Shamis v. Solil Management, LLC

Background

Ilona Shamis sued Solil Management, LLC and other defendants. The parties told the court that they had reached a settlement agreement in principle and were working to finalize it. They asked the court to stay the case and adjourn all deadlines and conferences. They also said they intended to file a joint dismissal with prejudice under Federal Rule of Civil Procedure 41(a)(1)(A) once the agreement was finalized.

Settlement Review

The court explained that Fair Labor Standards Act claims cannot be privately settled with prejudice without approval from the district court or the Department of Labor. The court therefore stated that it could not grant the dismissal stipulation contemplated in the parties’ letter.

Instead, the parties had to provide information allowing the court to determine whether the settlement was fair and reasonable. The court identified factors including the plaintiff’s possible recovery, the burdens and expenses the settlement would avoid, the litigation risks, and whether the agreement resulted from arms-length negotiations without fraud or collusion. If the settlement included attorney’s fees, the court also required separate evidence establishing the factual basis for those fees, including contemporaneous billing records.

The court further stated that, absent additional guidance from the Court of Appeals for the Second Circuit, it generally requires the same review for dismissals without prejudice.

Ruling

Judge Vernon S. Broderick granted the parties’ motion to stay the case and adjourn all existing deadlines and conferences. He ordered the parties to submit the settlement terms and a joint letter of no more than five pages by July 19, 2021, explaining why the settlement represented a fair and reasonable compromise of disputed issues. If the agreement included attorney’s fees, the parties also had to submit evidence supporting the fee award. The order did not approve the settlement or dismiss the case.