Duran v. C and J Brothers, Inc.

Background

Gabriel Duran brought a proposed collective action against C and J Brothers, Inc., doing business as C and J Brothers, and Chang Y. Park and Jung Yong Park. Duran alleged that the defendants employed him as a porter, stock worker, and inventory worker at a produce market in the Bronx. He alleged that the defendants failed to pay him and similarly situated employees for all hours worked and failed to pay overtime, among other violations.

Duran asserted claims under the Fair Labor Standards Act of 1938 (FLSA) and the New York Labor Law. He sought unpaid wages, liquidated damages, interest, damages related to wage statements and notices, attorneys’ fees, and costs.

Proposed Settlement

After the court ordered mediation, the parties reported that they had reached a resolution. Their proposed Settlement Agreement required the defendants to pay $15,000: $9,620.67 to Duran and $5,379.33 for attorneys’ fees and costs. The agreement also contained a release of claims and a mutual non-disparagement provision.

Because private settlements of FLSA claims require approval by the district court or the Department of Labor, the court evaluated whether the agreement was fair and reasonable. The court considered the possible recovery, the litigation burdens and risks avoided by settlement, whether the agreement resulted from arm’s-length negotiations, and any possibility of fraud or collusion. The court also separately assessed the attorneys’ fees and closely examined the release and non-disparagement provisions.

Court’s Analysis

The court found the damages amount reasonable. Duran’s damages chart estimated a maximum recovery of $31,343.36, although the defendants disputed that amount and Duran acknowledged possible flaws in his initial calculation. The proposed payment represented more than 30 percent of that estimate and was more than $500 greater than the unpaid wages and overtime Duran claimed. The court also noted that the settlement was reached early, before significant litigation expenses, and through court-ordered mediation without an indication of fraud or collusion.

The court found the attorneys’ fees and costs reasonable. Counsel would receive $5,379.33, including $569 in costs. The court found the hourly rates of $300 for attorney Bryan D. Robinson and $125 for CSM Legal’s paralegals reasonable. Robinson billed 15.2 hours, and the paralegals billed 6.4 hours. The resulting lodestar—a calculation based on a reasonable hourly rate multiplied by reasonable hours—was $5,360 before costs. The court noted that the agreed fees were less than that amount even when the calculation included only Robinson’s and the paralegals’ time.

The court also found the mutual non-disparagement provision reasonable. The provision barred both Duran and the defendants from making statements that could adversely affect the other’s reputation or interests. It allowed the parties to communicate truthfully about their experience in the litigation and to respond to subpoenas, court orders, or other legal requirements. It also prohibited the defendants from providing negative employment references for Duran.

Release Provision

The court found the release overbroad in at least three ways. First, it was not limited in time and could waive future wage-and-hour claims, including claims that might arise if Duran were later employed by the defendants or related businesses. Second, it extended beyond the overtime and wage claims involved in the case, including claims for income and employment taxes and other FLSA and New York Labor Law claims outside the dispute. Third, it covered affiliated business entities, potentially including employers that were not defendants in the case.

The court stated that it would not approve the agreement until the release was narrowed to cover only conduct arising from the same factual basis as the settled claims.

Disposition

The court denied approval of the Settlement Agreement at that time and rejected approval without prejudice to renewal. It gave the parties two options by September 22, 2023: file a revised agreement with a narrower release or submit a joint letter stating that they intended to abandon settlement and continue litigating the matter.