Suarez v. Rimawi

Background

Alvaro Suarez sued Nabiel Rimawi and Colonial Fuel & Food, Inc. under the Fair Labor Standards Act, a federal wage law, and New York law. He alleged that the defendants did not pay him overtime wages for all hours he worked over 40 per week as a manual laborer at a gas station and convenience store.

The parties jointly sought approval of a proposed settlement. The court previously denied approval twice. The first denial cited Colonial Fuel’s improper self-representation, inadequate explanation of attorney’s fees, and insufficient information about the defendants’ potential liability, the negotiation process, Suarez’s maximum possible recovery, and the likelihood of success. The court again denied approval after supplemental filings because Colonial Fuel still did not have a lawyer. Colonial Fuel later retained counsel, and the parties submitted further information.

Settlement review

Under Second Circuit law, a district court or the Labor Department must approve a settlement that ends Fair Labor Standards Act claims through a dismissal with prejudice. The court therefore examined whether the agreement was fair and reasonable. It considered the possible recovery, the burdens and risks of continuing litigation, whether the agreement resulted from good-faith negotiations between counsel, and whether fraud or collusion was possible.

The court found that the settlement was negotiated in good faith and at arm’s length, with no fraud or collusion. It also found that the agreement would help the parties avoid the expected burdens and risks of litigation.

The gross settlement amount was $16,000, and Suarez was to receive $15,500. He initially sought $56,515.70 in unpaid wages. During settlement discussions, the parties learned that the defendants had made several weekly payments intended to compensate him for overtime. Suarez disputed that those payments fully compensated him but reduced his demand to $35,000. The parties then agreed to the $16,000 settlement. The court noted that Suarez’s $15,500 recovery represented 28% of his initial demand and more than half of his later demand. Suarez’s counsel waived attorney’s fees and retained only $500 in filing-cost disbursements.

Release and fees

The court found that the settlement’s release provision was properly limited to the wage-and-hour claims involved in the action. It settled claims for damages arising from the incidents alleged in the complaint against the named defendants, rather than broadly releasing unrelated claims.

The court also reviewed records showing that counsel waived attorney’s fees and retained only $500 for disbursements. The court found that arrangement fair and reasonable.

Disposition

The court approved the proposed settlement because the supplemental information addressed its earlier concerns and Colonial Fuel was represented by counsel. The clerk was directed to close the case. The order approved the settlement; it did not decide whether the defendants actually violated the wage laws.