De la Rosa v. Chestnut Holdings of New York Inc.

Background

The court was notified that, through mediation, the parties had reached an agreement on all issues. The action asserted claims under the Fair Labor Standards Act (FLSA). The opinion does not state the settlement’s terms or the amount of any proposed payment.

Settlement approval and dismissal with prejudice

The court relied on the Second Circuit’s decision in Cheeks v. Freeport Pancake House, Inc. and ordered that the parties could not dismiss the action with prejudice based only on their settlement unless the agreement was approved by the court or the Department of Labor. A dismissal with prejudice permanently ends the action.

If the parties wanted a dismissal with prejudice, the court required either a joint letter motion asking it to approve the settlement or documentation showing Department of Labor approval. The letter motion and settlement agreement had to be filed on the public docket by February 29, 2020. The motion had to explain why the agreement was fair and reasonable and address:

- the plaintiff’s possible recovery; - the burdens and expenses the settlement would 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 hours worked or compensation owed and how much the plaintiff’s attorney would seek in fees. Unless special circumstances existed, the court stated that it would not approve an agreement filed under seal or in redacted form.

Alternative dismissal without prejudice

The court noted that the Second Circuit had left open whether an FLSA action could be settled without court or Department of Labor approval and then dismissed without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). If the parties chose that route, they had to file a stipulation under that rule within 30 days. The stipulation had to include an affirmation from the plaintiff’s counsel stating that the plaintiff or plaintiffs had been clearly advised that the settlement did not prevent another lawsuit against the same defendants and affirming that the agreement contained no release of the defendants. The court warned that this option could allow the case to be reopened later.

Order

The court did not approve or reject the settlement in this order and did not dismiss the action. It directed the parties to file either the approval materials or the stipulation by February 29, 2020. If they filed neither, the court scheduled a conference for March 6, 2020, at 10:00 a.m. in Courtroom 443 of the Thurgood Marshall United States Courthouse.