Paulino v. Kleiner

Background

The case had been stayed while the parties proceeded with arbitration. On August 8, 2024, the court was informed that the parties had reached a settlement during the arbitration. The opinion does not approve the settlement or state its financial terms.

Settlement-review requirement

The court explained that settlements of claims under the Fair Labor Standards Act (FLSA) require court approval when the parties contemplate dismissal under Rule 41 of the Federal Rules of Civil Procedure. The court also stated that settlements reached while an FLSA case is stayed for arbitration generally must receive the same fairness review as other FLSA settlements.

The court ordered the parties to submit the settlement agreement and a joint letter by August 23, 2024. The letter must explain the basis for the proposed settlement and why the agreement should be approved as fair and reasonable, referring to the factors identified in Wolinsky. The letter must also address any payment to the plaintiff beyond the settlement amount and any attorney-fee award to the plaintiff’s counsel, with supporting documentation when appropriate.

Possible magistrate-judge review

The court advised that, because the parties had reached a settlement, they could consent to proceed before the assigned magistrate judge for all purposes. If every party filed the required consent form by August 23, 2024, the magistrate judge would decide whether to approve the settlement.

Settlement provisions identified by the court

The court stated that it would not approve a settlement containing a confidentiality provision unless the parties showed case-specific reasons sufficient to overcome the public’s common-law right of 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 justified that broad release with case-specific reasons. In addition, the court would not approve a provision barring the plaintiff from making negative statements about a defendant unless it included an exception for truthful statements about the plaintiff’s experience litigating the case, or the parties provided case-specific reasons for omitting that exception.

If the agreement contained any of those provisions, the parties were required to say whether they wanted the court to consider approving the agreement with those provisions removed. The court noted that, absent good cause, it would publicly file both the joint letter and the settlement agreement in that situation, and that a court may approve or reject an FLSA settlement but may not rewrite the agreement. The court adjourned all pending deadlines indefinitely.