Gonzalez v. Taqueria Emilio 3 Corp.

Background

The court was notified that Yahir Gonzalez and the defendants, Taqueria Emilio 3 Corp. doing business as Taqueria Emilio and Elvin Lopez, had reached an agreement through mediation resolving all issues. The case includes claims under the Fair Labor Standards Act (FLSA), a federal wage-and-hour law.

Settlement-approval requirements

The court ordered that the parties may not dismiss the action with prejudice based on the settlement unless the agreement is approved by either the court or the Department of Labor. If the parties seek court approval, they must file a joint letter motion and the settlement agreement on the public docket by July 28, 2024. The motion must explain why the settlement is fair and reasonable, including the plaintiff’s possible recovery, the burdens and expenses avoided by settling, the litigation risks, the length of negotiations between experienced counsel, and the possibility of fraud or collusion.

The motion must also address whether a genuine dispute exists about the number of hours worked or the compensation owed, and how much the plaintiff’s attorney will seek in fees. The court stated that it generally would not approve an agreement filed under seal or in redacted form absent special circumstances.

The court also warned that it was unlikely to approve a general release, or a release of claims unrelated to the wage-and-hour claims under the FLSA or related state laws. If the parties believed unusual circumstances justified a broader release, their joint motion had to explain why. The court stated that failure to comply could result in summary denial of the motion and sanctions against the attorneys.

Dismissal without prejudice

The court noted that the Second Circuit had not decided whether the parties could settle an FLSA case without court or Department of Labor approval and dismiss it without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). If the parties chose that route, they had to file the required stipulation on the public docket within 30 days. The stipulation had to include an affirmation from plaintiff’s counsel stating that the plaintiff had been clearly advised that the settlement would not prevent another lawsuit against the same defendants and affirming that the settlement agreement contained no release of the defendants. The court warned that this option carried the risk that the case could later be reopened.

Ruling and effect

Judge Valerie Caproni canceled all previously scheduled conferences and other deadlines. If neither a settlement-approval letter nor a dismissal stipulation was filed by July 28, 2024, the court directed that a conference would be held on August 2, 2024. The order established procedures for the parties’ settlement but did not approve the agreement and did not dismiss the case.