Yulo v. Metz Zutto Ramen Inc.

Background

The court stated that it had been notified on March 10, 2020, that the parties reached an agreement on all issues through mediation. The defendants are Metz Zutto Ramen Inc. doing business as Zutto Japanese American Pub, German H. Metz, Yvonne Metz, and Leo Doe. The case includes claims under the Fair Labor Standards Act (FLSA).

Settlement and dismissal requirements

The court ordered that the parties could not dismiss the action with prejudice—that is, permanently based on the settlement—unless the settlement agreement was approved by the court or the Department of Labor. If the parties wanted that type of dismissal, they had to file a joint letter motion asking the court to approve the settlement, together with the settlement agreement, or provide documentation of Department of Labor approval.

The court required the letter motion to explain why the settlement was fair and reasonable. It also required discussion of the plaintiff’s possible recovery, the burdens and expenses the settlement would avoid, the litigation risks, whether the agreement resulted from arm’s-length bargaining between experienced counsel, and the possibility of fraud or collusion. The submission also had to address whether there was a genuine dispute about the hours worked or compensation due and the amount of attorney’s fees sought by the plaintiff’s attorney. The court stated that, absent special circumstances, it would not approve a settlement filed under seal or in redacted form.

Alternative dismissal procedure

The court noted that the Second Circuit had not decided whether an FLSA case could be settled without court or Department of Labor approval and dismissed without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). A dismissal without prejudice does not bar a new action, assuming the applicable filing deadline has not expired, and does not trigger claim-preclusion principles.

If the parties chose to proceed without court or Department of Labor approval, the court required them to file a Rule 41(a)(1)(A) stipulation on the public docket. 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 agreement did not release the defendants from liability. The court warned that this option carried the risk that the case could be reopened in the future.

Order

The court directed that any approval letter motion, settlement agreement, or alternative stipulation be filed on the public docket by April 11, 2020. If no letter or stipulation was filed by that date, the court ordered a conference for April 17, 2020, at 10:00 a.m. in Courtroom 443 of the Thurgood Marshall U.S. Courthouse in New York. The order itself did not approve the settlement or dismiss the action.