Perez et al v. Denco Construction LLC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Regina M. Rodriguez
Civil Action No. 24-cv-02766-RMR-KAS
WILMER PEREZ,
RUBY ORANTES,
EDGAR SUAREZ ACEROS,
GOJHAN SIERRA,
ESTABAN SUAREZ,
ALEXAS CALDERON,
Plaintiffs,
v.
DENCO CONSTRUCTION LLC d/b/a/ DENCO,
ROA CONSTRUCTION LLC,
ABC COMPANIES 1-10 (names fictitious)
BRUCE RAHMANI,
YESSICA ROA,
JOHN DOES 1-10 (names fictitious) individually,
Defendants.
ORDER
This matter is before the Court on the Recommendation of United States
Magistrate Judge N. Reid Neureiter, ECF No. 182, entered December 31, 2025,
addressing Defendant Denco Construction LLC’s (“Denco”) Motion to Enforce Settlement
Agreements (the “Motion”), ECF No. 112. Magistrate Judge Neureiter recommends that
the Motion be denied. Denco filed an Objection to the Recommendation. ECF No. 183.
Plaintiffs filed a Reply that exceeded the page limit by three pages. ECF No. 184. Denco
filed an opposed motion for leave to file a reply in further support of their objection. ECF
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No. 185. Plaintiff filed an opposed motion to amend their Reply to comply with the Court’s
page limitation of 10 pages. ECF No. 186. On February 5, 2026, the Court denied Denco’s
motion to file a reply and granted Plaintiffs’ motion to amend their Reply to Denco’s
Objection. ECF Nos. 188-89.
Defendants allegedly violated the Fair Labor Standards Act (“FLSA”). Denco has
moved to dismiss claims by Perez, Orantes, and Aceros because Denco asserts it settled
with these Plaintiffs and such settlement is a valid agreement which the Court should
enforce. Denco objects to Magistrate Judge Neureiter’s conclusion “that an FLSA
settlement agreement must be presented to the court for approval in accordance with
factors set forth in Lynn’s Food to be enforceable,” ECF No. 182 at 18, and his
recommendation to deny the Motion. This Court agrees with the other judges in this
District who have addressed this matter that not every FLSA settlement agreement must
be approved by the Court. See, e.g., Ruiz v. Act Fast Delivery of Colo., Inc., No. 14-CV-
00870-MSK-NYW, 2017 WL 11545275, at *2 (D. Colo. Jan. 9, 2017) (the Honorable
Marcia S. Kreiger holding that FLSA settlements do not require court approval, absent
special circumstances). However, Denco has not convinced this Court that this is one of
those cases that do not require court approval. For the reasons stated below, the Court
overrules Denco’s objection and adopts the Recommendation insofar as it denies
Defendants’ Motion to Enforce Settlement Agreement.
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I. BACKGROUND
A. Procedural Background
The parties do not object to the factual or procedural background outlined in the
Recommendation. Accordingly, the Court adopts and incorporates the factual and
procedural background included within the Recommendation as if set forth therein and
restates them only to the extent that it is helpful for the reader. On October 7, 2024,
Plaintiffs Perez and Orantes, along with a third plaintiff, who is no longer a plaintiff,1 filed
a Collective Action Complaint for Unpaid Wages against Defendants Denco and
Rahmani, alleging: 1) violations of the FLSA, 2) violations of the Colorado Wage Claim
Act, and 3) violations of Colorado’s Overtime and Minimum Pay Standards Order
(“COMPS”). ECF No. 1. Denco is a construction company. ECF No. 182 at 1. Plaintiffs
were employed by Denco as construction workers. Id. Plaintiffs allege that Denco required
workers to use two separate timecards. Id. The first 40 hours worked would be placed on
one timecard for Denco and any overtime would be put on a timecard for Defendant Roa
Construction LLC to avoid having to pay time and half for overtime. Id.
On December 18, 2024, the case was amended to add a class action component
to the CWA and COMPS claims. ECF No. 25. On February 10, 2025, Plaintiffs filed a
motion for a protective order, seeking to invalidate agreements entered into by 61 Denco
employees between December 24, 2024 and December 31, 2024. See ECF No. 59. The
agreements provided that those employees would release their wage and hour claims
against Denco in exchange for $500 (the “$500 Release”). Id. Plaintiffs also sought to
1 On November 4, 2024, Plaintiffs’ counsel filed a Notice of Voluntary Withdraw of Plaintiff Daniel Fuentes.
ECF No. 11. On November 5, 2024, the Court granted Plaintiff Fuentes’ request to withdraw. ECF No. 12.
