Alvarez Vargas v. Orenco Funding Group, Inc.

Background

On August 27, 2024, Plaintiff Jose Guillermo Alvarez Vargas and Defendants Orenco Funding Group, Inc. and Sean Nasab notified the court that they had reached an agreement on all issues. The case involves claims under the Fair Labor Standards Act, a federal wage-and-hour law.

Settlement approval and dismissal with prejudice

The court ordered that the parties may not dismiss the action with prejudice based on their settlement unless either the court or the Department of Labor approves the settlement. If the parties want court approval, they must file a joint letter motion and the settlement agreement on the public docket by September 28, 2024. Alternatively, they may provide documentation showing Department of Labor approval.

The letter motion must explain why the proposed settlement is fair and reasonable. The court stated that the motion should address the plaintiff’s possible recovery, the burdens and expenses the settlement would avoid, the risks of litigation, the parties’ bargaining process, and possible fraud or collusion. It must also address whether there is a genuine dispute about the hours worked or compensation owed and the amount of attorney fees the plaintiff’s lawyer will seek. Unless special circumstances exist, the court said it would not approve a settlement filed under seal or in redacted form.

Release provisions

The court advised that it was unlikely to approve a general release, or a release of claims not raised in the complaint and unrelated to Fair Labor Standards Act or related state wage-and-hour claims. If the parties believed unusual circumstances justified a broader release, their joint motion had to explain why. The court warned that failure to comply could lead to denial of the motion and sanctions against the attorneys.

Dismissal without prejudice

The court noted that the Court of Appeals for the Second Circuit had not decided whether an FLSA case may be settled without court or Department of Labor approval and dismissed without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). If the parties choose that route, they must file a stipulation on the public docket within 30 days. The filing must include an affirmation from Plaintiff’s counsel stating that the plaintiff was clearly advised that the settlement would not prevent another lawsuit against the same defendants and affirming that the settlement contains no release of the defendants. The court warned that this option could allow the case to be reopened later.

Other orders and disposition

The court canceled all previously scheduled conferences and other deadlines. If no letter or stipulation was filed by September 28, 2024, the court ordered a conference for October 4, 2024, at 10:00 a.m. The order established procedures for handling the reported settlement; it did not approve the settlement or dismiss the action.