Vaquero v. Shin Restaurant, Inc.

Background

The plaintiff, Gustavo Vaquero, sued Shin Restaurant, Inc., doing business as Ise Restaurant, and Nishigaki Manabu, individually. The opinion states that the case involved claims under the Fair Labor Standards Act (FLSA). The court was notified that mediation had produced an agreement resolving all issues.

Order concerning settlement approval

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 dismissal with prejudice, they had to file a joint letter motion asking the court to approve the settlement, together with the settlement agreement, or provide documentation showing Department of Labor approval. The filing deadline was April 15, 2021.

The court required the letter motion to explain why the proposed settlement was fair and reasonable. It had to address 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. It also had to address whether there was a genuine dispute about the number of hours worked or the amount of compensation due, and how much the plaintiff’s attorney would seek in fees.

The court stated that, absent special circumstances, it would not 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 covering claims not raised in the complaint and unrelated to FLSA or related state wage-and-hour claims. If the parties believed unusual circumstances justified a broader release, the joint motion had to explain why. The court warned that failing to comply could lead to summary denial of the motion and sanctions against the attorneys.

Dismissal without prejudice

The court noted that the Court of Appeals for the Second Circuit had not yet decided whether parties may settle an FLSA case without court or Department of Labor approval and dismiss it without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). If the parties chose that option, they had to file a stipulation under that rule within 30 days. The stipulation had to include 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 affirming that the settlement agreement contained no release of the defendants. The court warned that this option carried the risk that the case could later be reopened.

Disposition

The court did not approve or reject the settlement in this order and did not dismiss the case. It set requirements for either seeking approval and dismissal with prejudice or filing a stipulation for dismissal without prejudice. If neither a letter motion nor a stipulation was filed by April 15, 2021, Judge Valerie Caproni ordered a conference for April 16, 2021, at 10:00 a.m.