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prevent Denco from discussing the lawsuit with its employees; and prohibit Denco from
seeking additional $500 Releases. Id. On February 17, 2025, Plaintiffs filed a second
amended complaint adding Plaintiff Aceros and Defendants Roa Construction Group,
ABC Companies 1-10, Roa, and John Does 1-10. ECF No. 64. On April 3, 2025, Denco
filed the Motion seeking to enforce the settlement agreements between Denco and
Plaintiffs Perez, Orantez, and Aceros. ECF No. 112. On April 23, 2025, Plaintiff filed a
third amended complaint, which is now the operative complaint, adding Plaintiffs Calderon
and Sierra. ECF No. 117. On September 12, 2025, the Court denied without prejudice
Plaintiffs’ request to invalidate the 61 $500 Releases, ECF No. 160, and conditionally
certified a collective action for “All construction workers who worked on or after October
7, 2021, who worked for Defendants who were not paid overtime at time and one half
their hourly rate for work performed after 40 hours in a given week.” ECF No. 161. On
October 30, 2025, the court approved the collective notice. ECF No. 164. The deadline
to opt in was January 12, 2026. See ECF No. 169. At least eight additional individuals
have opted in. ECF Nos. 169, 170, 171, 175, 179, and 181.
B. Factual Background of Settlement Agreements at Issue
There are three settlement agreements at issue in the Motion. The first is the
settlement agreement for Plaintiff Perez. Plaintiff Perez worked for Denco as an
electrician from September 2019 through June 2024. ECF No. 182 at 3. In September
2024, Plaintiff Perez’s attorney sent a demand letter to Denco. Id. Within fourteen days,
Denco issued a check to Plaintiff Perez for $16,572.27. Id. Plaintiff Perez paid his attorney
$5,523.00 for his services. Id. Plaintiff Perez, with the assistance of his attorney, filed this
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lawsuit on October 17, 2024. ECF No. 1. On February 13, 2025, Plaintiff Perez, without
conferring with his attorney, signed a settlement agreement with Denco in exchange for
$12,000. ECF No. 182 at 4. The release of claims in the settlement agreement was
broad─to include FLSA, CWA, COMPS, and other unrelated federal and state law and
regulations, including Title VII, the Age Discrimination in Employment Act, the Americans
with Disabilities Act, the Colorado False Claims Act, and Colorado Whistleblower law.
See, e.g., ECF No. 112-3 at 1-2. The settlement agreement was in English and Spanish.
Id. at 1-11.
The second is the settlement agreement for Plaintiff Orantez. Plaintiff Ortanez, with
the assistance of his attorney, filed this lawsuit on October 17, 2024. ECF No. 1. He never
sent a demand letter. ECF No. 182 at 4. On October 25, 2024, Plaintiff Ortanez received
$11,305.00 from Denco. Id. On February 13, 2025, the same day as Plaintiff Perez,
Plaintiff Orantez, without conferring with his attorney, signed a settlement agreement
identical to the settlement agreement signed by Plaintiff Perez in exchange for $12,000.
Id.
The third is a settlement agreement for Plaintiff Aceros. Plaintiff Aceros worked for
Denco from November 2023 to July 2024. Id. at 5. On November 11, 2024, after this
lawsuit was filed and before Plaintiffs Perez and Orantez signed their settlement
agreements, Aceros signed a settlement agreement identical to the ones signed by
Plaintiffs Perez and Orantez, except Plaintiff Aceros’ settlement agreement was only in
English, in exchange for $500 and possible employment with another contractor. Id. at 6.
Plaintiff Aceros testified that he does not understand English. In November 2024, Plaintiff
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Aceros did not have a job. Id. A supervisor from Denco helped Plaintiff Aceros obtain a
painting job. Id. He started working the day he signed the settlement agreement with
Denco. Id. His new employer had Plaintiff Aceros sign the settlement agreement, telling
him it was for taxes and insurance. Id. Plaintiff Aceros was under the impression that the
$500 was an IRS refund for people who worked for Denco. Id. On February 17, 2025,
Plaintiff Aceros joined this lawsuit. ECF No. 64.
