Villalva v. Spaha Pizza LLC

Background

The court was notified that mediation had produced an agreement resolving all issues. The case asserted claims under the Fair Labor Standards Act (FLSA), a federal law governing wage and hour matters.

Settlement approval and dismissal with prejudice

The court ordered that the parties could not dismiss the action with prejudice—that is, in a way that would generally bar the same claims from being brought again—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 either a joint letter motion asking the court to approve the settlement or documentation showing Department of Labor approval.

The filing had to be made on the public docket by October 28, 2020. The letter motion had to explain why the settlement was fair and reasonable, including the plaintiff’s possible recovery, the burdens and expenses avoided by settlement, the litigation risks, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion. It also had to address whether there was a genuine dispute about hours worked or compensation owed and the amount of attorney fees sought. The court stated that it generally would not approve a settlement filed under seal or in redacted form.

The court warned that it was unlikely to approve a general release, or a release of claims unrelated to the wage-and-hour claims brought in the complaint. If the parties believed unusual circumstances justified a broader release, they had to explain why. The court warned that failure to follow these instructions could lead to denial of the motion and sanctions against attorneys.

Alternative dismissal without prejudice

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 then dismissed without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). If the parties chose that route, they had to file the required stipulation on the public docket within 30 days. The stipulation had to include an affirmation from plaintiff’s counsel stating that the plaintiff had been clearly told the settlement would not prevent another lawsuit against the same defendants and confirming that the settlement contained no release of the defendants. The court warned that this option could allow the case to be reopened later.

Disposition

Judge Valerie Caproni did not approve the settlement or dismiss the action in this order. Instead, she set the filing requirements and deadlines. If no letter motion or stipulation was filed by October 28, 2020, the court ordered a conference for October 30, 2020, at 10:00 a.m. in Courtroom 443 of the Thurgood Marshall United States Courthouse.