Miranda et al v. Grace Farms, Inc. et al

Filing 104

ORDER, I find that the Amaro Parties' proposed settlement agreement is not fair and reasonable. Accordingly, the parties' request that I approve the proposed settlement agreement is DENIED without prejudice. The parties are directed to a ppear for a telephonic conference on October 23, 2020 at 12:30 p.m. The dial-in number is [phone] and the access code is 2682448. The Amaro and Miranda parties may proceed by either:1. Filing revised proposed settlement agreements within twe nty-one (21) days of the date of this Order that cures the deficiencies discussed above; or 2. Filing a joint letter within twenty-one (21) days of the date of this Order that indicates the parties' intention to abandon settlement, at which po int I will set a date for a status conference. SO ORDERED. ( Telephone Conference set for 10/23/2020 at 12:30 PM before Judge Vernon S. Broderick.) (Signed by Judge Vernon S. Broderick on 10/15/20) Filed In Associated Cases: 1:16-cv-01369-VSB, 1:16-cv-07704-VSB (yv)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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ARTURO DANIEL MIRANDA, et al.,
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:
Plaintiffs,
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:
-v:
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GRACE FARMS, INC., et al.,
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Defendants. :
:
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:
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AYDE MENA AMARO, et al.,
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Plaintiffs,
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-v:
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UNAK GROCERY CORP. (d/b/a Liberty
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Café), et al.,
Defendants. :
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10/15/2020

ORDER

16-CV-1369 (VSB)

16-CV-7704 (VSB)

VERNON S. BRODERICK, United States District Judge:
On February 23, 2016, Plaintiffs Arturo Daniel Miranda, Alfonso Vera Rodas, Miguel
Garcia, and Daniel Grande Netzahuatl filed a collective action against Defendants Grace Farms,
Inc. d/b/a City Café, Unak Grocery Corp. d/b/a Liberty Café, Rajni Singhal, and Vivek Singhal,
alleging violations of the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. (“FLSA”) and the
New York Labor Law (“NYLL”) (the “Miranda Action”). (See generally Doc. 1.)
On December 9, 2016, I consolidated the Miranda Action with a related action, Amaro, et
al. v. Unak Grocery Corp., et al., 16-cv-7704 (the “Amaro Action”), involving different
plaintiffs but the same or similar Defendants. (See Doc. 35.) In that Order, I directed the parties

place any future filings on the docket of the first-filed case, No. 16-cv-1369. (Id. at 2.)
On January 30, 2017, Plaintiffs from the Miranda Action and Amaro Action filed a
consolidated collective action complaint in this matter. (Doc. 45.) Plaintiffs alleged various
violations of the FLSA and NYLL including that Defendants failed to pay them overtime
compensation for all hours worked in excess of forty hours per week and failed to pay spread-ofhours pay. (See id.)
During a status conference on July 18, 2018, the parties informed me that they had
reached a settlement with respect to Plaintiffs’ claims. (See Doc. 92.) Parties may not privately
settle FLSA claims with prejudice absent the approval of the district court or the Department of
Labor. See Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199, 200 (2d Cir. 2015). In the
absence of Department of Labor approval, the parties must demonstrate to this Court that their
settlement is “fair and reasonable.” Velasquez v. SAFI-G, Inc., 137 F. Supp. 3d 582, 584
(S.D.N.Y. 2015). Accordingly, I directed the parties file to a joint letter attaching the settlement
agreement and explaining how the terms of their proposed settlement are fair and reasonable.
(See Doc. 92.) On July 26, 2018, the parties filed two separate letters attaching two separate
proposed settlement agreements; one letter attached a proposed agreement between the plaintiffs
and defendants originally party to the Miranda Action (the “Miranda Parties”), and the other
letter attached a proposed agreement between the plaintiffs and defendants originally party to the
Amaro Action (the “Amaro Parties”). (See Docs. 93, 94.) By Order dated May 28, 2019, I
rejected the proposed agreement between the Amaro Parties and Defendants on the ground that it
contained an overbroad release, and declined to consider the agreement between the Miranda
Parties and Defendants, or the proposed settlement amounts and attorneys’ fees contained in the
agreement with the Amaro Parties, because I intended to consider the two agreements in tandem.

