Millan v. Sushibym Inc.

Background

Michelle Millan brought a wage-and-hour case against Sushibym Inc. and Yu Ying Lin under the Fair Labor Standards Act (FLSA). The parties consented to Magistrate Judge Sarah L. Cave’s jurisdiction to review their proposed settlement. They submitted a joint motion and a proposed settlement agreement for approval.

Court’s analysis

The court explained that FLSA settlements are generally reviewed for fairness and reasonableness. It also considered the defendants’ reported financial difficulties, which the court said supported finding the settlement reasonable because of the risk that Millan might not be able to collect a judgment fully.

After reviewing the submission, the court found that the agreement’s terms—including the allocation of attorneys’ fees and costs—appeared fair and reasonable except for the release in paragraph 3. That provision required Millan to release the defendants from liability for essentially all known and unknown claims, including claims unrelated to the lawsuit. The court held that this broad release was too sweeping to be fair and reasonable.

Ruling

The court stated that it could not approve the agreement in its current form. It ordered the parties to file a revised agreement by October 2, 2020, limiting the release to Millan’s wage-and-hour claims or claims arising from the same facts as the settled claims. If the revised agreement retained the challenged language or similar provisions, the parties had to submit a joint letter explaining the factual and legal grounds for considering those provisions fair and reasonable and identifying relevant Second Circuit authority, including decisions approving or rejecting similar language presented by the same attorneys or firms.