Lopez v. Nights of Cabiria, LLC
2015 U.S. Dist. LEXIS 42554
S.D.N.Y.2015Background
- Three named plaintiffs (Lopez, Meló, Ajtun) were tipped delivery workers at Two Boots Pizza who alleged substantial non-tipped work and brought FLSA and NYLL wage-and-hour claims (minimum, overtime, spread-of-hours, record-keeping).
- Parties proposed a settlement for $27,500: plaintiffs to receive $16,500 total; plaintiffs' counsel sought $11,000–$12,000 (≈40–44% of the fund).
- The proposed Agreement included broad confidentiality, non-disparagement, and liquidated-damages provisions ($3,000 plus fees for breaches), and very broad mutual releases covering virtually any claim "from the beginning of the world."
- Parties submitted competing estimates of maximum recovery ($49,000 plaintiff; $25,000 defendant) but provided no supporting calculations, timesheets, or declarations explaining hours/wages or per-plaintiff shares.
- The district court viewed the record as materially incomplete, found the confidentiality and release terms incompatible with FLSA purposes, and found the fee application inadequately supported.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Adequacy of settlement record | Settlement is fair given disputed facts and litigation risk; parties negotiated at arm’s length | Settlement resolves contested exposure and avoids litigation costs | Court: Record is inadequate—parties must provide hours, wage rates, per-plaintiff allocations, and supporting declarations before approval |
| Confidentiality & gag clauses | Confidentiality is routine in settlements and encourages resolution | Defendants seek to avoid publicity and copycat suits | Court: Confidentiality, non-disparagement, and liquidated-damages provisions impermissible or must be narrowed; FLSA settlements implicate public interest and must be public |
| Breadth of releases | Settlement releases all claims in exchange for payment | Defendant seeks global peace and protection from future claims | Court: Releases unacceptably overbroad; must be limited to claims arising from the same factual predicate or related to the wage claims settled |
| Attorneys’ fees documentation | Counsel proposes fee (≈$11–12k) as compromise of lodestar | Defendants consented to negotiated fee | Court: Fee request unsupported—contemporaneous billing, lodestar details, and rate justification required |
Key Cases Cited
- D.A. Schulte, Inc. v. Gangi, 328 U.S. 108 (1946) (employees may not waive unpaid wage claims absent proper supervision)
- Wolinsky v. Scholastic Inc., 900 F. Supp. 2d 332 (S.D.N.Y. 2012) (FLSA settlements require scrutiny; public interest favors nonconfidential settlements)
- Chao v. Gotham Registry, Inc., 514 F.3d 280 (2d Cir. 2008) (congressional purpose of the FLSA supports broad remedial interpretation)
- Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110 (2d Cir. 2006) (public right of access to judicial documents and how to weigh competing interests)
- Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96 (2d Cir. 2005) (standards for weighing public access to judicial materials)