II. LEGAL STANDARD
This Court is required to make a de novo determination of the magistrate judge’s
recommendation to which a specific objection has been made, and it may accept, reject,
or modify any or all of the magistrate judge’s findings or recommendations. 28 U.S.C.
§ 636(b)(1) (“A judge of the court shall make a de novo determination of those portions
of the report or specified proposed findings or recommendations to which objection is
made.”); Fed. R. Civ. P. 72(b)(3) (“The district judge must determine de novo any part of
the magistrate judge’s disposition that has been properly objected to.”). “[A] party’s
objections to the magistrate judge’s report and recommendation must be both timely and
specific to preserve an issue for de novo review by the district court or for appellate
review.” United States v. One Parcel of Real Property, 73 F.3d 1057, 1060 (10th Cir.
1996).
III. ANALYSIS
Defendants urge the Court to review the FLSA settlement agreements at issue like
any other request to enforce a settlement agreement and apply common law contract
principles. ECF No. 112 at 5. This approach eschews the standard set forth in Lynn’s
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Food Stores, Inc. v. United States, 679 F.2d 1350 (11th Cir. 1982)2 as well as the notion
that FLSA settlements must be approved by the court and parties should be represented
by counsel.
Magistrate Judge Neureiter provides a detailed history of the application of Lynn’s
Food in this District and across the nation. In Lynn’s Foods the Eleventh Circuit ruled that
there are only two contexts in which compromises of FLSA back wage or liquidated
damages claims may be allowed: (1) a payment supervised by the Secretary of Labor
pursuant to 29 U.S.C. § 216(c), and (2) a stipulated judgement entered by a court which
has determined that the proposed settlement is a fair and reasonable resolution of a bona
fide dispute. Id. at 1355. Thus, the Eleventh Circuit held that settlement agreements of
FLSA back wage claims or liquidated damages claims are not allowed unless there is a
stipulated judgment entered by a court. Since Lynn Foods was decided, courts across the
country and in this district have reached different conclusions as to whether court
approval is required for approval of FLSA settlements. Compare Fails v. Pathway Leasing
LLC, No. 18-CV-00308-CMA-MJW, 2018 WL 6046428, at *4 (D. Colo. Nov. 19, 2018)
(denying motion to approve settlement agreement because approval of an FLSA
settlement is not required absent special circumstances); Teague v. Acxiom Corp., No.
18-CV-01743-NYW, 2018 WL 3772865, at *4 (D. Colo. Aug. 9, 2018) (noting that “the
Parties [] may elect to proceed independently in the resolution of this matter without
2 Under the Lynn’s Foods, to approve a FLSA settlement agreement, the court must find “(1) the agreement
is the result of a bona fide dispute; (2) the proposed settlement is fair and reasonable to all parties involved;
and (3) the proposed settlement contains a reasonable award of attorneys’ fees and costs.” Prim v. Ensign
United States Drilling Inc., No. 15-CV-02156-PAB-KMT, 2020 WL 4539630, at *3 (D. Colo. Aug. 6, 2020)
(citing See Lynn's Food Stores, Inc., 679 F.2d at 1355).
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judicial approval of the settlement” and distinguishing between Ruiz because Teague was
not seeking to settle a collective action); Ruiz, 2017 WL 11545275, at *3 (same) with
Mathews, v. Elite Nurses Mgmt. LLC, No. 24-CV-01518-PAB-KAS, 2026 WL 632402, at
*9 (D. Colo. Mar. 6, 2026) (“When employees file suit under the FLSA, the parties must
present any proposed settlement to the district court for review and a determination of
whether the settlement agreement is fair and reasonable.”); Anderson v. Vitac Corp., No.
