Mendez v. K & Y Peace Corp.

Background

The plaintiffs brought this Fair Labor Standards Act case against K&Y Peace Corp. and other defendants. In October 2019, shortly before a jury trial was scheduled to begin, the parties informed the court that they had settled. The court granted multiple extensions for them to submit a proposed settlement for review under the requirement that certain wage-and-hour settlements receive judicial approval.

The parties submitted a proposed settlement agreement on December 11, 2019. Noe Alfredo Francisco Avila was not a signatory. The court had previously instructed the parties how to proceed if one or more plaintiffs did not sign and had given them an opportunity to state their positions regarding possible dismissal of non-signatory plaintiffs for failure to prosecute.

Why the Court Rejected the Agreement

The court reviewed the agreement and concluded that it could not approve it as fair and reasonable because it did not account for Mr. Francisco’s failure to sign. Specifically, the agreement included his recovery in the total settlement amount, directed defendants to make payments to him, referred to him throughout the agreement, and included his award in the total amount used by plaintiffs’ counsel to calculate and justify attorneys’ fees.

The opinion also notes that a chart summarizing each plaintiff’s payment, which plaintiffs said was attached to their submission, was missing.

Ruling

Judge Sarah Netburn ordered the parties to submit, by January 3, 2020, either the existing agreement executed by Mr. Francisco or an amended agreement executed by the other parties. The amended agreement had to modify the total award, remove all references to Mr. Francisco, and change the attorneys’ fee award so that it did not exceed one-third of the total settlement amount. The court stated that it would grant no extensions and might impose sanctions for failure to meet the deadline without good cause.