Aucacama v. CP Prince St LLC

Background

The court was notified on January 23, 2020, that the parties had reached an agreement on all issues. The case involved claims under the Fair Labor Standards Act, a federal law governing issues such as minimum wages and overtime pay. The opinion does not describe the settlement’s terms or the amount of any proposed payment.

Settlement approval and dismissal with prejudice

The court ordered that the parties could not dismiss the action with prejudice based on their settlement unless the settlement was approved by the court or the Department of Labor. A dismissal with prejudice would end the case and bar the claims from being brought again.

If the parties wanted court approval, they had to file a joint letter motion and the settlement agreement on the public docket by February 24, 2020. The motion had to explain why the settlement was fair and reasonable, including the plaintiff’s possible recovery, the burdens and expenses avoided through settlement, litigation risks, whether experienced counsel negotiated at arm’s length, and any possibility of fraud or collusion. It also had to address whether there was a genuine dispute about the hours worked or 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. Alternatively, the parties could provide documentation showing approval by the Department of Labor.

Dismissal without prejudice option

The court noted that 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 Federal Rule of Civil Procedure 41(a)(1)(A). If the parties chose that option, they had to file a stipulation on the public docket within 30 days, accompanied by an affirmation from the plaintiff’s counsel stating that the plaintiff or plaintiffs had been clearly advised that the settlement would not prevent another lawsuit against the same defendants and affirming that the settlement agreement did not release the defendants. The court warned that this option could allow the case to be reopened in the future.

Ruling and next step

Judge Valerie Caproni ordered that, if no required letter or stipulation was filed by February 24, 2020, a conference would be held on February 28, 2020. The order did not approve the settlement, decide the underlying claims, or dismiss the action.