Hernandez v. 2400 Amsterdam Ave. Realty Corp.

Background

The parties informed the court that they had reached a settlement in this Fair Labor Standards Act (FLSA) action. The order does not describe the settlement's financial terms or state that the court approved it.

Settlement-approval requirements

The court explained that an FLSA case cannot be dismissed under Federal Rule of Civil Procedure 41 based on a settlement unless the settlement is approved either by the court or by the Department of Labor. Therefore, to the extent Juan Hernandez sought dismissal under Rule 41, he or the parties jointly had to file either a letter motion asking the court to approve the settlement or documentation showing Department of Labor approval. The filing, including the settlement agreement, had to be placed on the public docket by July 1, 2024.

The letter motion had to explain why the settlement was fair and reasonable. At a minimum, it had to address Hernandez's possible recovery, the burdens and expenses avoided by settling, the litigation risks, whether experienced counsel negotiated at arm's length, and the possibility of fraud or collusion. It also had to discuss whether a genuine dispute existed about the hours worked or compensation owed and how much Hernandez's attorney would seek in fees.

The court stated that general or conclusory descriptions of the possible recovery and litigation risks would not be enough. Unless special circumstances existed, the court would not approve a settlement filed under seal or in redacted form. It also said that, absent compelling circumstances, it would not approve sweeping nondisclosure provisions or broad releases of claims unrelated to the FLSA dispute, including releases covering unrelated wage claims or entities beyond the defendants. Any attorney-fee request had to include contemporaneous billing records listing each attorney's date, hours, and work performed.

Other rulings

The parties could consent to proceed before Magistrate Judge Sarah L. Cave, who would then oversee settlement approval. The order stated that consent was voluntary and could be withheld without negative consequences. If the parties consented and the form was approved, future proceedings would take place before Judge Cave. The order also stated that any appeal would go directly to the United States Court of Appeals for the Second Circuit.

Judge Analisa Torres stated that any pending motions were moot and vacated all conferences. The order directed the parties to submit the required settlement-approval materials but did not itself approve or reject the settlement.