Tapia v. Huaquechula Restaurant Corp.

Background

The parties renewed their request for approval of a settlement agreement under the review required by Cheeks v. Freeport Pancake House, Inc. The court had denied the earlier application without prejudice on November 2, 2021, and ordered the parties to submit a revised agreement addressing five identified problems.

The settlement involved the plaintiffs and the settling defendants: Fidel Lira a/k/a Jesus Lira, Mary E. Moloney a/k/a Mary Lira, and New Killmallock, Inc. The proposed settlement amount stated in the earlier agreement was $30,000.

Problems with the Revised Agreement

The court found that the parties had not corrected most of the problems identified in the earlier order:

- The agreement still did not state the exact dollar amount each plaintiff would receive. Although the renewed application said the plaintiffs would divide the funds equally, the revised agreement itself did not say that or provide the individual dollar amounts. - The agreement still referred twice to “Opt-Ins,” even though the parties had represented that the settlement was limited to the named plaintiffs and was not a class or collective settlement. - The attorneys’ fees provisions still suggested that plaintiffs’ counsel would be paid under the contingency agreement and that one-third of the settlement amount, plus costs and expenses, would be requested. The court had ordered the parties to remove language that could prevent the court from independently deciding whether the requested fee was reasonable. - The agreement did not recalculate the allocations as the court had directed. The earlier order calculated that one-third of the total settlement amount after costs would be $9,770.20. It also stated that, if counsel received total fees and costs of $10,459.59, each plaintiff would receive $3,908.08. - The non-disparagement provision was unchanged. The court had required it to state that plaintiffs could speak truthfully about their experience litigating the case.

The court found that the renewed application and revised agreement did address two other issues. The application explained why the settlement proceeds would be divided equally and explained the basis for stating that the settling defendants were “Judgment proof.” The revised agreement also removed references to other unidentified entities from the definition of “Defendant Releasees.”

Ruling

Judge Andrew E. Krause denied without prejudice the parties’ renewed application for approval of the settlement. The parties were directed to submit a further revised settlement agreement by April 14, 2022.