Cortes v. The Bronx Bar and Grill, LLC

Background

Moises Cortes brought claims against The Bronx Bar and Grill, LLC and other defendants under the Fair Labor Standards Act (FLSA) and New York Labor Law. The parties asked the court to approve a settlement agreement under which Cortes would dismiss his FLSA claims with prejudice. Because FLSA settlements require judicial review in this context, the court evaluated whether the agreement was a fair and reasonable compromise rather than an improper waiver of statutory rights.

Release of Claims

The agreement required Cortes to release essentially all claims against the defendants, including claims unrelated to his employment. It separately allocated $3,000 as consideration for releasing non-complaint claims. The agreement also included a mutual release, under which the defendants released Cortes from their claims.

The court found the release language acceptable under the circumstances. The parties had determined that $7,500 represented 100 percent of Cortes’s potential recovery on his labor claims, and the additional $3,000 meant that Cortes would receive slightly more than his estimated labor-claim recovery. The court also noted that Cortes no longer worked for the defendants and that the release was mutual.

Confidentiality Provision

The agreement required Cortes to keep the existence and terms of the settlement confidential. It prohibited him from publishing the agreement on social media, the internet, or through the press, and from communicating the settlement amount. The agreement expressly allowed disclosure to Cortes’s spouse, tax preparer, attorney, or a person to whom disclosure was required by legal process.

The court concluded that the confidentiality language was ambiguous and potentially too broad. Although the agreement would be filed publicly, the confidentiality provision could prevent Cortes from discussing the settlement with others. The court explained that this restriction conflicted with the FLSA’s purpose of helping workers learn about their rights. The court did not find the restriction on disclosing the settlement amount equally problematic, because Cortes could still discuss the settlement’s existence and other terms while keeping the amount confidential.

Disposition

The court denied without prejudice the revised request to approve the proposed settlement. It stated that a future amended agreement could be approved if it prohibited Cortes only from disclosing the amount he would receive, subject to the agreement’s stated exceptions, and did not otherwise bar truthful discussion of the settlement’s existence or terms. Judge Sarah Netburn directed the parties by December 6, 2019, to file a revised agreement or indicate that they intended to proceed with the litigation.