Puello v. Weber Farhat OConnor Realty Management Inc.

Background

The court was notified that the parties had reached an agreement through mediation resolving all issues. The case involved claims under the Fair Labor Standards Act (FLSA), a federal wage-and-hour law.

Court-Approval Option

The court ordered that the parties could not dismiss the action with prejudice based only on their settlement. They first had to obtain approval from either the court or the Department of Labor. To seek court approval, they had to file a joint letter motion and the settlement agreement on the public docket by July 18, 2022. The letter had to explain why the settlement was fair and reasonable, including the plaintiff’s possible recovery, the burdens and expenses avoided by settling, the litigation risks, whether experienced counsel negotiated at arm’s length, and the possibility of fraud or collusion. It also had to address whether a genuine dispute existed about the hours worked or compensation owed and the amount of attorney’s fees the plaintiff’s lawyer would seek.

The court stated that it generally would not approve a settlement filed under seal or in redacted form without special circumstances. It also warned that it was unlikely to approve a general release, or a 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 a broader release, they had to explain why. The court warned that failure to follow these instructions could lead to denial of the approval motion and possibly sanctions against the attorneys.

Dismissal Without Prejudice Option

The court noted that the Second Circuit had not decided whether an FLSA case could be settled without court or Department of Labor approval and then 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 within 30 days, accompanied by an affirmation from the plaintiff’s counsel stating that the plaintiff had been clearly advised that the settlement did not prevent another lawsuit against the same defendants and affirming that the settlement agreement contained no release of the defendants. The court warned that this option could allow the case to be reopened later.

Disposition

The court did not rule on the merits of the FLSA claims, approve the settlement, or dismiss the case. Instead, Judge Valerie Caproni set procedures and deadlines for either seeking approval for a dismissal with prejudice or filing a dismissal without prejudice. If neither filing was made by July 18, 2022, the court ordered a conference for July 22, 2022, at 10:00 a.m.