Souffrant v. Grambro Realty Corp.

Background

Sidney Souffrant sued defendants including Grambro Realty Corp. and 14-15 Mertens Place Corp. The opinion states that Souffrant worked for the defendants as a superintendent until approximately May 31, 2019, when his employment ended. The parties jointly asked the court to approve their Negotiated Settlement Agreement under Cheeks v. Freeport Pancake House, which requires court review of settlements involving claims under the Fair Labor Standards Act (FLSA).

Under the agreement, Grambro Realty Corp., 14-16 Mertens Place Corp., and non-party Joseph DeBenedictis would pay Souffrant $32,000 to settle his claims, including claims under the FLSA and New York Labor Law. The agreement allocated $10,666.66 to Souffrant’s counsel for fees and costs, including $442.65 in costs. Payment would be made in two lump sums after Souffrant vacated his apartment at 14-16 Mertens Place, which he agreed to do within two weeks after court approval.

Court’s analysis

The court found the financial terms fair and reasonable. Souffrant represented that he valued his claims at $40,000, plus $40,000 in liquidated damages and $10,000 for a payroll mistake. The parties also identified a significant dispute about the hours Souffrant worked and legal questions about FLSA coverage, making a compromise settlement appropriate. The court also found the proposed attorney-fee award reasonable, including because the portion allocated to fees and costs was one-third of the settlement and the fee component was 1.6 times counsel’s asserted lodestar.

The agreement contained mutual general releases. Souffrant would release the defendants and numerous people and entities connected to them from all claims, known or unknown, while the defendants would release Souffrant and numerous people and entities connected to him from all claims, including claims related to his former employment. The court found that the releases were mutual in one sense but were not equal in breadth, confusing, and overbroad. They appeared to cover people or entities that could not exist or that were only loosely connected to the case, and they could be read to release unrelated claims, such as a personal-injury claim involving a former employee of a defendant.

Ruling and next step

The court stated that it could not approve the releases as written. It nevertheless found the agreement fair and reasonable based on the understanding that the releases would cover people or entities acting on behalf of, or in a legally connected relationship with, the parties, and would be limited to claims arising from actions taken in those capacities. The court said the agreement’s severability provision could support that construction if necessary.

The court directed any party who objected to its construction of the release provisions to notify the court by letter by March 18, 2020. If no party filed an objection by that date, the court would dismiss the action and direct the Clerk of Court to close the case. The Clerk was directed to leave the case open in the meantime. Judge Barbara Moses therefore did not immediately dismiss the action in this order.