Pacifico Reveliu v. 910 Seventh Ave Rest LLC
- Vernon Broderick
- 1:20-cv-01943
- U.S. District Court · Southern District of New York
- 6
In Pacifico Reveliu v. 910 Seventh Ave Rest, Judge Broderick denied without prejudice approval of an FLSA settlement because its non-disparagement clause was overbroad.
The plaintiff and defendants were affected because the court did not approve their proposed FLSA settlement. They could submit a revised agreement within 21 days or notify the court that they were abandoning the settlement.
What happened
In Fernanda Pacifico Reveliu v. 910 Seventh Ave Rest LLC, the parties asked the court to approve a settlement of the plaintiff’s Fair Labor Standards Act claims. The proposed agreement would have paid the plaintiff $65,000, including attorneys’ fees and expenses.
The court found that the settlement amount and proposed attorneys’ fees were fair and reasonable under the circumstances. But the agreement’s mutual non-disparagement clause did not allow the plaintiff to make truthful statements about the lawsuit, so the court found that it could discourage workers from learning about or enforcing their legal rights.
Judge Vernon S. Broderick denied without prejudice the request to approve the settlement. He gave the parties 21 days either to submit a revised agreement or to notify the court that they were abandoning the settlement.
The detailed version
- Pacifico Reveliu v. 910 Seventh Ave Rest LLC · No. 1:20-cv-01943
- Vernon Broderick
- Jan. 7, 2022
Background
The parties told the court that they had reached a settlement in this Fair Labor Standards Act (FLSA) case. Because the settlement was private and had not been approved by the Department of Labor, the court had to decide whether it was fair and reasonable before approving it. The parties submitted a revised agreement after explaining that the defendants’ financial situation had changed.
The proposed agreement provided for the plaintiff to receive $65,000, including attorneys’ fees and expenses. The plaintiff estimated total damages of about $310,744, including unpaid wages, overtime, liquidated damages, front pay, and emotional-distress damages. The opinion states that the plaintiff claimed $15,836 in unpaid wages and overtime and that $125,000 of the estimate concerned emotional damages related to her retaliation claim.
Court’s Analysis
The court concluded that the settlement amount was fair and reasonable in light of the risks and costs of continued litigation, the defendants’ stated limited ability to pay, the parties’ arm’s-length mediation, and the absence of any basis to find fraud or collusion.
The agreement also provided for $21,730.38 in attorneys’ fees and $418.49 in costs. The court found those fees and costs fair and reasonable, noting that counsel had performed work including drafting the complaint, exchanging initial discovery, preparing for and attending mediation, and negotiating the settlement. The court also considered counsel’s documented time and the lodestar calculation of $27,285.
The court rejected the agreement’s mutual non-disparagement clause. The clause barred the plaintiff from engaging in conduct intended to disparage the released parties and from defaming or inducing others to disparage or defame them, including online. It similarly restricted the released parties’ conduct toward the plaintiff. The court found the clause impermissibly broad because it contained no exception allowing the plaintiff to make truthful statements about her participation in the litigation. The court stated that it would not approve an FLSA settlement containing such a clause without that exception.
Disposition
Judge Vernon S. Broderick held that the overbroad non-disparagement clause made the proposed settlement not fair and reasonable. He denied without prejudice the parties’ request for approval. The parties were allowed 21 days to file either a revised proposed settlement agreement curing the identified deficiencies and any other improper terms under the FLSA, or a joint letter stating that they intended to abandon the settlement, after which the court would set a status conference.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.