Hernandez Leonardo v. Reza Fast Food, Inc.

Background

The plaintiffs brought claims under the Fair Labor Standards Act (FLSA) and New York wage laws for unpaid minimum and overtime wages, liquidated damages, interest, and attorneys’ fees and costs. After the parties reported that they had reached a settlement, the court required them to submit the agreement for approval because FLSA claims generally cannot be privately settled and dismissed without approval from the court or the Department of Labor.

The court rejected the original settlement agreement because its release provision was overly broad. The court explained that the original provision did not appear limited to the wage-and-hour claims involved in the case. It gave the parties an opportunity to submit a revised agreement or abandon the settlement.

Reasons for Approval

The parties submitted an amended settlement agreement. The court found its revised release fair and reasonable because it was limited to wage-and-hour claims, including claims under the FLSA and New York Labor Law that arose before the agreement’s effective date.

The amended materials also explained the settlement amount for each plaintiff. Based on the defendants’ records, the plaintiffs estimated total back wages of $38,800.94: $17,947.44 for Jose Luis Hernandez Leonardo and $20,853.50 for Yonic Hernandez. The plaintiffs estimated their total possible recovery, including additional damages, at $124,588.91. Under the $40,000 settlement, each plaintiff would receive approximately $13,333.33. The court noted that the plaintiffs’ combined amount, excluding attorneys’ fees and costs, represented approximately 21 percent of the estimated total possible recovery. The court also found no indication of fraud, collusion, or bargaining that was not conducted at arm’s length.

The agreement did not prevent the plaintiffs from working for the defendants in the future, and the court found that provision fair and reasonable. Plaintiffs’ counsel would receive $13,333.33, or one-third of the total settlement. Counsel reported a lodestar of $8,969, consisting of $8,442 in fees and $527 in costs. The court found the requested fees and costs fair and reasonable.

Disposition

Judge Vernon S. Broderick approved the amended settlement agreement and granted the parties’ joint motion seeking approval and entry of the proposed stipulation and order of dismissal with prejudice. The opinion stated that the dismissal document would be filed concurrently. The court did not decide the underlying wage claims after trial or summary judgment; it decided whether the proposed FLSA settlement was fair and reasonable.