Hernandez Fernandez v. City Sandwhich NYC, LLC

Background

Benito Hernandez Fernandez brought claims under the Fair Labor Standards Act on behalf of himself and others similarly situated against City Sandwhich NYC, LLC, doing business as City Sandwich; Eat Good Feel Good Inc., doing business as City Sandwich; Karima Zizoune; and Adam Doe. The parties notified the court that they had reached an agreement on all issues.

Settlement-approval instructions

The court ordered that the parties could not dismiss the action with prejudice based on their settlement unless either the court or the Department of Labor approved the settlement. A dismissal with prejudice generally bars bringing the same claims again. To request court approval, the parties had to file a joint letter motion and the settlement agreement on the public docket by August 9, 2021. The motion had to explain why the settlement was fair and reasonable, including the plaintiff’s possible recovery, the burdens and expenses avoided, 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 a genuine dispute existed about the hours worked or compensation owed and how much the plaintiff’s attorney would seek in fees. The court said it generally 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 under the Fair Labor Standards Act or related state laws. If the parties sought such a broader release, they had to explain why it was appropriate; failure to do so could result in denial of the motion and possible sanctions against the attorneys.

Alternative dismissal without prejudice

The court explained that the Second Circuit had not decided whether the parties could settle a Fair Labor Standards Act case without court or Department of Labor approval and dismiss it without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). A dismissal without prejudice generally allows a new action, subject to applicable time limits. If the parties chose that option, they had to file a stipulation under that rule within 30 days, accompanied by the plaintiff’s lawyer’s affirmation that the plaintiff had been told the settlement would not prevent another lawsuit against the same defendants and that the settlement contained no release of the defendants. The court warned that this option could allow the case to be reopened in the future.

If no required letter or stipulation was filed by August 9, 2021, the court ordered a conference for August 13, 2021. The order did not approve the settlement, grant or deny a settlement motion, or dismiss the action.