Mercado v. Metropolitan Transportation Authority

Background

The plaintiffs brought this Fair Labor Standards Act (FLSA) case against the Metropolitan Transportation Authority and Triborough Bridge and Tunnel Authority. The court was informed that the parties had reached a settlement. The opinion does not state the settlement amount or the specific claims being settled.

Settlement-approval requirement

The court stated that the action could not be dismissed with prejudice based only on the settlement unless either the court or the Department of Labor approved the settlement. If the parties wanted dismissal with prejudice, they had to file a joint letter motion asking the court to approve the agreement or provide documentation showing Department of Labor approval. The letter motion and settlement agreement had to be filed on the public docket by September 19, 2022.

The court required the parties' submission to explain why the proposed settlement was fair and reasonable. It identified these subjects for discussion:

- the plaintiffs' possible recovery; - the burdens and expenses the settlement would avoid in proving the claims and defenses; - the seriousness of the litigation risks; - whether experienced counsel negotiated the agreement at arm's length; and - the possibility of fraud or collusion.

The submission also had to address whether there was a genuine dispute about the number of hours worked or the compensation owed, as well as the amount of attorney fees the plaintiffs' attorney would seek.

Attorney fees and settlement terms

The court required any attorney-fee request to include supporting documentation. It specifically required contemporaneous billing records identifying, for each attorney, the date, hours worked, and nature of the work.

Absent special circumstances, the court said it would not approve a settlement filed under seal or in redacted form. It also said that, absent compelling circumstances, it would not approve agreements containing sweeping nondisclosure provisions or broad releases of claims unrelated to FLSA issues.

Other directions and disposition

The parties could voluntarily consent to have Magistrate Judge Katharine H. Parker oversee settlement approval. The court stated that the parties could withhold consent without negative consequences. Any pending motions were moot, and all conferences were vacated. The court did not approve the settlement in this order.

This was a procedural order about the requirements for settlement approval and case administration; it did not decide the underlying FLSA claims.