Ortega v. 230 A&M Deli-Grocery Inc.

Background

The court was advised by Magistrate Judge Cave, who had been assigned to conduct a settlement conference, that the parties had reached a settlement. The action was brought under the Fair Labor Standards Act (FLSA), which requires an employer that violates the overtime-pay requirement to pay the unpaid overtime and an equal amount as liquidated damages.

The court explained that, when FLSA claims are settled through a stipulated dismissal under Rule 41 of the Federal Rules of Civil Procedure, the settlement and any proposed attorney’s-fee award must be reviewed for fairness. The opinion cited factors used to evaluate whether an FLSA settlement and fee award are fair and reasonable.

Options for Finalizing the Settlement

Assuming the parties intended to dismiss the case under Rule 41, the court gave them two options, both due by March 9, 2021:

1. They could submit the settlement agreement and a joint letter explaining the basis for the proposed settlement and why it was fair and reasonable. The letter also had to address any incentive payment to the plaintiff and any attorney’s-fee award, including supporting documentation when appropriate. 2. They could consent to proceed before Magistrate Judge Cave for all purposes, allowing her to decide whether to approve the settlement.

The court noted that judicial approval is not required for an FLSA settlement made through a Rule 68(a) offer of judgment.

Settlement Provisions Identified by the Court

The court stated that it would not approve a settlement agreement containing a confidentiality provision unless the parties showed case-specific reasons sufficient to overcome the public’s common-law right of access to court documents. It also stated that it would not approve a release or waiver covering claims that had not accrued or claims unrelated to wage-and-hour matters unless the parties justified that broad release with case-specific reasons.

The court further stated that it would not approve a provision barring the plaintiff from making negative statements about a defendant unless the provision preserved the plaintiff’s ability to make truthful statements about his experience litigating the case, or the parties showed case-specific reasons for omitting that protection.

If the agreement contained any of those provisions, the court directed the parties to say whether they wanted the court to consider approving the agreement with those provisions removed. The opinion explained that the court could approve or reject the agreement but could not rewrite it.

Ruling and Disposition

Judge Jesse M. Furman ordered the parties to use one of the two procedures for seeking approval of their settlement. The order did not approve or reject the settlement itself. It also ordered that the conference scheduled for March 18, 2021, be adjourned without setting a new date.