Sanchez-Torres v. Sanchez
- Vernon Broderick
- 1:19-cv-04222
- U.S. District Court · Southern District of New York
- 5
In Sanchez-Torres v. Sanchez, Judge Broderick denied without prejudice approval of an FLSA settlement because its release covered nearly every possible claim.
Jessica Sanchez-Torres and the defendants in the proposed FLSA settlement were affected: the settlement was not approved, but the parties could revise it or abandon it.
What happened
In Sanchez-Torres v. Sanchez, the parties asked the court to approve a settlement of the plaintiff’s Fair Labor Standards Act wage-related case. The proposed settlement totaled $30,000, including $10,000 for attorneys’ fees and costs and $20,000 for the plaintiff.
The court found that the settlement amount appeared fair and reasonable given the risks and costs of continuing the case. But the agreement required the plaintiff to release the defendants from nearly all possible claims arising before she signed it, including claims unrelated to wages, and the release protected only the defendants.
Judge Vernon S. Broderick denied without prejudice the request to approve the settlement. He gave the parties 21 days to submit a revised agreement addressing the release or jointly state that they were abandoning the settlement.
The detailed version
- Sanchez-Torres v. Sanchez · No. 1:19-cv-04222
- Vernon Broderick
- Sept. 8, 2020
Background
The parties informed the court that they had reached a settlement in this Fair Labor Standards Act (FLSA) case and submitted the agreement for court approval. Because the Department of Labor had not approved the settlement, the court was required to decide whether the agreement was fair and reasonable. The court stated that it could not rewrite an unreasonable agreement; it had to reject the agreement or give the parties an opportunity to revise it.
Settlement Amount
The proposed settlement amount was $30,000. The agreement allocated $10,000 to attorneys’ fees and costs, leaving $20,000 for Plaintiff. Counsel represented that Plaintiff’s maximum potential recovery was $67,032, consisting of $28,516 in back pay, 100% liquidated damages, and wage-notice penalties.
Although the settlement was only a portion of the claimed maximum recovery, the court found the amount appeared fair and reasonable. The court considered the asserted risk that Defendants could not pay a larger judgment, the costs of continued litigation, the fact that the parties settled before discovery, and the absence of any basis to find fraud or collusion.
Release Provision
The court rejected the agreement because its release was overbroad. The provision released Defendants from “all possible” complaints, causes of action, liabilities, obligations, demands, contract rights, and claims that had arisen before Plaintiff signed the agreement. The listed examples included employment discrimination, harassment, retaliation, Employee Retirement Income Security Act, FLSA, National Labor Relations Act, wrongful-discharge, contract, personal-injury, negligence, defamation, and other claims.
The court explained that FLSA settlements generally should not release claims unrelated to the wage-and-hour dispute. It also found the provision especially problematic because it was not mutual and protected only Defendants. The court concluded that the release did not meet the standards for approving an FLSA settlement.
Disposition
The court found that the overbroad release made the proposed settlement not fair and reasonable. It therefore denied without prejudice the parties’ request for approval. The parties could, within 21 days of the order, file a revised settlement agreement curing the identified problems or file a joint letter stating that they intended to abandon settlement, after which the court would set a status conference.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.