Sanchez v. 1398 Ogden Deli Grocery Corp.

Background

The parties notified the court that they had reached an agreement on all issues. The case includes claims under the Fair Labor Standards Act, a federal wage-and-hour law.

The opinion does not state the settlement amount, describe all of its terms, or say that the court approved the agreement. Instead, it explains the procedures the parties must follow if they want to end the case based on the settlement.

Court’s Instructions

The court ordered that the parties may not dismiss the action with prejudice unless the settlement agreement is approved by either the court or the Department of Labor. A dismissal with prejudice would end the case in a way that bars the same claims from being brought again. To seek court approval, the parties must file a joint letter motion and the settlement agreement on the public docket by May 22, 2021, or provide documentation showing Department of Labor approval.

The approval request must explain why the proposed settlement is fair and reasonable. The court required discussion of the plaintiff’s possible recovery, the burdens and expenses the settlement would avoid, the litigation risks, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion. The submission must also address whether there is a genuine dispute about the hours worked or the compensation owed and how much the plaintiff’s attorney will 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 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 that an unusually broad release was appropriate, they would have to explain why. The court warned that failure to follow these instructions could result in denial of the approval motion and sanctions against the attorneys.

Alternative Dismissal Procedure

The order noted that the Court of Appeals 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). If the parties chose that route, they had to file a stipulation on the public docket within 30 days. The stipulation had to include an affirmation from the plaintiff’s attorney stating that the plaintiff had been clearly advised that the settlement would not prevent another lawsuit against the same defendants and confirming that the settlement agreement contained no release of the defendants.

The court warned that this option could allow the case to be reopened in the future. If no letter or stipulation was filed by May 22, 2021, the court ordered a conference for May 28, 2021, at 10:00 a.m.

Disposition

Judge Valerie Caproni issued procedural instructions concerning the reported settlement. The order did not approve or reject the settlement and did not enter a dismissal.