Pavone v. Diesel U.S.A., Inc.

Background

Joann Pavone brought claims against Diesel U.S.A., Inc. under the Fair Labor Standards Act (FLSA), the New York Labor Law, the New York State Human Rights Law, and the New York City Human Rights Law. She alleged gender discrimination, including that she was paid less than her male predecessors.

On January 31, 2022, the parties submitted a proposed settlement agreement and supporting memorandum. Under that agreement, Diesel would pay $35,000 within 30 days after court approval, and Pavone would receive the entire payment. The parties used a separate, confidential agreement to resolve Pavone’s non-FLSA discrimination claims.

Court’s Analysis

The court explained that parties cannot privately settle FLSA claims with prejudice without approval from the district court or the Department of Labor. The court therefore had to determine whether the FLSA agreement was fair and reasonable.

The court found the $35,000 payment reasonable. Pavone estimated that, if she proceeded to trial and succeeded on all claims, she could recover $162,000 in unpaid wages, plus liquidated damages and interest. The parties represented, however, that the claims presented serious litigation risks because they were more like gender-discrimination claims than typical wage-and-hour claims.

The court also found that the agreement’s release was appropriately limited. It released only claims that were or could have been asserted under the FLSA’s equal-pay provisions, rather than releasing unrelated or unknown claims. Diesel also released Pavone from compulsory counterclaims related to the FLSA claim, so the release was not one-sided. The agreement contained no confidentiality provision that would undermine the FLSA’s remedial purposes. Because the agreement awarded no attorney’s fees, the court did not need to evaluate the reasonableness of any fee award.

The court considered whether it also had to review the separate settlement of Pavone’s state-law discrimination claims. It concluded that judicial approval was not required for that separate agreement. The court noted that the FLSA agreement did not address the state-law claims and found no basis to conclude that the separate agreement was being used to evade restrictions on FLSA settlements.

Disposition

The court approved the proposed FLSA settlement. It retained jurisdiction to resolve disputes arising from the agreement and the action, and directed the Clerk of Court to close the case.