Hernandez Leonardo v. Reza Fast Food, Inc.

Background

Jose Luis Hernandez Leonardo and Yonic Hernandez sued Reza Fast Food, Inc., doing business as Crown Fried Chicken, and Adel Ejtemai under the Fair Labor Standards Act (FLSA). The court was advised that the parties had reached a settlement.

Legal standard

The court explained that parties generally cannot privately settle FLSA claims with prejudice without approval from the district court or the Department of Labor. The court must determine whether the settlement is fair and reasonable by considering the total circumstances, including the plaintiffs’ 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.

If the settlement includes attorney’s fees, the court must separately assess whether those fees are reasonable. The parties must provide a factual basis for any fee award, including billing records showing each attorney’s date of work, hours spent, and work performed.

Order

The court ordered the parties to submit the settlement terms within 30 days so it could determine whether they comply with the FLSA and represent a reasonable compromise of disputed issues. The parties must also submit a joint letter of no more than five pages explaining why they believe the settlement is fair and reasonable, including information about the five listed factors. If the settlement includes attorney’s fees, the parties must submit supporting evidence and contemporaneous billing records.

This order required additional submissions; the opinion does not state that the court approved or rejected the settlement.