Nava Perez v. Karayiannis Global Group, Inc.

Background

Norma Nava Perez sued Karayiannis Global Group, Inc. and George Karayiannis. She alleged that defendants employed her as a washer and folder at a laundromat business known as “Laundromat Lux.” She alleged that she worked more than 40 hours per week without proper overtime pay, that defendants made improper deductions, and that they failed to provide proper breaks and wage statements. Her claims arose under the Fair Labor Standards Act (FLSA) and New York Labor Law.

The parties submitted a proposed FLSA settlement agreement for court approval. The proposed settlement totaled $12,000: $7,200 for Perez and $4,800 for her attorneys’ fees and costs. Perez alleged that her maximum recovery on the wage-and-hour claims was approximately $9,686.38. The parties consented to the magistrate judge’s jurisdiction for all purposes.

Legal standard

The court explained that FLSA settlements requiring dismissal with prejudice must be approved by the district court or the Department of Labor. The court applies the fairness standard described in Wolinsky v. Scholastic Inc., considering the plaintiff’s possible recovery, the burdens and risks of continued litigation, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion.

Reasons for rejecting the proposed agreement

The court found the amount Perez would receive reasonable in light of the risks and burdens of continued litigation. However, the parties did not explain whether the settlement resulted from arm’s-length negotiations conducted by competent and experienced wage-and-hour counsel. The court also said it could not evaluate the risk of fraud or collusion without details about the negotiation process.

The court found the requested $4,800 in attorneys’ fees and costs unreasonable because counsel included time spent responding to orders to show cause concerning counsel’s lack of diligence in prosecuting the case. The court identified five time entries totaling 1.5 hours and $612.50, and stated that Perez should not be charged for time counsel spent causing or correcting the firm’s “law office failure.” The court directed counsel to review the time records and remove all time associated with that failure, including the flagged entries.

The settlement also barred Perez from entering defendants’ business, contacting defendants individually, or contacting or purposely encountering their staff, employees, and known agents. The court found that this provision functioned as a confidentiality and non-disparagement restriction. Because it contained no exception allowing truthful statements about Perez’s experience litigating the case, the court would not approve it as written.

Disposition

The court declined to approve the proposed Settlement Agreement. It directed the parties to file a revised settlement agreement by April 22, 2021 and directed the Clerk of Court to close ECF 47. The opinion also stated that the revised agreement should clarify Perez’s preferred pronouns because the draft referred to her as both “she” and “he.”