Cuba v. Shadwick, Inc.
- Edgardo Ramos
- 1:23-cv-05329
- U.S. District Court · Southern District of New York
- 7
In Cuba v. Shadwick, Inc., Judge Ramos denied settlement approval without prejudice because the wage-law agreement broadly released unrelated claims.
Laura Cuba, Shadwick Inc. d/b/a The Bravest, Michael F. Shadwick, and their attorneys; the proposed settlement was not approved as written.
What happened
Laura Cuba sued Shadwick Inc., doing business as The Bravest, and Michael F. Shadwick under the Fair Labor Standards Act and New York Labor Law. She asked the court to approve a proposed $16,500 settlement, under which she would receive $10,624.20 and her lawyers would receive $5,875.80 in fees and costs.
The court found that the proposed payment and requested attorney fees and costs were fair and reasonable. It also found that the agreement’s mutual promise not to disparage was acceptable because it allowed truthful statements about the case and settlement. But the court rejected the agreement because its release required Cuba to give up broad claims, including negligence and intentional-tort claims, that were unrelated to wage-and-hour issues.
Judge Edgardo Ramos denied the request for settlement approval without prejudice. He directed the parties by December 11, 2023, to submit a revised settlement, state that they would continue to trial, or agree to dismiss the case without prejudice; the Clerk was directed to terminate the settlement motion.
The detailed version
- Cuba v. Shadwick, Inc. · No. 1:23-cv-05329
- Edgardo Ramos
- Dec. 4, 2023
Background
Laura Cuba brought claims under the Fair Labor Standards Act (FLSA), a federal wage-and-hour law, and the New York Labor Law against Shadwick Inc. d/b/a The Bravest and Michael F. Shadwick. Cuba moved on behalf of the parties for approval of their proposed settlement.
The proposed agreement provided for a total payment of $16,500. Cuba would receive $10,624.20, and her counsel would receive $5,875.80 in attorney fees and costs. Cuba estimated her maximum possible recovery at trial at $18,142.86, consisting of unpaid overtime, liquidated damages under the FLSA, and statutory damages under the New York Labor Law. The parties identified disputes about the number of hours Cuba worked and the length of her employment. Cuba also stated that trial would depend heavily on the parties’ credibility. The defendants stated that they had limited financial resources and could not afford a larger settlement or judgment.
Court’s Analysis
The court explained that, in the Second Circuit, parties generally cannot privately settle FLSA claims with prejudice without approval from the court or the Department of Labor. The court therefore evaluated whether the proposed settlement was fair and reasonable.
The court found that Cuba’s proposed recovery was fair and reasonable in light of the risks and delays of continued litigation, the disputed facts, and the defendants’ stated financial limitations. The court also found the requested fees and costs reasonable. Counsel requested $5,310.60 in attorney fees and a total of $5,875.80 in fees and costs. The court approved the reasonableness of the hourly rates proposed for Peter A. Romero, Matthew J. Farnworth, Sara V. Messina, and paralegal Angelica Villalba. Based on counsel’s billing records, the lodestar—the reasonable hourly rates multiplied by the reasonable hours worked—was $5,825, making the requested attorney-fee amount approximately 0.9 times the lodestar.
The court found no objectionable confidentiality provision. It also found the mutual non-disparagement provision permissible because it allowed the parties to truthfully communicate their experiences concerning the action or settlement.
The court did, however, find the release of claims overly broad. The agreement released “any and all claims” arising from any cause of action, including negligence and intentional torts, occurring from the beginning of time through the date Cuba signed the agreement. The court stated that an FLSA settlement may release wage-and-hour claims that were or could have been at issue in the litigation, but the agreement did not limit the release to those claims. Because the release covered unrelated claims, the court concluded that the agreement was not fair and reasonable as written.
Disposition
Judge Edgardo Ramos denied the request for settlement approval without prejudice. The parties were instructed to do one of three things by December 11, 2023: submit a revised settlement motion and signed agreement addressing the release; submit a joint letter stating that they intended to abandon settlement and continue to trial; or stipulate to dismissal of the case without prejudice. The Clerk of Court was directed to terminate the settlement motion, docket entry 15.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.