Lopez et al v. Ploy Dee Inc. et al

Filing 35

MEMORANDUM AND ORDER. Approval of the settlement is denied. The parties shall submit a revised settlement agreement no later than July 20, 2016. SO ORDERED. (Signed by Judge Alison J. Nathan on 6/29/2016) (rjm)

USDC SONY
DOCl.\IENT
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

ELECTRONICALLY FILED
DOC'#:
DATE F-IL_E_D_:J"IT'UmN~2~9__,,2-0J-6

Manuel Montiel Lopez,
Plaintiff,
15-cv-647 (AJN)

-vMEMORANDUM &
ORDER

Ploy Dee, Inc., et al.,
Defendants.

ALISON J. NATHAN, District Judge:
On January 29, 2015, Manuel Montiel Lopez filed a complaint in the Southern District of
New York alleging violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et
seq., and New York Labor Law, Art. 19 § 650 et seq. On November 30, 2015, the parties

notified the Court that they had reached a settlement. Dkt. No. 26. The parties submitted the
settlement for the Court's review on December 28, 2015, along with Plaintiff's memorandum of
law setting forth his views on why the settlement would be fair. Dkt. No. 29.
On April 21, 2016, the Court declined to approve the settlement. Dkt. No. 31. In its
order, the Court stated that the settlement was broadly fair and reasonable, but could not be
approved until two conditions were met: (1) the parties narrowed the release from liability
provisions; and (2) the parties either narrowed the settlement's confidentiality and nondisparagement provisions, removed them entirely, or submitted briefing to justify them. The
Court also determined that a reasonable attorneys' fee would be no more than 33% of the total
settlement amount.
On May 17, 2016, the paiiies submitted a revised settlement proposal. Dkt. No. 34. The
revised settlement does not fully address the Comi's concerns. First, the revised settlement
provides that Plaintiff "will not directly or indirectly encourage, induce, solicit or assist anyone

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to file a wage and hour action or collective or class action against" Defendants. Proposed
Settlement if 14. Confidentiality and non-disparagement provisions "can be contrary to public
policy because they prevent the spread of information about FLSA actions to other workers (both
employees of Defendants and others), who can then use that information to vindicate their
statutory rights." Gaspar v. Pers. Touch Moving, Inc., No. 13-CV-8187 (AJN), 2015 WL
7871036, at *3 (S.D.N.Y. Dec. 3, 2015). Because "vindication ofFLSA rights throughout the
workplace is precisely the object Congress chose to preserve and foster through the FLSA,"
settlement provisions designed to insulate Defendants from "copycat litigation" by fellow
employees are generally not fair and reasonable. Lopez v. Nights of Cabiria, LLC, 96 F. Supp.
3d 170, 180 (S.D.N.Y. 2015). The settlement language quoted above is broad enough to prevent
Plaintiff from discussing his FLSA lawsuit with fellow employees who may be interested in
bringing similar lawsuits. Accordingly, the parties must either remove this language, narrow it,
or submit argument and authority why it is fair and reasonable.
Second, the release from liability provided by the proposed settlement remains too
broad. The proposed settlement provides that "neither [Plaintiff] nor [his] legal counsel will seek
any further compensation ... in connection with any of the matters encompassed in this
Agreement or any aspect of [Plaintiff's] relationship with [Defendants]." Proposed Settlement

if 5.

Furthermore, the settlement states that Plaintiff releases Defendants from a number of

enumerated claims arising from the employment relationship, including on-the-job injuries and
discrimination claims. Id.

if 14.

These claims have "no relationship whatsoever to wage-and-

hour issues," and they therefore cannot be released as part of a FLSA settlement. Cheeks v.

Freeport Pancake House, Inc., 796 F.3d 199, 206 (2d Cir. 2015).
The parties attempt to circumvent Cheeks by including a provision stating that "some
portion of the payment provided in this Agreement represents money over and above that to
which [Plaintiff] would otherwise be entitled" under the FLSA, and that the extra money
represents compensation for release of Plaintiff's other employment claims. Proposed
Settlement if 14. As a general rule, the Court will not scrutinize the settlement of "a non-FLSA
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claim that happens to be settled in the same agreement" as a FLSA claim. See Gaspar, 2015 WL
7871036, at *2. However, the proposed settlement here does not indicate how much of the
settlement amount constitutes payment for these non-FLSA claims. As a result, the Court can no
longer tell how much Plaintiff is receiving to settle his FLSA claim, and cannot determine
whether the FLSA settlement amount remains fair and reasonable. Banegas v. Mirador Corp.,
No. 14-CV-8491(AJN),2016 WL 1451550, at *3 (S.D.N.Y. Apr. 12, 2016). Although the
Court "need not and will not separately approve the fairness of the settlement" of Plaintiffs nonFLSA employment claims, "the Court must assure itself that [Plaintiff] is settling [his] FLSA
claims in a manner that comports with the requirements of Cheeks." Id. Accordingly, approval
of the settlement is denied.
The parties shall submit a revised settlement agreement no later than July 20, 2016.

SO ORDERED.

Dated:~~ ~,2016
New York, New York

United States District Judge

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