Abreu v. Torti Food, Corp.
- Analisa Torres
- 1:20-cv-10643
- U.S. District Court · Southern District of New York
- 6
In Abreu v. Torti Food, Judge Torres denied without prejudice approval of a wage-settlement because its support and release were inadequate.
Ramon Abreu and the defendants—Torti Food, Corp., LMP Coffee Shop Inc., Demetria Chapman, and Jose Perez—were affected because the court did not approve their proposed settlement. The parties could renew the request with revised materials.
What happened
In Abreu v. Torti Food, Corp., Ramon Abreu alleged that Torti Food, Corp., LMP Coffee Shop Inc., Demetria Chapman, and Jose Perez violated federal and New York wage laws by failing to pay overtime and provide required wage information, making unlawful deductions, and retaliating. After the parties reached a $45,000 settlement that included attorney’s fees and costs, they asked the court to approve it.
The court found that the parties had described the risks, costs, and negotiations sufficiently and found no evidence of fraud or collusion. But it said the parties had not provided enough evidence to evaluate whether the settlement amount was reasonable. The court also found the release too broad because it covered many unidentified affiliated people and businesses, could include unrelated wage claims, and gave the plaintiff no release in return.
Judge Analisa Torres found the requested attorney’s fees and costs reasonable, but denied the motion for settlement approval without prejudice to renewal. The parties were permitted to submit a revised letter and settlement agreement by August 14, 2023.
The detailed version
- Abreu v. Torti Food, Corp. · No. 1:20-cv-10643
- Analisa Torres
- July 14, 2023
Background
Ramon Abreu sued Torti Food, Corp., doing business as Mirador Restaurant; LMP Coffee Shop Inc., also doing business as Mirador Restaurant; Demetria Chapman; and Jose Perez. He alleged violations of the Fair Labor Standards Act and the New York Labor Law involving unpaid overtime, inaccurate wage statements, failure to provide a wage notice, unlawful wage deductions, and retaliation.
The parties reached a proposed settlement and asked the court to approve it. The settlement provided Abreu with $45,000, including attorney’s fees and costs.
Legal standard
The court explained that parties settling Fair Labor Standards Act wage claims generally need approval from the Department of Labor or a federal district court. A court may approve the agreement only if it is fair and reasonable. The court considers factors including the plaintiff’s possible recovery, the costs and burdens of continuing litigation, the risks faced by both sides, whether experienced counsel negotiated at arm’s length, and whether fraud or collusion may have occurred.
The court also stated that settlement agreements should not contain highly restrictive confidentiality provisions or overbroad releases. When a settlement includes attorney’s fees, the court must separately assess whether those fees are reasonable.
Analysis
The parties described the expected costs and delays of further litigation, the risks faced by each side, and their arm’s-length negotiations. They were represented by counsel experienced in wage-and-hour litigation, and the court found no evidence of fraud or collusion.
The court nevertheless found that it could not determine whether the settlement amount was reasonable. The parties stated that Abreu’s best potential recovery at trial under the Fair Labor Standards Act would be $26,447.14 in unpaid wages and another $26,447.14 in liquidated damages, but Abreu provided no supporting declarations or exhibits establishing the accuracy of those calculations or explaining why the settlement amount was sufficient.
The court also found the liability release overbroad in three respects. It released numerous entities and individuals beyond the named defendants, including various affiliates, related businesses, representatives, and others. It purported to bind Abreu’s dependents, heirs, representatives, successors, assigns, and agents. And, despite listing wage-related claims, its broad definition of the released parties could reach unrelated wage-and-hour claims against people and businesses only loosely connected to the defendants. The agreement also gave Abreu no release from liability.
The court found the requested attorney’s fees and costs reasonable. Counsel requested $13,364.70 in fees and $1,635.30 in costs, totaling $15,000, or one-third of the settlement. Counsel submitted records showing 81.4 hours of work and a lodestar—the total value of the hours billed at the stated hourly rates—of $23,350. The court concluded that the requested fee was below that lodestar and that the costs, which covered filing and service of process, were reasonable.
Disposition
The court denied the parties’ motion for settlement approval without prejudice to renewal. It stated that the parties could file a revised letter and settlement agreement by August 14, 2023. The opinion did not decide the underlying wage and retaliation claims.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.