Perez Molina v. Skyline Restoration Inc.

Background

The plaintiffs brought this action under the Fair Labor Standards Act, a federal law that requires covered employers to pay overtime wages and, for violations, an equal amount as additional damages. The plaintiffs and Skyline Restoration Inc., John Kalafatis, and Vasilios Pierrakis—the “Appearing Defendants”—informed the court that they had reached a settlement in principle.

Settlement-review requirements

The court explained that a settlement and dismissal of Fair Labor Standards Act claims under Rule 41 generally requires court approval or approval by the U.S. Department of Labor. The court ordered the parties to submit the settlement agreement and a joint letter by April 23, 2021. The letter must explain the basis for the proposed settlement and why it is fair and reasonable, using the factors identified in the cited precedent. It must also address any incentive payments to the plaintiffs and any attorney’s fee award, including supporting documentation when appropriate.

The court stated that it would not approve a settlement containing a confidentiality provision without case-specific reasons sufficient to overcome the public’s common-law right of access to judicial documents. It also would not approve a provision releasing or waiving claims that had not accrued or claims unrelated to wage-and-hour matters without case-specific justification. Finally, it would not approve a provision barring negative statements about a defendant unless it contained an exception for truthful statements about a plaintiff’s experience litigating the case, absent case-specific justification for the broader restriction. If the agreement contained any of these provisions, the parties had to say whether they wanted the court to consider approval with those provisions removed; the court noted that it could approve or reject the agreement but could not rewrite it.

Other defendants and deadlines

The settlement in principle did not include Ronald Duarte or Eric Doe. The court stated that those defendants had not appeared and that proof of service did not appear on the docket. The initial pretrial conference scheduled for April 29, 2021 therefore was to proceed as to them. All pending deadlines concerning the Appearing Defendants were postponed indefinitely.

Disposition

Judge Jesse M. Furman ordered the parties to submit the settlement materials and related explanation. This order did not approve or reject the settlement and did not dismiss the action.