Guerrero Marin v. Nelson Services Systems, Inc.

Background

Rafael Guerrero Marin brought this action under the Fair Labor Standards Act, a federal law governing matters including overtime pay. The parties notified the court that they had reached a settlement in principle.

Court’s analysis

The court explained that when parties settle Fair Labor Standards Act claims and seek dismissal under Rule 41 of the Federal Rules of Civil Procedure, the settlement—including any proposed attorney’s fee award—must be reviewed to determine whether it is fair and reasonable. The court also noted that judicial approval is not required for a Fair Labor Standards Act settlement made through a Rule 68 offer of judgment.

The court advised that it would not approve a settlement containing a confidentiality provision unless the parties showed case-specific reasons overcoming the public’s right of access to judicial documents. It also would not approve a release of unaccrued claims or unrelated claims, or a non-disparagement provision lacking an appropriate exception for truthful statements about the plaintiff’s experience litigating the case, absent case-specific justification. If such provisions appeared in the agreement, the parties were required to state 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.

Order and effect

The court ordered the parties to submit the settlement agreement and a joint letter by July 8, 2021. The letter must explain the basis for the proposed settlement and why any Rule 41 dismissal should be approved as fair and reasonable, and must address any incentive payment to Rafael Guerrero Marin and any attorney’s fee award, with supporting documentation when appropriate. If the parties instead proceeded through an offer of judgment, they had to file the offer, notice of acceptance, and proof of service by the same date. The court also postponed the July 1, 2021 pretrial conference and all other pending deadlines. The order did not approve the settlement or dismiss the case.