Campos v. 835 Fox St Realty, LLC

Background

Fernando Campos sued 835 Fox St Realty, LLC, Oak Equities, LLC, Oscar Kohn, and Josh Kowitz, individually and on behalf of other similarly situated persons. The opinion states that the case involved claims under the Fair Labor Standards Act (FLSA). On December 10, 2020, the court was notified that the parties had reached an agreement on all issues through mediation.

Settlement-approval requirements

The court ordered that the parties could not dismiss the action with prejudice—a dismissal that would generally end the case and bar the same claims from being brought again—unless the settlement was approved by the court or the Department of Labor. If the parties wanted court approval, they had to file a joint letter motion and the settlement agreement on the public docket by January 10, 2021. Alternatively, they could provide documentation that the Department of Labor had approved the agreement.

The letter motion had to explain why the proposed settlement was fair and reasonable. The court required discussion of the plaintiff’s possible recovery; the litigation burdens and expenses the settlement would avoid; the risks of litigation; whether experienced counsel negotiated the agreement at arm’s length; and the possibility of fraud or collusion. The filing also had to address whether there was a genuine dispute about the hours worked or compensation owed, and how much the plaintiff’s attorney sought in fees.

The court stated that, absent special circumstances, it was unlikely to approve a settlement filed under seal or in redacted form. It also stated that it was unlikely to approve a general release, or a release of claims unrelated to the wage-and-hour claims in the complaint and related state-law claims. If the parties believed unusual circumstances justified a broader release, the joint motion had to explain why. The court warned that failure to comply could lead to denial of the motion and sanctions against the attorneys.

Alternative dismissal procedure

The court noted that the United States Court of Appeals for 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 a stipulation within 30 days. The stipulation had to include an affirmation from plaintiff’s counsel stating that the plaintiff or plaintiffs had been clearly told that the settlement would not prevent another lawsuit against the same defendants, and confirming that the settlement agreement contained no release of the defendants. The court warned that this option carried a risk that the case could be reopened later.

Disposition

Judge Valerie Caproni did not approve or reject the settlement and did not enter a final dismissal. She ordered the parties to pursue either court or Department of Labor approval for a dismissal with prejudice or the specified dismissal-without-prejudice procedure. If neither a letter nor a stipulation was filed by January 10, 2021, the court ordered a conference for January 15, 2021.