Melman v. Daisy, Inc.

Background

The court was advised that the parties had reached a settlement in this Fair Labor Standards Act (FLSA) case. The opinion does not provide the settlement amount, the claims’ specific facts, or the agreement’s terms.

Settlement-Approval Requirement

The court explained that an FLSA action may not be dismissed based on a settlement unless the settlement agreement is approved either by the court or by the Department of Labor. The opinion cited Second Circuit precedent requiring this review.

To the extent Michelle Melman sought dismissal under Federal Rule of Civil Procedure 41, she or the parties jointly had to do one of two things by September 1, 2025:

1. File a letter motion asking the court to approve the settlement, together with the settlement agreement; or 2. Provide documentation showing that the Department of Labor had approved the agreement.

The court required the letter motion to explain why the proposed settlement was fair and reasonable. It specifically directed the parties to discuss:

- Melman’s possible recovery range; - The burdens and expenses the settlement would avoid in establishing the parties’ claims and defenses; - The seriousness of the litigation risks; - Whether experienced counsel negotiated the settlement at arm’s length; and - The possibility of fraud or collusion.

The filing also had to address whether a genuine dispute existed about the number of hours worked or the compensation owed, and how much of the settlement Melman’s attorney would seek as fees.

Restrictions on Settlement Terms

The court warned that, absent special circumstances, it would not approve an agreement filed under seal or in redacted form. Absent compelling circumstances, it also would not approve a sweeping nondisclosure provision or a release of claims unrelated to FLSA issues.

The opinion identified provisions that generally would not be approved absent extraordinary circumstances, including releases covering numerous entities beyond the defendant, provisions binding Melman’s successors, assigns, heirs, or representatives, and a release of all claims concerning unpaid or improperly paid wages rather than only the claims involved in this case.

Any request for attorney fees had to include contemporaneous billing records showing, for each attorney, the date, hours spent, and work performed.

Other Directions and Disposition

The parties could voluntarily consent to have Magistrate Judge Valerie Figueredo oversee settlement approval. The order stated that withholding consent would not have negative consequences and that any appeal would go directly to the United States Court of Appeals for the Second Circuit.

The court did not approve or reject the settlement in this order. Instead, it required the parties to seek approval or provide Department of Labor approval documentation. The court also stated that any pending motions were moot, suspended all deadlines other than those in the order, and vacated all conferences. Judge Torres issued the order on August 4, 2025.