25-CV-00329-PAB-NRN, 2026 WL 171737, at *4 (D. Colo. Jan. 22, 2026) (same). As
Magistrate Judge Neureiter notes, the Tenth Circuit has not addressed this issue.3
Ultimately, Magistrate Judge Neureiter concludes ”an FLSA settlement agreement must
be presented to the court for approval in accordance with the factors set forth in Lynn’s
Food to be enforceable.” ECF No. 182 at 18
All that being said, the Court finds that it does not need to reach the issue of
whether all FLSA settlement agreements generally require approval because the facts of
this case demonstrate that it involves special circumstances. Magistrate Judge Neureiter
recognized, “though there is disagreement over whether FLSA settlements must be
approved by the [c]ourt, there does not appear to be disagreement at this time over
whether FLSA settlements may be approved by the [c]ourt.” ECF No. 182 at 19-20 (citing
Slaughter v. Sykes Enters., Inc., No. 17-cv-02038-KLM, 2019 WL 529512, at *6 (D. Colo.
Feb. 11, 2019)).
3 In a footnote, “Denco respectfully requests the Court certify its order for interlocutory appeal pursuant to
28 U.S.C. § 1292(b) should it ultimately disagree with Denco’s arguments and deny the Motion.” ECF No.
182 at 2. The Court will not entertain a request for distinct action in a footnote of an Objection to a Magistrate
Judge’s Recommendation. See RMR Civ. Practice Standard 7.1A(a)(5) (“All requests for the Court to take
distinct actions must be contained in separate, written motions.”)
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This case is distinguishable from cases where the Court is presented with an
unopposed motion for approval of an FLSA agreement. In those cases, the parties have
voluntarily agreed to settle the matter. In contrast, the circumstances here certainly
indicate that coercive, deceptive, or overreaching tactics may have been used to secure
these settlement agreements. See Fails, 2018 WL 6046248, at *3 (holding that “judicial
review of bona fide FLSA disputes is not required” but if “there is evidence of malfeasance
or overreaching in obtaining a settlement agreement—this Court will scrutinize the
purported settlement”). This Court agrees with Magistrate Neureiter’s finding that,
“[b]ased on the evidence in the record, the Court cannot find that the settlement
agreements signed by Perez and Orantes reflected a compromise of a bona fide dispute
as to the amount owed at the time the settlement agreements were entered into.” ECF
No. 182 at 20. This Court also agrees with Magistrate Judge Neureiter’s finding that the
agreements are also defective under the Lynn’s Food test.4 In either scenario, the
settlement agreements signed by Perez and Orantes are not enforceable. The Court also
agrees with Magistrate Judge Neureiter’s factual findings and conclusion that the
settlement agreement signed by Plaintiff Suarez is similarly not enforceable.
It does not appear that the agreements here actually pertain to a bona fide dispute.
Fails, 2018 WL 6046248, at *3 (holding that review of FLSA settlements is still available
in certain circumstances . . . for example, . . . where a party alleges that an agreement
does not actually pertain to a bona fide dispute). “[C]ourts have used different definitions
4 At no point do Defendants argue that they satisfy the Lynn’s Food factors used by the court to approve or
enforce FLSA settlement agreements.
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of bona fide disputes.” Martinez v. Back Bone Bullies Ltd, No. 21-CV-01245-MEH, 2022
WL 782782, at *12 (D. Colo. Mar. 15, 2022). None of them led to the conclusion that a
bona fide dispute exists here.
In Frails, the Honorable Christine M. Arguello held that there is no bona fide dispute
if “there is evidence of malfeasance or overreaching in obtaining a settlement agreement.”
Fails, 2018 WL 6046428, at *3. Here, after the lawsuit was filed, but before the collective
action was approved, Denco quickly sought to enter into settlement agreements with its
current and former employees. Employees who agreed to sign the release received $500.
These circumstances are like those in Lynn’s Foods “– the employer overreached the
employees in inducing them to settle unasserted and unevaluated claims for a small
amount of money. The affected employees were largely unaware of the fact that they had
rights under the FLSA, had not been advised by an attorney before signing the
agreements; indeed, many did not speak English.” Ruiz, 2017 WL 11545275, at *2 (citing
Martinez v. Bohls Bearing Equip. Co., 361 F. Supp. 2d 608, 628 (W.D. Tex. 2005)).
