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

Filing 108

ORDER re: (66 in 1:16-cv-07704-VSB, 94 in 1:16-cv-01369-VSB) Settlement Agreement, filed by Ayde Mena Amaro, Paulino Ramales Bravo, Enrique Sanchez Vielma, Irving Ramos Franco, Miguel Rivera, Miguel Rivera, (93 in 1:16-cv-01369-VSB) Lett er, filed by Daniel Grande Netzahuatl, Arturo Daniel Miranda, Miguel Garcia, Alfonso Vera Rodas. For the reasons stated above, I find that neither settlement is fair and reasonable as it has been presented to me. The Amaro Settlement may well be; however, the Amaro Plaintiffs' counsel will need to explain with transparency how they calculated their clients' maximum possible recoveries and why the settlement amount is fair and reasonable when measured against that amount. The same i s true for the Miranda Plaintiffs. Additionally, as discussed, the Miranda Settlement is not fair and reasonable because of its clause restricting future employment. Accordingly, both settlements are REJECTED. The parties may proceed by filing revise d settlement agreements and new letters explaining why the revised settlement agreements are fair and reasonable within forty-five (45) days of the date of this Order. The parties must not file stipulations or amendments to their settlements as they have in the past, but must present self-contained settlement agreements for my review. If the parties do not make these filings within the deadline set by this Order or otherwise do not submit a filing regarding how they intend to proceed, I will construe that as an intention to abandon settlement, and I will set a date for a status conference. SO ORDERED. (Signed by Judge Vernon S. Broderick on 5/31/2022) Filed In Associated Cases: 1:16-cv-01369-VSB, 1:16-cv-07704-VSB (kv)

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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AYDE MENA AMARO, et al.,
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Plaintiffs,
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-v:
UNAK GROCERY CORP. (d/b/a Liberty Café), :
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et al.,
Defendants. :
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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 to place any
future filings on the docket of the first-filed case, No. 16-cv-1369. (Id. at 2.)

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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 absent the approval of the district court or the Department of Labor. See Samake v. Thunder
Lube, Inc., 24 F.4th 804, 806–07 (2d Cir. 2022); 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 to file a joint letter
attaching the settlement agreement and explaining how the terms of their proposed settlement were
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 that were originally parties to the Miranda Action (the “Miranda Parties”), and the other
letter attached a proposed agreement between the plaintiffs and defendants that were originally
parties 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 I 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. (Doc. 72.)

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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-cv7704, Doc. 73.) However, they filed this stipulation on the docket of Case No. 16-cv-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.)
I rejected the second proposed settlement agreement among the Amaro Parties, because I
found it was still not fair and reasonable. (Doc. 104.) On its face, I found the second proposed
settlement agreement’s provisions regarding the release of claims overbroad. (See id. at 4–5). As
such, I did not consider the settlement agreement amount among either the Amaro Parties or the
Miranda Parties. (Id. at 6.) I also identified what appeared to be a typo in the release of claims
language in the settlement agreement in the Miranda Action. (Id. at 6–7.)
On December 22, 2020, counsel for the Plaintiffs in the Miranda Action filed a revised
settlement agreement, (Doc. 105-1), in light of the typo that had been identified, (Doc. 105). On
March 3, 2021, counsel for the Plaintiffs in the Amaro Action filed a stipulation amending their
prior settlement agreement. (No. 16-cv-7704, Doc. 81.)
Having reviewed the materials before me, I find that the operative settlement agreement
among the Miranda Parties (the “Miranda Settlement” or “Miranda Agreement”) is still not fair and
reasonable. I also find that the settlement agreement among the Amaro Parties (the “Amaro
Settlement” or “Amaro Agreement”) is not fair and reasonable.
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

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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 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
A.

Non-Monetary Provisions

The Amaro Settlement’s non-monetary provisions independently appear to be fair and
reasonable. However, the same cannot be said of the Miranda Settlement’s non-monetary
provisions. Accordingly, I cannot approve the Miranda Settlement.

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1.

