Villegas v. Lex 1751 Inc

Background

The plaintiff, Ernesta Villegas, brought claims individually and on behalf of others similarly situated against Lex 1751 Inc. and the other named defendants. The case involved claims under the Fair Labor Standards Act (FLSA). On July 23, 2020, the court was notified that mediation had resulted in an agreement on all issues.

Order concerning settlement approval

The court ordered that the parties could not dismiss the action with prejudice unless the settlement agreement was approved by either the court or the Department of Labor (DOL). If the parties wanted court approval, they had to file a joint letter motion and the settlement agreement on the public docket by August 23, 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, the litigation risks, whether experienced counsel negotiated 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. The court stated that it generally would not approve a settlement filed under seal or in redacted form. It also warned that it was unlikely to approve a broad release of claims unrelated to the wage-and-hour claims in the complaint, unless the parties explained why such a release was appropriate in this case.

Alternative dismissal without prejudice

The court noted that the Second Circuit had not decided whether an FLSA case could be settled without court or DOL 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 within 30 days, accompanied by an affirmation from the plaintiff’s counsel stating that the plaintiff had been clearly advised that the settlement did 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 could allow the case to be reopened in the future.

Disposition

Judge Valerie Caproni did not approve or reject the settlement and did not decide the underlying FLSA claims. She ordered the parties to file either a settlement-approval request or the specified dismissal materials by August 23, 2020. If neither was filed, she ordered a conference for August 28, 2020.