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(Doc. 72.)
On June 14, 2019, the Amaro Parties filed a stipulation amending the settlement
agreement that contained a revised version of the release I had previously found objectionable.
(No. 16-cv-7704, Doc. 73.) However, they filed this stipulation on the docket of Case No. 16cv-7704, which had been closed. (See id.) On April 29, 2020, the Amaro Parties refiled this
stipulation on the docket of Case No. 16-cv-1369, but it was administratively rejected by the
Clerk. (Doc. 100.) On June 9, 2020, the Amaro Parties properly refiled the proposed stipulation
(“Revised Release”). (Doc. 101.)
However, I find that the proposed agreement between the Amaro Parties is still not fair
and reasonable. As I still intend to consider the proposed settlement amounts and attorneys’ fees
requests in tandem, I do not address the fairness and reasonableness of the settlement amounts
contained in either of the agreements.
I.

Legal Standard

To determine whether a settlement is fair and reasonable under the FLSA, I “consider the
totality of circumstances, including but not limited to the following factors: (1) the plaintiff’s
range of possible recovery; (2) the extent to which the settlement will enable the parties to avoid
anticipated burdens and expenses in establishing their respective claims and defenses; (3) the
seriousness of the litigation risks faced by the parties; (4) whether the settlement agreement is the
product of arm’s-length bargaining between experienced counsel; and (5) the possibility of fraud
or collusion.” Wolinsky v. Scholastic Inc., 900 F. Supp. 2d 332, 335 (S.D.N.Y. 2012). “In
addition, if attorneys’ fees and costs are provided for in the settlement, district courts will also
evaluate the reasonableness of the fees and costs.” Fisher v. SD Prot. Inc., 948 F.3d 593, 600
(2d Cir. 2020). In requesting attorneys’ fees and costs, “[t]he fee applicant must submit adequate

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documentation supporting the [request].” Id. The Second Circuit has described a presumptively
reasonable fee as one “that is sufficient to induce a capable attorney to undertake the
representation of a meritorious civil rights case.” Restivo v. Hessemann, 846 F.3d 547, 589 (2d
Cir. 2017) (citation omitted). A fee may not be reduced “merely because the fee would be
disproportionate to the financial interest at stake in the litigation.” Fisher, 2020 WL 550470, at
*6 (citing Kassim v. City of Schenectady, 415 F.3d 246, 252 (2d Cir. 2005)). “When a district
court concludes that a proposed settlement in a FLSA case is unreasonable in whole or in part, it
cannot simply rewrite the agreement, but it must instead reject the agreement or provide the
parties an opportunity to revise it.” Fisher, 948 F.3d at 597.
II.

Discussion

Although the Revised Release is narrower than its original form, I find it to be overbroad.
“In FLSA cases, courts in this District routinely reject release provisions that ‘waive practically
any possible claim against the defendants, including unknown claims and claims that have no
relationship whatsoever to wage-and-hour issues.’” Gurung v. White Way Threading LLC, 226
F. Supp. 3d 226, 228 (S.D.N.Y. 2016) (quoting Lopez v. Nights of Cabiria, LLC, 96 F. Supp. 3d
170, 181 (S.D.N.Y. 2015)). Moreover, “[i]n the context of an FLSA case in which the Court has
an obligation to police unequal bargaining power between employees and employers, such broad
releases are doubly problematic.” Martinez v. Gulluoglu LLC, No. 15 Civ. 2727 (PAE), 2016
WL 206474, at *2 (S.D.N.Y. Jan. 15, 2016) (quoting Camacho v. Ess-A-Bagel, Inc., No. 14-cv2592 (LAK), 2014 WL 6985633, at *4 (S.D.N.Y. Dec. 11, 2014)). For this reason, “[a] number
of judges in this District refuse to approve any FLSA settlement unless the release provisions are
‘limited to the claims at issue in this action.’” Cionca v. Interactive Realty, LLC, No. 15-CV5123 (BCM), 2016 WL 3440554, at *3 (S.D.N.Y. June 10, 2016) (quoting Lazaro-Garcia v.