Release Clauses

I begin with the clauses releasing Defendants across both actions from liability, as those
were both an issue in my most recent analysis of the settlement agreements. I find that the releases
in the most recent settlement agreements in both of these consolidated FLSA actions have been
narrowed sufficiently to allay the concerns I identified previously.
The previous version of the Amaro Settlement contained a clause entitled “Release and
Covenant not to Sue,” which reads:
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.
(Doc. 80, at 5.) Because the portion following “covenants not to file” was not “limited in time and
scope,” I found it improper under the standards for approval of FLSA settlements. (Id.) By
contrast, the operative release language in the Amaro Settlement now provides that
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,
arising up to and as of the date of the execution of this Agreement.
(Doc. 81.) This language thus obviates the previously identified issues of overbreadth of the release
through the addition of language limiting the time period to which the “covenants not to file”
language applies.
Similarly, the Miranda Settlement states that “Plaintiffs hereby covenant and agree not to
sue” over “any claims that are referred to in paragraph two (2) of this agreement.” (Doc. 105-1 ¶
3(c).) Paragraph two provides releases to Defendants and certain defined “Releasees,” who include
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Defendants, from claims . . . “arising out of the allegations set forth in th[e] [Miranda] Action,” and
only through “the date th[e] [Miranda] Agreement is executed.” (Id. ¶ 2(a).) This is sufficiently
narrow, as it does not waive claims that may accrue later in time or claims that may have nothing to
do with the labor issues that form the basis of the Miranda Action. Cf. Gurung v. White Way
Threading LLC, 226 F. Supp. 3d 226, 228 (S.D.N.Y. 2016) (“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.’” (quoting Lopez v. Nights of Cabiria, LLC, 96 F. Supp. 3d 170, 181 (S.D.N.Y. 2015))).
2.

Other Provisions

The Miranda Settlement fails to pass muster because it contains a clause that restricts the
Miranda Plaintiffs’ future employment. Paragraph 3(e) of the Miranda Settlement states that
should Plaintiffs again apply to work at or for Defendants/Releases in any capacity,
Defendants/Releases, based on this clause, may deny Plaintiffs employment for any
position they seek, and said denial will not be a violation of any . . . law . . . and will not
be retaliatory in any way.
“Courts in this Circuit have consistently rejected FLSA settlements that seek to prevent plaintiffs
from having a future employment relationship with the defendant as contrary to the underlying
aims of the FLSA.” Diaz Bravo v. Broadway Fines Deli Corp., 21-CV-1946 (VSB), 2021 WL
4263047, at *2 (S.D.N.Y. Aug. 4, 2021) (quoting Zekanovic v. Augies Prime Cut of Westchester,
Inc., No. 19-CV-8216 (KMK), 2020 WL 5894603, at *5 (S.D.N.Y. Oct. 5, 2020)). The Miranda
Plaintiffs do not even address this clause in their letter motion in support of settlement approval.
(See Doc. 93.) The Miranda Plaintiffs’ counsel’s use of this clause cannot be justified given the
law in this District. I thus do not approve the Miranda Settlement.
Both Settlements also contain non-disparagement clauses, but these clauses have carveouts
to allow the parties to “truthfully communicat[e] their experiences concerning the [respective]
Action[s] or the [respective] Settlements.” (See Doc. 105-1 ¶ 7; Doc. 66-1 ¶ 23 (“The Parties agree
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not to disparage each other. Nothing herein shall prevent the Plaintiffs from speaking truthfully
about this case.”).) These clauses are proper given FLSA settlement practice in this District. See
Baikin v. Leader Sheet Metal, Inc., 16 Civ. 8194 (ER), 2017 WL 1025991, at *1 (S.D.N.Y. Mar.
13, 2017) (“Courts in this District have held that while not all non-disparagement clauses are per
se objectionable, if the provision would bar plaintiffs from making any negative statement about
the defendants, it must include a carve-out for truthful statements about plaintiffs’ experience
litigating their case.” (citation omitted)).
B.

Settlement Amounts

When assessing the fairness of a settlement amount in a FLSA action, courts in this circuit
consider a “maximum possible recovery,” which includes all possible bases entitling a FLSA
plaintiff to monetary relief, such as “liquidated damages.” See, e.g., Cronk v. Hudson Valley
Roofing & Sheetmetal, Inc., 538 F. Supp. 3d 310, 316, 322 (S.D.N.Y. 2021); Zorn-Hill v. A2B Taxi
LLC, Case No. 19-CV-1058 (KMK), 2020 WL 5578357, at *4 (S.D.N.Y. Sept. 17, 2020) (“The
percentages provided by the Parties undercount the [p]laintiffs’ alleged damages and best-case
return” because “they do not include liquidated damages”); Vargas v. Pier 59 Studios L.P., 18-CV10357 (VSB), 2020 WL 8678094, at *1 (S.D.N.Y. Sept. 10, 2020) (“Plaintiff’s calculation of
potential recovery does not appear to include the possibility of liquidated damages, which FLSA
authorizes at a rate of 100 percent of unpaid wages”). Because of this, parties seeking approval of a
FLSA settlement must supply calculation addressing all possible sources of a plaintiff’s potential
damages. See, e.g., Ramos v. DNC Food Serv. Corp., 19-CV-2967 (VSB), 2022 WL 576300, at *2
(S.D.N.Y. Feb. 25, 2022) (calculating damages based on “unpaid minimum wage, unpaid overtime
premiums, unpaid spread of hours premiums, liquidated damages, wage notice and wage statement
damages, and interest as of the date of the mediation statement.” (internal quotation marks
omitted)); Kanchanawong v. Amobee, Inc., 21-CV-4409 (VSB), 2021 WL 6500139, at *2

