/b/a City Lights · No. 1:24-cv-03938
- Sidney Stein
- Apr. 16, 2025
Background
Sheena Ali and Yajaira Badillo brought claims under the Fair Labor Standards Act (FLSA) and the New York Labor Law against High-Steppers Corp. d/b/a City Lights, John Migillico, and Victor A. Rodrigues. The parties submitted a negotiated settlement agreement for court approval. The court previously declined to approve the first agreement because it included impermissible non-economic provisions: a non-cooperation clause, a non-disparagement clause without an exception for truthful statements, and an overly broad and one-sided general release.
The parties then submitted a revised agreement. The court had already found the settlement amount and the combined award of counsel’s fees and costs fair and reasonable. Because the revised agreement kept the same economic terms, the court reviewed only its non-economic provisions.
Court’s analysis
The revised agreement removed the non-cooperation clause. It also changed the non-disparagement clause to state that the plaintiffs could discuss or disclose the facts alleged in the lawsuit, the parties’ factual or legal positions related to those allegations, and truthful statements about their experiences litigating the lawsuit or settlement. The court found this clause fair and reasonable under the required settlement review standard.
The court rejected Paragraph 3, the release provision. Although narrower than the first agreement, it still released all known and unknown claims relating to the plaintiffs’ working relationship or employment, not just wage-and-hour claims. The court said this could cover claims unrelated to the FLSA, including potential health-and-safety or civil-rights claims. The release was also nonmutual because it limited only the plaintiffs’ claims against the defendants. The court additionally required revision of a bold, capitalized paragraph on the agreement’s last page that stated the plaintiffs intended to waive, settle, and release all claims against the defendants and “Releasees.” The court noted that “Releasees” was not defined in the agreement.
Disposition
The court DENIES approval of the Revised Agreement with leave to amend. It directed the parties to file a second revised settlement agreement by Wednesday, April 30, 2025, modifying the identified release provisions. The court also allowed them instead to submit a joint letter stating that they intended to continue litigating the action. This order addressed approval of the settlement; it did not decide the underlying wage-and-hour claims.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.