Morales v. Ship Wrecked Bar and Grill, Inc.

Background

The plaintiffs brought this action under the Fair Labor Standards Act, a federal law governing matters including overtime pay. The parties informed the court that they had reached a settlement in principle.

Court’s Order

The court ordered the parties to submit the settlement agreement and a joint letter by August 27, 2024. The letter must explain the basis for the proposed settlement and why it should be approved as fair and reasonable if the parties intend to dismiss the case under Rule 41 of the Federal Rules of Civil Procedure. The parties must also address any incentive payments to the plaintiffs and any attorney’s fee award to plaintiffs’ counsel, including supporting documentation when appropriate.

The court explained that settlements of Fair Labor Standards Act claims generally require court or Department of Labor approval when the parties seek dismissal under Rule 41. The parties may instead consent to proceed before the assigned magistrate judge, who would decide whether to approve the settlement. If they choose that option, all parties must file a completed consent form by the same deadline.

The court stated that it would not approve an agreement containing a confidentiality provision unless the parties showed case-specific reasons sufficient to overcome the public’s common-law right to access judicial documents. It also would not approve a release or waiver covering claims that had not accrued or claims unrelated to wage-and-hour matters without case-specific justification. A provision restricting negative statements about a defendant must include an exception for truthful statements about a plaintiff’s experience litigating the case, unless the parties justify the broader restriction with case-specific reasons.

If the agreement contains any of those provisions, the parties must tell the court whether they want it to consider approving the agreement with the provisions removed. The court noted that it may approve or reject the agreement but may not rewrite it.

Disposition and Effect

The court adjourned all pending deadlines until further order and directed the Clerk of Court to terminate ECF No. 26. The order did not approve the settlement, dismiss the action, or decide the merits of the plaintiffs’ Fair Labor Standards Act claims. Judge Dale E. Ho issued the order.