Anselmo Lopez v. Uno Express Cleaners Inc.

Background

The plaintiff brought claims under the Fair Labor Standards Act and New York Labor Law for allegedly unpaid overtime, failure to pay the minimum wage, and failure to provide wage statements and records. She alleged that she worked as a dry-cleaning worker and ironer from approximately March 2009 to January 2018, and again during March 2018. She alleged that she worked up to 64 hours per week while receiving a fixed weekly salary, was not given meal or rest breaks, was required to record fewer hours than she worked, and was required to sign documents misstating her hours.

The plaintiff filed the complaint on November 16, 2018. Although the complaint indicated an intent to convert the case into a collective action, the parties settled before the plaintiff filed a motion seeking conditional certification. They jointly submitted their proposed settlement for court approval under the Second Circuit’s requirements for settling Fair Labor Standards Act claims.

Court’s Analysis

The court evaluated whether the proposed settlement was fair and reasonable. The plaintiff estimated actual damages of $34,824, an equal amount in liquidated damages, and up to $5,000 each for alleged wage-notice and wage-statement violations, for a potential total recovery of $79,648. The proposed settlement totaled $15,000, with $4,950, or one-third, allocated to the plaintiff’s attorney. The plaintiff would receive $10,050. The court found the settlement amount reasonable given the risks and burdens of further litigation.

The defendants represented that they had produced employment records disputing the plaintiff’s allegations about her hours and pay. The court concluded that additional discovery and depositions would increase the litigation’s cost and that the plaintiff faced a risk that a factfinder would not credit her testimony, reducing any damages award. The court also accepted the parties’ representation that the settlement resulted from extensive, arm’s-length negotiations involving a mediator, and found no evidence of fraud or collusion. It found the proposed attorney-fee award reasonable and noted that the agreement contained no confidentiality or non-disparagement provision.

The court rejected the agreement’s release provision. The provision released essentially all possible claims connected to the plaintiff’s employment or separation from employment, including claims under laws and legal theories unrelated to the wage-and-hour claims in the case. The court explained that a Fair Labor Standards Act settlement cannot release claims having no relationship to wage-and-hour issues or claims the plaintiff had not raised in the case. Because the release included claims under laws such as the Employee Retirement Income Security Act, the Vietnam Era Veterans’ Readjustment Assistance Act, and the Americans with Disabilities Act, the settlement could not be approved as written.

Ruling

Judge Ona T. Wang declined to approve the proposed settlement as fair and reasonable and denied without prejudice the parties’ joint request for approval. The parties were permitted to renew their request and submit a revised settlement agreement consistent with the opinion by January 10, 2020. The opinion stated that otherwise the parties could proceed with litigation.