Hernandez v. Sharp Management Corp.
- Valerie Caproni
- 1:20-cv-04415
- U.S. District Court · Southern District of New York
- 3
In Hernandez v. Sharp Management Corp., Judge Caproni set requirements for resolving the parties’ agreed Fair Labor Standards Act settlement.
Julio Hernandez and Sharp Management Corp., as well as the attorneys handling their Fair Labor Standards Act settlement.
What happened
In Hernandez v. Sharp Management Corp., the parties notified the court that they had reached an agreement on all issues in a Fair Labor Standards Act case. The order does not describe the settlement’s terms or approve it.
The court said the parties could not dismiss the case with prejudice based on the settlement unless the court or the Department of Labor approved it. They could instead file a dismissal without prejudice under the applicable federal rule, subject to specified conditions, including a statement from the plaintiff’s lawyer that the plaintiff understood another lawsuit could be filed and that the agreement contained no release.
Judge Valerie Caproni required any approval request or dismissal filing to be submitted by April 23, 2021, and required a later conference if nothing was filed. The court also warned that broad releases could lead to denial of approval and possible sanctions against attorneys.
The detailed version
- Hernandez v. Sharp Management Corp. · No. 1:20-cv-04415
- Valerie Caproni
- Mar. 24, 2021
Background
The parties notified the court on March 22, 2021, that they had reached an agreement on all issues. The case involves claims under the Fair Labor Standards Act, a federal law governing wage and hour rights. The order does not state the settlement amount or other settlement terms.
Order regarding dismissal with prejudice
The court ordered that the parties may not dismiss the action with prejudice based on their settlement unless the settlement is approved by the court or the Department of Labor. A dismissal with prejudice generally ends the case and prevents the same claims from being brought again. If the parties seek court approval, they must file a joint letter motion and the settlement agreement on the public docket by April 23, 2021. The motion must explain why the settlement is fair and reasonable and address:
- The plaintiff’s possible recovery range.
- How the settlement would avoid anticipated burdens and expenses of proving the parties’ claims and defenses.
- The seriousness of the litigation risks.
- Whether experienced counsel reached the agreement through arm’s-length bargaining.
- The possibility of fraud or collusion.
The motion must also address whether there is a genuine dispute about the hours worked or compensation owed and how much the plaintiff’s attorney will seek in fees. The court stated that, absent special circumstances, it is unlikely to approve a settlement filed under seal or in redacted form.
The court further warned that it is 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 believe unusual circumstances justify a broader release, their motion must explain why. The court warned that failing to follow these requirements could result in summary denial of the motion and possible sanctions against the attorneys.
Alternative dismissal without prejudice
The court noted that the Court of Appeals for the Second Circuit had not decided whether the parties could 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). A dismissal without prejudice does not bar a new action based on the same matter, assuming the applicable filing deadline has not expired.
If the parties choose that option, they must file a Rule 41(a)(1)(A) stipulation on the public docket within 30 days. The filing must include an affirmation from the plaintiff’s counsel stating that the plaintiff was clearly advised that the settlement does not prevent another lawsuit against the same defendant and affirming that the settlement agreement contains no release of the defendant. The court warned that this option creates a risk that the case could later be reopened.
Disposition
The order did not approve or reject the settlement. Instead, it established the procedures and deadlines for either seeking approval of a dismissal with prejudice or filing a dismissal without prejudice under the stated conditions. If no letter or stipulation was filed by April 23, 2021, the court ordered a conference for April 30, 2021, at 10:00 a.m. Judge Valerie Caproni issued the order.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.