Pugo v. Soho Design NY LLC
- Valerie Caproni
- 1:19-cv-11792
- U.S. District Court · Southern District of New York
- 3
In Pugo v. Soho Design NY LLC, Judge Caproni required approval procedures before an FLSA settlement could end the case with prejudice.
The parties to the FLSA action—Diego Pugo and defendants Soho Design NY LLC, Lazaro Jewelry LLC, Lazaro Inc., Lazaro Diaz, and Brad Longenecker—and their attorneys.
What happened
In Pugo v. Soho Design NY LLC, the parties told the court that mediation had produced an agreement resolving all issues in this Fair Labor Standards Act case.
The court said the parties could not dismiss the case with prejudice unless the settlement was approved by the court or the Department of Labor. It also described an alternative process for dismissing the case without prejudice, which would not include a release of the defendants’ claims.
Judge Valerie Caproni required the parties to file either a settlement-approval motion or the alternative stipulation by January 16, 2021, or attend a conference on January 22, 2021. The court did not approve the settlement in this order.
The detailed version
- Pugo v. Soho Design NY LLC · No. 1:19-cv-11792
- Valerie Caproni
- Dec. 16, 2020
Background
The plaintiff, Diego Pugo, sued Soho Design NY LLC, Lazaro Jewelry LLC, Lazaro Inc., Lazaro Diaz, and Brad Longenecker. The case involved claims under the Fair Labor Standards Act. On December 14, 2020, the court was notified that mediation had resulted in an agreement on all issues.
Settlement-approval requirement
The court ordered that the parties could not dismiss the action with prejudice based on their settlement unless the settlement agreement was approved by either 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 16, 2021. The motion had to explain why the settlement was fair and reasonable, including the plaintiff’s possible recovery, the burdens and expenses the settlement would avoid, 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. The court stated that, absent special circumstances, it was unlikely to approve a settlement filed under seal or in redacted form.
Release provisions and alternative procedure
The court warned 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, their motion had to explain why. The court warned that failing to comply could lead to summary denial of the motion and possibly sanctions against the attorneys.
The court also noted that the Second Circuit had not decided whether the parties could settle an FLSA case without court or Department of Labor approval by filing a dismissal without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). If the parties chose that option, 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 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 in the future.
Disposition
The order did not approve or reject the settlement. It set filing requirements and deadlines. If no letter motion or stipulation was filed by January 16, 2021, the court ordered a conference for January 22, 2021, at 10:00 a.m.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.