Bailey-Thomas et al v. U.S. Security Associates, Inc. et al

Filing 22

OPINION AND ORDER: The parties' request for approval of the proposed settlement is DENIED without prejudice. The parties may proceed in one of the following ways: 1. File a revised settlement agreement on or before March 22, 2017 that includes a provision concerning how the funds will be allocated between Plaintiff and his counsel and further explains the relationship between the provisions in the non-disparagement section; or 2. File a joint letter on or before March 22, 2017 that indi cates the parties' intention to abandon settlement and continue to trial, at which point the Court will reopen the case and set down a date for a pre-trial conference, and as further set forth in this order. (Signed by Judge Edgardo Ramos on 3/17/2017) (ap)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ERROLL O. BAILEY-THOMAS,
Plaintiff,
OPINION AND ORDER

– against –
U.S. SECURITY ASSOCIATES, INC., U.S.
SECURITY ASSOCIATES AVIATION
SERVICES, INC., BILL BUBENJECK, MARIA
RIVERA, and BILL FLORES,

16 Civ. 3560 (ER)

Defendants.
Ramos, D.J.:
On February 7, 2017, the parties filed under seal an application for the Court to approve
their agreement settling claims brought under the Fair Labor Standards Act (“FLSA”) and the
New York Labor Law and to dismiss the case with prejudice. On February 14, the Court denied
their application and directed the parties to file the settlement agreement on the public docket.
(Doc. 17). On February 28, the parties submitted a revised settlement agreement (Doc. 19),
which the Court denied, directing the parties to indicate how the settlement funds would be
allocated between Plaintiff and his counsel and to clarify provisions in the non-disparagement
clause. (Doc. 20) On March 13, 2017, the parties submitted another revised settlement
agreement (“Revised Agreement”). (Doc. 21) The Revised Agreement provides that the
settlement is for $12,000 total, with $7,000 payable to Plaintiff, and $5,000 payable to Plaintiff’s
counsel for attorneys’ fees and costs. Agreement § 3.
In this Circuit, parties cannot 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). The parties therefore must satisfy the Court that

Case 1:16-cv-03560-ER Document 22 Filed 03/21/17 Page 2 of 4

their agreement is “fair and reasonable.” Beckert v. Ronirubinov, No. 15 Civ. 1951 (PAE), 2015
WL 8773460, at *1 (S.D.N.Y. Dec. 14, 2015).
“In determining whether the proposed settlement is fair and reasonable, a court should
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.” Felix v. Breakroom Burgers & Tacos, No. 15 Civ.
3531 (PAE), 2016 WL 3791149, at *2 (S.D.N.Y. Mar. 8, 2016) (quoting Wolinsky v. Scholastic
Inc., 900 F. Supp. 2d 332, 335 (S.D.N.Y. 2012)).
The parties have adequately justified the dollar amounts constituting the settlement here:
Plaintiff worked for Defendant for approximately six months. Though he claimed that
Defendant had failed to pay him at least minimum wage for the hours he worked during the
duration of his employment, during negotiations Plaintiff conceded that he was paid at least
minimum wage at all times and that “he might have been owed overtime for two or three days, if
any.” See Letter (Doc. 19, Ex. B). The parties further claim that Plaintiff might be entitled to the
statutory amount of $5,000 for alleged violations of the New York’s Wage Theft Prevention Act
and assert that Plaintiff’s total liability and attorney’s fees would amount to approximately
$6,000 or $7,000. Thus, Plaintiff’s direct recovery of $7,000 is fair and reasonable. The record
also demonstrates that counsel have engaged in good faith and arm’s length negotiations to arrive
at this settlement, and there is no sign of fraud of collusion. See Docs. 16, 18, 19, 21. The time

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sheets submitted by Plaintiff’s counsel, totaling over $17,000 in billed hours, renders the $5,000
in attorneys’ fees here a reasonable fee. (Doc. 19, Ex. B).
However, although the parties have cured the Court’s prior concerns regarding the
allocation of attorneys’ fees and the non-disparagement clause, the Revised Agreement still
contains an improper release. See Revised Agreement § 8 (“Plaintiff agrees and covenants not to
file any suit, complaint, charge, claim, grievance, or demand . . . with regard to any claim . . .
with respect to any maters that were or could have been alleged in the Complaint, arising out of
the Plaintiff’s employment or otherwise.”). “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.’” Martinez v.
Gulluoglu LLC, No. 15 Civ. 2727 (PAE), 2016 WL 206474, at *2 (S.D.N.Y. Jan. 15, 2016)
(quoting Lopez v. Nights of Cabiria, LLC, 96 F. Supp. 3d 170, 181 (S.D.N.Y. 2015)); see also
Garcia v. Jambox, Inc., No. 14 Civ. 3504 (MHD), 2015 WL 2359502, at *3–4 (S.D.N.Y. Apr.
27, 2015). Though the parties do include a release provision limited to wage-and-hour claims,
see Revised Agreement § 4, the additional release provision in paragraph 8 is excessively broad
and bears no relation to the actual claims at issue, and is thus not “fair and reasonable.” The
Court will not approve an agreement that contains a release provision extending beyond the
claims at issue. See Martinez, 2016 WL 206474, at *2; Lazaro-Garcia v. Sengupta Food Servs.,
No. 15 Civ. 4259 (RA), 2015 WL 9162701, at *32 (S.D.N.Y. Dec. 15, 2015).

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