Rodriguez v. Kiara Foods Inc.

Background

Dario Rodriguez brought this Fair Labor Standards Act (FLSA) case against Kiara Foods Inc., doing business as Manolo Tapas Restaurant, and Jesus Perez. On March 18, 2021, the parties notified the court that mediation had resulted in an agreement resolving all issues.

Court’s order

The court ordered that the parties could not dismiss the action with prejudice based on the settlement unless either the court or the Department of Labor approved the settlement agreement. A dismissal with prejudice generally ends the case and bars the same claims from being brought again. If the parties wanted that type of dismissal, 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 had to be made on the public docket by April 18, 2021.

The court required the approval request to explain why the settlement was fair and reasonable. It identified several subjects the request had to address, including Rodriguez’s possible recovery, the litigation costs and burdens avoided by settlement, the risks faced by the parties, whether experienced counsel negotiated at arm’s length, and possible fraud or collusion. The request also had to address whether the parties genuinely disputed the hours worked or compensation owed and how much Rodriguez’s attorney would seek in fees.

The court stated that it generally would not approve a settlement filed under seal or in redacted form absent special circumstances. It also 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, they had to explain why. The court warned that failing to follow these instructions could result in denial of the motion and sanctions against the attorneys.

Alternative dismissal procedure

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 dismissed without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). The parties could pursue that option by filing a stipulation within 30 days. The stipulation had to include an affirmation from Rodriguez’s counsel stating that Rodriguez 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 a risk that the case could later be reopened.

Disposition

The order did not approve or reject the settlement itself. It established the procedures the parties had to follow if they wanted to dismiss the case with prejudice or, alternatively, without prejudice. If no letter motion or stipulation was filed by April 18, 2021, the court ordered a conference for April 23, 2021, at 10:00 a.m.