Swain v. Jodlowski

Background

The parties submitted a proposed settlement for approval in this Fair Labor Standards Act (FLSA) lawsuit. Under the required settlement review, the court considered whether the agreement was fair and reasonable based on the circumstances, including the plaintiffs’ possible recovery, the litigation burdens and risks, the parties’ negotiations, and the possibility of fraud or collusion.

Reasons Approval Was Not Granted

The court concluded that it could not approve the agreement without additional information. The submission stated that the plaintiffs claimed approximately $120,000 if they prevailed on all claims and that the proposed settlement would pay them $57,000. It also stated the percentage of the plaintiffs’ award that each plaintiff would receive. But the submission did not explain how the potential recovery, settlement amount, or individual shares were calculated. The court therefore could not evaluate whether the settlement was fair and reasonable.

The agreement included what the parties called mutual releases. The court said broad mutual releases could be appropriate here because defendants had previously sued certain plaintiffs in New York State court over different issues, and the settlement referred to ending that state-court lawsuit. But the proposed releases were not sufficiently mutual: the list of claims released by the plaintiffs was much longer than the corresponding list for defendants. The court also found the definitions of the people and entities being released too broad and directed the parties to limit them to persons or entities acting for, or legally connected with, the parties, and to claims arising from actions taken in those roles.

The court identified additional errors and ambiguities in the agreement. Among other things, the parties had to add the state-court action’s index number, correct references to the state-court dismissal documents, use the defined term “this Agreement” consistently, explain the basis for references to New York City paid sick-leave law and the New York City Administrative Code if those references remained, correct several uses of “Releasees,” and replace other incorrect references.

The court also found that the submission did not adequately support the requested attorneys’ fees. Plaintiffs’ counsel sought one-third of the plaintiffs’ recovery, plus an additional discount. The court required contemporaneous time records and hourly-rate information to support the fee request. It also required an explanation of the proposed $500 in expenses and supporting documentation for those expenses if they were for anything other than the case filing fee.

Disposition

The court did not approve the proposed settlement. Judge Andrew E. Krause directed the parties to file a supplemental settlement submission containing the required information and revisions by May 21, 2021. The order did not state that the settlement was finally rejected; it required additional submissions before the court could decide whether to approve it.