Cruz v. Steven Madden Ltd.

Background

The court was notified that, through mediation, the parties had reached an agreement on all issues. The case involves claims under the Fair Labor Standards Act, a federal law governing matters including wages and working time. The order does not approve the agreement or state its terms.

Court’s instructions about dismissal with prejudice

The court ordered that the parties may not dismiss the action with prejudice based on their settlement unless the settlement agreement is approved by either the court or the Department of Labor. A dismissal with prejudice generally ends the case and prevents the same claims from being brought again. If the parties want that type of dismissal, they must file either a joint letter motion asking the court to approve the settlement or documentation showing Department of Labor approval. The letter motion and settlement agreement must be filed on the public docket by March 3, 2025.

The court said the request must explain why the proposed settlement is fair and reasonable. It must address, at a minimum, the plaintiff’s possible recovery; the burdens and costs the parties would avoid by settling; the seriousness of the litigation risks; the length of negotiations between experienced counsel; and the possibility of fraud or collusion. It must also address whether there is a genuine dispute about the hours worked or compensation owed, and how much the plaintiff’s attorney will seek in fees. Absent special circumstances, the court said it would not approve an agreement filed under seal or in redacted form.

The court also warned that it was unlikely to approve a general release, or a release of claims not raised in the complaint and unrelated to wage-and-hour claims under the Fair Labor Standards Act or related state laws. 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.

Possible dismissal without prejudice

The court noted that the Second Circuit has not decided whether the parties may settle a Fair Labor Standards Act case without court or Department of Labor approval and dismiss it without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). A dismissal without prejudice does not bar a new action, assuming the applicable filing deadline has not expired.

If the parties wanted to proceed without court or Department of Labor approval, the court required them to file a Rule 41(a)(1)(A) stipulation on the public docket within 30 days. The stipulation had to include an affirmation from the plaintiff’s counsel stating that the plaintiff or plaintiffs had been clearly advised that the settlement would not prevent another lawsuit against the same defendants, and affirming that the settlement agreement contained no release of the defendants. The court warned that this option could allow the case to be reopened in the future.

Disposition and next steps

The court canceled all previously scheduled conferences and other deadlines. If no letter or stipulation was filed by March 3, 2025, the court ordered that a conference would be held on March 7, 2025, at 10:00 a.m. in Courtroom 20C of the Daniel Patrick Moynihan Courthouse in New York, New York.