Kumar v. S & A Stores, Inc.

Background

Ashutosh Kumar filed a putative class action against S & A Stores Inc., Ronald Ades, Morris Ades, Louis Ades (deceased, his heirs and assigns), Isaac Kairey, and Nadeem Choudhury. He alleged violations of the Fair Labor Standards Act, the New York Labor Law, the New York Wage Theft Prevention Act, and the New Jersey Wage Law. His claims included allegations that the defendants failed to pay lawful minimum wages, overtime compensation, and spread-of-hours pay, and failed to provide proper wage statements. He also alleged unjust enrichment and retaliation.

The parties submitted two earlier settlement proposals. The court rejected the first because it did not estimate Kumar’s maximum possible recovery and contained an objectionable non-disparagement provision. The court rejected the second because it did not provide Kumar’s estimated maximum recovery if he prevailed at trial. The parties then filed a third motion seeking approval of their settlement agreement.

Settlement Amount and Attorney Fees

The proposed agreement provided for a total recovery of $77,500. Kumar would receive $51,008, while his counsel would receive $25,885 in attorney fees and $607 in costs. Kumar estimated his maximum recovery at $227,816.50, making his proposed payment approximately 34 percent of that estimate.

The court concluded that the settlement amount was fair and reasonable. It found that the settlement allowed Kumar to receive payment without the risks and delays of continued litigation, resolved genuine disputes, and resulted from negotiations conducted by experienced labor and employment attorneys. The court also considered information described by Kumar concerning alleged inaccuracies in his time records and his failure to complain to his former employer about unpaid overtime.

The court separately found the requested attorney fees and costs reasonable. It accepted counsel Geoffrey Kalender’s proposed hourly rate of $385 and considered his reported 83 hours of work. The resulting lodestar—the estimated fee based on a reasonable hourly rate multiplied by reasonable hours—was $31,995. The requested attorney fees and costs were $25,885, including $25,278 in fees, which produced a lodestar multiplier of approximately 0.79. The court accepted that multiplier under the circumstances.

Release Provision

The court rejected the agreement’s release. The agreement included a supplemental “Final Waiver and General Release” covering possible claims against the defendants arising from or related to Kumar’s employment, from the beginning of the relationship through the date of the release. The court found that this language released claims beyond Kumar’s wage-and-hour allegations in the action.

The court explained that parties may settle and release claims related to the existing lawsuit, but an FLSA settlement may not use partial payment of alleged wages to erase unrelated potential liability. Because the release was overly broad, the court found that the proposed agreement was not fair and reasonable as written.

Disposition

The court denied the parties’ request for approval of the settlement agreement without prejudice. It directed the parties, by May 12, 2025, either to file a revised letter and signed agreement releasing the defendants only from claims arising out of this action or to stipulate to dismissal of the case without prejudice. The court stated that such a stipulated dismissal did not require approval under the cited Second Circuit authority.