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Sengupta Food Servs., No. 15-CV-4259 (RA), 2015 WL 9162701, at *2 (S.D.N.Y. Dec. 15,
2015)). Courts may also approve releases of claims arising up to the date of the agreement under
the wage and hour statutes pursuant to which the plaintiff has brought his action. See Aguilar v.
N & A Prods. Inc., No. 19-CV-1703 (RA), 2019 WL 7293362, at *1 (S.D.N.Y. Dec. 30, 2019).
The Amaro Parties’ Revised Release, entitled “Release and Covenant Not To Sue,” reads
as follows:
Plaintiffs knowingly and voluntarily release and forever discharge Defendants of
and from any and all claims at issue in this action, whether known or unknown,
asserted or unasserted, arising up to and as of the date of the execution of this
Agreement, which Plaintiffs have or may have against Defendants, and also
covenants not to file any claim or suit alleging a violation of any federal or state
wage and hour laws including, but not limited to, the Fair Labor Standards Act
and the New York Labor Law.
Thus, while the “release of claims” portion of the Revised Release is limited in time and scope,
the “covenant not to sue” portion is not. Because the covenant not to file any claim is not limited
to claims arising through the date of the agreement, or claims arising out of the conduct alleged
in the Complaint, it arguably precludes Plaintiffs from bringing FLSA or NYLL actions against
Defendants that may accrue in the future. Such a release does not meet the standards for
approval established in this District. See Babayeva v. Halstead Mgmt. Co., LLC, No. 16-CV3794(RA), 2018 WL 5997919, at *3 (S.D.N.Y. Nov. 15, 2018) (rejecting agreement that
contained a release of all claims the parties currently had or “may have in the future”); Larrea v.
FPC Coffees Realty Co., Inc., No. 15-CV-1515 (RA), 2017 WL 1857246, at *3 (S.D.N.Y. May
5, 2017) (striking a mutual release agreement that required “Plaintiffs to waive virtually
any claim, of any type, in existence now or in the future, against Defendants or any possibly
related entity”).

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Although some Courts in this district have approved release provisions on the basis of
their mutuality, see, e.g., Lola v. Skadden, Arps, Meagher, Slate, Flom, LLP, No. 13-cv-5008
(RJS), 2016 WL 922223, at *2 (S.D.N.Y. Feb 3. 2016), the parties offer no basis for finding that
this release provision provides Plaintiffs any benefit, comparable or otherwise. Moreover, “[t]he
fact that the general release is styled as mutual, although favoring the settlement, does not
salvage it, absent a sound explanation for how this broad release benefits the plaintiff employee.”
Gurung, 226 F. Supp. 3d at 229; see also Martinez v. SJG Foods LLC, No. 16-CV-7890 (RA),
2017 WL 2169234, at *2 (S.D.N.Y. May 16, 2017).
Because I find the release provision in the Amaro Parties’ revised proposed settlement
agreement to be overbroad, I do not address the Miranda Parties’ proposed settlement agreement
(“Miranda Agreement”) at this time. However, I note that although the release provision of that
agreement appears to be limited in scope, (see Doc. 93-1, at ¶ 2), the agreement contains two
potential issues. First, the Miranda Parties have settled for less than the Amaro Parties, neither
party addresses the reason for that difference, and neither addresses why, despite that difference,
the respective settlements are fair and reasonable.
Second, the covenant not to sue contained in Paragraph 3(c) of the Miranda Agreement
appears to contain a typo that may materially alter the agreement. Specifically, under that
provision, Plaintiffs “covenant and agree not to sue, commence, prosecute and continue any
other proceeding or complaint or accept any relief individually or as a member of a class, against
Defendants or Releasees based on any claims that are referred to in paragraph three (3) of this
Agreement.” (Id. at 3(c).) However, while Paragraph 2 lists the types of claims waived by both
parties under the agreement, Paragraph 3 does not. Accordingly, if the Miranda Parties wish to

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proceed with settlement, they shall resubmit the settlement agreement with that error fixed, or
explain why it is not an error.
III.

Conclusion

For the reasons stated above, I find that the Amaro Parties’ proposed settlement
agreement is not fair and reasonable. Accordingly, the parties’ request that I approve the
proposed settlement agreement is DENIED without prejudice. The parties are directed to appear
for a telephonic conference on October 23, 2020 at 12:30 p.m. The dial-in number is (888) 3634749 and the access code is 2682448.
The Amaro and Miranda parties may proceed by either:
1.

Filing revised proposed settlement agreements within twenty-one (21) days of the
date of this Order that cures the deficiencies discussed above; or

2.

Filing a joint letter within twenty-one (21) days of the date of this Order that indicates
the parties’ intention to abandon settlement, at which point I will set a date for a
status conference.

SO ORDERED.
Dated:

October 15, 2020
New York, New York
______________________
Vernon S. Broderick
United States District Judge

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