Escalante v. Elimor LLC

Background

Ricardo Escalante brought claims against Elimor LLC, doing business as Bonjour Crepes & Wine; Elicosmar-1 LLC, also doing business as Bonjour Crepes & Wine; Parvez A. Eliaas; and Felix Ernesto Jones. He alleged violations of the Fair Labor Standards Act (FLSA), the New York Labor Law, and related regulations based on alleged failures to pay overtime wages, minimum wages, and spread-of-hours pay, as well as failures to provide wage notices and accurate wage statements.

The parties reached a settlement and sought court approval. The court had previously denied an earlier approval request without prejudice and directed the parties to submit a revised settlement letter and agreement. The revised request was before Judge Torres in this order.

Court’s Analysis

The court explained that FLSA wage claims generally cannot be settled without approval from the Department of Labor or a district court. A court may approve a proposed settlement only if it is fair and reasonable, considering the circumstances of the case. The court also must separately assess the reasonableness of any attorney’s fees and costs.

The parties stated that there was no fraud or collusion and that Escalante had been represented by experienced counsel during mediation. They also stated that Escalante faced significant factual and legal risks and that documents produced by the defendants contradicted some of his claims or made them nonviable. Although the settlement amount was at the low end of settlements approved in the district, the court found it fair and reasonable in light of those risks.

The court nevertheless identified several problems. First, the parties did not expressly describe the litigation risks faced by both sides beyond Escalante’s concerns about collecting a recovery. Because of that omission, the court could not determine that all required fairness factors had been satisfied.

Second, the settlement’s liability release was overbroad because it could cover claims unrelated to the lawsuit. The agreement also stated that the defendants released Escalante from alleged violations of the FLSA and New York Labor Law. The court explained that those statutes apply to employers, so that release did not meaningfully release the defendants from liability. The court therefore could not find the release provision fair and reasonable.

Third, the agreement’s mutual non-disparagement provision was not narrowly tailored. The court would not approve a provision that prevented Escalante from openly discussing his experience litigating the wage-and-hour case. The provision allowed him to provide truthful and accurate information only when required by legal process, which the court said could prevent information about FLSA cases from spreading to other workers.

Attorney’s Fees and Costs

Escalante’s counsel requested $5,210.80 from the settlement fund for attorney’s fees and costs, described as approximately one-third of the recovery after costs. Counsel submitted time records. The court found the hourly rates reasonable and calculated a requested lodestar—the reasonable hourly rate multiplied by the reasonable hours worked—of $4,846.25. The court accepted a 1.1 multiplier and found $4,394.60 in attorney’s fees reasonable. It also found $816.20 in documented costs reasonable.

Disposition

The court denied the parties’ motion for settlement approval without prejudice to renewal. By July 26, 2023, the parties could file a revised letter and settlement agreement, stipulate to dismissal of the case without prejudice, or notify the court that they intended to abandon settlement and continue litigating. The order did not approve the revised settlement agreement.