Lopez v. Poko-St. Ann L.P.
176 F. Supp. 3d 340
S.D.N.Y.2016Background
- Plaintiffs were former live-in superintendents at a low-income complex managed by Poko-St. Ann L.P., alleging unpaid overtime under the FLSA and New York Labor Law, plus wage-notice, unlawful-deduction, retaliation claims, and two plaintiffs alleging sexual harassment.
- Parties mediated before the magistrate judge, placed material settlement terms on the record, and later submitted a Confidential Settlement Agreement for court approval.
- The settlement total is $175,000; plaintiffs’ counsel seek $71,400 (40.08%) for fees and costs, not detailed in the agreement or record.
- The written Agreement contains a broad, one-way general release covering unknown claims and many non-party entities, confidentiality and non-disparagement clauses that largely bind plaintiffs, and clauses limiting plaintiffs’ ability to seek individual monetary relief from administrative filings.
- The magistrate judge found the settlement amount reasonable given litigation risks but identified three problems: (1) inadequate justification for the >40% fee, (2) overbroad, non-mutual release provisions, and (3) one-sided confidentiality/gag provisions; ordered the parties to revise or proceed to litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Attorney fees percentage | Counsel entitled to contingent fee per agreement; 40.08% reasonable | Fee reflects parties’ negotiated deal; should be approved | Court rejected approval absent documentation; capped at one-third absent justification or detailed lodestar/time records |
| Scope of release | Plaintiffs assented to broad release in agreement | Defendants sought a broad release to fully resolve claims | Court held release overbroad and one-way; ordered narrowing to claims related to the case or making release mutual |
| Confidentiality/gag clauses | Plaintiffs agreed to confidentiality except disclosures to agencies, spouse, tax advisor, counsel | Defendants imposed broad limits on plaintiffs’ speech about case and settlement | Court found one-sided confidentiality contrary to public policy for FLSA cases; ordered removal of plaintiff gag provisions |
| Mutuality and non-disparagement limits | Plaintiffs accepted non-disparagement and reference clauses | Defendants limited references and sought anti-encouragement clause restricting promotion of claims | Court tolerated narrow, truthful-reference and non-defamatory non-disparagement clauses but warned the "encouragement" prohibition must be removed or clarified |
Key Cases Cited
- Wolinsky v. Scholastic, Inc., 900 F. Supp. 2d 332 (S.D.N.Y. 2012) (factors for evaluating FLSA settlements)
- Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015) (district court approval required for FLSA settlement)
- Lopez v. Nights of Cabiria, LLC, 96 F. Supp. 3d 170 (S.D.N.Y. 2015) (district court scrutiny of overbroad releases in wage-and-hour settlements)