Reyes v. Gracefully, Inc.
- Valerie Caproni
- 1:17-cv-09328
- U.S. District Court · Southern District of New York
- 3
In Reyes v. Gracefully, Judge Caproni set filing and approval requirements for the parties’ proposed settlement before ending the case.
The parties to the Fair Labor Standards Act case, including Cresenciano Reyes and the named defendants, and their lawyers.
What happened
Reyes v. Gracefully, Inc. concerns claims under the federal Fair Labor Standards Act. The parties told the court they had reached an agreement in principle resolving all issues.
The court said the parties could not end the case permanently unless the settlement was approved by the court or the Department of Labor. It required a public filing explaining why the settlement was fair and reasonable, including information about possible recovery, litigation risks, bargaining, possible fraud or collusion, any genuine dispute about hours or compensation, and requested attorney fees.
Judge Valerie Caproni also described an alternative: the parties could file a dismissal without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A), with a statement from the plaintiff’s lawyer confirming that the plaintiff understood another lawsuit could be filed and that the settlement released no defendants. The order did not itself approve the settlement or dismiss the case.
The detailed version
- Reyes v. Gracefully, Inc. · No. 1:17-cv-09328
- Valerie Caproni
- Jan. 17, 2020
Background
Crescenciano Reyes brought claims on behalf of himself and others similarly situated against Gracefully, Inc. doing business as Gracefully Deli East Village; Foodex LLC doing business as Gracefully Deli Upper West Side; FoodMood LLC doing business as Gracefully; Joel Dancyger; Grace Dancyger; and Victuals, LLC. The claims arose under the Fair Labor Standards Act. On January 16, 2020, the parties notified the court that they had reached an agreement in principle resolving all issues.
Court’s Requirements
The court ordered that the parties could not dismiss the action permanently unless either the court or the Department of Labor approved the settlement. If they sought that approval from the court, they had to file a joint letter motion and the settlement agreement on the public docket by February 17, 2020. The letter motion had to explain why the proposed settlement was fair and reasonable and address:
- The plaintiff’s possible range of recovery;
- The burdens and expenses the settlement would help the parties avoid;
- The seriousness of the litigation risks;
- Whether experienced counsel negotiated the agreement 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 the plaintiff’s attorney would seek in fees. The court stated that, absent special circumstances, it would not approve a settlement filed under seal or in redacted form.
Alternative Dismissal Without Prejudice
The court noted that the Court of Appeals for the Second Circuit had not decided whether parties may settle a Fair Labor Standards Act case without court or Department of Labor approval and dismiss it without prejudice under Rule 41(a)(1)(A). If the parties chose that route, they had to file a stipulation on the public docket within 30 days. The stipulation had to include an affirmation from the plaintiff’s counsel stating that the plaintiff had been clearly advised that the settlement would not prevent another lawsuit against the same defendants and affirming that the settlement contained no release of the defendants. The court warned that this option carried a risk that the case could be reopened later.
Disposition
Judge Valerie Caproni ordered the parties to file either the approval materials or the alternative stipulation by the specified deadline. If neither a letter nor a stipulation was filed by February 17, 2020, the court set a conference for February 21, 2020. The opinion did not approve the settlement or enter a dismissal.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.