Arriaga v. Nipa Thai Restaurant Corp.

Background

The court was advised that the parties had reached a settlement in this Fair Labor Standards Act (FLSA) case. The opinion does not state the settlement terms or the amount of any proposed payment.

Settlement-approval standard

The court explained that parties may not privately settle FLSA claims with prejudice without approval from the district court or the Department of Labor. The court therefore had to determine whether the settlement was fair and reasonable. It identified five relevant factors: the plaintiffs’ possible recovery; the extent to which the settlement would avoid the burdens and expenses of proving the claims and defenses; the seriousness of the parties’ litigation risks; whether experienced counsel negotiated at arm’s length; and the possibility of fraud or collusion.

When a settlement includes attorney’s fees, the court must separately assess whether those fees are reasonable. Counsel must provide a factual basis for any fee award, including contemporaneous billing records showing each attorney’s date of work, hours spent, and the nature of the work.

Order

Judge Vernon S. Broderick ordered the parties to provide the court with the settlement terms within 30 days so the court could determine whether they were fair and reflected a reasonable compromise of disputed issues. The parties also had to submit a joint letter of no more than five pages explaining why the settlement was fair and reasonable and addressing the five identified factors. If the agreement included attorney’s fees, the parties had to submit supporting evidence for the fee award. The order did not approve the settlement in this opinion.