Mendoza v. Kidz Korner of New Rochelle Inc.
- James Cott
- 1:20-cv-05761
- U.S. District Court · Southern District of New York
- 4
In Mendoza v. Kidz Korner, Judge Cott approved the wage settlement after striking an unenforceable non-disparagement clause.
Erica Mendoza, the other similarly situated plaintiffs identified in the case, and the defendants, including Kidz Korner of New Rochelle Inc. The opinion does not state the settlement amount or how payments would be allocated.
What happened
In Mendoza v. Kidz Korner of New Rochelle Inc., Erica Mendoza and the defendants asked the court to approve their settlement of a wage-and-hour case under the Fair Labor Standards Act. The parties had reached the agreement after a lengthy settlement conference.
The court found that the settlement’s terms, including the attorneys’ fees and costs, appeared fair and reasonable under the circumstances. The court also considered the defendants’ financial difficulties during the COVID-19 pandemic and the fact that payments would be made in installments.
Judge James L. Cott ruled that the agreement’s non-disparagement provision was invalid because it was not mutual and did not clearly allow truthful statements. He struck that provision under the agreement’s severability clause and approved the settlement as modified. The parties could submit a revised mutual provision by March 5, 2021, and were required to submit a dismissal stipulation by that date.
The detailed version
- Mendoza v. Kidz Korner of New Rochelle Inc. · No. 1:20-cv-05761
- James Cott
- Feb. 24, 2021
Background
This was a wage-and-hour case brought by Erica Mendoza individually and on behalf of others similarly situated against Kidz Korner of New Rochelle Inc. and other defendants. The parties submitted a joint request for approval of a fully executed settlement agreement under the Fair Labor Standards Act. They had consented to Magistrate Judge James L. Cott’s jurisdiction and had reached the settlement after a lengthy settlement conference.
Court’s analysis
The court explained that settlements in Fair Labor Standards Act cases are generally presumed fair because courts may be less able than the parties to evaluate the reasonableness of the agreement. It also considered the defendants’ financial situation resulting from the COVID-19 pandemic, the possible difficulty of collecting damages, and the agreement’s installment-payment structure. After reviewing the parties’ submission and agreement, the court found that all terms—including the allocation of attorneys’ fees and costs—appeared fair and reasonable under the circumstances, except for the non-disparagement provision. The court noted that approval of the fee allocation did not approve the hourly rate of the plaintiff’s counsel.
Non-disparagement provision
Paragraph 9 barred the plaintiff from making critical, derogatory, disparaging, defamatory, or untruthful statements about the defendants or released parties. The court ruled that the provision was invalid as written because it was not mutual and did not contain the required explicit exception for truthful statements. The court also found that the agreement’s severability provision allowed the invalid term to be removed without affecting the rest of the agreement.
Ruling and next steps
Judge James L. Cott approved the proposed settlement as modified by striking paragraph 9. The parties were permitted to submit a revised settlement agreement containing a mutual non-disparagement clause with the required exception for truthful statements by March 5, 2021. Regardless of whether they did so, they were required to submit a stipulation of dismissal by March 5, 2021; otherwise, the court stated that it would direct the Clerk to close the case. The opinion states that the settlement agreement contemplated dismissal with prejudice, but no dismissal stipulation was attached to the agreement filed with the court.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.