Espaillat v. W. 205 Realty Co., LLC

Background

The court was notified that Alejandro Espaillat and W. 205 Realty Co., LLC, and 172 Audubon Corp. had reached an agreement on all issues through mediation. The case includes claims under the Fair Labor Standards Act, a federal wage-and-hour law.

Settlement requiring approval for dismissal with prejudice

The court ordered that the parties may not dismiss the action with prejudice—that is, in a way that would ordinarily bar the same action from being brought again—unless the settlement agreement is approved by either the court or the Department of Labor. If the parties want that type of dismissal, they must file a joint letter motion asking the court to approve the settlement or provide documentation of Department of Labor approval. The submission must include the settlement agreement and must be filed on the public docket by May 21, 2025.

The letter motion must explain why the proposed settlement is fair and reasonable. The court identified factors including the plaintiff’s possible recovery, the burdens and expenses the settlement would avoid, the seriousness of the litigation risks, the length of negotiations between experienced counsel, and the possibility of fraud or collusion. The submission must also address whether there is a genuine dispute about the number of hours worked or the compensation owed, and the amount of attorney’s fees the plaintiff’s lawyer will seek.

The court stated that it would generally not approve a settlement filed under seal or in redacted form unless special circumstances exist. It also warned that it was unlikely to approve a general release, or a release of claims unrelated to the wage-and-hour claims in the complaint and related state-law claims. If the parties believe unusual circumstances justify a broader release, their joint motion must explain why. The court warned that failing to comply could lead to denial of the motion and possibly sanctions against the attorneys.

Possible dismissal without prejudice

The court noted that the Second Circuit has not decided whether the parties may settle an FLSA case without court or Department of Labor approval and dismiss it without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). If the parties choose that route, they must file a stipulation under that rule within 30 days. The filing must include an affirmation from plaintiff’s counsel stating that the plaintiff was clearly told the settlement does not prevent another lawsuit against the same defendants and affirming that the settlement agreement contains no release of the defendants. The court warned that this option creates a risk that the case could be reopened in the future.

Other orders and next date

The court canceled all previously scheduled conferences and other deadlines. If no letter or stipulation is filed by May 21, 2025, the court ordered a conference for May 23, 2025, at 10:00 a.m. in Courtroom 443 of the Thurgood Marshall U.S. Courthouse in New York, New York.