Martinez v. Fiscardo, Inc.

Background

The case was brought by Victor Martinez and Nestor Toribio Ramos against Fiscardo, Inc. doing business as Orion Diner & Grill, Astrinos Voumvourakis, and Ioannis Akriotis. The claims arise under the Fair Labor Standards Act (FLSA), a federal law governing wages and working hours. On December 29, 2021, the court was notified that mediation had produced an agreement resolving all issues as to Ramos.

Settlement approval requirement

The court ordered that the parties may not dismiss the action with prejudice based on the settlement unless the settlement agreement is approved by either the court or the Department of Labor. If the parties sought court approval, they had to file a joint letter motion and the settlement agreement on the public docket by January 29, 2022. The motion had to explain why the proposed settlement was fair and reasonable, including:

- Ramos’s possible recovery; - the burdens and expenses the settlement would avoid; - the seriousness of the parties’ litigation risks; - whether experienced counsel negotiated the agreement 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 the amount of attorney fees sought. The court stated that, absent special circumstances, it was unlikely to approve an agreement filed under seal or in redacted form.

Releases and alternative dismissal

The court advised that it was unlikely to approve a general release, or a release covering claims not raised in the complaint and unrelated to FLSA or related state wage-and-hour claims. If the parties believed unusual circumstances justified a broader release, their joint motion had to explain why. The court warned that failure to comply could lead to denial of the motion and sanctions against the attorneys.

The court also noted that the United States Court of Appeals for 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 on the public docket within 30 days, together with an affirmation from plaintiff’s counsel stating that the plaintiff or plaintiffs had been clearly advised that the settlement did not prevent another lawsuit against the same defendants and affirming that the agreement contained no release of the defendants. The court warned that this option carried a risk that the case could later be reopened.

Disposition

Judge Valerie Caproni did not approve or reject the settlement in this order. Instead, she ordered the parties to submit either a settlement-approval request or the specified dismissal stipulation. If no letter or stipulation was filed by January 29, 2022, the court ordered a conference for February 4, 2022, at 10:00 a.m.