Andrades Cordoba v. Rivington Laundromat & Dry Cleaning, Inc.

Background

The parties reached a settlement on or about February 15, 2022, in Plaintiff’s Fair Labor Standards Act (FLSA) case. Because FLSA claims cannot be privately settled and dismissed without approval from either the Department of Labor or the district court, the parties sought court approval. The proposed settlement would pay Plaintiff $2,750.

Judge Broderick rejected the parties’ first request on April 8, 2022, finding that they had not supplied enough information to determine whether the settlement was fair and reasonable. The parties filed a new joint letter on April 27, 2022, again asking the court to approve the same settlement.

Legal standard

The court explained that it must consider the total circumstances of an FLSA settlement, including Plaintiff’s possible recovery, the burdens and costs of continuing the case, the litigation risks, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion. If the settlement includes attorneys’ fees or costs, the court must also evaluate whether those amounts are reasonable and supported by adequate documentation.

When a proposed FLSA settlement is unreasonable in whole or in part, the court may not rewrite the agreement. It must reject the agreement or give the parties an opportunity to revise it.

Discussion

The renewed settlement request did not provide the information the court had previously requested. The parties stated that Plaintiff had chosen to accept $2,750 rather than pursue claims for up to $10,000 in wage-notice and wage-statement damages at trial. The court found that explanation too general to evaluate the parties’ negotiation process or Plaintiff’s likelihood of success. The parties did not explain what might prevent Plaintiff from proving that she lacked the required notices and statements, or why the settlement was favorable to Plaintiff rather than primarily favorable to Plaintiff’s counsel or Defendants.

The parties also failed to address the previously identified discrepancy in the potential damages. Their latest letter stated that Plaintiff’s potential recovery was approximately $11,713.21, while supporting documents stated that it was $11,716.78. The court noted that it had specifically directed the parties to address this discrepancy.

Ruling

Judge Vernon S. Broderick denied the parties’ request to approve the settlement. The court reserved judgment on other portions of the agreement, including whether the attorneys’ fees were fair and reasonable and whether other terms could make the settlement unreasonable or unfair.

The parties may either file a new settlement-support letter within 21 days that adequately explains why the agreement is fair and reasonable, or file a joint letter within 21 days stating that they intend to abandon the settlement. If they abandon it, the court will set a date for a status conference.