Aquino-Moreno v. Consolidated Scaffolding, Inc.

Background

Luis Aquino-Moreno filed a proposed collective action against Consolidated Scaffolding, Inc. and Tom Bowes. He alleged, among other things, that Defendants violated the Fair Labor Standards Act (FLSA) and the New York Labor Law by failing to pay overtime wages. Franz Suarez-Rojas filed a written consent to join the FLSA action as an opt-in plaintiff on December 20, 2024. The court held that he joined the action even though the court had not conditionally certified the proposed collective, because Defendants did not dispute that he was similarly situated to Aquino-Moreno.

In January 2025, the parties agreed to arbitrate their claims, and the court stayed the action. Suarez-Rojas and Defendants represented that arbitration was ongoing. The court lifted the stay only to decide their joint request for approval of a settlement between Suarez-Rojas and Defendants.

Legal standard

Under the FLSA, an employer’s settlement of wage claims requires approval by the United States Department of Labor or a district court. A court may approve the settlement only if it is fair and reasonable. Courts consider factors including the employee’s possible recovery, the litigation costs and burdens the settlement avoids, the risks of litigation, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion. Courts also do not approve highly restrictive confidentiality provisions or releases that are broader than the claims in the case.

Reasons for denying approval

The proposed settlement would provide Suarez-Rojas $35,000, including attorney’s fees and costs, with $22,953.33 ultimately going to him. The parties stated that this represented 89.3% of the amount he sought and nearly a year’s salary, but they did not provide information about Defendants’ potential exposure, the nature of Suarez-Rojas’s claims, how they estimated his maximum recovery, or his likelihood of success. The court therefore could not determine whether the settlement satisfied the fairness factors.

The court also found problems with the release provision. Suarez-Rojas would release claims not only against Defendants but also against “affiliated business entities,” a term the court said could encompass employers that Defendants might later identify as affiliated. The release also covered all claims under the FLSA, New York Labor Law, and related regulations, including claims outside this litigation. In addition, the agreement gave Suarez-Rojas no release from liability in return.

The agreement separately included a promise not to sue any released party under federal, state, or local law for any known or unknown wage-related claim. The court found that this promise, like the release, went beyond the claims relevant to the litigation.

Disposition

Because the parties had not shown that the settlement was fair and reasonable and because the release and promise not to sue were overbroad, the court denied the motion for settlement approval without prejudice to renewal. The parties may file a revised letter and settlement agreement by June 30, 2025. The stay remains in effect until further order, without prejudice to their filing a revised submission. The Clerk was directed to terminate the motion at ECF No. 22.