Martinez v. Fiscardo, Inc.

Background

The court was notified that the parties had reached an agreement on all issues as to Plaintiff Victor Martinez. The claims in the case arose under the Fair Labor Standards Act (FLSA), a federal law governing wages and working hours.

Court’s Instructions Regarding Permanent Dismissal

The court ordered that the parties could not dismiss the action with prejudice—that is, permanently—unless the settlement agreement was approved by either the court or the Department of Labor. If the parties wanted a permanent dismissal, they had to file either a joint letter motion asking the court to approve the settlement or documentation showing Department of Labor approval. The materials, including the settlement agreement, had to be filed on the public docket by August 2, 2021.

The court required any approval request to explain why the proposed settlement was fair and reasonable. It specifically 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 filing also had to address whether there was a genuine dispute about the hours worked or compensation owed and how much of the settlement the plaintiff’s attorney would seek as fees.

The court stated that, absent special circumstances, it was unlikely to 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 sought approval of a broader release, they had to explain why that unusual term was appropriate. The court warned that failure to comply could lead to denial of the motion and sanctions against the attorneys.

Alternative Dismissal Without Prejudice

The court noted 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 route, they had to file a stipulation under that rule within 30 days. The stipulation had to include an affirmation from plaintiff’s counsel stating that Martinez 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 carried a risk that the case could later be reopened.

Disposition

The court did not approve or reject the settlement. It ordered the parties to file either the required settlement-approval materials or the alternative stipulation by August 2, 2021. If they filed nothing by that date, the court ordered a conference for August 6, 2021, at 10:00 a.m. in Courtroom 443 of the Thurgood Marshall U.S. Courthouse. Judge Valerie Caproni issued the order.