Issa v. A to Z on 8th, Inc.

Background

The court stated that the parties had reached a settlement in the case and that the settlement included claims under the Fair Labor Standards Act (FLSA). The order explained three ways the parties could proceed.

First option: dismissal with prejudice

If the parties wanted to dismiss the FLSA claims with prejudice, meaning permanently, they had to seek judicial approval under Federal Rule of Civil Procedure 41(a)(2). The court relied on the Second Circuit’s decision in Cheeks v. Freeport Pancake House, Inc., which held that FLSA claims cannot be dismissed with prejudice under Rule 41(a)(1)(A) without court approval.

The parties first had to discuss whether they would consent to having all further proceedings conducted by the assigned magistrate judge. If both consented, they had to file the required consent form by October 16, 2024. If either party declined, the parties had to file a joint letter by that date stating that they did not consent, without identifying the party who declined.

If the parties did not consent to proceed before the magistrate judge, they had to submit a joint motion by October 23, 2024 explaining why the settlement was fair and should be approved. The motion had to address the factors identified in Wolinsky v. Scholastic Inc. and include the settlement agreement. The court stated that it would not approve settlement agreements containing confidentiality provisions and would not allow settlement-related materials to be filed under seal without a particularized showing overcoming the presumption of public access. If the settlement included attorney’s fees, the parties also had to address whether the fees were reasonable and provide detailed attorney time records.

Second option: dismissal without prejudice

The parties could instead submit a stipulation dismissing the FLSA claims without prejudice, meaning the dismissal would not permanently bar those claims, under Rule 41(a)(1)(A). To use this option, they had to certify that there had been no settlement of the FLSA claims. The stipulation and certification were due October 16, 2024. If the parties could not make that certification, the court directed them to seek approval of the settlement under the first option.

Third option: offer of judgment

The parties could resolve the case through an offer and acceptance of judgment under Federal Rule of Civil Procedure 68(a). The order explained that, under Second Circuit precedent, court approval is not required for a Rule 68(a) offer of judgment involving FLSA claims. If the parties chose this route, they had to submit the executed offer and acceptance, along with a proposed order entering judgment, by October 16, 2024.

Ruling and effect

The court directed the parties to proceed under one of these three alternatives. The order set procedures and deadlines; it did not state that the court had approved the settlement, dismissed the claims, or entered judgment. Judge Gregory H. Woods signed the order on October 2, 2024.