Martinez v. Sana Deli Corp.

Background

The mediator represented that the parties had reached a settlement in principle in this Fair Labor Standards Act (FLSA) case. The opinion explains that the FLSA requires an employer that violates overtime-pay requirements to pay the unpaid overtime and an equal amount as liquidated damages.

Under Second Circuit precedent, a proposed settlement of FLSA claims that would be dismissed under Federal Rule of Civil Procedure 41 must be reviewed by the court, including any proposed attorney’s fee award. The court must determine whether the settlement is fair and reasonable.

Order

The court ordered the parties to submit the settlement agreement and a joint letter by August 30, 2024. The letter must explain the basis for the proposed settlement and why it should be approved as fair and reasonable if the parties plan to seek dismissal under Rule 41. It must address the fairness factors identified in the cited precedent and, if applicable, any incentive payment to the plaintiff and any attorney’s fee award to plaintiff’s counsel. The parties must provide supporting documentation for the fee award when appropriate.

The court also stated that it would not approve an agreement containing certain provisions unless the parties provided case-specific justification. These include a confidentiality provision that lacks sufficient justification; a release or waiver covering claims that have not accrued or claims unrelated to wage-and-hour matters; and a clause barring negative statements about the defendant without an exception for truthful statements about the plaintiff’s experience litigating the case. If such provisions are included, the parties must say whether they want the court to consider approving the agreement with those provisions stricken. The court noted that it may approve or reject an FLSA settlement but may not rewrite the agreement.

The parties were also reminded that they could consent to proceed before the assigned Magistrate Judge for all purposes. If they did so, that judge would decide whether to approve the settlement, and the parties would have to file the completed consent form by the same deadline.

Disposition

The court did not approve or reject the settlement in this order. It ordered the parties to submit the agreement and required explanation for review. The order also notes that court approval is not required for an FLSA settlement made through a Rule 68(a) offer of judgment.