Chavaloc Choror v. Abitino's Pizza 49th Street Corp.

Background

Pedro Giddel Chavaloc Choror and Renato Lopez Say Aman brought claims against Abitino’s Pizza 49th Street Corp., Abitino’s Pizza & Restaurant, Inc. No. II, and the individual defendants. The claims included allegedly unpaid minimum and overtime wages under the Fair Labor Standards Act (FLSA), parallel claims, and violations of New York wage-notice and wage-statement requirements.

The parties reached a settlement and asked the court to approve it. The proposed agreement provided the plaintiffs with $20,000, including attorneys’ fees and costs. The plaintiffs estimated that their maximum possible recovery at trial was $70,000, including $25,000 in unpaid wages, liquidated damages, and statutory penalties. The parties cited the burdens and costs of further discovery and trial, including depositions, missed work, translation expenses, and other trial costs. Settlement discussions lasted about a year and included court-annexed mediation, with both sides represented by experienced counsel.

Court’s analysis

The court applied the requirement that an FLSA settlement be fair and reasonable. It considered the plaintiffs’ possible recovery, the burdens and expenses of continued litigation, the litigation risks, the parties’ negotiations, and the possibility of fraud or collusion. The court concluded that the settlement satisfied those factors.

The court separately examined the agreement’s release clause, which released liability only for the defendants. The court found three problems. The clause bound the plaintiffs and their heirs, executors, administrators, successors, and assigns. It also released numerous entities beyond the defendants, potentially covering wage-and-hour claims against unidentified people and businesses only loosely connected to the defendants. Finally, the agreement gave the plaintiffs no releases from liability.

Because the release was not fair and reasonable, the court would not approve the settlement. The court’s order did not decide the plaintiffs’ underlying wage claims.

Disposition

Judge Analisa Torres denied the parties’ motion for settlement approval without prejudice to refiling a revised settlement agreement. The revised agreement must narrow the release so that it does not provide an unearned benefit to entities or individuals beyond the parties and limits the release to claims arising from the same facts as the claims in this action. The parties were ordered to file the revised agreement by June 7, 2022.