Reinhardt v. Corporate Express, Inc.

Background

The parties notified the Court on March 25, 2022, that they had reached an agreement on all issues. The action asserted claims under the Fair Labor Standards Act (FLSA). The Court addressed what the parties needed to do if they wanted to end the case based on that agreement.

Required approval for dismissal with prejudice

The Court ordered that the parties may not dismiss the action with prejudice—that is, in a way that would bar the action from being brought again—unless the settlement agreement is approved by either the Court or the Department of Labor (DOL). If the parties wanted that type of dismissal, they had to file a joint letter motion asking the Court to approve the agreement or provide documentation of DOL approval. The filing, together with the settlement agreement, had to be placed on the public docket by April 25, 2022.

The approval request had to explain why the proposed settlement was fair and reasonable. It also had to address the plaintiff’s possible recovery; the litigation costs and burdens the settlement would avoid; the risks faced by the parties; whether experienced counsel negotiated the agreement at arm’s length; and the possibility of fraud or collusion. The request also had to discuss whether a genuine dispute existed about the hours worked or compensation owed and how much the plaintiff’s attorney sought in fees.

The Court stated that it was unlikely to approve an agreement filed under seal or in redacted form without special circumstances. It also warned that it was unlikely to approve a broad release of claims unrelated to the wage-and-hour claims in the complaint and related state-law claims. If the parties believed unusual circumstances justified such a release, their motion had to explain why. The Court warned that failure to comply could result in denial of the motion and sanctions against the attorneys.

Alternative dismissal without prejudice

The Court noted that the Second Circuit had not decided whether parties may settle an FLSA case without Court or DOL approval by filing a dismissal without prejudice under Federal Rule of Civil Procedure 41(a)(1)(A). If the parties chose that route, they had to file a stipulation within 30 days. A stipulation is an agreement filed with the Court to end the action. It had to include an affirmation from the plaintiff’s counsel stating that the plaintiff or plaintiffs had been clearly told that the settlement would 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 could allow the case to be reopened in the future.

Disposition

The Court did not approve the agreement and did not dismiss the action in this order. It set filing requirements and stated that, if no letter or stipulation was filed by April 25, 2022, a conference would be held on April 29, 2022, at 10:00 a.m. Judge Valerie Caproni entered the order.