Aguilar v. Tacos Grand Central, Inc.

Background

Miguel De La Luz Aguilar sued Tacos Grand Central, Inc., doing business as Tacos Times Square, Cesar Hernandez, Elias Doe, and Rodolfo Hernandez. He alleged violations of the Fair Labor Standards Act, a federal law governing minimum and overtime wages, and the New York Labor Law. The parties reached a settlement and previously asked the court to approve it. The court denied that earlier request without prejudice to renewal.

The parties then submitted a revised settlement agreement and renewed their request for approval. The revised agreement provided Aguilar with $7,500, including attorney's fees and costs. The parties said Aguilar's estimated maximum recovery was $54,416.67, but they argued that the defendants' records created significant factual and legal difficulties concerning Aguilar's hours, wages, status as a tipped worker, and recordkeeping claims.

Court's analysis

The court explained that a settlement of Fair Labor Standards Act wage claims requires approval by the Department of Labor or a federal district court. For court approval, the settlement must be fair and reasonable. The court considers factors including the possible recovery, the burdens and expenses of continuing the case, litigation risks, whether experienced counsel negotiated at arm's length, and the possibility of fraud or collusion. The court also examines confidentiality provisions, liability releases, and any attorney's-fee award.

The court concluded that the proposed payment was fair and reasonable despite being substantially below Aguilar's estimated maximum recovery. It found that the significant factual, legal, and evidentiary challenges Aguilar would face at trial supported the settlement. The court also stated that it had previously found the requested attorney's fees and costs fair and reasonable.

The court nevertheless found the revised release provision overbroad. Although the revision limited the release to Aguilar and to wage-and-hour claims against the defendants, it also released a large group of additional entities and people, including the defendants' heirs, successors, assigns, affiliates, parent organizations, subsidiaries, directors, owners, shareholders, members, agents, attorneys, legal representatives, and managers. Because the release was not fair and reasonable, the court could not approve the revised settlement.

Disposition

Judge Analisa Torres denied the parties' motion for settlement approval without prejudice to renewal. The order allowed the parties to file a revised letter and settlement agreement consistent with the order by September 29, 2023. The order did not decide whether Aguilar ultimately proved his wage claims or whether the defendants were liable for them.