Luna v. J.S. Held LLC, 2:21-cv-03072

Background

Plaintiff Monica Luna worked as a Staff Accountant from July 19, 2018 to January 27, 2020 and alleges she was non-exempt but paid a $65,000 salary and unpaid overtime; she also alleged discriminatory conduct and related non-wage claims.
Luna sued under the FLSA, NYLL, WTPA and separately asserted discrimination claims under Title VII and the NYSHRL.
After mediation the parties executed a bifurcated resolution: a Wage & Hour Settlement (this Court’s Cheeks review) for $15,000 (with $5,000 proposed to counsel) and a separate private agreement resolving non-wage claims.
The Court conducted a Cheeks review and identified several defects in the submitted FLSA settlement and fee request.
The Court denied approval without prejudice and directed the parties to file a revised agreement and joint letter addressing the Court’s concerns (non-disparagement clause, release scope, plaintiff’s range of recovery, and attorney-fee documentation).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the FLSA settlement should be approved under Cheeks/Rule 41	Settlement is a reasonable compromise reached after mediation; should be approved	Settlement resolves disputed wage claims and avoids litigation costs	Denied — Court found multiple deficiencies preventing Cheeks approval
Permissibility of bifurcated settlement (FLSA claims judicially reviewed; non-FLSA resolved privately)	Bifurcation acceptable; non-wage claims excluded from Cheeks review	Bifurcation appropriate given differing approval requirements	Allowed in principle — bifurcation not per se improper; Court accepted bifurcation framework
Non-disparagement clause scope	Clause is part of negotiated compromise	Clause protects defendants’ reputation	Denied — clause is overbroad and must carve out truthful statements about plaintiff’s experience/litigation
Release language breadth	Release settles wage-and-hour claims	Release intended to encompass related employment claims	Denied — release is overbroad (sweeping "any and all" known/unknown claims) and offends Cheeks precedent
Disclosure of plaintiff’s range of possible recovery	Parties submitted total settlement amount but no damage calculations	Defendants rely on disputed exemptions and classification defenses	Denied — parties failed to provide estimates/calculations of hours or damages, so Court cannot assess reasonableness
Attorney-fee request and documentation	Counsel seeks one-third of fund ($5,000) and asserts $9,017 in fees/costs	Fee is a customary contingency percentage	Denied — lack of contemporaneous billing records and supporting lodestar information prevents fee approval

Key Cases Cited

Cheeks v. Freeport Pancake House, 796 F.3d 199 (2d Cir. 2015) (FLSA stipulated dismissals require court or DOL approval and courts must police overbroad provisions)
Wolinsky v. Scholastic Inc., 900 F. Supp. 2d 332 (S.D.N.Y. 2012) (factors for evaluating fairness of FLSA settlements)
Lopez v. Nights of Cabiria, LLC, 96 F. Supp. 3d 170 (S.D.N.Y. 2015) (rejecting non-disparagement restrictions that lack truthful-statement carve-out)
Snead v. Interim Healthcare of Rochester, Inc., 286 F. Supp. 3d 546 (W.D.N.Y. 2018) (approving non-disparagement clause that permits truthful statements about litigation)
Gurung v. White Way Threading LLC, 226 F. Supp. 3d 226 (S.D.N.Y. 2016) (discussing overbroad releases in FLSA settlements)
Fisher v. SD Prot. Inc., 948 F.3d 593 (2d Cir. 2020) (prevailing FLSA plaintiffs are entitled to reasonable attorneys' fees and costs)
Millea v. Metro–N. R. Co., 658 F.3d 154 (2d Cir. 2011) (lodestar method for attorney-fee calculations)
McDaniel v. County of Schenectady, 595 F.3d 411 (2d Cir. 2010) (percentage-of-fund method and fee cross-check considerations)
A.H. Phillips, Inc. v. Walling, 324 U.S. 490 (1945) (FLSA’s remedial purpose and policy considerations)

Notes: The Court denied approval without prejudice and invited the parties to cure the defects and renew their Cheeks application.