Del Aguila v. Newmark Solutions Corp.

Background

Edgar Del Aguila sued Newmark Solutions Corp. and Wilfredo Rodriguez Cruz under the Fair Labor Standards Act and the New York Labor Law. He alleged that he worked more than 40 hours per week without receiving overtime pay and that, on certain public works contracts with New York City, the defendants did not pay the required local prevailing wage. The complaint asserted six claims, including claims under the wage laws and, alternatively, unjust enrichment.

After mediation, the parties submitted a settlement agreement for court approval. The agreement provided for a $45,000 settlement. Del Aguila’s counsel requested approval of $15,000 in attorneys’ fees, equal to one-third of the settlement, and submitted billing records.

Legal Standard

The court explained that settlements of Fair Labor Standards Act claims require approval by a court or the Department of Labor. The parties had to show that the settlement was fair and reasonable. The court considered factors including the possible recovery, the costs and burdens of continued litigation, litigation risks, whether the agreement resulted from arm’s-length negotiations by experienced counsel, and the possibility of fraud or collusion.

The court also explained that confidentiality provisions and overbroad non-disparagement provisions can conflict with the Fair Labor Standards Act’s purpose of informing employees about their rights and promoting compliance with the law.

Confidentiality Provision

The agreement required the parties to keep all settlement terms confidential and barred disclosure to third parties, subject to exceptions for tax or legal advisers and disclosures required by law. The court rejected this provision because it would prevent Del Aguila from discussing the case’s outcome with third parties except in narrow circumstances. The court also noted that the settlement information had already been disclosed through filings in the case.

Non-Disparagement Provision

The agreement broadly barred the parties from making statements or taking actions that could disparage or make derogatory statements about the parties and related people and entities. It allowed truthful statements required by law, regulation, or legal process. The court found that this exception did not allow truthful statements about Del Aguila’s experience bringing the lawsuit. Because the provision lacked that broader protection for truthful statements about the litigation and the facts underlying the claims, the court would not approve it as written.

Disposition

The court approved the settlement figure and the proposed $15,000 attorneys’ fee award. It denied the parties’ request for approval of the settlement agreement because of the confidentiality and non-disparagement provisions, while allowing the parties to renew the request with a revised agreement. By November 5, 2020, the parties could file a revised agreement, jointly state that they would abandon the agreement and continue litigating, or stipulate to dismissal of the action without prejudice.