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Russell v. Broder & Orland, LLC

United States District Court, D. Connecticut

November 28, 2017

KATHLEEN RUSSELL Plaintiff,
v.
BRODER & ORLAND, LLC, Defendant.

          RULING ON PARTIES' JOINT MOTION FOR SETTLEMENT APPROVAL

          VICTOR A. BOLDEN, UNITED STATES DISTRICT JUDGE.

         Kathleen Russell (“Plaintiff“) filed this lawsuit alleging violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219, the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001-1461, and state law. Compl., ECF No. 1. After negotiations with Magistrate Judge Garfinkel, the parties reported that they had reached a settlement agreement and sought court approval to dismiss the case with prejudice. See Joint Mot. for Approval of Settlement, ECF No. 19.

         The motion will be DENIED the motion without prejudice for the reasons stated below.

         I. Discussion

         The Fair Labor Standards Act “is a uniquely protective statute.” Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199, 206 (2d. Cir. 2015). In light of these protections, courts in the Second Circuit are required to approve settlement agreements where the parties seek dismissal with prejudice of FLSA claims. Id. at 206 (“Thus, Rule 41(a)(1)(A)(ii) stipulated dismissals settling FLSA claims with prejudice require the approval of the district court or the DOL to take effect.”).

         After reviewing the proposed Settlement Agreement between the parties in this case, the Court has three main concerns in light of Cheeks. First, the agreement contains a broad release clause. Second, the agreement contains non-disparagement and confidentiality clauses that would include truthful statements about the litigation. Third, the parties have not submitted any documentation for the Court to adjudicate whether or not the settlement agreement fairly resolves a bona fide dispute. The Court is therefore unable to approve the proposed settlement without further modification.

         A. Release Terms

         Courts within the Second Circuit have examined broad release clauses with skepticism, especially when the terms go beyond the types of claims raised an initial complaint. See, e.g., Thallapaka v. Sheridan Hotel Assocs. LLC, No. 15CV1321, 2015 WL 5148867, at *1 (S.D.N.Y. Aug. 17, 2015) (“This Court will not sanction releases in FLSA cases where the parties purport to waive ‘practically any possible claim against the defendants, including unknown claims and claims that have no relationship whatsoever to wage-and-hour issue.') (quoting Camacho v. Ess- a-Bagel, Inc., 14 Civ. 2592(LAK), 2015 WL 129723, at *1 (S.D.N.Y. Jan. 9, 2015)); Olano v. Designs by RJR, Ltd., No. 17CV5703, 2017 WL 4460771, at *3 (S.D.N.Y. Oct. 6, 2017) (rejecting “general release of all past, current, or future claims, whether known or unknown, suspected or unsuspected, relating to any matter up to the execution date of the Settlement Agreement, which is not limited to claims related to this action or Plaintiff's employment with Defendants.”)

         The Settlement Agreement at issue here includes a broad release section. Settlement Agreement ¶ 4, ECF No. 26. Ms. Broder “knowingly and voluntarily releases and forever discharges” Defendants “of and from any and all claims, known and unknown, asserted and unasserted, which Russell has or may have against Releases as of the date of execution.” Id. By the terms of the Agreement, id., these include:

[A]ny alleged violation of FLSA, REZA, Age Discrimination in Employment Act, the Older Workers Benefits Protection Act, Title VII of the Civil Rights Act of 1964; and Medical Leave Act; Connecticut Fair Employment Practices Act, any other federal, state or local civil or human rights law or any other local, state or federal law, regulation or ordinance; any public policy, contract, tort, or common law; any allegation for costs, fees, or other expenses including attorneys' fees any other federal, state or local civil or human rights law or any other local, state or federal law, regulation or ordinance; any public policy, contract, tort, or common law; or any allegation for costs, fees, or other expenses including attorneys' fees; provided, however, that this release shall not impact Russell's existing right to receive vested benefits under the Broder & Orland, LLC Pension Plan.

         The broad language of the clause seems to sweep beyond the release of the type of claim settled in this FLSA action, especially given the inclusion of past and future claims under tort, common law, or federal, state, and local human rights law.

         Additionally, the scope of the release provision stretches beyond the claims initially alleged by Ms. Russell in her Complaint, which included FLSA and ERISA claims, as well as claims under Connecticut wage and hour laws. See Compl. Compare with Panganiban v. Medex Diagnostic & Treatment Ctr., LLC, No. 15CIV2588AMDLB, 2016 WL 927183, at *3 (E.D.N.Y. Mar. 7, 2016) (approving of broad waiver including human rights claims because plaintiff had pled those claims in the original complaint and “at the very least, the plaintiff is aware of her claims arising under these statutes.”)

         Therefore, the Court cannot approve the Settlement Agreement as it is currently drafted, given its scope.

         B. Non-Disparagement and ...


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