Torres v. Crispy Burger , LLC

Background

Jose Torres filed this proposed collective action under the Fair Labor Standards Act (FLSA), a federal wage law, and the New York Labor Law. He alleged that, while working as a cook and food preparer for Crispy Burger, LLC, he was denied required overtime pay and minimum wages. The defendants were Crispy Burger, LLC, Fred Z, and Yi Zheng. The docket did not show that the defendants had been served, and none had appeared.

Torres filed a stipulation seeking voluntary dismissal under Federal Rule of Civil Procedure 41. After the court asked whether the dismissal resulted from a settlement, Torres’s counsel confirmed that it did. Counsel reported that Torres had negotiated a settlement without consulting the firm and had insisted on proceeding despite counsel’s advice against the terms. According to counsel, the arrangement involved Torres receiving his job back and defendants paying $3,630 toward his attorneys’ fees and costs. Counsel stated that Torres then paid that amount to the firm. The firm’s itemized invoice listed $6,277.50 in fees and costs.

The written settlement released the claims alleged in the complaint and included a confidentiality provision barring Torres from discussing the settlement or the negotiations. It stated that the $3,630 payment was consideration for Torres’s execution of a Rule 68 offer of judgment and the settlement agreement. An offer of judgment signed by Crispy Burger and Yi Zheng was attached, but the court did not receive written notice that Torres accepted it or a certificate of service showing the required filing steps.

Settlement-review requirement

The court explained that, under Second Circuit precedent, a voluntary dismissal settling FLSA claims requires judicial approval, including when the dismissal is described as being without prejudice. The purpose of review is to protect workers who may face financial pressure and unequal bargaining power. Courts examine whether a settlement is a fair and reasonable compromise rather than an employer’s overreaching or a waiver of statutory rights. Relevant considerations include the possible recovery, litigation burdens and risks, whether experienced counsel negotiated at arm’s length, and possible fraud or collusion.

The court noted that the parties had not submitted information justifying the agreement’s fairness. The settlement provided Torres no recovery on his overtime or minimum-wage claims and only paid part of his attorneys’ fees. No discovery had occurred, so the possible strengths and weaknesses of his claims could not yet be assessed. The court also noted that the agreement was not the product of arm’s-length bargaining between experienced counsel, based on counsel’s statement that Torres entered it against counsel’s advice and was induced by a separate promise to rehire him that was not included in the written agreement.

The court further concluded that the confidentiality provision provided an additional reason not to approve the settlement because such restrictions are contrary to public policy in FLSA settlements and can prevent workers from sharing information or acting together.

Ruling and next steps

The court declined to approve the settlement agreement as fair and reasonable. It therefore ruled that the Rule 41 dismissal stipulation had no effect and that the case remains open. Torres must file a letter by June 27, 2025, stating his position about the next steps. He must also serve the opinion and order on the defendants within one week and file a certificate of service afterward.