Koutali v. La Delice Pastry Shop Inc

Background

The parties advised the U.S. District Court for the Southern District of New York that they had reached a settlement in this Fair Labor Standards Act (FLSA) case. The opinion does not state the settlement amount or its other terms.

Court’s Analysis

The court explained that an FLSA action cannot be dismissed under Federal Rule of Civil Procedure 41 based on a settlement unless the settlement has been approved by the court or by the Department of Labor. The court therefore directed the plaintiff, or the parties jointly, to do one of two things by August 8, 2024: file a letter motion asking the court to approve the settlement, together with the settlement agreement, or provide documentation showing Department of Labor approval.

A request for court approval must explain why the proposed settlement is fair and reasonable. The court required discussion of the plaintiff’s possible recovery; the burdens and expenses the settlement would avoid; the seriousness of the litigation risks; whether experienced counsel negotiated at arm’s length; and the possibility of fraud or collusion. The filing must also address whether there is a genuine dispute about the number of hours worked or the compensation owed, and how much of the settlement the plaintiff’s attorney will seek as fees.

The court advised the parties to provide specific information about possible recovery and litigation risks because conclusory statements are insufficient. It also stated that, absent special circumstances, it would not approve a settlement filed under seal or in redacted form. Absent compelling circumstances, it would not approve sweeping nondisclosure provisions or releases of claims unrelated to FLSA issues, including broad releases covering numerous affiliated entities, the plaintiff’s successors or representatives, or wage claims beyond those involved in the case. Any attorney-fee request must include contemporaneous billing records showing, for each attorney, the date, hours worked, and nature of the work.

Additional Case-Management Option

The parties may consent to have Magistrate Judge Ona T. Wang oversee settlement approval. If they consent, they must file a fully executed consent and reference form by August 8, 2024. The order states that the parties may withhold consent without negative consequences and that any appeal would go directly to the U.S. Court of Appeals for the Second Circuit.

Disposition

Judge Analisa Torres ordered the required settlement-approval filing or Department of Labor documentation by August 8, 2024. The opinion does not approve the settlement or dismiss the action.