Lipstein v. 20X Hospitality LLC

Background

Milan Lipstein brought this action on behalf of himself and others similarly situated against 20X Hospitality LLC, doing business as Spicy Moon, and other defendants. The opinion states that the action was brought under, among other laws, the Fair Labor Standards Act (FLSA), which addresses overtime wages and liquidated damages. By a January 15, 2025 letter, the parties informed the court that they had reached a settlement in principle.

Court’s analysis

The court explained that when parties settle FLSA claims and seek dismissal under Rule 41 of the Federal Rules of Civil Procedure, the settlement and any proposed attorney-fee award must be reviewed for fairness. The court directed the parties to address the fairness and reasonableness factors identified in Wolinsky v. Scholastic, Inc. The parties also had to address any proposed incentive payment to Lipstein and any attorney-fee award to his counsel, including supporting documentation when appropriate.

The court stated that it would not approve a settlement containing a confidentiality provision unless the parties showed case-specific reasons sufficient to overcome the public’s common-law right of access to judicial documents. It likewise 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. The court also would not approve a non-disparagement clause barring negative statements about a defendant unless it protected truthful statements about the plaintiff’s experience litigating the case, absent case-specific justification for omitting that protection. If the agreement contained any of these provisions, the parties had to state whether they wanted the court to consider approving the agreement with those provisions stricken. The court noted that it could approve or reject an FLSA settlement but could not modify the agreement itself.

Order and effect

The court ordered the parties to submit the settlement agreement and a joint letter explaining the basis for the proposed settlement and why it should be approved as fair and reasonable, if they contemplated dismissal under Rule 41, by January 30, 2025. The court did not approve or reject the settlement in this order. It reminded the parties that they could consent to proceed for all purposes before the assigned magistrate judge, who would then decide whether to approve the settlement. All pending deadlines were adjourned without a new date.