Espinoza v. Euro Design and Stone LLC

Background

The plaintiffs brought this action under the Fair Labor Standards Act (FLSA), a federal law governing matters including overtime pay. The parties advised the court that they had reached a settlement in principle.

The court explained that when FLSA claims are settled and dismissed under Rule 41 of the Federal Rules of Civil Procedure, the settlement—including any proposed award of attorneys’ fees—must be reviewed for fairness. The opinion notes that this judicial-approval requirement does not apply to an FLSA settlement made through a Rule 68(a) offer of judgment.

Order

The court ordered the parties to submit the settlement agreement and a joint letter by July 28, 2022. The letter must explain the basis for the proposed settlement and why it should be approved as fair and reasonable, referring to the factors identified in Wolinsky v. Scholastic, Inc. It must also address any incentive payments to the plaintiffs and any attorneys’ fee award, with supporting documentation when appropriate.

The court stated that it would not approve an agreement containing a confidentiality provision unless the parties showed case-specific reasons sufficient to overcome the public’s common-law right of access to judicial documents. It likewise would not approve a release or waiver of claims that had not accrued or that were unrelated to wage-and-hour matters without case-specific justification. A provision barring a plaintiff from making negative statements about a defendant would also require a carve-out for truthful statements about the plaintiff’s experience litigating the case, or case-specific justification for omitting that carve-out.

If the agreement contained any of those provisions, the parties were directed to state whether they wanted the court to consider approving the agreement with the provisions removed. The court noted that it could approve or reject the settlement but could not modify the agreement itself. The parties could also consent to have the assigned Magistrate Judge decide whether to approve the settlement.

Other Procedural Actions and Effect

The court adjourned the default-judgment briefing schedule, the August 9, 2022 hearing, and all other pending deadlines without setting new dates. It also directed the Clerk of Court to mail the order to Defendants Salih Ozen and Robert Lala.

The order did not approve or reject the proposed settlement and did not decide the merits of the plaintiffs’ wage claims.