Similarly, here, Plaintiffs are Hispanic immigrants with limited formal education with only
a basic understanding of English, and who rely on their paychecks to cover daily living
expenses, with very little in the way of savings. Plaintiffs and other Denco employees are
likely to accept fast and easy cash without realizing they may be entitled to more or that
their attorney fees may be covered. It is also troublesome that Plaintiff Aceros testified
that he was under the impression that the $500 he received was a tax refund, and the
English-only paperwork he signed was required for a new job opportunity. Denco argues
that Plaintiff Aceros’ claim that he did not understand the settlement agreement because
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it was in English is not a defense. However, the Court agrees with Magistrate Judge
Neureiter that the cases cited by Denco for its proposition that a language barrier is not a
sufficient ground for invalidating the contract are distinguishable. ECF No. 182 at 7; see
also Flight Concepts Ltd. P’ship v. Boeing Co., 38 F.3d 1152, 1157 (10th Cir. 1994)
(dealing with a duty to read a contract and not making any reference to the contract being
in a foreign language); Rasmussen v. Freehling, 412 P.2d 217, 219 (Colo. 1966) (same).
There is evidence of overreaching to obtain the settlement agreements here. Thus, under
the definition used in Fails, there is no bona fide dispute.
In Martinez, Magistrate Judge Michael E. Hegarty found the “weight of authority
[is] that a bona fide dispute does not exist if the employee is unrepresented when agreeing
to settle an FLSA claim.” 2022 WL 782782, at *13. Here, Denco was aware that Plaintiffs
Perez and Orantes were represented by counsel at the time of settlement; however,
according to Plaintiff Perez, Denco encouraged him not to consult with his attorney so
that he could keep more of the money. Denco argues that “it has long been the policy of
Colorado to permit represented parties to settle without counsel.” ECF No. 183 at 11 n.4
(citing Nichols v. Orr, 166 P.561, 563 (Colo. 1917)). Nichols does not involve the FLSA.
Denco fails to cite any case holding that FLSA settlement agreements are enforceable if
represented parties settle without counsel. In fact, “the weight of authority holds that
employees must have counsel for private settlement of FLSA claims to be enforceable.”
Martinez, 2022 WL 782782, at *13 (citing Martin v. Spring Break '83 Prods., L.L.C., 688
F.3d 247, 257 (5th Cir. 2012)). Plaintiff Aceros was not represented by counsel when he
signed the settlement agreement. Here, the release in the settlement agreements covers
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Plaintiffs’ FLSA claims, but because Plaintiffs were not represented during the
negotiations, the settlement agreements are unenforceable.
In Teague, the Honorable Nina Y. Wang, then serving as a Magistrate Judge, held
that that [f]or the court to discern whether a bona fide dispute exists, the parties must
present: (1) a description of the nature of the dispute; (2) a description of the employer's
business and the type of work performed by the employee; (3) the employer's reasons for
disputing the employee's right to overtime; (4) the employee's justification for the disputed
wages; and (5) if the parties dispute the computation of wages owed, each party's
estimate of the number of hours worked and the applicable wage.” 2018 WL 3772865, at
*2 (citing Baker v. Vail Resorts Mgmt. Co., No. 13-CV-01649-PAB-CBS, 2014 WL
700096, at *1 (D. Colo. Feb. 24, 2014). Here, the Court is not convinced that there is a
bona fide dispute as to the amount of unpaid wages and overtime that is arguably owed
to the Plaintiffs. As Magistrate Judge Neureiter noted in the Recommendation, Denco
fails to provide any explanation for the amounts paid to the Plaintiffs to settle their FLSA
claims or whether they dispute the calculations presented by the Plaintiffs. Nor can the
Court determine whether these amounts were fair and reasonable. Thus, because the
settlement agreements do not relate to a bona fide dispute for the reasons above, the
Court agrees with the conclusion of the Recommendation that the settlement agreements
are unenforceable as to the FLSA claims.
IV. CONCLUSION
For the reasons set forth above, Defendant Denco Construction LLC’s Motion to
Enforce Settlement Agreements, ECF No. 112, is DENIED.
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Accordingly, it is ORDERED as follows:
1. Plaintiff’s Objection, ECF No. 183, is OVERRULED;
2. The Recommendation of the United States Magistrate Judge, ECF No. 182, is
ACCEPTED and ADOPTED as stated in the above; and
3. Defendant Denco Construction LLC’s Motion to Enforce Settlement
Agreements, ECF No. 112, is DENIED.
DATED: March 17, 2025
BY THE COURT:
_____________________________
REGINA M. RODRIGUEZ
United States District Judge
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