Cortorreal v. Reyes Fastest Shipping Inc.

Background

Mercy Cortorreal brought an action for damages under the Fair Labor Standards Act, a federal law governing matters including wages and hours. The parties consented to have the case decided by the magistrate judge under 28 U.S.C. § 636(c).

On January 4, 2025, the parties asked the court to approve their settlement agreement and submitted supporting materials concerning damages and attorney’s fees. On February 20, 2025, the court denied that request because the proposed agreement contained an improper “covenant not to sue,” but allowed the parties to revise the agreement and resubmit it. On March 12, 2025, the parties submitted a revised settlement agreement for approval.

Court’s Analysis

The court explained that it had to determine whether the Fair Labor Standards Act settlement was fair and reasonable and resulted from arm’s-length negotiations rather than employer overreaching. The court reviewed the revised agreement and the parties’ supporting submissions.

The court found that the revised agreement removed the improper provision identified in the earlier order. It also considered the risks, burdens, and costs of continuing the case; the possible recovery; whether the agreement resulted from arm’s-length bargaining; the attorney’s fees; and the possibility of fraud or collusion. The court noted that the agreement contained no confidentiality restrictions, limited the release to wage-and-hour claims, and provided attorney’s fees within a fair, reasonable, and acceptable range.

Ruling

The court approved the revised settlement agreement. Because the case was resolved by settlement, it dismissed and discontinued the case in its entirety, with prejudice, without costs or fees to any party except as provided in the revised agreement. The court retained jurisdiction for the limited purpose of enforcing the agreement and directed the Clerk of Court to terminate all motions and deadlines and close the case.