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(S.D.N.Y. Dec. 27, 2021) (assessing a settlement breaking down the sources of possible damages as
stemming from “around $51,000 in unpaid wages, $51,000 in liquidated damages, and $10,000 for
violations of the Wage Theft Prevention Act.”); Galindo v. E. Cnty. Louth Inc., 16 Civ. 9149 (KPF),
2017 WL 5195237, at *4 (S.D.N.Y. Nov. 9, 2017) (“The settlement amount that Plaintiff is to
receive, $5,292, would cover all back wages, liquidated damages, and statutory penalties.”).
Here, because the parties have failed to supply sufficient information, I cannot say that
either Settlement’s amount is fair and reasonable.
The Miranda Settlement provides that the Miranda Plaintiffs will receive $80,000, inclusive
of attorneys’ fees and costs. (Doc. 93-1 ¶ 1.) Counsel for the Miranda Plaintiffs state that the
Miranda Plaintiffs stood to recover “approximately $146,531.83 . . . not including liquidated
damages and statutory penalties.” (Doc. 91, at 1.) The settlement amount— $80,000—thus
represents approximately 54% of the possible stated recovery not accounting for liquidated damages
and statutory penalties. However, the Miranda Plaintiffs’ counsel must account for liquidated
damages, as well as for the other sources of damages pleaded in the operative complaint. (See Doc.
45, at 39 (demanding damages for “unpaid minimum and overtime wages, and for any improper
deductions . . . as well as awarding spread of hours pay under the NYLL,” and for, among other
things, “violation of the NYLL notice and recordkeeping provision” and “liquidated damages.”).)
Here, considering potential liquidated damages, the Miranda Settlement’s $80,000 amount actually
reflects approximately 27% of the total possible recovery. Factoring in other sources of damages, if
any are applicable, would likely lower this percentage further, but the Miranda Plaintiffs’ counsel
have not supplied the necessary information for me to assess what the percentage would be, nor
have they argued why such a recovery would be fair and reasonable.

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The Amaro Settlement provides for a gross settlement amount of $210,000, with $140,000
to be paid to the Amaro Plaintiffs, and $70,000 in attorneys’ fees and costs. 1 (Doc. 66, at 3.) The
Amaro Plaintiffs’ counsel states that they estimate the Amaro Plaintiffs stood to recover
approximately $199,000 “in minimum and overtime base damages.” The Amaro Plaintiffs’ counsel
do not explain how they calculated this amount or whether there are other possible sources entitling
the Amaro Plaintiffs to damages. They do not address the various sources of damages they assert in
their operative complaint. (See Doc. 45, at 39.) Accordingly, if the Amaro Plaintiffs have a case
for seeking liquidated damages, their maximum possible recovery would be at least $398,000. The
$210,000 amount would be approximately 52% of that number. However, as with the Miranda
Plaintiffs, the Amaro Plaintiffs have not explained if there are other sources in law that might entitle
them to damages.
Without more transparency into the maximum possible recovery, I cannot find either
settlement fair or reasonable.
III.

Conclusion

For the reasons stated above, I find that neither settlement is fair and reasonable as it has
been presented to me. The Amaro Settlement may well be; however, the Amaro Plaintiffs’ counsel
will need to explain with transparency how they calculated their clients’ maximum possible
recoveries and why the settlement amount is fair and reasonable when measured against that
amount. The same is true for the Miranda Plaintiffs. Additionally, as discussed, the Miranda
Settlement is not fair and reasonable because of its clause restricting future employment.
Accordingly, both settlements are REJECTED.

1

The propriety of attorneys’ fees is discussed infra. I note here that the Amaro Settlement itself only states that
“Defendants shall pay” a total of “$210,000” to the Amaro Plaintiffs’ counsel, with the further allocation of that money
to be handled at “the sole responsibility of the Plaintiffs and their counsel.” (Doc. 66-1 ¶ 1.) This should not matter to
the certainty that the Amaro Plaintiffs will receive at least $140,000 as part of the Amaro Settlement, as counsel must
know it is bound by the representations it has made in their filing to me.

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The parties may proceed by filing revised settlement agreements and new letters explaining
why the revised settlement agreements are fair and reasonable within forty-five (45) days of the date
of this Order. The parties must not file stipulations or amendments to their settlements as they have
in the past, but must present self-contained settlement agreements for my review. If the parties do
not make these filings within the deadline set by this Order or otherwise do not submit a filing
regarding how they intend to proceed, I will construe that as an intention to abandon settlement, and
I will set a date for a status conference.
SO ORDERED.

Dated:

May 31, 2022
New York, New York

________________________________
Vernon S. Broderick
United States District Judge

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