Hernandez Leonardo v. Reza Fast Food, Inc.
- Vernon Broderick
- 1:20-cv-08879
- U.S. District Court · Southern District of New York
- 6
In Hernandez Leonardo v. Reza Fast Food, Inc., Judge Broderick rejected the Fair Labor Standards Act settlement because its release was too broad.
The plaintiffs and defendants were affected: the proposed settlement was rejected, and the parties could revise it or abandon it within 21 days.
What happened
Hernandez Leonardo v. Reza Fast Food, Inc. involved a proposed settlement of a Fair Labor Standards Act wage case. After the parties reported reaching a settlement, the court required them to submit the agreement for approval. The proposed settlement provided $40,000 to the plaintiffs, and their lawyers requested $13,333.33 in fees and costs.
The court found that the agreement released claims far beyond the wage claims involved in the case, including unknown claims, and that the parties did not explain or justify this provision. The court also identified missing information about possible damages, each plaintiff’s share, and the requested attorneys’ fees if the parties submitted a revised agreement.
Judge Vernon S. Broderick rejected the settlement. Within 21 days, the parties could submit a revised agreement addressing the court’s concerns or file a joint letter saying they intended to abandon the settlement, after which the court would schedule a status conference.
The detailed version
- Hernandez Leonardo v. Reza Fast Food, Inc. · No. 1:20-cv-08879
- Vernon Broderick
- July 5, 2022
Background
The plaintiffs and defendants reported that they had reached a settlement in a case under the Fair Labor Standards Act (FLSA). Because the Department of Labor had not approved the settlement, the parties needed approval from the court. They submitted a settlement agreement and a supporting letter.
The proposed agreement provided $40,000 to the plaintiffs. Plaintiffs’ counsel requested $13,333.33 in attorneys’ fees and costs, stating that this amount represented one-third of the recovery and was lower than the 40% fee described in the operative retainer agreement.
Reasons for Rejection
The court held that the settlement was not fair and reasonable because its release provision was overly broad. The provision required the plaintiffs to release the defendants from essentially any claims or liabilities, including unknown or unsuspected claims, rather than limiting the release to the wage-and-hour claims at issue in the lawsuit. The parties did not discuss or justify this provision in their supporting letter.
The court also identified issues that would need to be addressed in any revised settlement. The parties compared the $40,000 settlement with an estimated $38,800.94 in back wages but did not address other possible damages, including liquidated damages or damages for failing to provide wage notices. They also provided only an aggregate damages estimate instead of explaining each plaintiff’s possible damages and settlement payment. If the parties sought approval of a revised settlement, the court directed them to provide that information.
The court further stated that plaintiffs’ counsel should submit the retainer agreement if the parties sought approval of a revised settlement, so the court could evaluate the requested fees and costs.
Disposition
The court found that the settlement was not fair and reasonable and rejected it. The parties could either file a revised settlement agreement and supporting letter within 21 days or file a joint letter stating that they intended to abandon the settlement. If they abandoned the settlement, the court would set a date for a status conference.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.