Sanchez v. Milea Truck Sales Corp.

Background

The parties informed the court that they had reached a settlement in principle in this action under the Fair Labor Standards Act (FLSA), a federal statute that includes requirements for paying overtime wages. The opinion explains that an employer violating the overtime requirement may owe unpaid overtime compensation and an equal amount as liquidated damages.

Court’s Analysis

The court stated that an FLSA settlement and dismissal under Rule 41 of the Federal Rules of Civil Procedure must be reviewed to ensure that the settlement is fair. The review also covers any proposed attorney’s fee award. The order directed the parties to submit the settlement agreement and a joint letter by November 11, 2024. The letter must explain the basis for the proposed settlement and, if the parties seek dismissal under Rule 41, why the settlement should be approved as fair and reasonable. It must address the factors identified in Wolinsky v. Scholastic, Inc., and, if applicable, any incentive payment to Sanchez and any attorney’s fee award, with supporting documentation when appropriate.

The court also advised the parties that they could consent to proceed before the assigned magistrate judge, who would then decide whether to approve the settlement. Alternatively, the parties could use an offer of judgment under Rule 68(a), which the order states would not require judicial approval for resolution of the FLSA claims.

Settlement Terms the Court Would Not Approve Without Further Justification

The court stated that it would not approve a settlement agreement containing a confidentiality provision unless the parties showed case-specific reasons sufficient to overcome the public-access right applicable to judicial documents. It also would not approve a provision releasing or waiving unaccrued claims or claims unrelated to wage-and-hour matters unless the parties provided case-specific justification. Finally, it would not approve a non-disparagement clause barring Sanchez from making negative statements about a defendant unless the clause included an exception for truthful statements about Sanchez’s experience litigating the case, or the parties justified the clause with case-specific reasons.

If the agreement contained any of those provisions, the parties had to say whether they wanted the court to consider approving the agreement with the provisions removed. The order noted that the court could approve or reject an FLSA settlement but could not modify the agreement itself.

Disposition

Judge Jennifer H. Rearden ordered the parties to submit the settlement agreement and joint letter by November 11, 2024. The order did not approve the settlement, dismiss the action, or decide the underlying wage-and-hour claims.