Ni v. Courage Team Inc

Background

Kong Shun Ni, Ying Ping Cao, and Zeng Guan Li sued Courage Team Inc. doing business as Pig Heaven, Nancy Lee, and Hui Rong Lee under the Fair Labor Standards Act (FLSA) and the New York Labor Law. The plaintiffs alleged that the defendants failed to pay the applicable minimum hourly wage and failed to comply with New York’s annual wage-notice and wage-statement requirements.

The parties jointly informed the court that they had reached a settlement and asked the court to approve it. Because the settlement involved FLSA claims, the court was required to determine whether the agreement was fair and reasonable. The court also had to separately assess any attorney’s-fee request supported by the agreement.

Court’s analysis

The court independently reviewed the proposed settlement and supporting submissions. It found the agreement unfair and unreasonable because its release provision was too broad. The provision released the defendants not only from the wage-and-hour claims in the lawsuit, but also from virtually any federal, state, or city labor and employment claim connected to the plaintiffs’ employment.

The court identified potential claims involving discrimination, wrongful discharge, family and medical leave, and occupational safety and health laws—none of which were at issue in the lawsuit. The release also appeared to cover future claims that had not accrued when the agreement was signed. The court explained that FLSA settlement releases generally must be limited to the claims involved in the action because of the unequal bargaining power between employees and employers.

Because of the overbroad release, the court did not decide whether the settlement amount or the requested attorney’s fees were reasonable. The court noted that the plaintiffs’ counsel had not submitted billing records supporting the request to use 33% of the settlement amount for attorney’s fees. It stated that a future fee request would not be approved without documents showing, for each attorney, the date, hours, and nature of the work performed.

Disposition

Judge Vernon S. Broderick found that the settlement agreement was not fair and reasonable and DENIED without prejudice the parties’ request for approval. The parties were given 21 days from the date of the order to either file a revised proposed settlement agreement correcting the identified problems or file a joint letter stating that they intended to abandon settlement. If they abandoned settlement, the court would set a status conference. The clerk was directed to terminate the pending motion at Document 19.