Velasquez v. The Baodega LLC

Background

The parties advised the court that they had reached a settlement in this Fair Labor Standards Act (FLSA) case. The order did not approve the settlement itself. It addressed what the parties had to do if they wanted the action dismissed with prejudice—that is, dismissed in a way that bars refiling the same claims.

Settlement-Approval Requirements

The court ordered that the action could not be dismissed with prejudice unless the settlement agreement was approved either by the court or by the Department of Labor. If the parties sought dismissal with prejudice, they had to file a joint letter motion asking the court to approve the agreement, or documentation showing Department of Labor approval. The letter motion and settlement agreement had to be filed on the public docket by October 4, 2024.

The letter motion had to explain why the proposed settlement was fair and reasonable. It also had to discuss the plaintiff’s possible recovery; the burdens and expenses the settlement would avoid; the litigation risks; whether experienced counsel negotiated the agreement at arm’s length; and the possibility of fraud or collusion. The parties also had to address whether a genuine dispute existed about the number of hours worked or the compensation owed, and how much of the settlement the plaintiff’s attorney would seek as fees.

Attorney Fees and Settlement Terms

Any request for attorney fees had to include contemporaneous billing records showing, for each attorney, the date, hours worked, and nature of the work. Unless special circumstances existed, the court said it would not approve a settlement filed under seal or in redacted form. The court also said that, absent compelling circumstances, it would not approve agreements containing sweeping nondisclosure provisions or broad releases of claims unrelated to FLSA issues.

Other Orders and Disposition

The parties could consent to have Magistrate Judge Sarah Netburn oversee settlement approval, but they were free to withhold consent without negative consequences. If they consented and the court approved the consent form, further proceedings would occur before Judge Netburn. Any appeal would go directly to the United States Court of Appeals for the Second Circuit. Judge Analisa Torres stated that any pending motions were moot and vacated all conferences. The order did not state that the settlement was approved or that the action was dismissed with prejudice.