Fernandez v. 219 Dominican Valle Corp.
- John Cronan
- 1:19-cv-09513
- U.S. District Court · Southern District of New York
- 9
In Fernandez v. 219 Dominican Valle Corp., Judge Cronan denied without prejudice approval of proposed wage-and-hour settlements because required information and narrower releases were missing.
The ruling directly affected Christine Fernandez, Johanna Mojica, Edwin Hernandez, the Cordoba Defendants, the Vasquez Defendants, and plaintiffs’ counsel by leaving the proposed settlements unapproved and permitting a corrected submission or continued litigation.
What happened
Christine Fernandez, Johanna Mojica, and Edwin Hernandez sued 219 Dominican Valle Corp. and other defendants, alleging unpaid minimum wages and overtime under federal and New York law, along with harassment and discrimination. The parties asked the court to approve settlement agreements resolving the case.
The court said it could not decide whether the settlements were fair and reasonable because the parties did not explain how much of the payments covered the federal wage claims, how the damages estimates were calculated, or how many hours the plaintiffs worked and what wages applied. The proposed release for the Vasquez defendants also covered claims beyond wage-and-hour issues, and the court could not confirm that all Cordoba defendants had agreed to the revised settlement.
Judge Cronan denied the request for settlement approval without prejudice. He said the parties could submit new agreements addressing these problems, with supporting information and evidence for counsel’s requested fee, or notify the court that they wished to continue litigating.
The detailed version
- Fernandez v. 219 Dominican Valle Corp. · No. 1:19-cv-09513
- John Cronan
- Jan. 25, 2021
Background
Christine Fernandez, Johanna Mojica, and Edwin Hernandez, former employees of The Dominican Valle Restaurant in the Bronx, alleged that the restaurant and its managers or owners, Omar Cordoba and Dorka Cordoba, failed to pay minimum wages and overtime required by the Fair Labor Standards Act (FLSA) and the New York Labor Law. They also alleged violations of New York notice-and-recordkeeping requirements. Fernandez and Mojica alleged sexual misconduct by Omar Cordoba, while Hernandez alleged verbal abuse and derogatory comments about Dominicans. The plaintiffs brought a harassment and discrimination claim under New York State and New York City human-rights laws.
The complaint also named Jose Vasquez and 352 El Club Valle Restaurant Corp. as the Vasquez Defendants. It alleged that they were successors to the Cordoba Defendants and therefore jointly responsible for unpaid wages. The parties later reached proposed settlements involving both groups of defendants and jointly asked the court to approve them.
Legal standard
The court explained that, in the Second Circuit, parties cannot privately settle FLSA claims through a stipulated dismissal without approval from the court or the Department of Labor. The court therefore had to decide whether the proposed agreements were fair and reasonable. It considered the plaintiffs’ possible recovery, the burdens and expenses of further litigation, litigation risks, whether the agreements resulted from arm’s-length bargaining by experienced counsel, and the possibility of fraud or collusion.
Reasons approval was not possible
The proposed agreement with the Cordoba Defendants required payment of $30,000 over twenty-seven months. The proposed agreement with the Vasquez Defendants required payment of $8,000 upon approval. The submission stated that $9,500, or 25 percent, would go to plaintiffs’ counsel and that the plaintiffs would divide the remaining amount according to their losses. But the parties did not explain what portion of the settlement compensated the FLSA claims and what portion, if any, compensated the harassment or discrimination claim. The court also questioned the lengthy payment schedule because the parties had identified collection problems and possible bankruptcy as risks of continuing to trial.
The parties estimated total lost wages of $59,735.50 and a total possible recovery, including additional damages, of $119,470.32. They did not explain how they calculated those figures, provide supporting declarations or exhibits, or clearly explain the defendants’ disagreement with the estimates. Without that information, the court could not evaluate several of the fairness factors.
The release in the Vasquez agreement required the plaintiffs to waive wage-and-hour claims and “all other related claims” involving acts or omissions through the agreement’s execution, including claims that the Vasquez Defendants were successors to the Cordoba Defendants. The court found this language too broad because it did not define what counted as a related claim and could waive claims unrelated to wage-and-hour issues. The court required the release to be tied to FLSA-related claims.
The court also could not confirm that all Cordoba Defendants had agreed to the revised settlement. In particular, Omar Cordoba’s signature was dated October 18, 2020, even though the revised agreement appeared to have been prepared after a November 2 conference. The court required any new agreement to be signed by all parties and required relevant signatures to be dated after the new agreement was prepared.
Disposition
The court denied the parties’ request for approval of the proposed settlement agreements without prejudice and directed the Clerk of Court to terminate the motion at Docket Number 48. The parties could submit new agreements addressing the identified issues by February 15, 2021, including evidence supporting plaintiffs’ counsel’s requested fee. Alternatively, they could notify the court by joint letter that they wished to continue litigating the matter.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.