Bantsadze v. Burger Man Inc.

Background

The mediator reported that the parties had reached a settlement in principle. The action was brought under the Fair Labor Standards Act (FLSA), a federal wage-and-hour law, and New York Labor Law.

The court explained that approval is required for settlement of FLSA claims when dismissal under Federal Rule of Civil Procedure 41 is contemplated. It also explained that approval is required for settlement of state-law claims on a class-wide basis under Federal Rule of Civil Procedure 23.

Court’s Order

The court ordered the parties to file, no later than July 31, 2024, a motion for:

- class certification; - preliminary approval of the class-wide settlement; and - approval of the FLSA settlement.

The motion papers must include the proposed settlement and a proposed schedule for notifying class members, allowing them to opt out, seeking preliminary approval, and holding a settlement fairness hearing. The parties must also submit a proposed order as a separate docket entry and send it to chambers as a Word document. That proposed order must address preliminary approval, notice, and scheduling of the fairness hearing.

If the parties contemplate dismissing the FLSA claims under Rule 41, their supporting memorandum must explain why the settlement is fair and reasonable. It must address the factors identified by the court in Wolinsky v. Scholastic, Inc. The memorandum must also address any proposed incentive payments to the plaintiffs and any proposed attorney-fee award, including supporting documentation when appropriate.

Settlement Provisions Identified by the Court

The court advised that it would not approve a settlement containing a confidentiality provision unless the parties show case-specific reasons sufficient to overcome the common-law right of public access to judicial documents.

The court also stated that it would not approve a release or waiver covering claims that had not accrued or claims unrelated to wage-and-hour matters unless the parties provide case-specific reasons justifying that broad release.

Finally, the court stated that it would not approve a provision barring a plaintiff from making negative statements about the defendant unless the provision includes an exception for truthful statements about the plaintiff’s experience litigating the case, or the parties provide case-specific reasons justifying the provision without that exception.

If the proposed settlement contains any of these provisions, the parties must state in a joint letter whether they want the court alternatively to consider approving the agreement with those provisions removed. The court noted that it may approve or reject an FLSA settlement but may not modify the agreement itself.

Disposition

The order did not grant preliminary approval, certify a class, or approve the settlement. It set requirements for the parties’ future motion. The parties could also consent to proceed before the assigned magistrate judge for settlement approval and, if all parties consented, had to file the executed consent form by July 31, 2024. The court canceled the conference scheduled for July 16, 2024. Judge Dale E. Ho issued the order.