Sanchez v. Park Avenue North Realty LTD.

Background

The court stated that, on September 16, 2022, it was notified that mediation had produced an agreement on all issues. The action involved claims under the Fair Labor Standards Act (FLSA), a federal wage-and-hour law.

Settlement approval and dismissal with prejudice

The court ordered that the parties could not dismiss the action with prejudice based on the settlement unless the settlement agreement was approved by either the court or the Department of Labor. If the parties wanted a dismissal with prejudice, they had to file a joint letter motion asking the court to approve the agreement or provide documentation of Department of Labor approval.

The letter motion and settlement agreement had to be filed on the public docket by October 19, 2022. The motion had to explain why the settlement was fair and reasonable, including the plaintiff’s possible recovery, the burdens and expenses avoided through settlement, 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 how much the plaintiff’s attorney would seek in fees.

The court stated that, absent special circumstances, it would not approve a settlement filed under seal or in redacted form. It also advised that it was unlikely to approve a general release, or a release of claims unrelated to the wage-and-hour claims in the complaint. If the parties believed unusual circumstances justified a broader release, their motion had to explain why. The court warned that failing to comply could lead to denial of the motion and sanctions against the attorneys.

Dismissal without prejudice without approval

The court noted that the United States Court of Appeals for the Second Circuit had not decided whether an FLSA case could be settled without court or Department of Labor approval and dismissed without prejudice under Rule 41(a)(1)(A). If the parties chose that route, they had to file a stipulation under that rule on the public docket within 30 days. The stipulation had to include an affirmation from plaintiff’s counsel stating that Sanchez had been clearly advised that the settlement would 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 in the future. If neither the settlement-approval materials nor the stipulation was filed by October 19, 2022, the court ordered a conference for October 21, 2022, at 10:00 a.m.

Disposition

Judge Valerie Caproni did not approve or reject the settlement in this order. She set requirements and alternatives for resolving the case and scheduled a conference if the parties did not make the required filing.