Martinez Aguilar v. VBFS Inc.
- James Cott
- 1:19-cv-00621
- U.S. District Court · Southern District of New York
- 3
In Martinez Aguilar v. VBFS Inc., Judge Cott denied without prejudice approval of an FLSA settlement because its no-rehire clause barred future employment.
The plaintiffs and defendants were affected because the court would not approve their settlement as submitted. The plaintiffs could not be bound by the proposed provision barring them from seeking future employment with the defendants unless the parties submitted an acceptable revised agreement and obtained court approval.
What happened
Martinez Aguilar v. VBFS Inc. is a wage-and-hour case in which the parties asked the court to approve their settlement under the Fair Labor Standards Act. The proposed agreement included a provision preventing the plaintiffs from seeking future employment with the defendants in any capacity.
The court found that the settlement terms generally appeared fair and reasonable, but it would not approve the no-rehire provision. The parties had not explained or justified that provision, and the court said such restrictions conflict with the purposes of the wage law.
Judge Cott denied the settlement-approval request without prejudice to renewal. He directed the parties to submit a revised agreement by March 16, 2020, or say whether they would continue litigating; if they revised the agreement, they also had to submit a dismissal agreement for court approval.
The detailed version
- Martinez Aguilar v. VBFS Inc. · No. 1:19-cv-00621
- James Cott
- Mar. 3, 2020
Background
Lorena Martinez Aguilar and Manuel Carranza Cayetano brought this wage-and-hour case individually and on behalf of others similarly situated against VBEFS Inc., doing business as M&M Market Deli, Virgilia Branco, and Fernando Pinho Sanches. The parties consented to Magistrate Judge James L. Cott’s jurisdiction and submitted a joint letter and fully executed settlement agreement for approval under Cheeks v. Freeport Pancake House, which requires review of Fair Labor Standards Act settlements.
Court’s analysis
The court said there is generally a strong presumption that an FLSA settlement is fair. It also considered the plaintiffs’ stated concerns about whether they could collect a judgment and their agreement to a payment schedule. After reviewing the parties’ submissions and participating in a lengthy settlement conference, the court found that the settlement’s terms, including the allocation of attorneys’ fees and costs, appeared fair and reasonable under the circumstances.
The court rejected Section 5, which prohibited the plaintiffs from seeking future employment with the defendants “in any capacity.” The court explained that provisions waiving future employment are highly restrictive and conflict with the remedial purposes of the FLSA. The parties offered no explanation or supporting cases for including the provision. Because the agreement did not contain a severability provision, the court said it could not simply remove Section 5 and approve the rest of the agreement.
Ruling and next steps
Judge Cott denied the parties’ application to approve the settlement without prejudice to renewal. The parties were ordered, by March 16, 2020, to provide a revised settlement agreement that addressed the no-reemployment provision or otherwise advise the court whether they intended to proceed with the litigation. If they revised the agreement, they were also directed to submit a stipulation of dismissal with prejudice for the court’s approval. The court noted that its approval of the attorneys’ fee allocation did not approve the hourly rate of the plaintiffs’ counsel.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.