Santiago Morales v. Lombardi's Pizza Inc.

Background

The plaintiffs brought claims under the Fair Labor Standards Act (FLSA). On April 15, 2021, the parties notified the court that mediation had resulted in an agreement resolving all issues. The opinion does not describe the underlying wage-and-hour allegations or the settlement's terms.

Court's Instructions for a Dismissal With Prejudice

The court ordered that the parties could not dismiss the action with prejudice based on the settlement unless the settlement was approved by either the court or the Department of Labor. If the parties wanted court approval, they had to file a joint letter motion and the settlement agreement on the public docket by May 16, 2021. The motion had to explain why the proposed settlement was fair and reasonable, including the expected burdens and expenses of continued litigation, the parties' litigation risks, whether experienced counsel negotiated at arm's length, and the possibility of fraud or collusion.

The filing also had to address whether a genuine dispute existed about the hours worked or the compensation owed and how much of the settlement the plaintiffs' attorney would seek as fees. The court stated that, absent special circumstances, it would not approve a settlement filed under seal or in redacted form.

The court further warned that it was unlikely to approve a general release or a release covering claims unrelated to the wage-and-hour claims under the FLSA or related state laws. 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 approval motion and sanctions against the attorneys.

Alternative Dismissal Without Prejudice

The court explained 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). If the parties chose that option, they had to file a required stipulation on the public docket within 30 days. The stipulation had to include an affirmation from plaintiffs' counsel stating that the plaintiffs had been clearly advised that the settlement would not prevent them from filing another lawsuit against the same defendants and affirming that the settlement contained no release of the defendants. The court warned that this option carried a risk that the case could later be reopened.

Disposition

The court did not approve the settlement or dismiss the action. It ordered the parties to file either a joint settlement-approval request or the specified dismissal-without-prejudice stipulation. If neither a letter nor a stipulation was filed by May 16, 2021, the court ordered a conference for May 21, 2021, at 10:00 a.m.